Manage your research, design and development

To keep ahead of the market, you need to check that you're meeting customer needs and anticipate what customers may require in future. The key to this process is research, design and development, whether you sell goods or provide services.

You can do your own research, design and development in-house or outsource it to external contractors. For more information, see internal research and development and external research and development.

The role of research in the design and development process

Research is the initial stage that involves assessing the current and future needs of customers and suppliers - asking for their views and feedback and carrying out market research. See more about market research and market reports.

Once you understand customers' needs and your marketplace, you can identify:

• modifications to your product or service
• new, commercially viable products or services
• improvements to business processes that will benefit customers

Your research will reveal ideas and markets for potential new products or services. The development process tests these ideas, demonstrates whether they are achievable and helps turn your ideas into reality. Find out more about the new product development process.

Design and development

The design and development process should examine all the potential risks and hurdles you will need to overcome to get the product to market. For example, it should look at whether the product meets a market need and whether it will sell at the price needed to make a profit. It involves defining the specification and the design of your product or service through drawings, models or prototypes.

Good project management often affects the success of the design and development project. You should map out deadlines for completion of key stages. At the end of each phase, you should review progress and decide whether to proceed. You'll also need to put appropriate resources in place and consider factors such as price and demand.

Sound research and development (R&D) enables you to stay competitive and build customer loyalty. The products and services you develop can help you to:

• boost sales
• increase your profitability
• open new markets - both in the UK and overseas
• enhance your brand and gain a reputation as an innovative business
• attract the best employees through your enhanced reputation
• find new business partnerships
• attract external finance
• gain access to new supply chains

By looking at the business processes that allow you to manufacture, market and sell your products or services, you can:

• reduce costs
• improve the quality of your offer
• get your product to market more quickly

Your research may also bring less tangible benefits - perhaps by revealing knowledge about your market that doesn't have an immediate commercial application, but may be useful in future.

Make sure you protect any intellectual property you create through research, development and product design. For more information, see how to protecting intellectual property.

Remember - if you don't devote enough resources to R&D, your business could risk losing its competitive edge.

You can save yourself considerable time and money by exploring ideas in depth before you commit resources to research and development (R&D).

It is easy to get carried away with new and exciting ideas and plough money into projects that have no realistic chance of success. Before investing in products, take a step back and review what is achievable and financially viable.

Ask yourself if:

• the product or service fills a market gap or need
• it fits with your current offerings or business strategy
• the product is technically feasible or you will require additional expertise or technology
• the product is unique or will it face competition from rivals

Your market research and industry knowledge can answer some of these questions. However, you may need additional expertise or further technical, market or product information to help you assess new ideas.

Read about screening new product or service ideas.

Check what advice and funding might be available to you under the government's schemes devised to help with R&D.

Check feasibility of your ideas

By filtering ideas before committing to the development of a new product or service you can avoid wasting money on products that are unlikely to get off the ground. This allows you to explore a wider range of possible ideas and options in the early stages. Read about eliminating ideas that are not viable.

You can do your own research, design and development in-house or outsource it to external contractors. See internal research and development and external research and development.

Research and development (R&D) needs to be carefully planned and managed to succeed. It is easy to waste money on developing ideas that go nowhere, but getting it right can lead to business stability, security and long-term profits.

Planning for R&D

You should include R&D in your overall business plan. The plan should illustrate the direction you want the business to take and how R&D fits in with your other business activities. Set out clear objectives, time frames and budgets, including resources you are willing to commit to your R&D efforts.

A clear plan can prevent the project straying from your business goals and wasting valuable resources and money. See how to prepare a business plan for growth.

You may need to involve staff with specific skills to draw up the plan, for example, finance staff to set up budgets. You may also need outside help. Read more about exploring your ideas.

Your plan should set out the steps that need to be taken from the inception of the ideas to the product launch.

You should allocate the necessary resources to the project, including funding, staff and time. You might decide to set up a specific team to work on the project. Read about budgets and business planning.

