There’s an old Chinese proverb that says “When the winds of change blow, some people build walls and others build windmills.” In other words, some people (and companies) shy away from change, instead preferring the comfy slippers of the status quo. But for others, change is the chance to learn and grow. It’s something to be embraced.
The fact is that only by innovating and adapting will a company stand any chance of surviving in the long term. But the draw of if it ain’t broke don’t fix it can be incredibly strong, and abandoning tried and tested working practices certainly isn’t for the fainthearted.
The key lies in finding a balance, coming up with new innovations and tackling challenges whilst also minimising any potential dangers. After all, every company’s situation – particularly in terms of skills and finances – is different. But by understanding the risks of innovation, a balance can usually be struck.
Of course, being bold and disruptive in your innovation efforts doesn’t automatically mean being reckless. Innovative projects must be supported by a solid framework backed by considered financial planning.This is where a solid R&D strategyis worth its weight in gold.
Here we delve into what it is that makes innovation so scary and how those fears can be mitigated.
- Actually understand what the risks are
Assessing the risks the company is willing and able to take will help your client better understand their challenges. Not just financial but legal, technical, logistical, HR and safety issues – to name just a few – will be important factors.
In order to gain the most accurate overview of where the company stands right now, different employees both internal and external should be consulted.
Then there’s the stakeholders, including of course the shareholders. What level of risk are they willing to take? After all, different personalities mean some are keen to be ambitious and shoot for the moon while others are much more cautious. But only when the bare facts are presented can a true, realistic R&D strategy be formed.
- Grab all the financial support available
The government wants UK companies to innovate. That’s a fact.
Innovation not only boosts individual company growthbut it also benefits the wider economy through job creation. This helps bolster the government’s coffers whilst ensuring the country’s competitiveness on the global stage.
This is whya range of financial incentives have been offered to UK companies by the government over the last twenty years. One of them is the highly generous R&D Tax Credits scheme.
Allowing eligible companies to claim up to 33% of their R&D expenditure back as a credit from HMRC, the scope of projects that can attract R&D tax relief is huge. Open to any UK-based company of any size and in any industry, far too many companies are still missing out on thousands of pounds of tax relief they’re rightfully entitled to. Companies either apply using the SME branch of the scheme or RDEC, depending on size, turnover and whether any previous state aid has been received.
Some companies (and your clients may well come under this category) simply don’t know the scheme exists. Others don’t know where to start when it comes to claiming or wrongfully believe they won’t qualify.
Your accountancy firm is about so much more than simply filing tax returns. You strive to offer your clients the very best range of services, not just for their benefit but also to build your brand.
That’s why many practices are offering an R&D tax claims service by using an online R&D claims portal. Do your homework, but by finding a specialist consultancy to collaborate with you can expand your range of services whilst also earning a nice little kickback.
- Tackle the biggest risks first
Once the risks of innovation have been identified, they need to be broken down into ‘quick wins’ and longer-term goals. But once the most significant risks have been addressed (budget, expertise, logistics etc.), smaller risks tend to become clearer. This is also an important tool in helping ensure the R&D project isn’t completely derailed later on, potentially wasting a lot of time, resources and money.
Companies should therefore be comfortable with the hefty risks early on and work on the detail later.
- See risk as a positive thing
Although risk can lead to big rewards, it’s tempting to shy away from the chance of potential failure. But only by experimental trial and error can any progress ever be made. And if it does go wrong, there’s aways the ability to pivot, to change direction, and make things right.
One way of doing this is through a positive company culture of innovation. It takes time, but by weaving an innovative outlook into the workforce – and giving them freedom to express their ideas – can great things happen. It’s about a positive attitude.
- See risk management as a continuous process
An effective programme of innovation isn’t something that can just be done once and that’s it. It’s something that is constantly evolving, necessitating constant revision of your R&D strategy. Risks too will evolve over time, why is why being proactive about tackling them on an ongoing basis will help prevent problems down the line.
Yes it would be great to start a project and always get it right first time with a predictable outcome. But only by hitting a dead end can further technical and scientific research occur – and that’s what leads to R&D tax relief.