Innovation Helps Businesses Expand

Issue 003

Innovation is crucial to the continuing success of any organisation.

Innovation is the creation, development and implementation of a new product, process, service marketing or management methodology with the aim of improving efficiency, effectiveness or competitive advantage.

Businesses confront “innovation” virtually every day. A slight change in a process, a different way of greeting a customer and developing a new methodology for the preparation of quotations, are all examples of innovation.

Innovation can be very valuable for a business because it can add to the “intellectual property” that is owned by a business. Whilst most businesses do not reflect the value of their intellectual property within their Balance Sheet, the importance of the development of innovation which is added to the intellectual property pool, is reflected in the multiplier that has been utilised in the valuation of the business because businesses that have been innovative can normally argue for an above average multiplier to be utilised within the calculation of the value of the business. For example: a business with an after-tax profit of $200,000 that has not undertaken any innovative activities would normally be valued at around 4 times the after-tax profit. This would be a valuation of $800,000.

If a business that has undertaken innovation and, as part of this process, incorporated as a company and has completed one or more research and development projects and is looking to apply for a special government grant for innovative companies and is contemplating raising capital direct from the public, the multiplier factor could be 5 which would result in a valuation of $1,000,000 or in some instances closer to 6, which would result in a valuation of $1.2 million. This is the value adding benefit to businesses that have made a commitment to be “innovative”!

Innovation is available to all types of businesses, both large and small. It normally starts with an idea which may have been suggested by anyone within an organisation.

Normally, someone within the leadership team will authorise 1 or 2 people to explore the “idea” and to bring a report back on what the benefits are relating to this “idea”. A decision could then be made as to whether to proceed with a research and development project in which case there is a special government incentive to encourage companies to undertake research activities.

There are also government grants to assist defray some of the costs that are incurred by innovative businesses. Towers Business Development can assist businesses, wishing to undertake an innovation journey, by implementing appropriate systems for the control of research and development, applying for a special government grant for innovative companies, preparing Business Plans, Budgets and Cashflow Forecasts to assist in applying for loans or seeking to raise capital to finance the innovative activities.

Towers Business Development is presenting a special webinar titled “The Innovation Journey Is Not A Closed Shop” on Thursday, 17th June 2021 at 12-noon AEST. You are most welcome to join us for this free webinar – to register please (Click here).

If you would like to discuss the implementation of an “innovation system” for your company or business, please do not hesitate to contact Peter Towers, Managing Director, Towers Business Development Pty Ltd – an experienced accountant, company secretary, director and business consultant for a discussion:

Email:
Telephone: 1800 232 088

You might be interested in some of the issues that we have discussed in our recent posts and videos:

If you are a company director you might be looking at the funding opportunities that are available to your company at present.

“Companies Can Raise Capital” - click here

Video recording – click here

Virtual CFO’s services are provided by accountants who have wide commercial experience in a range of business activities to assist growing SMEs.

“Virtual CFOs Services Help SMEs” - click here.

Video recording – click here

Towers Business Development Services

Towers Business Development does not give taxation advice but offers consultancy services for small/medium enterprises and accountancy businesses including:

Government Grant Advice for SMEs
Establishment of Research and Development Systems
Preparation of Business Plans
Preparation for Capital Raising for Small Private Companies including:
Early Stage Innovation Company
Crowd Sourced Funding Equity Raising
Section 708 Corporations Act Capital Raising
Succession Planning
Family Businesses

Upcoming Free Webinars Presented By Towers Business Development

“Predictive Accounting Identifies the Financial Picture” - Tuesday 15th June 2021 at 12-noon AEST. To register - click here.
“The Innovation Journey Is Not A Closed Shop!” - Thursday 17th June 2021 at 12-noon AEST. To register - click here.
“Research & Development Is The Start Of The Innovation Journey” - Thursday 24th June 2021 at 12-noon AEST. To register - click here.
“Having a ‘Virtual Chief Financial Officer Service’ Could Launch Your Business in 2021/22” - Thursday 1st July 2021 at 12-noon AEST. To register - click here.
“Grants Can Assist Funding for Research Activities” - Thursday 8th July 2021 at 12-noon AEST. To register - click here.
“Early Stage Innovation Company Status - Great For The Company - Investors Love The Incentives” - Thursday 15th July 2021 at 12-noon AEST. To register - click here.