Scaling up can be a difficult time for businesses, both financially and logistically. MCS corporate has worked with businesses across all stages of growth, and know that R&D tax credits can be a useful – but often overlooked – financial tool to help facilitate fast growth.
We look at four ways that tax relief could help your business through scaling up:
Trial and error
The process of scaling up can include an element of trial and error, as you explore new avenues of expansion. Whether it’s a new customer base, a new range of products, a new service or simply an expansion of your existing activity, finding your feet as you step up to the ‘next level’ can be difficult, and not every plan is guaranteed to succeed. R&D tax credits can help to alleviate some of the pressure of this stage of growth, allowing you to recoup some R&D costs, whether the development is successful or not.
Most businesses looking to scale up need to approach external financiers for funding. Yet for any business that has carried out research and development activity in the last two years, R&D tax credits could provide a generous cash injection to kick start scale up activity. It may not be enough to facilitate full expansion plans, but it could be enough to get the ball rolling with an initial investment into the area of the business you are looking to grow.
Attracting external investment
If you are looking to external investment to facilitate fast growth, your research and development activity will naturally be a key signifier of future growth potential for interested financiers. However, R&D tax credits could also play an important role in your financial reporting, illustrating your business’ ability to self-fund development projects and explore expansion opportunities.
Adapting to demand
One scale-up challenge that many businesses face is the ability to adapt quickly to changing demand and grasp fast growth opportunities. For example, an existing client is expanding their own service to a new market or new region, and would like your business to support the activity. Yet doing so will mean making changes to your processes or technology. R&D tax credits provide the flexibility to facilitate this activity, allowing you to recoup some of the development costs and injecting that cash into future projects – or off-setting it against losses if the deal doesn’t pan out as expected.
To speak to one of our experts and find out how R&D tax credits could help your business to scale up, call us on 01926 512 475.