Australian manufacturing is having a rough ride at the moment. It seems no one has a positive take on the role of manufacturing in the economy. A lot of the negative commentary is focused on particular sectors that have long been in decline.
Still, for business owners in the manufacturing sector, you would be forgiven for thinking this country has abandoned manufacturing and run away with the service sector.
But you’d be mistaken.
Manufacturing receives a great deal of strategic public investment through the R&D Tax Incentive. Small to medium-sized businesses are in a prime position to benefit and grow as a result if they are committed to innovation. There is a truism in business – if you don’t innovate, you’ll be gone in five years.
Just look at the way corporate giants – McDonalds for example – reinvent their image and offer new products “for a limited time” to remain relevant and coax customers in the door. If a global name like McDonalds relies on innovation to survive, so do Aussie manufacturers who, having carved out precious market share, quickly find the patch crowded with competition.
So what can you do?
Successful companies use opportunities such as the R&D Tax Incentive to share the cost and reduce the risk when developing their market position. This doesn’t just apply to new product lines but to improving processes and broadening the application of existing products. As long as you are using scientific principles to solve defined technical problems, the R&D Tax Incentive comes into play and you will receive a tax offset of 45c for every dollar spent on eligible research and development.
Australia benefits by having new technology and better processes that feed into the health and productivity of every sector. If the five-year business life-cycle is a given, then innovation through R&D should also be a given. Yet, in my experience, many small to medium sized manufacturers fear taking the first step and hesitate for too long.
Having a mindset that is pro-change helps. Having a partner that is willing to absorb nearly 50 percent of costs associated with R&D also helps. Most of all, seeing your R&D spending as an investment, rather than an expense provides a very different perspective.
It might just save your business.
Talk to your tax agent or accountant about the R&D Tax Incentive. Subscribe to this blog. Download this e-book. Join the conversation.