Managing your R&D

Good management is vital to reduce risk of failure and realise as many ideas as possible. To manage R&D projects effectively you should:

• make sure staff involved in R&D understand the business' overall strategy
• ensure these employees understand what is commercially realistic
• assess the changing risks and potential of projects as they progress, continually developing a rigorous business case
• ensure that intellectual property ownership issues are resolved
• recognise when a project isn't going to work and eliminate ideas that are not viable
• understand the relative importance of different projects to your business

Support might be available from Invest Northern Ireland (NI) to help with scoping, defining and planning an R&D project. Find out about Invest NI's R&D support for business

You can carry out your own research and development (R&D) in-house. If you do not have the resources, you could consider outsourcing to external contractors.

Managing internal research projects

You can use internal project managers to carry out certain research activities. Internal research can include looking at:

• identifying new customers
• identifying and evaluating new markets
• upgrading your product/design
• assessing the impact of a new product or service on the business
• determining if a new product will meet customer needs and specifications

In many smaller businesses, an existing member of staff can take on the role of a project manager alongside their existing duties.

Your project managers will be responsible for planning, developing, implementing, controlling and closing the project, and embedding its results in the business. See more on project management.

Advantages of internal research

Internal research can benefit your business in several areas, such as:

• Costs - hiring external researchers is often more expensive than using your existing employees. Keeping the tasks in-house also means you can control and monitor expenses and resources better.
• Flexibility - internal teams can be more agile when carrying out research. They can also adapt quicker to the specific or changing needs of the business.
• Security - keeping research in-house can help prevent leakage of information or intellectual property outside of the organisation.

Internal research can also bring opportunities, in the long term, to increase productivity and profitability, enhance your brand and stay competitive in your marketplace. Read about the commercial benefits of research and development.

Disadvantages of internal research

One of the biggest downsides of internal research is the potential lack of specialisation. Some larger companies have dedicated R&D departments. This may not be viable for you if you run a smaller company.

Your employees may have great project management skills, but may lack specific skills and expertise they can bring to the research, for example in marketing or design. If you do not have the internal resources, you can choose to outsource some, or all, elements of R&D to an external contractor. See more on external research and development.

If you have considered keeping your research and development (R&D) in-house, but feel you do not have the resources or desired skill set, you may choose to outsource all or some of it to outside experts.

If you're not likely to require a full-time position, you have the option of hiring either for a specific project or on a longer-term basis, perhaps on a freelance or fixed-term contract.

Hiring project managers

Project managers are responsible for making sure that a project is planned, developed, implemented, controlled, closed and the results embedded in the business. See project management - the basics.

Hiring designers

Using a professional designer will help you make better design-related decisions and focus more strongly on your customers' needs. You can draw on a designer's skills throughout a project, from strategy and idea generation to implementation and evaluation.

Designers can help you deliver a broad range of R&D including:

• research to help you discover the difference between what customers say they want and what they really want
• websites
• branding
• packaging

For more information, see how to choose and work with a designer and manage your design projects.

Working with universities and colleges

Academic research can help businesses develop new ideas or enhance existing ones. Your business can benefit commercially from relevant research into processes and technologies, while universities and colleges gain new sources of funding and researchers achieve a better understanding of industry needs.

See how to work with UK universities and colleges.

It may also be necessary to commission external expertise when your business requires information relating to the development of new technologies.

There aren't any hard-and-fast rules on how much you should spend on research and development (R&D) and product design. It can depend on:

• the size of your business
• your sector
• the commercial potential of a project
• the importance of the project to the future success of your business
• the expected duration of a project
• what your competitors are doing

You should always consider how R&D fits into your overall business strategy when deciding how much to invest. See strategy for research and development.

R&D risks

R&D always carries an element of risk because it involves trying out new, untested ideas. Common risks include:

• new or modified products or services proving more difficult or costly to develop than anticipated
• developing a product or service that isn't commercially successful
• initiating the development of a product that turns out to be unworkable

R&D rewards

It can be helpful to think of R&D costs as an investment. There won't always be a return on that investment and sometimes you could lose your outlay entirely.

On the other hand, returns from R&D can be considerably greater than for other investments - and could even ensure your business' future survival.

