Launch of New Loan Scheme
Last evening the St Canice’s Kilkenny Credit Union launched their Small Business Support Loan Scheme, which is a very timely intervention for small business in Kilkenny.
The Kilkenny CEB is delighted to partner with the Credit Union in combining our resources in the delivery of the Scheme. As you know, the CEB provides supports to assist the start-up, development and growth of small businesses.
We have found in recent months that the biggest challenge facing small business is cash-flow.
The vast majority of our clients, with the slow-down in the economy, have experienced falling turnover and margins, and this has been compounded by the added pressures of getting paid on time and accessing appropriate forms of credit.
Most of these businesses, while still profitable are struggling to survive due to lack of working capital - to pay the bills, to pay the wages, to pay suppliers, to take on new orders – in short to keep the business going. Cash is the lifeblood of all business and without cash-flow they cannot survive. The slow-down in the availability and movement of cash is now a critical issue for small business right across the country.
I would like to share with you just one or two headline statistics from a Credit Survey undertaken by the national network of CEBs recently. 56% of clients report difficulty accessing finance (in the form of overdrafts; term loans; bridging finance; etc.) with very serious implications for their business; and 76% report that debtor days have increased in the last 6 months. This is a double-edged sword.
I attended a workshop hosted by Minister Billy Kelleher on Monday afternoon last dealing with issues arising in relation to access to credit. This provided an opportunity to highlight the concerns and pressures being created as a result of the credit crisis in the small business sector, while at the same time hearing the views of the banks. The fact is that there would not be a need for schemes such as that launched by St Canice’s Credit Union if the banks were providing the service to small business. I know from chatting with the Minister after the event that he will be very interested in the operation of the Scheme in Kilkenny.
The small business sector is the future of this country. With the decline of Foreign Direct Investment in the years ahead, we are going to have to rely more and more upon our own capacity to create and grow indigenous small businesses to create jobs and to drive our economy. But we need to create the right environment and that requires all of us who interact with small business to be more creative in providing new forms of support to encourage and help small business.
Right now there is undoubtedly a gap in the market for the supply of credit. And the St Canice’s Kilkenny Credit Union have demonstrated tremendous initiative in responding to the challenge and putting in place this Scheme to help fill the gap here in Kilkenny.
The Scheme will help provide much-needed credit to a wide range of people:
• from those at start-up stage with viable new business ventures – giving them the finance they need to start their business;
• as well as existing businesses who remain commercially viable but are experiencing difficulty in accessing the necessary finance to meet their day-to-day working capital needs.
The Scheme combines a package of supports derived from the main strengths of the Credit Union and the CEB. The Credit Union will provide the loan finance under the Scheme, while the CEB will assist in 2 key areas:
• first we will help people make application to the Scheme. This will include providing advice and support to applicants in preparing the support documentation they will need, such as business plans and cash-flow projections;
• second we will provide an after-care service to all successful loan applicants, through the range of business supports we have to offer, including the appointment of a Mentor from our extensive panel of professionals to assist applicants to implement their plans and grow their business, as well as with cash-flow management.
So we hope that in working in partnership with the Credit Union and combining our resources that together we can provide through this Scheme a much stronger support package and give businesses the best opportunity for success.
This is very much a pilot Scheme. The process will evolve over time as we try to get it right for everybody concerned.
But our hope is that the Scheme will be a success, and that in time it will become a model for other Credit Unions throughout the county and indeed elsewhere throughout the country to partner with CEB network to roll out similar partnership initiatives, because they are very much needed at this time.
I have no doubt there will be great interest and demand generated in the Scheme. We look forward to working with the Credit Union and more importantly we look forward to hearing from small businesses out there. If you would like to hear more about the Scheme, give us a buzz on 056 7752662.
Sean.
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Notwithstanding the challenging times emerging in 2008 that I alluded to in an earlier post, we had a busy year of activity providing supports to start-up and expanding small businesses last year. I have provided a very brief synopsis of activity below:
Hundreds of people availed of our ’business advisory’ service and many more received basic information and advice from the CEB during the year.
Some 500 entrepreneurs participated in enterprise training programmes organised and delivered by the Board in 2008 – programmes aimed at improving the management capability of participants. These ranged from sales & marketing through financial management to computerised accounts.
