Annual trend predictors are doomed to failure, but existing macro trends may hold clues to small business success in 2017.
The £2bn Research & Development funding announced in the recent Autumn Statement came as good news to the UK’s community of innovative small businesses. With 51% of UK firms expecting to be disrupted in the next two years, the drive to innovate faster than the competition has never been stronger. Small enterprises are famously agile and built for developing new concepts, but success will also depend on making the most of the technology on offer.
The start of a new year is often awash with commentators proclaiming that the coming 12 months will be the year of a certain trend or technology. Despite the bold predictions, foreseeing what will define the future is next to impossible without hindsight (how many toasted the first chimes of 2016 predicting Brexit, President Trump, and Ed Balls becoming one of the UK’s most popular politicians?)
A better predictor can be found in the macro trends already making themselves felt and gauging their direction of travel.
So what standout tech developments are already helping small business owners innovate, and how are they likely to develop in 2017 and beyond?
Small firms focused on design or any kind of bespoke manufacturing are already enjoying great advantages from the rise of 3D printing to gain both cost-savings and incremental product innovation.
Early predictions that this technology would replace large-scale manufacturing processes have so far disappointed, as 3D printing can’t compete on price en masse. However, it is particularly useful for small businesses that lack economies of scale. When you’re talking about creating hundreds, rather than tens of thousands of products, 3D printing can deliver great cost-savings. It is also opening up new avenues for personalisation –¬ whether that be for clothing, homewares, food or niche products. What’s more, 3D printers support trials and tests enabling low cost prototype products for market research and beta tests.
AI and Automation
Rapid improvements in robotics continue to offer great potential for small businesses in terms of streamlined manufacturing, as well as efficiencies through changing their processes. As drones become ever-more present in our skies logistics may also benefit, but that looks a little further off.
So far the benefits of robotics have mostly been felt by large corporates, but lowering costs and inevitable improvements mean that small businesses can look forward to embracing robotics to make their services both smarter and more competitive.
Many cloud services are already well established, but cloud migration is likely to become even more central to the way small businesses innovate in 2017 as a core part of digital transformation.
As more software packages move from traditional downloads to cloud-based Software-as-a-Service (SaaS) models, business owners could think about the way that they operate and the potential impact of moving more operations to the cloud.
There are also more fundamental management benefits to be gained from some cloud services. Service-based businesses like consultancies for example, could benefit from access to real-time data to review their profitability and KPIs. What’s more, further improvements to remote working technology may have a great impact on talent retention and productivity.
Putting Innovation into Practice
Given the immense potential benefits of these macro trends, the question turns to how entrepreneurs can successfully use them.
Whether considering incremental innovations, or aiming to entirely disrupt a market, effective budgeting for both staff time and additional expenses can make all the difference when it comes to successful delivery. Planning room for innovation in resourcing plans can give companies sufficient breathing space to develop the products and revolutionary business models that will ultimately give them an edge.
Good financial management and accounting tools can help keep track of investments in various projects and track them against KPIs, while protecting management team time.
On top of the need to properly forecast, it’s also worth looking at how to finance innovation. The government’s commitment to R&D is an encouraging sign that debt-free options may be available to businesses looking to break the mould, although we need to see how much of this will go to small firms. It’s also worth looking at what’s available through Innovate UK, the government’s innovation agency, and Horizon 2020, a pan-European innovation fund – both of which offer funding opportunities for small businesses.
Outside the relatively limited world of grants, business owners may want to consider alternative finance. Disruptive brands and innovative proposals can be a major draw for business angles and venture capital firms, while newer alternatives offer a whole other set of options.
Crowdfunding can be particularly effective when it comes to funding new product development, with firms offering first access or special editions of the product in exchange for financial support. A good example is the VR technology company Oculus, which raised 2.4bn USD to develop their VR headset the Oculus Rift via Kickstarter and went on to be acquired by Facebook.
Small firms have swift decision-making, passionate leadership and creative teams on their side. Combined with the best in new technology, I’m willing to bet some of the most exciting developments of 2017 will come from these ambitious young enterprises.
To find out how KPMG Small Business Accounting could help free up your time so you can concentrate on business success, request a callback for a quote today.
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