Is R&D Worth it?
Research and development, R&D, can be the key to unlocking greater competitiveness for companies, whatever their size. Investing in R&D is what drives advances in innovation, and innovation is one way for a business to differentiate itself the marketplace. Is R&D worth the investment though?
R&D is where businesses can develop new products, or enhance existing ones and, through vigorous testing and prototyping, prepare them for market.
There are various business benefits connected to R&D, but, the critical question for many companies will be around resources: if they do not have the in-house capability for R&D, are there other ways to harness its potential and reap these benefits?
One solution is to outsource R&D. Obviously, this means finding the right kind of service, and building the kind of close links that will enable a business to maximise research and development opportunities.
A further impetus for taking this route comes from the Government’s R&D tax credits, where SMEs can claim R&D tax relief, providing their expenditure qualifies.
Is R&D Worth it?
R&D helps companies grow. Research and development is the means for them to gain the greater knowledge and insight that will enable them to design, develop and enhance their products. It might be about introducing something altogether new, or adding improved features to existing products or services.
For many UK manufacturers, innovation is now playing a pivotal role, enabling them to offer added value to customers and consumers, and also to build inherent advantages into new product lines.
R&D is the means by which these manufacturers can turn ideas into reality, and the most successful businesses have absorbed R&D into their overall business plans, making it a key tenet of strategy.
What does research and development mean in practice?
It is investigative, but also extends to practical testing and experimentation. Typically, there will be basic or applied research, followed by development and prototyping.
It is about exploring possibilities and thereby opening up new opportunities. R&D may result in new products or services, or indeed, to servitisation of products, where enhancements through smart technology, for example, bring additional dimensions to the inherent value of the products themselves.
Key Benefits of R&D
R&D is not something that is limited to large corporations, in fact when asking ‘is R&D worth it?’, there are key benefits for SMEs looking for ways to compete more effectively.
While having a unique selling proposition (USP) is cited as a key quality for businesses, in practice it can be a challenge to achieve. However, R&D is one clear means of working towards and gaining a USP.
Researching new product or service ideas is the strategic approach to developing a USP.
R&D can also be an income builder, either from creating new income streams, or from attracting fresh investment on the back of innovation and new concepts.
It also provides an excellent foundation for collaborative working and fruitful partnerships, further honing a company’s competitive edge.
R&D helps build reputations and strengthen brands. If a brand becomes known for innovation and for getting ahead of the curve, this can be a very powerful thing, helping to create a momentum which means more income and more investment.
R&D and Tax
The UK Government’s R&D tax credits are a tax break, which allows qualifying SMEs to claim up to 33% of their R&D costs. This even applies to projects which are not, ultimately, successful. Larger businesses too can claim, getting up to 10% of their R&D expenditure refunded.
Companies can choose to either have R&D tax relief, reducing their corporation tax bill, or to receive a tax credit.
The money then allows businesses to make more of their R&D, through investing in more equipment and staff, or, if outsourcing, hiring and commissioning R&D development.
What Qualifies as R&D For Tax Relief Purposes?
This can involve modifying existing systems or products to improve their efficiency, capacity or performance. It might be about creating new systems or software, or developing bespoke solutions for specific problems.
It can involve improving a product, or service quality.
The drive to improve efficiency and reduce production costs, for example, cuts across a great many sectors.
Making Plans for the Year Ahead
What are the practical steps companies can take to improve their performance and grow?
The National Centre for Universities and Business (NCUB) focuses on the collaboration between businesses and universities, and one vital area of this is R&D.
The process of university business collaboration is one where knowledge gained and developed in universities can be used as a cornerstone of business strategy.
Research is a prominent aspect of this, and as a consequence, many businesses now work with universities, offering internships to talented students.
This is an especially useful means for businesses without their own in-house R&D capabilities to bring in outside expertise, while offering something of value in return.
Another route in to R&D is by creating trusted relationships with specialist suppliers of these services, who can provide on-the-ground expertise and practical applications of new ideas through prototyping.
Elmelin and R&D
Our prototyping capabilities mean we can help our clients discover new ways of improving their processes, or of developing entirely new product ranges where thermal management and high temperature insulation are vital qualities.
Prototyping takes R&D into real-world testing, helping refine and shape concepts for full-scale production.
If you are looking at the immediate future, how to grow your business through R&D or even still asking is R&D worth it, please get in touch.