Definition of Research and Development
Research and development refer to innovating or implementing new products or services through a series of investigations and experimentation. Businesses conduct research and development for introducing new products or services in the market. Individuals with a definitegoal in mind towards creating new products can also do research and development. Implementationof a new product into a company is a crucial factor for any company to service, due to high competitiveness in the consumer market today.
Research and development have become imperative for businesses in achieving growth and maintaining their products in the market consistently. If you’re starting a new company of your own, or you’re working for an existing company, and you want to create a new product, you need to have the money, the time and the patience to conduct research and development.The entire process of research and development is overall expensive and failure is part of the equation.
Getting enough of funds to complete the entire process can be quite taxing depending on the different phases of research and development. Any investment in the early stages of the process involves risk as failures are bound to happen. However, failures should be a one-stop for you to end this process. As you keep diving into the process with investigations, you would start refining your methods.
Ways to pay for your research and development
Personal savings or business savings
This is a good option by paying from your business fund which can be operated out of a bank balance. It’s obvious there would be limitations of using this method for funding as it depends on the amount of money existing in the bank. Once the money gets exhausted, you will have to scout for other sources to get funds. Initially it’s always a rough start, however eventually once you have the finished product, there will be companies or investors who would want to invest in your product, and this calls for incoming funds.
This means that you gain funds by borrowing against your business or personal assets. This means when you are securing a loan you place your personal or business assets at stake or risk. An instance of a failure due to varied reasons or if your startup doesn’t do well, you fall into debt to repay your stakeholders. Loans usually come with lower interest rates, and when securing the loan, they are convenient to get.
Venture capital is a great option when it comes to getting funds. An investor puts a sum of money into your business for a certain percentage of interest at a later point; however, in venture capital, they receive a share of profits, rather than investment. Depending on the agreement contract and percentages, this proposition can be an excellent deal.
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