How six small business owners prioritize innovation
In today's competitive market, small businesses need to constantly think about innovation. Yet in a survey conducted for Chase by CNBC and SurveyMonkey, an astonishing 35 percent of 2,030 small business owners said they spend 5 percent or less time considering innovation.
Six entrepreneurs who've caught the attention of Marcus Lemonis and The Profit spend far more time on innovation than the survey's respondents—all reporting they spend at least 25 percent of their time, if not more, thinking about what is next. And they frequently leverage their business credit cards or reward points to finance that innovation. Here is how that approach to innovation is driving these six businesses forward.
SJC Drums, Southbridge, Massachusetts
Mike Ciprari co-founded SJC Drums with his brother in 2000, while they were still teenagers. They hit the radar of big-time bands in 2006, when an SJC kit was played on stage at a major music awards show. Now, SJC drums are on stages all over the world.
SJC's business grew by building drums completely to the specifications of its customers. Among the cosmetic flourishes and custom touches SJC has created are a shark-themed drum set and a snare drum made from an old Jack Daniels whiskey barrel. One drummer wanted wooden hoops that would completely cover the drums' top rim and lugs to create a simple, vintage aesthetic. That feature has become one of the most-requested options on SJC custom kits, and is an example of how customers help drive the company's innovation.
"Drums are a small, competitive market. We have to innovate to come up with new products. That's what it takes in this day and age," says Ciprari, who estimates the company spends way more than 25 percent of its time innovating—far more than 75 percent of the respondents in the survey.
SJC is making plans to move into a new building with upgraded equipment—computer guided cutting machines, spray booths and filters—that will allow the company to offer even more outlandish and innovative finishes. "We will finance the smaller purchases of the new shop, things under $100,000, with a credit card," Ciprari says.
Inkkas Footwear, Brooklyn, New York
Inkkas Global Footwear incorporates traditional Latin American textiles into modern shoe styles. Dan Ben Nun founded the company after a backpacking trip across South America in which he met local artisans making sneakers from local textiles. Inkkas partners with indigenous communities in Latin America and promises to plant a tree for every pair of shoes it sells.
"We spend about 30 percent of our effort on new product design," says David Malino, one of the company's founders and now Director of Sourcing Distribution. "It's a big part of our day-to-day work. We do two collections every year. We have to constantly be on the lookout for new ideas, new designs."
For instance, Inkkas has primarily produced fashion sneakers so far, but just introduced a performance running shoe that incorporates native textiles into a cushiony trainer that weighs just half a pound. Inkkas was committed to finding a factory in Latin America, and found a manufacturer in Mexico that uses high-tech expandable molds for the athletic shoes. Like 33 percent of the respondents of the Small Business survey, Inkkas financed the introduction of this new product by utilizing its credit card.
"We financed the start-up costs—trips to Mexico, samples and so on," Malino explains. "It made the innovation process easier."
Windward Boardshop, Chicago, Illinois
Windward Boardshop started out as a shop for windsurfing, a popular sport on Lake Michigan, and gradually expanded into other board sports: snowboarding, skateboarding, surfing, paddle boarding, electric-powered boards.
"If we're not innovating, we'll be obsolete quickly, says Chris Currier, Windward's co-owner. Areas of innovation include the sales floor and the customer experience. "Our customers are young. They're innovators," Currier says. "We need to work to stay ahead of them, but we also use them to help us find the next big thing."
Among the ways Windward innovates in order to please its clientele is by subscribing to SaaS business services such as a customer service support software, which routes email and web inquiries to the appropriate staff, and a live chat service, which allows customers to ask questions from the website in real time. The store also constantly updates its payment options, adding mobile payments and financing options, as they become available.
Windward has also recently added three touch screens to the sales floors in its two stores from which staff and customers can access up-to-the-minute inventory information and product pictures and details. The screens cost $2,000 each, and like its subscriptions to the SaaS services, Windward used its Chase card to buy them. "We got the tech, and the reward points," Currier says.
Windward invests those rewards points into its business, using them to underwrite travel to trade shows, where they've discovered new gear for the store such as step-on bindings for snow boards and electric longboard skateboards.
Sweet Pete's, Jacksonville, Florida
Allison Behringer of Sweet Pete's candy shop says she and her husband, Pete Behringer, spend way more than 25 percent of their time on innovation. That's not so surprising when you consider that their new 23,000-square-foot candy emporium carries 1,000 kinds of candies, many of them unique to Sweet Pete's, such as toasted coconut caramels and apple pie caramels. "Pete prefers R&D more than anything," Allison says.
Sometimes innovation actually requires looking to the past: Sweet Pete's specializes in natural candies made with traditional methods. Their best-selling candy is sea salt caramel, but modern wrapping machines brush the salt off the candy, so Sweet Pete's had seven employees doing nothing but twist-wrapping caramels.
"We just got a super-cool, new twist-wrap machine. It's 80 years old," Allison says. "Pete is an equipment junkie and had been lusting after it for a long time. It can wrap 110 pieces a minute!" The machine cost the business about $50,000, but saves much more than that in labor costs, Allison says.
Flex Watches, Los Angeles, California
Flex Watches has built a growing fashion watch brand on the power of 10: 10 colors, each linked to one of 10 causes, which receives a donation of 10 percent of each sale.
Flex crowd-sources its designs through Printed Village, a digital gathering place for 1,000 designers from all over the world. The Flex brand lives online, finding customers, suppliers, and new ideas there.
"The cool thing about online innovation is that there are so many apps to help," says Trevor Jones, the founder and CEO of the company. "We use an app to determine a customer's 'exit intent.' If they almost make a purchase, we have an app called "Wheelio" that will give them a pop-up spinning wheel, like a game show, that will spin and stop on a coupon or another promotion. We use Klaviyo email marketing automation to figure out the age and sex of our customers so that we can better target our marketing to them. We use survey tools to get feedback from the 20 percent of customers who provide 80 percent of our revenue," Jones says. "All these apps work by subscription, which we finance with our Chase credit card."
Grafton Furniture, Miami, Florida
Steve Grafton built his high-end, custom furniture business the old-fashioned way: By hand-crafting high-quality furniture for mansions and yachts and delivering white-glove customer service.
The white-glove service and hand-assembled pieces remain, but Grafton has also moved with the times: With the help of Lemonis, the company financed a $250,000 computerized router that allows its designers to cut wood quickly and efficiently, and with an exactitude out of reach of the most skilled human craftsman. "While the machine is cutting, my craftsmen can be assembling pieces," Grafton explains. "Now we can cut and assemble in half the time."
Not only does the new machinery double the amount Grafton can produce while still maintaining its quality, it also enables 3D rendering of pieces before they are built (something not previously possible), eliminating after-the-fact errors, further increasing the company's productivity.
Grafton has also become more efficient in its material purchases, which, in turn, has saved the company money. "By buying poplar in bulk—a three-month supply, rather than buying by the project—we save 25 percent on the material cost," Grafton says, noting the company finances its bulk wood purchases with its Chase credit card, where dollars can go even further by earning reward points.
Every business must evolve to stay competitive, and those small business owners who constantly innovate are the ones most likely to thrive. Nearly 23 percent of the small business owners surveyed spend 25 percent or more of their time thinking about innovation. And to pay for the implementation of new ideas, 33 percent use a business credit card and 11 percent use reward points. To learn how Chase Ink® can help you leverage your credit card rewards to invest in your own innovation, visit Chase.com/Ink.