An R&D project to improve an existing product or service has a far higher chance of success than one aimed at creating a new product or service but the rewards are likely to be far lower.

Government support

You may be able to get help with R&D projects related to product or process development. For more information, see innovation, research and development grants.

A successful design stems from a collaborative process involving good planning and communication. It is equally important to have a solid, carefully considered strategy for research and development.

The design brief

Whether you use an in-house designer or an outside agency, their work will only be as good as the information you provide. You will need to brief your designers comprehensively on:

• details of your aims and objectives
• every function and feature you want your product to have
• information about your marketplace, your business and its objectives

Be clear about who will own any intellectual property arising from the collaboration.

See our guide on how to choose and work with a designer.

The concept stage

Once your designers have analysed all the elements of the design brief, they'll draw up their first proposals. These may be on paper or involve making models of the proposed product. Research and testing is important as the proposals are refined.

Implementing and reviewing your design

Unforeseen problems can arise as the product is prepared for production. You may need to review what is possible and make subsequent redesigns before manufacture can happen. For this reason it is important that the designers are still fully involved during the implementation process.

Production

After successful testing, it's time to move to the production stage - though you may need to get special tools made before you can begin manufacture. Your designers must be on hand during production to communicate their ideas to the engineers, IT experts and others involved in this process.

Some products will never be financially or technically viable. This can apply to the modification of existing products as well as to the development of new ones. It is important that you establish this before you invest too much time and money into the project and risk financial problems.

There are some key steps you can take to help avoid this:

• Complete thorough market research. There is no point making a product which customers don't want or which costs more to make than customers would be willing to pay. See how to price your product or service and use market research and market reports.
• Conduct a patents search to check that your idea is new. You can use the IPO's Online Patent Information and Document Inspection Service.
• Draw up clear business plans and budgets and review them regularly. See budgets and business planning.
• Involve people with relevant skills or knowledge who can tell you what is and isn't feasible.
• Split the project up into steps and review the project at the end of each stage.
• Listen to the advice you are given and don't be afraid to drop unrealistic projects.

To help determine the viability of your ideas, you should consider getting assistance from Invest Northern Ireland. Find out about Invest NI's R&D support for business.

There are a number of ways you can fund your research and development (R&D) project.

Getting a bank loan

Approaching your bank for a loan will require a well thought-out business plan. Your plan should help investors and lenders understand your vision and goals, explain how you are going to spend the invested or borrowed money and set out how this will benefit both them and the business.

See how to tailor your business plan to get funding.

Seek investment

You could try to attract investment from business angels - wealthy individuals who invest in private companies, typically £10,000 to £250,000 - but you must be prepared to relinquish some control of your business.

Read about business angels and how they operate.

Apply for a grant

Applying for a grant could help finance part of your project. There are many sources of publicly funded grants and support schemes:

• UK website offers a UK-wide database of business support - search for finance and support for your business.
• Northern Ireland database of support programmes and assistance is also available - search the Northern Ireland business support finder
• Invest Northern Ireland manage numerous programmes that could offer advice and financial support for R&D projects - look at Invest NI's R&D solutions
• your local councils and enterprise agencies may have additional programmes of support and finance options

See how to apply for a government grant.

R&D tax reliefs

You could claim the tax relief and credits available to small and medium-sized businesses which pay corporation tax for appropriate R&D spending. Read more about research and development (R&D) tax reliefs.

Other sources of help

There are several other sources of assistance:

• The Enterprise Europe Network brings together buyers and sellers of innovative products with the aim of promoting and exchanging new technologies and ideas.
• Business Innovation Centres nurture innovative new businesses helping them through the difficult start-up stage.
• Local Chambers of Commerce can provide access to training, information and networking opportunities. Get in touch with the Northern Ireland Chamber of Commerce.
• Many universities collaborate with local businesses on R&D projects. See how you can work with UK universities and colleges.
• Innovate UK provides R&D funding through various competition programmes. Read more about Innovate UK funding competitions.

See also support networks and facilities for innovation and R&D.

Watch the animation below to see how Invest Northern Ireland can help you be more innovative through research and development.