Innovative Victorian SMEs are seeing their business bottom lines improve at a greater rate compared to their interstate counterparts, according to research published today by Commonwealth Bank, which found SMEs are leading the charge when it comes to innovative business practices.
Having surveyed 2195 business owners across Australia and 535 within Victoria, the research found businesses that are making new or significant improvements in their products or services, business processes, organisational methods or marketing practices are adding $405,000 on average to their earnings.
But for Victorian SMEs, that number is increased by 11%, with businesses in the southern state raking in an additional $50,000 thanks to their innovations.
Across the Victorian business landscape, medium businesses were found to be the strongest innovators, with 45% of businesses with annual turnover between $2 million and $20 million being “active innovators”. Comparatively, 41% of small businesses ($500,000 to $2 million in annual turnover) were found to be innovating.
The research found the age of a business also influences how much innovation being done, with the highest amount of active innovation happening in businesses that are younger than five years (45%), followed by businesses that have been operating for at least 20 years (44%).
Additionally, businesses that are keen to innovate are more likely to encourage innovation and thought leadership from their employees, with 34% of the businesses surveyed that are innovating telling the researchers that they challenge their employees to ask questions.
“True innovators are driven by a clear vision and genuine commitment, not only navigate change but to benefit from it. Innovators constantly strive to do better and this is something we see every day when we’re dealing with clients across industries and regions,” said Commonwealth Bank’s business and private banking group executive Adam Bennett in a statement.
The survey also found that passionate Victorian business owners and entrepreneurs who were pursuing their dream are more likely to be innovating, coming in at 58%, compared to the 50% who say they are driven by the challenge of building a successful business, and 41% who are motivated by wealth.
Innovations abound for family owned winery
One example of a passionate Victorian business taking advantage of innovation is Andrew Peace Wines, founded in 1996, which has grown from a small family business to one of Australia’s largest family owned wineries and now goes through over 30,000 tonnes of grapes per year.
Director of Andrew Peace Wines, Cathryn Peace, told SmartCompany the business has put a primary focus on international markets ahead of domestic ones, which has allowed it to advance and innovate in ways other local wineries haven’t.
“We’ve travelled a lot and done a lot of product research in international markets, which has let us know what consumers around the world really want,” she says.
“Businesses should definitely look outside of Australia for innovation; we’re only a small country. It’s becoming much easier to do international business, and it’s very important to look at what competitors are doing in terms of the overseas market.”
While improving business processes and organisational methods might not naturally spring to mind when envisioning innovation, these are the top areas Victorian businesses are pouring their efforts into, according to the Commonwealth Bank’s research. Product and marketing innovation are at the bottom of the rankings in the study.
Peace says when the winery was younger it didn’t have the same backup of regular buyers and customers it does now, which leads the team to take more risks. The company has done most of its innovation in the products area, introducing things like spiced wines, or sulphur free wines, which have seen big success overseas.
“Now we’re more established, buyers are wanting to know what new things we’ve got for them this time. Wine is such a traditional product and market, we’ve had to look at what different consumers and younger customers want,” she says.
“When we first started out, we wanted to break into the UK market, and what they want is good value wines at a low price, so we had to look at how we can be efficient and cheap.”
For other businesses looking to ramp up their innovation efforts in their business, Peace says the most important thing is a drive and passion for it.
“You need that drive and passion for what you want to achieve. Talk to new people and look at things differently, and don’t feel like anything’s a stupid idea,” she says.
“There’s always something around the corner, you’ve just got to have the persistence to do it.”
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.