70 people participated in the Board’s Start Your Own Business (SYOB) Programmes, which is aimed at giving participants an introduction to all of the main issues encountered when starting up and running a business from researching and planning their idea through to compliance issues and financial projections.
A further 151 people availed of the Board’s Mentoring service, which provides owner-managers with a temporary business advisor to help them identify and overcome obstacles in their business. Demand for this service increased in 2008, and this can be attributed mainly to the new set of challenges that many of our clients are now facing.
33 people were supported with Technical Assistance catering for specialist and customised supports (e.g. Specialist Training Assistance; Trade Fair Assistance; Market Visits; etc.), while another 33 businesses were supported with a Tech Check Audit, which is aimed at helping small businesses maximize their use of the latest technology available for the development of their business.
The Board approved financial assistance totaling almost €600,000 to 28 businesses in 2008. 18 of these were new business starts and the other 10 were expansions of existing businesses.
These projects have the potential to create an additional 72 full-time job equivalents when fully implemented. This brings the total number of projects assisted by the Board since its establishment to over 680 and the total number of jobs created to almost 1,100.
The Board continued to sponsor the Student Enterprise Awards in second level schools, with almost 300 students participating (www.studententerprise.ie).
We organised another very successful Enterprise Week in October, 2008 in conjunction with local business networks and partner organisations, including the Kilkenny Chamber of Commerce, FAS, Failte Ireland and Kilkenny Local Authorities. We also piloted the enterprise bus, bringing the services of the Board to some of the smaller towns and villages around the County (in June) and to local shopping centres (in October.) The Board also drafted and launched our enterprise strategy for the next 5 years.
While the period ahead is undoubtedly full of uncertainty and the focus of our clients is very much on survival, the onus is on you to engage with the Board and avail of the services on offer. If you are in business then we are here to help you in any way that we can.
I have posted on nuggets being picked up through my participation in our management development programme currently running and being delivered by Blaise Brosnan. Well we have invited Blaise to deliver the first of our lunchtime seminars this year – ‘Assessing Your Business Health’ today in the Newpark Hotel, Kilkenny. This FREE seminar will help you understand how to identify the issues that impact on the health of your business in the current economic climate. I hope to see some of you there.
Sean.
www.kceb.ie
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Challenging Times
2008 saw the onset of extremely challenging times for the vast majority of our clients.
The Irish economy began to change dramatically during the year after 15 years of sustained and unprecedented growth. There was a significant slowdown in the economy, the main causes of which are attributed to varying degress to a combination of: downturn in the construction sector and the housing market; the slowing of the US economy; the appreciation of the euro against the US dollar and British sterling; declining tax revenues; and the increasing cost of energy prices.
The Irish Economic and Social Research Institute (ESRI) reported that in 2008 the Irish economy experienced a recession for the first time since 1983.
The onset of the recession is also reflected in the public finances. From an overall budget surplus of circa €5 Billion in 2006, the Government incurred a deficit of circa €8 billion in 2008.
This is the economic environment that businesses and in particular micro-enterprises are now operating, and this situation is compounded by the current credit crisis.
A national online survey of a representative sample of CEB clients (mainly owner-managers of micro-enterprises) undertaken in December 2008, of which there were approximately 1,000 respondents, revealed that:
· 54% of respondents indicated that their business activity is being curtailed at present due to Bank Credit issues (i.e. unable to access necessary overdraft facilities; term loans; bridging finance; etc.);
· 52% indicated that the banking situation is having either a serious or very serious adverse effect on their business;
· 31% reported that their business is at risk of closure due to lack of credit; and
· 74% reported that debtors and/or debtor days has increased, putting severe pressure on their working capital and cash-flow needs.
The national network of CEBs recently submitted proposals to the Department of Enterprise Trade and Employment for the introduction of a range of new supports in order to be more responsive to the needs of our clients in these challenging times.
This included the introduction of a micro-credit scheme (i.e. Enterprise Loan Fund) as a response to the growing credit crisis adversely impacting upon micro-enterprises.
We shall keep you posted of developments.
Sean.
www.kceb.ie
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management development programme
I am currently participating in our ‘Management Development Programme’ along with a group of 20 other owner-managers of small businesses in Kilkenny-Carlow. The Programme is delivered by Blaise Brosnan, Management Resource Institute. As Blaise says the aim of the Programme is to:
”initially understand and then challenge and empower our existing potential to significantly increase our performance capability, so that our objectives can be achieved.”
