Episode A5.009 Suggest candidates for D&R (Development & Research) to create new products and services and/or new processes

Introduction
It’s hard to believe it is now September and before we know it we will be in the last quarter of 2020. Many people you talk to just want 2020 to be over. As an entrepreneur, I still see a lot of opportunities in 2020.  We can’t just stop and wait for this crazy year to be over. It’s still unclear what more the government is going to do and my guess is not much substantive will happen between now and the election.

Why do I mention this, well we need to forge on and the best way is to be part of a community of like-minded entrepreneurs, whose number one goal is to succeed at their business. That’s why the IBGR community is so important - now more than ever. Let’s work at helping each other.

During the months of July and August we discussed how to look at the Stage V company and come up with ways to maximize the value through process improvement and revenue growth.  We also discussed the process of getting a business valuation.

Today we will look at coming up with a process for developing new products and services, because we know that a Stage V company has a only few options at this point, 1) it is time to sell the company when it has the highest value , 2) reinvent the business using retained earnings for reinvestment, 3) or do nothing and decay.

The investment in research and development is a long term and oftentimes expensive commitment. The knowledge behind research and development can be purchased or developed in-house. This is the decision the management team needs to make with regards to new product development.

Have a great business week.
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Show Objectives
Development and research (D&R) is a process intended to create new or improved products and services in order to increase a competitive advantage. While the rewards can be very high, the process can be risky. Many (D&R) projects fail to provide the expected financial results, and the successful projects, somewhere between 25 to 50% percent, must also pay for the projects that are unsuccessful. Because of this, a company's R & D efforts must be carefully organized, controlled, evaluated, and managed.


Key Issues - ​Owner/Manager Perspective:
The three research types

1. Basic Research - basic research is defined as research that advances scientific knowledge but does not have specific commercial objectives.
2. Applied Research - applied research is directed towards gaining knowledge or understanding necessary for determining the means by which a recognized and specific need may be met.
3. Development - Research creates knowledge. Development of designs and building prototypes proves their feasibility

What You Need to Know
Buy or develop decision

1. Proprientariness - Can the product be protected by patents, trade secrets, or NDAs
2. Timing - What do current market conditions look like for this product
3. Risk - development is much riskier than acquisition. Will performance specifications not be met on time if developed?
4. Cost - Costs of acquisition are high and can continue to be a burden long in the future. 

What You Need to Do​

1. Assess Customer needs
2. Identify Objectives
3. Define and Design Processes
4. Create a Team
5. D&R Process

Shows

• Previous: Episode A5.008 Audit the business to identify how to increase revenue instead of reducing costs in the future
• Next: Episode A5.010 Monitor Progress on MBO 

Written by Ellen McIlhenny - CFO Plus Services - www.cfoplusservices.com