In business, you have those who strive for stability and the peace that comes with knowing you have a steady stream of revenue. There are also those who like to push the envelope and create the next big thing, sometimes taking big risks in order to do so. However, no business owner has to fall on one side or the other.
To achieve the best of both worlds, consider the following advice from the members of Young Entrepreneur Council. Here, they offer up their best tips for how to balance the need to stay ahead of the curve and innovate with the equally important need to maintain stable cash flow and profitability.
1. Innovate Your Way To Profitability
Why not have both? My advice is to innovate your way to profitability! One approach that has worked well for me is to set aside a portion of your profits for experimentation and research. That way, you can explore new ideas and test new products or services without jeopardizing your cash flow or profitability. Ultimately, the key to balancing innovation and profitability is to strike the right balance between risk and reward. Don’t be afraid to take calculated risks and try new things, but always keep a close eye on the bottom line. Remember: Innovation and profitability are not mutually exclusive. With a little creativity and a lot of hard work, it’s possible to achieve both. – Abhijeet Kaldate, Astra WordPress Theme
2. Ensure You Have Streamlined Operations
Having streamlined operations and processes and giving direction to your whole team is the most important approach for any successful company. Easier said than done, of course, but this is the secret to staying ahead of the curve. When your team knows what their duties are on a day-to-day basis, and when you have your leaders actually leading and not just possessing the title, what happens next is: You save on payroll, you keep sales coming, you save on expenses and you keep your net operating income growing. – Doval Bacall, Bacall Companies
3. Define Your Success Indicators
In order to stay ahead of the curve and maintain a stable cash flow, it’s essential to clearly define the indicators that define your success and assess your financial stability. These indicators will help you know where you are and where you have to be. Once you’ve figured it out, it becomes easier to come up with innovative ways to reach your goal and ensure profitability by utilizing available resources to their fullest. – Stephanie Wells, Formidable Forms
4. Establish A Separate Investment Or Lab
Establish a separate investment or lab function. This enables you to allocate resources and investments specifically toward innovation without jeopardizing your main business. By setting up a separate entity or even just allocating a lean budget of time and resources, you can focus on experimenting with new ideas while minimizing the impact on your core business operations. This approach allows you to stay ahead of the curve and remain competitive with limited risk on profitability or cash flow. It’s important to establish clear qualifying investment criteria, goals and metrics for such a function to ensure that the investment is driving tangible returns for your business. By balancing innovation and profitability, you can create a sustainable business model that’s poised for long-term success. – Devesh Dwivedi, Devesh Dwivedi
5. Invest In Innovation After You Hit Your Profit Goals
Devise a business plan and a profit and loss sheet that revolves around profitability and efficiency. Innovation should not come at the cost of the core business model. Make sure that your core business works and evolves steadily, and allocate a fraction of the time to experiments and new initiatives. For instance, strive for 20% profit margin month over month. Once secured, invest the additional resources on well-designed experiments constrained by time and resources. Don’t run more than two or three experiments simultaneously. As winners keep popping up, diversify slowly, but maintain the profit margins established at first. – Mario Peshev, DevriX
6. Enhance What You Already Have
Explore possibilities within your unique selling proposition. The idea here is to understand your target market’s needs and focus on increasing value with your existing solutions. Rather than innovating simply to keep up with the competition or get ahead, it’s more profitable in the long run to focus on ways you can enhance what you already have going for you. I believe in steady, incremental innovation with customer experience awareness. A strong CRM is also a must. Strategies like beta testing, running A/B tests or collecting customer feedback will provide valuable information about which innovations will actually make an impact in terms of growing revenue streams and creating greater efficiency across operations. So, ultimately, you are innovating for the customer with a product line or solution they need. – Tonika Bruce, Lead Nicely, Inc.
7. Focus On Your Company’s Values And Strengths
My advice for achieving the tricky balance between innovation and stable profitability is to focus on your core strengths and stay true to your company’s values. Yes, you must keep your eyes open and change with the times, but you should make large changes only when they seem imperative instead of running after every new trend. Ultimately, the focus must be on staying true to your company’s values and focusing on delivering value to your customers in the long run. This will help you build a loyal customer base and create long-term sustainable growth. For example, if you’re a software company, you should focus on developing new features for your existing products rather than investing in a completely new product line unless it is in the saturation or decline stage of the product life cycle or simply getting unprofitable. – Vikas Agrawal, Infobrandz
8. Ask If Changes Align With Your Overall Vision
Think strategically, always. Avoid getting caught up in the latest business trends and technology. Don’t feel like you have to jump on board with every new “improvement” that comes along. Yes, always look for new ways of managing processes and improving systems, but make sure it’s the right one for your business and its unique needs. Make sure it works well for your team and their individual strengths and weaknesses. Before adopting changes, ask yourself if they’re aligned with your overall vision and the end goal. This will help you not only stay ahead of the curve and innovate in a strategic, purposeful way, but also maintain stable cash flow and protect your business’s long-term financial health. – Blair Thomas, eMerchantBroker