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A Small Business Approach to Research and Development

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Technically speaking, doing research and development or R&D means officially allocating time and resources to a team of inventors or product manufacturers who think of and develop product ideas. This crack team will make prototypes and conduct formal trials with prospective customers to see if a product will fly.

If this sounds like it’s well beyond the scope of your budget and resources (both financial and human), you might be right. But small business owners shouldn’t skip the R&D stage of determining if your business idea is solid. Instead, you get to be creative about eliciting feedback from your target market on a product or idea -- without breaking the bank. Here’s how some entrepreneurs in QB Community cleverly approach their R&D:

After Erica Liu Williams got rave reviews from family and friends about her healthful granola, she figured the fastest way to test-market her recipe was to sell at the local farmer’s market. She launched her gr8nola business in three months and promptly headed to the market.

I had to feel confident that my recipe was exceptional and that it met the needs of not just myself, friends and family but of the market. First and foremost, would people buy it? And more importantly, would they come back and buy again and again? When I first sold gr8nola in farmer’s markets, I got a lot of immediate comments from customers about everything from the taste to the packaging.”

Alexia Burke wanted a “clean,” additive-free dessert option, so she started blending up cashew nuts and coconut milk in her little Cuisinart. Her R&D process for Izza Pops was short and sweet:

I brought some popsicle prototypes to a dinner party at my now co-founder's house. She loved them! Within a month, we’d both quit our jobs to build a company and create a product we couldn't find on the shelves.” 

Alexis Monson knew she needed some R&D on her idea for Punkpost, a service that creates and sends beautiful handwritten cards on a customer’s behalf. So she and her co-founder/husband, Santiago Prieto, built a prototype of Punkpost on a SquareSpace site. Then they went to a vendor event with an iPad to showcase the site.

“We wanted to see if they felt this product could make their lives easier and better. Would it help them connect with their friends and family on a deeper level? The response was overwhelmingly positive. One week later, we both decided to lean in and give it our all.”

Other options for getting product feedback fast? Pop-up shops and markets, trunk shows and, of course, online marketplaces.

Here are some things to consider when you’re thinking about how to approach R&D for your small business:

  • R&D isn’t just for developing new products. If you think you can improve upon an existing product, it pays to figure out how.
  • R&D means identifying and learning about your competitors. This valuable process of discovery and analysis helps you create a product and build a brand that stands out.
  • On a related note, focused R&D is the most useful. Take what you’ve learned from your market research and use your R&D resources to help you understand or reach a specific business goal or objective.
  • R&D will help you understand the specific pain point or problem your product addresses. When it comes to getting investors and customers, you’ll be glad you can clearly articulate the value of your product.
  • Once you done all this “R,” you’re ready to focus on “D.” The development stage might include prototype design and testing. Are you using the right materials? Do the hinges/circuits/wicks/clasps/you name it perform as expected? Does the product stand up to daily usage? Now’s the time to find out.
  • If your product is seasonal, timely or will only be available for short periods of time (looking at you, Mensch On a Bench), investing time and money into extensive R&D may not make sense for your business.
  • Ask for insight, ideas and support from your network. At this key point in business or product development, you need as much honest feedback as possible. Sure, your mom thinks you’re a genius for having a cool idea in the first place. Now’s the time to make sure other people agree!

As a small business owner, you may not have the financial and human resources to dedicate to a full-scale, formal R&D effort. But by thinking outside the box and getting your creative juices flowing, you’ll get valuable feedback about turning your brilliant idea into a booming business.

Want to find out about the processes (and epiphanies!) behind some of the amazing businesses in QB Community? Read these posts: 

 You can read more tips for small business owners who are weighing the value of R&D in this article from the QuickBooks Resource Center: Understanding the Basics of Research and Development

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QB Community members, how much time and money have you devoted to R&D in your business? What was the best insight you learned as a result?

Want to weigh in but not yet a QB Community member? Click HERE to sign up in a flash!

 

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It is also important to keep in mind that software development also qualifies as R&D activity.

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