Well to date, Blaise has certainly been provoking us all to have that ‘felt-need’ to change the way we currently manage our businesses and do things more effectively and efficiently. I would like over the course of the next few weeks to share (briefly) some of the many nuggets of advice imparted.
The Programme has been running one night per week (Wed evenings) since last September and will run to the end of next March (2009).
According to Blaise – the ‘job’ of all owner-managers of small business is to: first of all decide what needs to be done; then cause it to be done; while all the time measuring what is being done. I think this sums it up rather well.
It is critically important to measure business performance - have key performance indicators (KPI’s). If we don’t have KPI’s – how do we know we are succeeding, or how do we know what action needs to be taken? Furthermore – “What gets measured gets done!”
But its just as important to have the right measures. Business performance must be judged on output rather than activity, otherwise we could all become busy fools! For example, contacting potential customers by telephone is an activity but conversting calls into actual sales is output.
And we need external measures (be able to benchmark performance against others), as well as internal measurements (e.g. comparing performance one week/month/year with last week/month/year; etc.)
Ask yourself – “what measurements or KPIs do I use in my business?” If you feel you need help to review how you currently manage your business, now might be a good time to contact us at Kilkenny CEB. Tel: 056 7752662. www.kceb.ie
Sean.
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Enterprise Week 2008
We were involved in running a very successful Enterprise Week here in County Kilkenny as part of the regional ‘Spirit of Enterprise Week’ in the south east, which ended on 17th October last. Thanks to all our partner organisations who were involved in hosting the various events around the County.
The ‘flagship’ regional event – the ‘Making Business Happen’ Conference was held on Thursday 16th October here in Kilkenny. There were almost 200 people in attendance. There was also an exhibition of agencies and organisations providing supports to entrepreneurs beforehand, so that attendees could get a chance to see what help was available.
There was a great line-up of speakers - you can log into www.spiritofenterprise.ie for the podcasts of each of them. The conference was chaired by John Purcell, Managing Director of ‘KCLR 96FM’, and he did a fantastic job on the night.
The keynote address entitled ‘From Politician to Entrepreneur,’ was delivered by Ivan Yeats – the former Fine Gael politician who now owns the Celtic Bookmakers chain. You should log in to hear his speech in full – very sobering…
He began by giving a brief outline of how he first got involved in politics in his hometown of Enniscorthy, how he quickly moved up the ranks within Fine Gael, how he became Minister of Agriculture 1994-1997, and how he then decided to retire from politics because he just got bored with it all!
He went on to outline from his experience the traits of the most successful entrepreneurs, some of which I list here: ‘ability to listen;’ ‘ability to persuade others to do what you want them to do;’ ‘have passion and self-belief;’ ‘have determination and perserverance to succeed;’ ‘have courage;’ ‘attention to detail;’……
He imparted his own instructive advice to those in business, again some of which I list here: ‘make lists of everything you must do today, this week, next month, etc. and revert to them regularly to make sure that you are acting on them;’ ‘learn to say NO - but dont take NO for an answer;’ ‘preparation is absolutely key to success;’ ‘have clarity of purpose – know what business you are in;’ ‘business plans are important but get outside independent people to critique them;’……
He reflected on: how does one know if they will make an entrepreneur or not? – ‘if you could imagine you are on your deathbed and you would die with regret if you did not do it – then u know!’
He commented on the downturn in the economy and upon the recession BUT he finished on an optimistic note, with a number of predictions: ‘inflation will fall next year to around 1%;’ ‘the price of oil will remain low;’ ‘the price of commodities will continue to fall;’ ‘interest rates will be cut further;’ and ‘the Euro will fall in value against sterling and the dollar.’ However, he wasn’t taking any bets on any of his predictions……
The mood of the conference afterwards was very upbeat and in speaking with some of the delegates afterwards, it was clear that each of the speakers on the night had made an impact in telling their story and provided inspiration to others.
I can assure you that Enterprise Week is now a fixture in the calendar and I am already looking forward to improving upon our schedule for next year.
Sean.
www.kceb.ie
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Enterprise Week 2008
Following the tremenduous success last year, the Spirit of Enterprise Forum has decided to co-ordinate ‘Enterprise Week’ in the south east region again this year.
