In a hypercompetitive world, one of the few ways a startup can stand out from the crowd is to be more innovative.
Better techniques, smarter delivery, clever products, and unique services can all help you gain a competitive edge over your well-funded and more experienced rivals.
A combination of innovation and risk-taking has helped companies in Silicon Valley conquer the world. British startups need to adopt a similar mindset if they hope to stake a claim in their industry before a well-funded foreign competitor soaks up the market share in their region.
The UK government is well aware of the need for innovation to help local startups survive. Since 2000, the government has been incentivising innovation in the British economy with specialised R&D tax credits.
Here’s how you can use the government’s R&D tax credit scheme as a launchpad for your new business:
Understanding the R&D tax credit scheme
Although the government’s R&D tax credit scheme isn’t complicated, a lack of awareness and certain misconceptions have prevented many businesses from seeking claims under this program.
As a startup founder, it’s worth taking a closer look at how this scheme can benefit your company. Small and medium-sized British enterprises can claim up to 230 per cent of eligible R&D costs in tax credits.
These credits can help offset the corporate tax a small company has to pay every financial year. Even loss-making companies can claim 14.5 per cent of surrenderable losses to offset tax liabilities.
A closer look and thorough due diligence could help you streamline your tax costs and boost profits.
Hire professionals
Tax professionals and R&D tax credits specialists can help you get the maximum amount of benefit from this scheme. Self-service platforms such as Tax Cloud will help you to identify eligible costs, estimate your R&D expenses and file a claim, whilst also giving you access to R&D tax credit experts.
As a small startup, an easy-to-use and affordable online platform like this can help you claim R&D tax credits without needing to hire an army of tax specialists, lawyers and accountants.
However, a professional R&D tax service will also make the claiming process faster and easier, so you can focus on what matters: Building your company.
Invest for the long-term
In his critically acclaimed podcast “Masters of Scale”, LinkedIn co-founder and Greylock partner, Reid Hoffman, said there are two ways to scale a startup: The easy way and the hard way.
The hard way to scale a startup is to create a product and invest a lot of time and money into marketing it. Your efforts in marketing will help you create revenues that can be used to improve the product. In other words, you invest in creating demand.
Reid believes a better, easier, approach is to invest in the product so that demand flows organically. Time, effort, and money spent on research and development will help you create a product or service that is miles better than anyone else’s.
These investments in R&D and technical experiments will not give you instant payoffs, but they will help you create self-sustaining demand in the long-term.
With the government’s R&D tax credits scheme, the cost of investing in science and technology are minimised. These credits support your efforts to make improvements and redefine your products.
Ultimately, the intellectual property and experience your team gains from R&D projects will form the base of your competitive advantage.
These are long-term, durable assets that will generate demand and profits, helping you grow from a tiny startup into a multinational behemoth. Take advantage of this scheme to grow your business over the long-term.
