Many SMEs set out with a vision to develop a product, process, service or some other business activity. Unfortunately, some people have not considered the entire process in their initial thinking. An appropriate terminology for the process is “The Innovation Journey”.
The innovation journey does require planning and an understanding of the time that it will take and the documentation that will be required much of which will need to be provided by an external expert.
The innovation journey normally starts with research and development.
To claim the Research and Development Tax Offset, the applicant must be a company.
Government grants are a great way to receive assistance without too many strings attached i.e. rarely does a government grant impose any sort of ownership being transferred to a government agency.
Business Plans are important. In fact, a Business Plan is just as important for a business person as a map is for a tourist – if you don’t know where you are going, how are you going to know when you get there? More importantly, how will you know when you are off track on your overall strategy?
Predictive accounting reports are the financial reflection of what is contained within the Business Plan. This is very important and relates to Budgets, Cash Flow Forecasts and Projected Balance Sheets.
Funding for the business is an ongoing issue. Do you borrow money? If so, do you have security that you can offer the lender or do you attempt to raise capital? There are now three ways that private companies are able to raise capital direct from the public.
Board of Advice can play a very important role in assisting an entrepreneur to navigate the challenges on an innovation journey.
This is the “Innovation Journey”!.
Whilst innovation normally starts with research, unfortunately, some people miss out on being able to claim the Research and Development Tax Offset, because they are not operating as a company or they are unaware of the record-keeping requirements to be able to claim the Research and Development Tax Offset.
If the company is spending more than $20,000 in the financial year on legitimate Research and Development expenditure and all of the records pertaining to that research expenditure have been maintained, the company is able to claim 43.5% of that Research and Development expenditure as the Research and Development Tax Offset.
If the company is trading at a loss, the company is able to make an election in its income tax return; that the cash equivalent of the Research and Development Tax Offset is paid by the Australian Tax Office to the company’s nominated bank account, subject to the company’s tax losses exceeding the calculated Research and Development Tax Offset amount.
To start the “Innovation Journey”, directors are urged to obtain advice on Research and Development.
Understanding the Research and Development system is important - Towers Business Development can assist!
Businesses undertaking the “Innovation Journey” are able to access a number of grants made available by the Australian, State and Territory governments.
Whilst there is an application process and a need for the Business Owner or Directors to discuss their vision with a government department officer or contractor, there are not too many strings attached.
A popular grant that assisted many companies that were on the “Innovation Journey” was the “Accelerating Commercialisation Grant”, which operated for about twelve years until it was phased out in the 2023/24 Australian Government Budget.
In the budget speech, the Federal Treasurer indicated that the Government was proposing to introduce a similar grant to the Accelerating Commercialisation Grant later in 2023.
Some information has been released on the Internet which indicates that the “Industry Growth Program” will support early-stage businesses in their most challenging development phase.
Projects in the priority areas of the “National Reconstruction Fund” will be eligible for the “Industry Growth Program”:
The government has announced that the new programs will offer grants of $50,000 - $5 million to help businesses scale up.
If you are wanting to undertake the “Innovation Journey”, now is the time to prepare the key documentation for your project, such as Business Plan, Budgets and Cash Flow Forecast, to be able to apply for this new grant when it is released later this year.
Grants are great and Towers Business Development can help you apply for them.
To participate in the “Innovation Journey”, a business needs a guidance book - and this is its own Business Plan.
A Business Plan should be developed exclusively for your business and not be taken out of a textbook or someone else’s modified plan.
Your Business Plan needs to be unique. It needs to analyse your business. Just like a tourist, you plan your journey and you determine what you wish to achieve at various stages, to allow you to make comparison from where you’re at and what you have achieved.
The key components of a Business Plan are:
This is the financial interpretation of the Business Plan!
The “Innovation Journey” should be exciting, but it can be disastrous if you are not careful!
If you would like to know more about the “Innovation Journey” and how Towers Business Development can assist you to meet these challenges:
We are available for a complimentary Zoom discussion.