Enterprise Week 2008 will be held from 13th – 17th October.
A regional ’steering committee’ is in place, and local ‘operational committees’ comprising of the main agencies and organisations with a role and remit for enterprise, will be setting-up in each local authority area in the south east in the coming weeks.
This year the theme for Enterprise Week is “Make Business Happen.”
One of the main events this year will be a major regional conference for entrepreneurs to be held in Kilkenny. This is still very much in the concept stage but promises to build upon the very successful ‘Enterprise Supports Event’ organised by Kilkenny CEB as part of Enterprise Week last year.
I will keep you posted on developments over the coming months.
Sean.
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Enterprise Bus
More and more people are considering starting a business. This is confirmed by the latest Global Entrepreneurship Monitor (GEM) Report for Ireland (www.gemconsortium.org), which reveals that some 270,000 adults have expressed a desire to start a business within the next 3 years. GEM also reports that 44% of Irish adults perceive that there are good opportunities to establish a new business at present, while 50% of adults believe that they have the necessary skills to successfully establish and run a new business.
This is all very encouraging. However, as the Small Business Forum reported (www.smallbusinessforum.ie) access to relevant information and advice is hampering the number of small business starts. Many people considering starting a business are often unable to search through the wide range of available sources to access the right information they need to answer their specific queries.
The national network of CEBs provide a ‘first-stop-shop’ service for entrepreneurs and strive to provide as comprehensive a business advice and information service as possible. Notwithstanding this, the Small Business Forum found that a rising frustration among those seeking business information is that they may not be aware of where best to access it, with the result that they often resort to sourcing information that is ill-suited to their needs. The CEBs therefore have to constantly raise awareness of the services they provide and try to come up with new and novel ways of promoting and providing access to these services.
In an attempt to do just that, a number of CEBs (including ourselves here in Kilkenny) in conjunction with Bank of Ireland Business Banking, have come together to pilot the ‘Enterprise Bus’ initiative (www.theenterprisebus.ie). The objective of the Enterprise Bus is to provide the first free mobile advice centre to people thinking of setting-up or growing their business.
It is hoped that the Enterprise Bus will make the services of the CEB more accessible to people either in business or considering setting-up in business. The Bus will visit hundreds of small towns and villages all over the country over the course of the next 10 months. With almost 19,000 new businesses setting up in this country in 2007, and a similar number forecast for this year, we anticipate that the Enterprise Bus will potentially be of help to as many entrepreneurs with business ideas as possible.
The Bus will provide support and advice to people in their own localities, from enterprise mentors and business advisers on all aspects of business, training available, business planning, accessing the right type of finance and guidance on other services available to enterprises.
The Bus will visit locations throughout County Kilkenny during the weeks commencing 2nd June and 6th October next. Full location details and dates of the Enterprise Bus as it travels throughout the country are available on www.theenterprisebus.ie.
The Enterprise Bus is certainly a novel initiative and should greatly assist us to promote the availability of our services to an even wider audience, as well as providing the opportunity for individuals and businesses to access the supports offered by the CEBs at local level. So watch out for that Bus in your local area ….
I will post again on the initiative closer to the first week that the Bus will be in County Kilkenny.
Sean.
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summary of activity 2007
I would like to wish all visitors to this blog a very prosperous and enterprising New Year!
As we look ahead to 2008, I think it would be useful to first look back at 2007. I have provided below a mainly quantitative review of activity last year under some of the main CEB performance indicators under our 2 main Measures of support:
Measure 1: Grant-aided Projects
We received a total of 37 applications for grant-aid in 2007 (compared to 38 in 2006). 32 (or 86%) of the applications received were approved, 4 were refused (mainly on the grounds of being ineligible for financial assistance, lacking commercial viability or posing a risk of displacement) and a decision on 1 had been deferred pending receipt of additional information at year end.
Again as reported in a previous blog, we receive many more enquiries for grant assistance, but because of the extremely selective nature of the financial assistance we provide, the majority of these prove to be ineligible for support and therefore do not proceed to application stage.
The Kilkenny CEB has now provided grant assistance to almost 650 business projects since its establishment in 1993.
