In today’s ever unpredictable business environment, it’s easy to get so wrapped up in the thrill of chasing sales today that you forget to stay competitive for tomorrow.
For many business owners, the thought of innovating their services and products is an enticing prospect but the associated research and development (R&D) costs and commitments of running a business – not to mention the time involved – often puts these plans on the backburner.
However, R&D doesn’t have to be a long and costly process. In fact, it can have immediate benefits for any business.
What is research and development (R&D)?
When we talk about R&D, chances are you envisage tech wizards designing the next Uber app or a large laboratory working on a new wonder chemical. It can be that, but it’s also a blanket term for when businesses plan a new product, sales platform or any asset at all.
For retail businesses, it might be as simple as developing environmentally friendly packaging for your product, employing someone to design an original mobile sales platform or re-designing your product to be more efficient. Even the smallest tweaks can be considered R&D.
Different types of R&D
According to The National Science Foundation, there are three different types of R&D: basic research, applied research and experimental development.
Basic research
Sometimes known as pure or fundamental research, the aim of basic research is to have complete knowledge and understanding of one specific subject. Basic research is about gaining new knowledge without having commercial goals in mind. It can often be described as having knowledge for knowledge’s sake.
Applied research
Applied research is carried out to answer practical questions and solve problems. It aims to address customer or industry-specific requirements. This type of research has commercial goals or objectives in the form of products, processes or services.
Experimental development
Experimental development draws on the knowledge gained from research and practical experience. The findings from this type of research give additional knowledge to produce something new or to improve existing products or processes
What are the practical benefits of R&D?
The main benefit is that your research and development can result in a product or service that none of your competitors offer . Not only does that make you a more attractive prospect for discerning customers, it means you’re more likely to keep them – because there’s no one else quite like you.
If you protect your new designs with a copyright or patent, you can even make money from licensing this to rivals – or companies from other sectors – for a fee. Developing your business like this will mean you’re not just relying on your own sales.
Finally, research suggests that employees working on new ideas or projects are much less likely to leave. Treat them well, and they’re even more likely to stay, so you’re likely to find it easier to hang on to the cream of your crop.
How can I make the most of my R&D?
It’s normal to worry that your hard work won't pay off. But even if it doesn’t deliver the breakthrough you wanted, there are ways to make it work for you – starting with intelligent marketing. For example, if you’re working on that environmentally friendly packaging, shout about your green credentials. Share your intentions on social media, and with local press, and you might attract a whole new audience.
Working on R&D can also help you establish new connections. Engaging with others developing ideas in your field, talking to universities and attending events are all great ways to discover inspiration and meet people. These are valuable in themselves, and can lead to all sorts of opportunities.
How can I fund research and development?
There are several tax incentives to help small businesses cut the cost of R&D.
The R&D tax relief scheme is designed to encourage small businesses to spend more money and time on researching and creating new products. The scheme reimburses businesses via a cash payment or corporation tax reduction. For more information about R&D tax relief schemes, take a look at AXA’s guide to research and development tax credits for small businesses.
If you need cash to get your R&D project started, there are government grants and loans available to help small businesses. If you on GOV.UK, you’ll find a list of the finance and support available, including grants, awards, advice and loans.
You could also consider alternative funding options like crowdfunding or angel investors to get you started. However, it's important to remember your ideas aren’t automatically protected when you put your pitch online and you risk exposing your ideas to competitors.
Research and development can be a real benefit to businesses. And with cost-reducing tax incentives available, businesses can worry less about money issues and focus on innovating their offering and finessing the future of their business.
