Keeping up with your competitors in business is always a challenge. There are always businesses that push the envelope and if you aren’t innovating you could be left behind.
But innovation doesn’t come easily and for most, it can be expensive too. When most businesses think about research and development they think it’s for huge corporations and while big corporations do benefit from research and development it doesn’t mean small businesses like yours can’t benefit either.
There are many benefits of research and development and I will go through them in this post. By the end of this blog, you should have a better understanding of research and development and if it’s something that can benefit your business.
I will also share tips on what you should do if you consider research and development something you want to learn more about and implement within your business.
What is R&D
So let’s start at the beginning. What exactly is research and development (commonly called R&D)?
Research and development is the process of solving difficult problems within your industry that an expert would have a problem solving. This is a definition given from a government website, and the reason for this is because of the tax breaks you can get from R&D. This is something we will cover a little later on.
Research and development is the process of improving products, materials, processes and difficult problems that apply to businesses. Solving these problems or creating new materials will lead to innovation which should have a positive effect on the companies bottom line.
Many businesses will use research and development to make their products cheaper, improve their existing processes to be more productive or create a new version of a product to capture a larger market share.
A great example of this is the company Tuball which have invested in R&D for materials such as Acrylic, Polyester, Epoxy and Silicone and as a result has created additives that can be used with 70% of the materials we see around us to give them additional properties that can improve their durability, conductivity and efficiency.
Benefits of Research and Development
There are many benefits of research and development, not just for the company carrying out the research but also for the industry as a whole. For example, R&D from one company could improve processes which could make other industries more affordable.
A good example of this would be the electric car market. Years ago electric cars would have been too expensive to run on the roads due to the cost of charging and coming up with a battery that could hold enough power to make travel in an electric car efficient. Thanks to the R&D from the electric car manufacturers it’s not more affordable and safe to have these cars on the road.
This technology will continue to be researched and developed and eventually will flood into other areas of technology too, hopefully creating a greener world.
But it’s not just corporations with 100’s of employees that can see benefits from R&D. Small companies can also see the benefits of R&D through tax relief, tax credits, improved efficiency and sales.
As a smaller company, you may not be inventing materials that can make other materials stronger but you could look at existing processes within your industry and make them more affordable or more efficient. This alone will lead to innovation and will improve your companies bottom line.
Could your business benefit?
Most businesses will benefit from conducting research and development, so there is a high chance yours could too. If you do decide to invest in R&D you should look for R&D tax accountants that can advise you on the best way of investing your money, as not all research can be claimed back via tax or be eligible for tax credits.
No one likes to pay out more in tax than they need to so speaking to a tax expert could help you cut down your tax bill and also get credited in fees if your research meets the criteria.
If paying less tax isn’t enough to consider research and development you should also consider the benefits it has to your business from a marketing point of view.
Standing out in a busy environment is often difficult if not impossible to do. Having unique data or information or even a product that is different is going to make it much easier for you to market and sell compared to your competitors.
Final thoughts on R&D
As a small business owner you may run or hide every time someone mentions research and development, but now you know it isn’t just for the big guys. R&D can be used by small businesses to improve and innovate in even the most obscure industries.
If you are considering investing in R&D then your first stop should be to talk to an R&D accountant. They can advise what is covered and what isn’t when it comes to research and how much tax credit you could potentially get if you were to carry out research within your own business.