We awarded a total of €441,569 (compared to €425,370 in 2006) in grant-aid to the 32 projects approved, last year. The average grant of circa €13,850 demonstrates the relatively small-scale nature of the projects that we support (i.e. involving overall capital expenditure averaging between €25,000 to €30,000.)
10 of the projects grant-aided in 2007 are local services, 19 are manufacturing operations, 1 has the potential to become an Internationally Traded Service (ITS) and 2 are tourism projects.
23 of the projects are promoted by men, 8 are promoted by women and 1 project is promoted by a co-operative organisation. Some 24 of the projects supported are start-ups, and the remaining 8 projects have been assisted to expand their operations.
The 32 projects approved have the potential to create an additional 60 full-time and 25 part-time jobs when fully implemented.
Measure 2: Information & Advice, Mentoring, Enterprise Training & Management Development Support (Soft Supports)
We invested circa €400,000 in soft supports in 2007, ranging from the provision of information, business advice and training through to mentoring, technical assistance and management development supports.
A total of 58 Enterprise Training & Management Programmes were organised and delivered last year, amounting to a total of over 1,000 training days. Over 530 people participated in these Programmes and a further 210 clients received mentoring or technical assistance. We also launched a very successful Enterprise Week from 1st to 5th October last year, which helped raise the profile of entrepreneurship and small business in the region.
For the first time ever, all 16 second level schools in County Kilkenny registered to participate in the Student Enterprise Awards competition for the 2007/2008 academic year, with almost 500 students participating in setting up businesses.
So as you can see from this brief account of activity, we were busy last year and we hope to continue the trend in 2008. So if you are in business or thinking about starting one, get in touch with us to see how we can help you.
Sean.
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business innovation network
Earlier this year, the Kilkenny CEB piloted a series of ‘creative workshops’ with a group of CEB client companies. The group included companies from the neighbouring counties of South Tipperary and Carlow. This pilot programme proved extremely successful at introducing the effectiveness of creative thinking techniques in assisting participants to consider their existing product and service offerings. So we decided to follow-up on this pilot with a more intensive programme.
We now intend to establish a ’creative business innovation network’ of up to 18 companies and provide support to the network (e.g. facilitated meetings, structured techniques, etc.) for a period of 1-year initially.
The business innovation network will have the following aims:
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To continue the delivery of training of established creativity techniques
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To use these techniques to support real business objectives and challenges
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To create a long-term support system between groups of participants
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To support each participant in his/her endeavour to create an innovative work environment
We had a very well-attended information session last week in the Newpark Hotel, Kilkenny to launch this new programme and such was the interest that 18 companies subsequently signed-up to participate in the business innovation network from January of next year.
Structure
The group of 18 companies will now be sub-divided in to triads (i.e. small groups of three people), and they will maintain communication and support each other to achieve their individual objectives throughout the course of the programme.
They will also ‘practice’ techniques learnt at Network meetings, to generate ideas for each other, to help each other overcome obstacles they face in their business and generally coach and mentor each other. They will also commit to pre-arranged conference calls or meeting up at least once between main Network meetings.
The Network Meetings
The Network meetings will take place once a month over the 12 months (i.e. total of 12 meetings). Each meeting will begin with a 30 minute feedback session, with one member of each triad reporting on the progress of his/her group.
There will then follow a 1½ hour session during which a new creativity / innovation technique will be introduced by the network facilitator. This will also be accompanied by an evaluation /decision making technique.
Participants will then engage in group workshops for circa 1 hour to practice the given techniques on relevant challenges chosen by the group.
This will be followed by 15 minutes of feedback, and finally 30 minutes of goal setting. (i.e. – participants will re-form into their triads and agree on their individual tasks and goals to be achieved within the coming month.)
During the programme the whole group will also be encouraged to work on a combined project such as a fundraising challenge for charity or other not-for-profit organization.
This is an exciting initiative and I am very much looking forward to seeing how the participants will benefit from the various elements of the network. I will keep you posted on progress.
Sean.
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I was asked to present at the FBD / KCLRFM Conference on ‘Change Your Thinking – Be Creative’ in the Newpark Hotel Kilkenny during the week.
I was pleasantly surprised in the first instance that an insurance company and a local radio station would be hosting such a conference, and even more so by the 200 or so small business people that actually turned up to the event! So the subject matter of the conference obviously caught the attention!
