Grants | alchemyinnovation

ideas-online

27 Jan, 2012

by admin

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The NSW Department of Trade and Investment have developed a tool – Ideas Online.

You will be asked to complete 40 questions about your idea.

It is easy to get excited by the prospects of a new idea, so you need to be aware that your judgement might become distorted by your enthusiasm.

Your objective is to select the most accurate and honest response to each of the questions.

1. For each section your answers will be plotted on a spider graph to enable you to review and interpret your responses.

2. The answers will also be used to determine a number of diagnostic assessments that are presented as a series of graphs and text interpretations. These will help you to better understand the commercial feasibility of your idea, identify viable markets, anticipate risks, and find the right business model.

3. An ‘Overall Assessment Summary’ is produced after you complete all 40 questions. It includes a Commercial Feasibility Rating, an interpretation of this and a ‘Next Steps’ area which contains a number of suggestions, contacts and ideas for you to consider to help you pursue your business idea.

Whatever the likelihood of your idea succeeding in the marketplace, you should seek advice from a professional adviser or contact the NSW Innovation Advisory Service – the initial consultation is free if you are from New South Wales.

Enter Ideas Online

The NSW Innovation Advisory Service is funded by the NSW government to support small business and innovators develop their ideas. Go to www.ausinvent.com for more information or to book an appointment

Grants for small business and small business finance

27 Jan, 2012

by admin

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Major cashflow boost for small companies from the new R&D Tax Credit

Alchemy Equities, an expert in small business finance, asked Gerry Frittmann – Managing Director of TCF Services, a leading industry specialist in R&D Tax Credit and government grants for small business, to update us on the changes to the Australian R&D Tax Credit program.

Tax Status ($1m)

While claimants with grouped turnover over $20m will receive a non-refundable Tax Credit equivalent to a 10% net benefit, up from 7.5% under the current scheme, the R&D Tax Credit has come down squarely aimed at fostering an increase in R&D for smaller companies. Of course, the king’s largesse is rarely extended without an increase in the complexity of the rules and regulations.

In this case, there is a change in the definition of R&D; a split between Core and Supporting R&D, and a dominant purpose test which will qualify or disqualify the Supporting activities and their cost.

Core R&D activities are defined as experimental activities:

• whose outcome cannot be known or determined in advance on the basis of current knowledge, information or experience, but can only be determined by applying a systematic progression of work that:

– is based on principles of established science; and – proceeds from hypothesis to experiment, observation and evaluation, and leads to logical conclusions; and

• that are conducted for the purpose of acquiring new knowledge concerning the creation of new or improved materials, products, devices, processes or services.

New definition of Supporting R&D activities

This imposes a dominant purpose test whereby supporting activities whose dominant purpose is to support the Core R&D will be eligible, while activities undertaken for production purposes OR future commercial benefit will be excluded. The R&D Tax Credit is not intended to cross-subsidise commercial activities so the dominant purpose test is designed to reduce claims for expenditures that do not impose an additional cost on the company arising from R&D activities.

Intending claimants need to rigorously assess themselves against a new range of eligibility criteria and internal capabilities. These include their entity structure, ownership and grouped turnover; the division of their R&D activities between the newly defined Core and Supporting activities; the application of the new dominant purpose test; their ability to meet the new record keeping obligations and track labour and material expenses as they go, and their individual tax status. Those who can create a system that meets the new benchmark will be given the option of claiming their Tax Credits quarterly from January 2014. Companies who wish to maximise their return and ensure their compliance will adopt more reliable management processes than they have under the R&D Tax Concession, and forward looking claimants, will be setting themselves up to track as they go so they can claim early and reap the rewards.

Turnover $5-20mil

The biggest winners from the new R&D Tax Credit are R&D intensive companies with grouped turnover between $5 – 20m who are in tax loss. For the past ten years they have been unable to claim the R&D Tax Offset and receive the 37.5% rebate because their turnover has been over $5m. Faced with the option of receiving the 7.5% Tax Concession and adding to their tax losses, most have declined to claim. Now under the new R&D Tax Credit they will receive a 45% refundable tax credit net of any other tax liabilities delivered in cash, creating new sources of cash-flow for R&D rather than marginal increases in tax loss.

For further information on how you can help maximise the return and minimise the fuss contact the NSW Innovation Advisory Service.

commercialisation-101

27 Jan, 2012

by admin

Comment

Choose the best path to market.

Many companies we see at the NSW Innovation Advisory Service are uncertain about which route to market is best for their product or service. Much time and money is wasted pursing the wrong strategy.

A simple way to consider the best route to market is to ask the question:

Is it a sustaining technology or a game changer?

If sustaining (incremental improvement, better design, improved service function), that is a sustaining improvement – we suggest to our clients to resist going head-to-head with the incumbent competition, but rather to pursue a licensing strategy. This is where as the owner of the intellectual property (patent, brand, design, trademark), you license the technology to another company to manufacture, market and distribute.

If it is a game-changing opportunity(as VOIP was to telephony)– then we suggest the company pursue a spinoff or startup strategy – which generally means capital raising.

We have clients that have come to us after spending three years pursuing a licensing strategy, unsuccessfully for a game-changing technology. The product they were endeavoring to license – would have resulted in reduced sales to the target company’s existing product line. If a product being pitched for licensing, makes an existing product line redundant – a company is unlikely to license in the new technology.

Three years on, management should have asked that simple question – is the innovation an incremental improvement or a game-changer?

So what are the skills required to bring new products and services to market?

This is a major area our innovation consultants discuss with clients. We regularly have the technology specialist seeking advice on commercialisation of the product they have designed.

At the NSW Innovation Advisory Service, our first response is – who is your team to deliver this product to market? Successful commercialisation is about team. We suggest to technical types – that they team up (and share the equity) with an entrepreneur who understands how to bring something to market and sell. Days, weeks, years are lost with the wrong people attempting to bring products to market.

It is a major reason for the weakness in Australia’s track record in achieving successful commercialisation. We are great inventors – but not great innovators – that is, when you commercialise that invention.

Technical-types spend many hours getting their product 100% perfect. It’s in their DNA to do so. Budgets get overrun and timelines extended as a result. But when teamed up with an entrepreneur, who’s DNA is to get the deals and secure the cash-flow – a product is delivered to the market can be 75% ready. By setting to market early and remaining flexible, the team can incorporate customer and distributor feedback to fine-tune the product and can start generating the sales to keep the show on the road.

Understanding the market can save time

At the NSW Innovation Advisory Service, an innovation consultancy service, we often see teams who have assumed they know their market and have not assessed if the market warrants the investment in time and money. Wrongly pitched product launches can easily be the result. We site an example of a kitchen manufacturing company which was about to launch a website for purchasing kitchen components. A short focus group test market session indicated they needed to tweak their campaign and introduce a “touch and feel” element – women would not buy the kitchens without feeling/seeing the surfaces. They adjusted their service accordingly and went on to a successful launch.

Had they not undertaken that focus group session they would have launched and spent years reshaping their product offerings.

The focus group was cost effective and saved considerable time.

Successful commercialisation doesn’t have to be about trial and error. There are proven, cost-effective ways to bring products and services to market without wasted effort and heartache.

Start with assessing the opportunity correctly, build a team around the opportunity and understand the marketplace. Seek out advice from those that have trodden the path before.

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Kate Ingham is the Senior Client Manager with Alchemy Equities, a Sydney-based business innovation consultancy firm which assists companies commercialise technologies and services. Alchemy Equities is contracted by the NSW state government to deliver the NSW Innovation Advisory Service.