There are many components of a business that is required to perform at optimal efficiency in order to ensure company success. However, if there is a department that often doesn't get as much attention as it should, it is the research and development sector. There are a litany of reasons as to why this section of the business can directly affect a company's bottom line.
First and foremost, it should be understood why
research and development are so essential to business functions. This portion of a business adds features to old products and seeks valuable knowledge in order to develop the products or services being offered. In doing so, this knowledge is connected with the business' marketing plan and how they can reduce costs.
The term "research" in a business context refers to a way of thinking that results in brand new features for a product that already exists. Further broken down, there is applied and basic research. Basic research applies more scientific research while applied research seeks for practicality in the real world. This research is then intertwined with development.
Development refers to the actual application of this new line of thinking that was discovered so that a better service or product can be given as a result. It can technically be said that research and development should be the first step in product development. In addition, research and development are able to provide effective ways to get an advantage over other businesses in the same market.
Since research and business aims to lead to an improved process in the business as well as an improved product, this will lead to a valuable inverse relationship of decreased costs and increased productivity. According to research from the
Small Business Administration, this sector of a business is what often leads to the development of a new product the most. You will find that industries such as computing technology and industrial machinery commonly use this sector of the business to continually find ways to perform optimally.
There are also many
marketing and advertising benefits that comes from adequate research and development. Research and development functions as an effective marketing conduit and helps facilitate the development of strategies to advertise a new product. By giving customers something new and fresh, this can increase
market share to a great degree, and the R&D department is what is responsible.
There is also another benefit that a lot of customers do not take advantage of. Starting in 1981, the Internal Revenue Service offered tax breaks to businesses who spend a great deal of money investing in this department. Companies who qualify are primarily startups and other businesses who have research expenses that qualify. There is also a 20 year carry forward provision added in as well.
For those interested in buyouts or mergers, there is great deal of money to be made. Those who have good ideas that are backed by adequate research and development will attract the attention of companies who may seek to join their business or own the business with a huge sum of money. Having an effective R&D department increases the chances of these ventures.
As you can see, this department is imperative to the success of any business. From managing cost reduction strategies and advertising techniques to advancing marketing abilities, there are plenty of reasons to invest time and money to ensure that this section of a business is stable. Knowing where a business should be investing money can be difficult depending on what specific needs entail. However, other sectors of a business can be directly or indirectly affected by how prominent research and development is. Consider investing more in this department today.