The other speakers at the conference included:
Dermot McConkey of ‘McConkey Performance Management Ltd.’ (www.mcconkey.ie);
Thomas Marry, MD, Surfbox (www.surfbox.ie); and
Robert Kerr, MD, Insomnia Cafes (www.insomnia.ie).
Dermot gave a very wide ranging motivational talk that certainly provoked, stimulated and entertained the large audience. The main thing I picked up form his presentation was the importance of delivering a quality service.
His main message: “People don’t buy similarity or mediocrity – they buy difference!” And in order to differentiate – we have to be creative!
Thomas and Robert highlighted the various forms of change they have had to deal with – from start-up to success – in their respective businesses.
In my presentation, I attempted to focus upon the challenges that face the owners of small business and the importance of being open to change.
I copy below my presentation -
What’s going on in Your Business Right Now?
I want to first of all start by making a statement:
“Owner-managers of small business are not getting the return they should for the work they are putting in to their business.”
Have a think about this. Do you agree or disagree?
Honestly ask yourself are you satisfied with the return that you are currently getting from the hard work and effort that you are putting into your business? If you forget for a moment about the satisfaction that self-employment might give you or the freedom you might enjoy from being your own boss and look purely at the monetary return you take for the hours you put into the buisness – are you satisfied with the rate at which you are being renumerated?
I would guess that the vast majority of you are not satisfied. And I would argue that one of the main reasons that you are not getting the return you should is that as owner-managers you are not allocating your time properly . You are too preoccupied with ‘fire-fighting’ the day-to-day issues in your business that you are not devoting any or enough time to stand back to organise and plan for the overall development of your business.
You are spending too much time doing the wrong work! The worst case scenario is that you are busy fools!
The American guru Michael Gerber perhaps articulates this best when he says that every small business owner must be three distinct entities in one.
They must be at the same time an entrepreneur, a manager, and a technician.
The entrepreneur in you comes up with new ideas for the business.
The really good entrepreneurs constantly try to innovate their business and they have an ability to change in response to changes in the external environment.
If you correctly interpret what is happening now, you will win a huge advantage over your competition and be in a better position to adapt to change.
The technician in you strives to develop the methods necessary to put your idea(s) into practice.
Most businesses are started by technicians – individuals who have tradeable skills or an expertise in a certain area, and they often make the assumption that if one understands the technical work involved in a business, then it automatically follows that one understands a business that does that technical work.
This of course is not the case and is unfortunately one of the root causes of most small business failures – Poor business planning and management skills. The really good technicians continually look for best practice to aid continuous improvement.
Finally, the manager in you takes care of the business functions necessary for the operation of the business.
The really good managers will create action plans to support your business; use Key Performance Indicators (KPI’s) to constantly try to quantify the impact of the new ideas – how does it improve upon the bottom line; take the time (monthly and/or quarterly) to evaluate critical business indicators to check the health of your business; etc.
Identifying and developing essential small business and management skills are vital components of entrepreneurial success. Business and management skills such as sales & marketing; financial planning; costing & pricing; etc.
You need to get the right balance and devote sufficient time to all three roles.
One way of looking at your business objectively is to imagine that you have been approached to franchise it in some other part of the country in the morning.
Ask yourself – would you be able to show a franchisee how to run your business? Explain to them your vision and what business you are in? Outline your target market and customer base? Would your business processes, marketing approaches, etc. be easily and readily followed?
We can all innovate!
The Enterprise Strategy Group (ESG) were set-up by the Government to develop an economic strategy for the country as a whole going forward in 2003.
In their report published in 2005, the ESG stated that in order to maximise the greatest number of sustainable enterprises in this country in the future, we will have to ensure that a combination of the right ‘essential conditions’ and ‘competitive advantages’ are put in place.
These will involve a wide range of stakeholders where everyone has a role to play in ensuring that we have the greatest possible number of sustainable, profitable enterprises in the country going forward – from society in general, and our attitudes towards enterprise; to our the education system and government policy (e.g. taxation regime, infrastructure, etc.) to state agencies with supports they make available – but most importantly of all you the small business owners have the biggest role to play.
You must recognize that you face challenges too. The ESG outlined a number of essential conditions, and given the subject matter of the conference here today, I will focus on one of these, namely – innovation & entrepreneurship.
In fact I have adapted this slightly to ‘innovation and creativity’ as I believe they are so closely linked.
