Out with the new in with the old: Canadian SBOs say innovation for existing products is top priority
With willingness to take a risk at the lowest level in almost two years, SBOs are focused on improving their current product line instead of developing net new products.
MARKHAM, ON, Dec. 10, 2012 /CNW/ - In an economy where business is a rapidly changing environment, gaining a sustainable edge has become top of mind and more important than ever for small business owners (SBOs).However, as small business owners look to a variety of sources for innovative ideas, they are reserving their efforts to further expand their current product offerings.
The quarterly American Express Small Business Monitor revealed small business owners continue to experience a negative outlook on their business' potential. However, they recognize the longevity of their company's success hinges on their current products or services. While innovation remains a priority, improving their current product line (43%) is emphasized as the most important factor to the future success of their company. SBOs understand that while bringing new products to the market is important; but delivering fresh thinking to their current offerings is key. This takes greater precedence over creating new products (31%).
Small business owners show a willingness to invest in research and development, yet a knowledge gap exists for available resources
It is evident SBOs value research and development as they spent an average of 11% of their total revenue on this in the last year. SBOs also reported they plan to increase this budget to 12.7% in the next year. However, SBOs are neglecting to explore the full extent of government resources specifically designed to alleviate their investment.
The survey revealed while Canadian SBOs are eligible for the Scientific Research and Experimental Development (SR&ED) tax credit, more than half (58%) of businesses have never heard of it. Furthermore, over one fourth (28%) have heard about the SR&ED tax credit, but don't apply. Canadian SBOs are missing the opportunity to gain valuable resources and funds as the average grant for the SR&ED tax credit is $67,832.
"While it is positive to see SBOs investing largely in research and development, it is surprising to see the data reveal the complacence when it comes to taking advantage of financial breaks," says Athena Varmazis, Vice President and General Manager, Small Business Services, American Express Canada. "As a result, they are missing out on robust government resources that can help their businesses thrive."
SBOs rely on their instincts yet welcome feedback from their employees and clients
The Monitor revealed over half (61%) of SBOs identify sales, marketing and branding as an area where innovation is most required, yet they continue to recognize the need for further investment in customer service (56%).
For that reason, 66% of SBOs report they have implemented ideas in the past two years focused on improving their existing products and services. Over half (63%) of Canada's SBOs rely on their instincts when testing the effectiveness of a new product or service.
While SBOs most often place serious consideration on their own ideas (42%) for new products/services, they acknowledge the insight their employees and current clients offer their business. Nearly half (47%) of SBOs report customer suggestions as the source that provides the best ideas for improving products and services.
Entrepreneurs are also acknowledging their employees in relation to internal business processes. Over one fourth (34%) of SBOs report employees provide the best suggestions for improving how the company operates day to day from accounting to administration practices.
"It is refreshing to see SBOs embracing the feedback from both their clients and employees alike," says Varmazis. "This allows them to not only inherit valuable insight into their business strategy, customer service model and their internal operations, but presents the opportunity for them to successfully evolve."
Optimism about the financial state of their business continues to decline amongst SBOs leading into the last quarter of the year
In terms of the quarterly index portion of the survey, the Monitor reveals there is a continued decline in SBOs optimism levels. While over half (52%) of SBOs remain hopeful about their future financial position, this is down 5 points from last quarter (57%).
Although over four in five (81%) SBOs remain confident their business will grow over the next six months, there continues to be a decline from last quarter in the overall perception of their business' financial state. Thirty-eight per cent of SBOs report their business' current financial position is improving, down 8 points since last quarter (46%) and down 11 points since November 2011 (49%).
About the American Express Small Business Monitor
From October 26th and November 6th, 2012, Rogers Connect Market Research conducted an online survey on behalf of American Express Small Business Services with a sample of 535 Canadian small business owners each employing between 2 and 100 people. The margin of error for the total sample is +/- 4.2%, 19 times out of 20. In order to ensure the results are representative of the entire population of small business owners in Canada, the data have been statistically weighted for small business by region according to Statistics Canada. Respondents were located across Canada and came from a variety of industries, including health, social services, education, tech, sales and skilled trades. Due to rounding, some results may add to over 100 per cent.
About American Express Small Business Services
American Express Small Business Services (SBS) is dedicated exclusively to the success of small business owners and their companies. SBS supports business owners with exceptional service. We offer tailored products and services that deliver purchasing power, flexibility, control and rewards to help customers run their business. Specifically, business owners can leverage an enhanced set of products, tools, services and savings, including charge and credit cards, robust online account management capabilities and savings on business services from an expanded line-up of partners. To obtain more information about SBS, visit www.amexforbusiness.ca or www.facebook.com/AmexforBusiness.
SOURCE American Express