Innovation increasing among small businesses

Monday 21 March 2016

A new report has suggested that many small businesses are experiencing a confidence boom, with statistics showing that the pace of innovation is increasing.

Deciding to become self-employed or start your own company can be difficult, as it often comes with risks and an element of stepping into the unknown. However, choosing to drive innovation once you have gone limited or started your own business can be just as challenging.

Innovation can be one of the best ways for companies of all sizes to avoid stagnation, encourage growth and even ensure that your firm gets and keeps the best talent in the industry.

However, investing in this area also carries a number of risks so the fact that innovation is growing suggests that confidence among smaller businesses is also increasing, with many more feeling stable enough to counterbalance the potential problems.

The report, from the government’s Department for Business, Innovation and Skills (DBIS), found that small and medium-sized businesses have experienced a significant boost in levels of innovation.

According to the study, technology was a popular area for companies of this size to invest further in.

It found that more than a quarter of the 29,000 enterprises surveyed (27 per cent) had started using new new computer software, while slightly fewer (24 per cent) had bought new computer hardware.

For the sake of the report, innovation was defined as any introduction of new or significantly improved products, services or processes, new and improved forms of organisation, structure and marketing approaches, investment activities, and/or engagement in innovation activities.

It revealed that more than half (53 per cent) of the companies surveyed were involved in innovation between 2012 and 2014. This is a significant increase on previous years and shows a definite change in attitudes among small and medium-sized businesses.

More than a tenth of firms were investing in internal research and development (16 per cent), implementing training for innovative activities (15 per cent), or making changes to marketing methods (12 per cent).

The research also provides some key insight into why companies are looking to drive innovation, with most citing a desire to improve the quality of their goods and services as their main motivation.

Encouragingly, the report found that innovation was consistently increasing across the country, apart from in the south-west which experienced a small drop. The best-performing regions were found to be Yorkshire and the Humber (65 per cent) and the south-east (58 per cent).

The findings should act as further encouragement to those considering whether going limited is the right decision for their brand or not.

By Victoria McDonnell

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