What is meant by innovation and creativity?
Innovation: is the process of developing new products, services, or ways of operating the business for commercial gain.
Creativity: enables innovation. It is the discovery of new ideas or new ways of doing things.
Most times clients I work with switch off when they hear the word Innovation, as unfortunately it is too often viewed as the preserve of large industry and that small business have little or no role.
To be fair, this view is to often bourne out by the way that innovation is spoken about and by the way it is measured. We hear about investment spend in R&D, university research, technology transfer, by the no. of PHd’s; by the no. of science graduates; by the no. of patents registered; etc.
Sure all of this is important, but is only part of the picture of innovation and I would argue – only a very small part!
Many of the hundreds of small businesses supported by the CEB in Kilkenny in the last 13 years have displayed various forms of innovation (technological and non-technological).
They have been creative in order to adapt the way they do business to become more efficient and effective. I want to just give a few examples here:
Example 1: Oldtown Hill Bakehouse trades under the brand “Where food still tastes the way it should.” All their products are free from artificial additives. They operate in a very difficult sector where the vast majority of bakeries in this country have closed down in the past 20 years, they have worked very hard to develop an extremely successful business from start-up.
They use traditional methods and recipes throughout their range of products from Brown Bread and Apple Tarts to luxurious Chocolate Fudge Cake. However, they were finding it difficult selling their new range of rhubarb and apple crumble cakes, which they tried initially selling in packs of 6.
They knew the product was a quality one and that it should sell but couldn’t undertsand why it wasn’t. Following consultation with the shop owners through which they sell and their own market analysis they introduced simple innovation - adapted the product to packs of 4.
Sales dramatically increased as a result and the product line is now one of their best earners.
This was mainly due to the fact that the no. of 1 person households in this country has increased by almost one third in the last 10 years with more single people living in 1 bedroom apartments and more old people living alone. So these people were less inclined to purchase a premium fresh product of 6, but more inclined to purchase pack of 4.
Oldtown didn’t compromise on the product itself – it is still a premium product – it is not cheaper. This to me is an excellent example of simple non-technological innovation. The CEB assisted Oldtown with a small capital grant to set-up their state-of-the art premises in Tullaroan.
Example 2: Up to 80 per cent of all Leaving Cert students currently take grinds, paying between €25 and €50 per hour, depending on the subject, which means that this market is worth at least €50 million per annum.
We have supported a teacher who was one of those that gave grinds to set-up ‘ReviseOn-Line’ (www.reviseonline.ie), which is an on-line service opening access to a greater number of students for course materials for a fraction of the costs, taking the same materials that he gave in one-to-one situations and small group workshops here in Kilkenny, and using the latest internet based technology to make them available to a much larger market nationwide via the internet. Again – this is real innovation.
The CEB has supported this project through small levels of grant-aid, technical assistance and mentoring to establish the project.
Example 3: Another client of the CEB has developed a board game based around field sports such as gaelic football, hurling, rugby and soccer. It is similar to monopoly but based on the rules of field sports.
However, he realises that the concept of his ‘roll-the-dice’ board game is really difficult to market in today’s world, especially when competing against the likes of sony playstations, Nintendo wiis and other computer games. He is aware that his product will not be appearing on many Santa lists.
So he has creatively adapted the game on 2 fronts:
first as a tool for aiding the teaching of Irish with the support of the Dept Community Rural and Gaeltacht Affairs, where primary schools will be given 6 copies of the board game; and
second he has developed the board game as a merchandising product available in the merchandising stores of English soccer clubs. The game is adapted with the branding and logo of the club concerned. The price point is right in that adults attending the games are more inclined to purchase the product as a merchandising product to bring home as a present for kids. This again is innovation. The CEB assisted the project through a Feasibility Study Grant to develop a prototype for the merchandising product.
The above examples prove that every business can be creative and innovate.
Challenges that lie Ahead:
We are increasingly being subjected to international competition from many foreign markets attracted by Ireland’s growing population and wealth. We can access them and they can access us. You only have to look at shopping centres to see that more and more foreign owned companies are occupying space there selling goods here that are made elsewhere!
This emphasizes the need for Irish companies to identify precisely what it is they are good at so that they can secure business and build good customer loyalty. Local businesses now have to compete with some of the world’s largest global brands in every sector. Many of these companies operate with huge economies of scale and can therefore produce products and services at much lower costs, so it is becoming almost impossible to compete with them on price. But you can compete by offering superior levels of service and quality – by innovating.
