What Exactly Is Business Innovation And Why Is It Important?
Company innovation is absolutely essential to survival, growth and financial health - we can’t emphasise this enough. Why? Because without it a company stagnates. It can lose its market edge, staff can become disillusioned and opportunities can all too easily be missed. A business taking its eye off the innovation ‘ball’ is likely to find another company will come along and offer a better product for less. Over time this can mean it is no longer viable and, no matter how successful it was previously, it will fail.
But what actually is innovation, and is it as simple as it sounds? Here we take a look.
What constitutes business innovation?
Innovation is when a company designs, makes and markets a new product or service. It can refer to new processes too, or new ideas about how best to achieve something. It’s when someone, or a group of people, come up with a way to do more for less; to be more efficient or to offer something no other organisation offers. It doesn’t even have to be that drastic. It can happen when a business takes an existing product, service or process and improves it in some way.
Why is innovation so important?
As we’ve mentioned, companies will only stand the best chance of surviving and thriving if they innovate. By coming up with new product ideas, or increasing the appeal of ones already in existence, companies can future-proof themselves. They can also stay ahead of the game by maintaining their competitive edge.
There’s credibility to consider too. A business that is clearly successful and expanding sends out the message that it’s stable and doing well. This can attract not only potential new customers, but investors too, of course then injecting more money for investment.
Which industries are most likely to innovate?
Every successful company in every sector will grow and innovate at some time. However, there are several industries in particular which spring to mind when it comes to innovation, and the pace of change is very fast. In healthcare for example, people are constantly needing better medicine, more cutting edge equipment and more scientific breakthroughs in curing some of our most life-limiting diseases. Pharmaceutical companies therefore carry out huge amounts of innovative work every day, particularly with items like medication, vaccines and therapies.
Other notable sectors that depend heavily on innovation include technology - for example mobile phones, TVs, mobile devices and drones to name just a few. Then you’ve got robots and automation, VR, aviation and vehicle mechanics.
A lesser considered sector that’s still incredibly reliant on innovation is farming. With a growing world population, more mouths to feed and less space to farm, there’s been massive investment in research and development (R&D) in farming over recent decades. Many exciting new scientific and technological leaps forward are being made in areas such as better quality, more environmentally-friendly fertiliser. Drones too can now be used to cover large fields very quickly, taking aerial images that help farmers spot crop damage and baron areas faster. Vertical farming is another one, where crops are grown in stacked layers - a sort of ‘block of flats’ effect which better utilises limited space. It often requires controlled-environment agriculture, aiming to optimise healthy plant growth, as well as soilless farming techniques including aeroponics, aquaponics and hydroponics.
Innovation differences between large and small businesses
It could be argued that small businesses and start-ups have the biggest need to grow and establish themselves - and quickly - over larger businesses. The tricky bit is that this is also the time when cashflow can be a problem and reliable financing options are in short supply.
The speed at which decisions are made can also be different depending on company size. Larger companies come with more staff, more management layers and often more bureaucracy, therefore often taking much longer to make decisions. This can mean when both types of organisations come to work together, smaller companies may find progress painfully slow. At the same time, larger companies tend to have more money to throw around, and are potentially more able to therefore invest in larger innovative projects.
Is there any financial help towards the costs of innovation?
The good news is that yes, there is. The UK government has long looked to encourage innovation, as it’s a vital component of a healthy economy. However, it also recognises that R&D can be expensive, and since the year 2000 has offered a couple of incentives in the form of R&D Tax Credits and R&D Grants.
R&D Tax Credits work by offering a reduction in the amount of Corporation Tax a company has to pay in respect of its R&D activities. It can help to finance a huge range of projects and is open to companies of any size in any sector.
The amount of R&D Tax Credits a company can claim depends on its gross turnover, assets, number of staff and whether or not it has received any state aid before. It must also no be eligible for any other similar tax relief in any other country.
The amount claimable, depending on the branch of the scheme used, is currently between 12 and 33 percent. This is generous indeed, and we’re not talking pocket change here.
R&D Grants are offered as a cash lump sum and are administered by winning a competition. The key is to win by making the highest quality application. You can find out more on our webpages: R&D Tax Credits and R&D Grants.
Applying for R&D Tax Credits and R&D Grants
This is all good, but the application processes for both of these can be difficult. There are many grey areas when it comes to costs and documentation, and putting together an optimised claim is often tricky.
This is where Myriad Associates can help. We will work alongside you to offer the very best R&D tax relief service to your clients. Having had years of experience dealing solely in R&D tax relief claims, we’re experts in collaborating figures and documents, and creating a narrative piece that’s second to none. All this means you can get on with everything else.
If you need advice about R&D tax relief, call our friendly team today on 0207 3994 2449 or use our contact page and we’ll get back to you.