New startups and entrepreneurs appear every day, but real success is relatively rare. Most businesses go under within a year of opening their doors, and many of the ones that supposedly make it do so more in terms of surviving than thriving. Businesses that really grow and succeed have to bring something new and innovative to the table. They make a splash and they cause disruptions.
Let’s take a look at some of the ways that innovative businesses have done this in the past, and what you might be able to look to, to help you break your business out of the industry mold to create something new and better.
Innovations in finance
How your business gets access to, processes, or moves money can have a transformative effect on your business. This can mean finding ways to get financing that are unusual for your industry, such as crowdfunding, or perhaps finding ways to avoid structural fees or interest that competitors typically pay to move or process funds. It might also just be a more convenient way to pay for your customers. It’s important to understand that this doesn’t necessarily require inventing new tools or technologies, it just means recognising the potential of existing solutions, and being the first to properly apply them in your industry.
Uber’s frictionless payment system is a great example of this. Their system for receiving payments from customers and for paying drivers is transparent, predictable, and easy to understand. On top of that, it’s extremely convenient to use with its variety of payment options, and there’s absolutely no need to haggle with a driver, regardless what country you might be travelling in. This relatively simple change in financial technology made Uber far more convenient to use than established taxi services, and was instrumental in their amazing success.
Reimagining complete customer solutions
Another way to disrupt an industry is to analyse an entire system and to systematically design an integrated solution that completely outclasses competitors in every meaningful way. One entrepreneur who’s famous for applying this approach is Elon Musk. Instead of focusing on a single feature, Paypal, Tesla, SolarCity, and SpaceX have all pushed their respective industries into brand new territory.
Tesla cars don’t just go fast and look nice; they have revolutionarily long ranges and supercharger stations all over the world. SolarCity doesn’t just make efficient solar panels, they designed ones that look like regular roof tiles that are more cost effective to install than traditional options. SpaceX isn’t just aiming to develop a cheaper way to get into low-earth orbit, they’re working to make space travel and interplanetary colonisation possible for lay people within a decade.
This style of disruption is predictably expensive, and usually requires a lot of initial investment. That makes it difficult to pull off, but it has the incredible advantage of unambiguously establishing your business at the cutting edge of your industry.
Revolutionising industry processes
A more classic approach to beating competitors is to tweak procedures, tools, and supplies to produce goods and services more efficiently. Usually this isn’t very disruptive since it usually results in small incremental changes, but a sufficiently creative and daring business that is willing to take it to the extreme can make a big splash with this tactic. A great example of this is the rapid growth of RyanAir and Europe’s other budget airlines.
Budget airlines have been around for a long time, but in Europe they really started to shine in the 2000s. Today, you can book a ticket with a low-cost carrier like RyanAir or EasyJet for 10% of the price of a regular carrier, and just 10 days before your flight. Despite that, they’re registering record profits while traditional carriers flounder. They did this by changing how their industry operates. They stripped out luxuries that passengers might not voluntarily pay for given an option, and cut costs by running all new identical airplanes that require low maintenance, are easy to train staff for, and can be resold at a high value. Most importantly, they refused to work with large expensive airports, opting instead to patronise desperate small regional hubs that were being abandoned by traditional carriers.
As a result, they could negotiate extremely favourable deals. Because costs have been driven down so much, these low cost carriers have managed to tap into a brand new market. A huge number of people in Eastern Europe who otherwise wouldn’t be able to afford to travel regularly now have access to easy, cheap flights. As a result, those bigger airports are now much more amenable to working with budget airlines because they want to get access to these new customers.
Achieving great successes like these is about finding new ways to look at your industry, and disrupting it by finding opportunities and innovating solutions to problems that competitors aren’t addressing properly. Our mission at Fifo Capital is to help businesses do that by getting you the finances you need to realise your ideas. Give us a call today to talk to one of our expert representatives!