You Shouldn't Cut Back on Your R&D in a Recession.



Posted: Monday, March 30, 2009

by Courtney Wilson
Northbridge SR&ED Consultants

We all know that the economy is tough right now. Businesses that had been doing well for years are now finding it hard to survive. Unemployment is rising. Companies are looking to cut costs in whatever areas they can, and this can mean cutting costs that would typically be used in research and development.

Research and development is a vital part of business today it helps to improve products and processes, as well as helps to develop new technologies. It gives companies an edge and helps them in the competitive global market. Without research and development, the economy would be at a standstill there would never be any new and emerging technologies or products.

But yes, R & D can be difficult to justify right now. You can't always guarantee that a project you are working on is going to get you the results that you want. You could spend months on a project, only to discover that the results you want aren't feasible, and that results in lost money. You could be working to develop something new, only to discover that one of your competitors has already developed that technology. Even if things work out as you'd like them to, it can be a long time before you start seeing the return on investment for the project it could take months for the project to be ready to be delivered to the mass market, and even then it could take years before the sales of the product or technology makes up for the costs you spent on the research and development in the project originally.

Research and development can be expensive, there is no denying that. But without it, your business, as well as the products or technologies that you provide, would grow stagnant. Without R & D you could even be missing out on new opportunities in industry sectors that are still thriving (for example, if your company has primarily dealt in the automotive industry, there may be the opportunity to branch out into aerodynamics, an industry that hasn't been affected by the recession).

There are some ways that R & D costs can be recovered, however. Some countries have tax programs specifically to support research and development. Canada 's federal government has the Scientific Research and Experimental Development (SR & ED) program; this program returns up to 35% of eligible costs spent on research and development. Most provincial governments in Canada also have programs to assist with R & D-incurred costs.

There is also the possibility of partnering up with another company (or school institute) for the purposes of R & D. You can also talk to your bank about getting a loan for your R & D.

While it may look like R & D should be an activity that you put on hold during a recession, without it your company can't move forward. There are still many opportunities to cover R & D costs, and you may find a new opportunity that you hadn't thought existed before.

Courtney Wilson works for Northbridge SR&ED Consultants.
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Top-level comments on this article: (1 total)
» left by Teresa Ortiz
 3 years 36 days ago.
186 fans.
HI courtney, welcome to searchwarp! Thank you for sharing your expertise. This is great information businesses. Blessings to you! Teresa
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