Keeping your business competitive means making sure your products and services meet your customers’ needs, which may change over time. And the best way to do that is to invest time and money into market research.
The benefits of research and development
You can do your own research and development in-house or outsource it to external contractors. Either way, it lets you stay competitive and builds customer loyalty by:
- boosting your sales
- opening new markets – in the UK and overseas
- improving your products and services, and developing new ones
- enhancing your brand with a reputation as an innovative business
- attracting the best employees (through your enhanced reputation)
- finding new business partnerships
- attracting external finance.
And if you come up with some new ideas, make sure you protect your intellectual property.
Developing your ideas
While research reveals reveal ideas, the development process tests them and helps turn your ideas into reality.
The process should examine all the potential risks and hurdles you’ll need to overcome to get something to market. For example, consider whether your product meets a market need and will sell at the price needed to make a profit. Development involves defining the specification and design of your product or service through drawings, models or prototypes.
First, examine your ideas
It’s easy to become over-enthusiastic about a new idea. But looking at your ideas in depth before committing resources to research and development can save you time and money. Ask yourself whether your proposed product or service:
- fills a market gap or need
- fits with your current offerings or business strategy
- is technically feasible or will require additional expertise or technology
- is unique or will face competition from rivals.
Your market research and industry knowledge can answer some of these questions. However, you may need additional expertise or further technical, market or product information to help you assess new ideas.
Bright Idea Scotland can help you with questions about intellectual property, patents, copyright, trademarks and registering designs.
Scottish Enterprise’s Innovation Support Service can help you assess your ideas and identify business opportunities using a project review.
Careful planning and management of your research and development (R&D) can lead to business stability, security and long-term profits. So decide how much money and resource you’re willing to commit to R&D at this strategy stage.
R&D should be included in your overall business plan, illustrating how it fits in with your other business activities. Set out clear objectives, time frames and budgets. A clear plan can prevent the project straying from your business goals and wasting valuable resources and money.
You should allocate the necessary resources to the project, including funding, staff and time. You might decide to set up a specific team to work on the project.
Managing your project
To manage R&D projects effectively you should:
- make sure staff involved in R&D understand your overall strategy
- ensure everyone understands what is commercially realistic
- assess the changing risks and potential of projects as they progress
- ensure that intellectual property ownership issues are resolved
- recognise when a project isn’t going to work
- understand the relative importance of different projects to your business.
Map out deadlines for completing important stages. Then at the end of each phase, you can review your progress and decide whether to proceed.
External research and development
If you don’t have internal resources, you can choose to outsource some or all elements of R&D to an external contractor, including design, project management and specialist expertise.
If you’re not likely to require a full-time position, you have the option of hiring for a specific project or on a longer-term basis, perhaps on a freelance or fixed-term contract.
Hiring project managers
Project managers are responsible for making sure a project is planned, developed, implemented, controlled and closed.
You can draw on a designer’s skills throughout a project, from strategy and idea generation to implementation and evaluation. They can help you deliver a broad range of R&D including customer research, websites, branding and packaging.
Working with universities and colleges
Academic research can help you develop new ideas or enhance existing ones. Your business can benefit commercially from relevant research into processes and technologies, while universities and colleges gain new sources of funding and researchers achieve a better understanding of industry needs.
Risks versus benefits of R&D
R&D always carries an element of risk because it involves trying out new, untested ideas. Common risks include:
- new or modified products or services proving more difficult or costly to develop than anticipated
- developing a product or service that isn’t commercially successful
- starting the development of a product that turns out to be unworkable.
On the other hand, returns from R&D can be considerably greater than for other investments – and could even ensure the future survival of your business.
An R&D project to improve an existing product or service has a far higher chance of success than one aimed at creating a new product or service, but the rewards are likely to be far lower.
Funding your research and development
Loans and private investors
Approaching your bank for a loan will require a well thought-out business plan. Or you could try to attract investment from business angels – wealthy individuals who invest in private companies, typically £10,000 to £250,000. You must be prepared to relinquish some control of your business though.
Applying for a grant could help finance part of your project.
R&D Tax Relief
This is available if your company spends at least £10,000 a year on qualifying R&D costs. Tax relief on allowable costs incurred after 1 August 2008 is 175 per cent. You can only claim for relief if the R&D aims to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.