Why innovation is the X-factor during COVID-19

Why innovation is the X-factor during COVID-19
31Jul2020

Without exception businesses have had to adapt to life in the pandemic. But businesses doing R&D have had more than their fair share of changes thanks to the financial havoc wreaked by COVID-19.

Over the past two months, innovators have been taking different courses of action. So what works best when it comes to making it through the biggest economic crisis in a century?

To innovate or not to innovate, that is the question

If you’ve been thinking about innovation and turning more to R&D since the pandemic struck, you’re not alone. A recent poll by SmartCompany and Radium Capital found almost 60% of respondents said innovation was very important. And almost 40% are now either spending more on R&D or starting to spend on R&D for the first time due to the pandemic.

There’s been a lot of airtime devoted to businesses that have pivoted their operations during the pandemic in response to rapid changes in markets and consumer demand. A small number of businesses doing R&D, especially those in the healthcare or technology space, have even benefitted. For those fortunate ventures, their innovations have become overnight successes or must-haves to help counter the health crisis, or the economic impacts of worldwide lockdowns and restrictions.

Chances are COVID-19 hasn’t created the perfect conditions for your R&D or to grow your business. So what are the options? For most businesses there are three main ones to assess: pivoting research and operations; continuing with existing research; or battening down the hatches and going into hibernation until the pandemic is over. Let’s look at the pros and cons of each.

Push to pivot

Much has been made of businesses pivoting or adapting operations to a new activity during the coronavirus crisis.

If you haven’t already explored this as an option for your business, it’s still worth considering.

Health experts predict that COVID-19 will be with us for months—maybe even one or two years. So it’s a pretty safe bet that its economic impacts will be too.

Pivots can come in all shapes and sizes. There’s no magic recipe. But there are a few things to bear in mind. If you’re planning to change what you do, albeit temporarily, make sure it’s definitely an option for you to switch course once this current crisis is over.

If the best option for you is a permanent change of direction, then make sure your new activities have longevity and market relevance beyond the pandemic.

Leverage some, if not all, of your existing skills and resources when you pivot. Mid-pandemic is probably not the best time to go for opportunities that are entirely outside your wheelhouse. Make sure you have sufficient capital and cash flow to execute your new plans. There is no net benefit in pivoting your operations into insolvency.

Stay the distance

Your second option is sticking by your original plan. To succeed you need to shore up your capital and cash flow to keep pushing your existing research and business activities forward despite the tough times.

There’s always benefit in investing in R&D but this is doubly true right now. COVID-19 has discouraged market entrants and this crisis will have caused some of your competitors to take their eye off the ball.

Batten down the hatches

Mothballing your operations and slashing costs is definitely an option open to many businesses with R&D. This could keep your business solvent until the worst of the crisis has passed. But it might not be the best strategy. Your competitors could easily steal a march on you while you’re busy hibernating. And when you’re ready to return to R&D, it might be impossible to catch up.

Finding those funds

Adjusting your business to pandemic economics, whichever path you choose, is all very well in theory, but it’s what you do in practice that counts. You will need the correct balance of capital and cashflow to be successful. Here are a few pointers to keep in mind.

Whether you choose to pivot, stay the course or batten down the hatches, cutting or deferring any non-essential spending is a must.

If you’re continuing existing research or pivoting to something new, demonstrating you have a sound offering with market demand is the best way to entice nervous investors. This will also help reassure the bank and other providers of traditional capital.

But if you’re looking for smart funding that you can count on, then R&D advances from Radium Capital fit the bill. Radium Advances offer you certain capital for these uncertain times. If you’re eligible for the Federal Government’s R&D tax incentive, then you’re eligible to apply for a Radium Advance. Using a platform-based approach, Radium Capital can approve your application within two business days and get funds flowing into your bank account three business days after you sign your loan documents. This fixed rate financing is secured against your tax refund. With no upfront fees and nothing to pay until you receive your tax back, this is a cash-flow-friendly option for your R&D.

We’re here to support your business through the crisis and beyond. So get in touch for further advice on how to smooth your capital and cash flow and keep that all important innovation going.

Interested in R&D? Let Carbon help.

If the above has appealed to you and you're interested in finding out more about the R&D claim process, then our R&D team is ready to help. The claim process can be tricky to navigate, so we'll work with you from beginning to end. Find out more about our simplified R&D process here on our website or by calling us on 1300 454 174.

Guest blog written by Radium Capital

 
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