You will have to find new ways of competing – based mainly on building customer loyalty - knowing your customers better; developing stronger relationships with them; knowing their needs; providing unique products and services; etc. – in short in every aspect of your business, striving to be the best. This will require greater levels of innovation.
Predicting the future is easier said than done.
Lets look for a moment at some of those who got it wrong in the past.
“I think there is a world market for maybe five computers.” Thomas Watson, founder of IBM, 1943.
“There is no reason why anyone would want a computer in their home.” Ken Olson, founder of Digital, 1977.
The moral here is not that major business leader say foolish things but rather that you must be prepared to accept that everything is subject to change sooner or later.
What holds true today may not hold true tomorrow. We have to be prepared to: – change, come outside our comfort zone, be open, be creative and innovate!
The key for the future will be to know what business you are in.
What business are You in?
All businesses operate between 2 extreme ends of a spectrum:
At one end you have those that operate on a ‘Cost leadership strategy,’ which is a bit like saying ‘buy mine, its just as good but it’s cheaper.’ This is the no frills product or service produced at relatively low cost.
This strategy depends largely on economies of scale; efficiencies, upon cutting costs. We can all think of examples of companies that have a leaning towards this model of doing business – RyanAir; Lidl; etc. There is typically very little brand loyalty here, as the customer tends to shop around for the cheaper option all the time!
At the other end of the spectrum you have companies that operate on a ‘Differentiation strategy,’ which is a bit like saying ‘I’m better than all the rest but you will have to pay more!’
Products or services produced within this strategy are perceived as being unique and premium (e.g. rolex; Gucci; Jaguar; etc.). This strategy depends upon creativity – innovation, adaptability, etc.
The ‘Cost Leadership’ strategy is also referred to as ‘so what’ whereas the ’Differentiation’ Strategy is referred to as ‘oh yes’. There is nothing wrong with operating strategies at either end of the spectrum. There is a place for them all, but it is becoming increasingly difficult for small businesses to compete on cost alone.
Small businesses in particular will have to differentiate themselves more and more in other ways. And this is where the role of creativity comes in. I would contend that small businesses in particular have a better chance of succeeding by differentiating and to succeed here you will have to be creative to come up with ways of being different from the competition.
Structured Creative Thinking Techniques
You can introduce structured creative thinking techniques into your everyday business practices to help you adapt to change. The CEB through a new initiative with which we are involved – the nc4c – ran a pilot programme earlier this year with 16 small companies from Kilkenny, South Tipperary and Carlow.
The programme was aimed at helping owner-managers introduce creative techniques to help with their:
Marketing & Sales:
to develop stronger relationships with customers and to help them identify their differentiation.
Improving Work Practices:
to become more efficient & effective;
overcome challenges more easily; and
achieve a better work balance (between the entrepreneur, manager and technician)
Product & Service Innovation:
to solve problems;
do things better;
identify future opportunities.
The feedback from this pilot programme has been excellent and has inspired us to run a number of further ’structured creative thinking’ programmes. Indeed, we have an information session planned on 11th December next to explore this subject further.
Be Open:
Sometimes we are blinded by our culture, by our education, by our background, by our prejudices, etc and that can prevent us from opening up our minds.
We can find that we look at things in the same way that we always did and as the old addage states if we always do what we’ve always done then we’ll always get what we’ve always got, and we will be unable to adapt to change.
Look at this photo – what does this group of people conjure up in your mind?
If they approached you in the morning would you consider investing in them?
If I said the era is 1978 and this is the original team at Microsoft would you have a different view?
They eventually secured loan finance to start their company and in 1981 they had their IPO. The company is now one of the largest in the world and employs 80,000 people worldwide. 4 of the people in this photo are now billionaires and this little boy in the bottom left hand corner is Bill Gates, multi-billionaire and reputed to be the richest man in the world!
I want to finish up now.
I would contend that there has never been a more supportive environment for those either in business or thinking of starting one.
The CEB ladder of supports – we are the first point of contact for small business in County Kilkenny.
I urge you to be open – seize the opportunity – come talk to us today.
Thank You for your attention.
Sean McKeown.
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