Innovation

When we think of innovation, new product development is what first comes to mind. But sometimes innovation can come through simple changes. I got a call from a business acquaintance whose profitability had begun to slip. As a result, their equipment and facilities became dated and began to fail. After my assessment, I made several recommendations including current product repackaging, improved margins, a capital budget, and a new dividend policy.

After making these changes, sales and profits improved. Once profits improved, we were able to fund their capital budget allowing them to update equipment and facilities. Innovation is sometimes as simple as having an outsider help you look at your business with a different perspective.

Another client was a gas energy company. It’s hard to differentiate gas, so I repackaged our offerings around the services that customers wanted, all with different margins. When we made these changes, their profits improved. They invested these profits back into the company for growth, and eventually a higher valuation.

So, if your budget is tight and you can’t afford new product development, consider ways to repackage your current products that will result in greater demand and higher profits.

Excerpt from The Extraordinary Business by Mike Hill

Write to Mike at Mike.Hill@TeamTrenton.com