Double Your Cash Flow with the Innovation Tax Credit
Creating innovative products and services for your growing business may be second nature to you, but what’s not often second nature is..
Let’s be honest, who wouldn’t want their business to be more like Google?
Google is one of the most highly valued and profitable businesses in the world, and they are consistently finding new and innovative ways to stay on top of their game, such as securing new revenue streams, focusing on OKRs, and saving money with R&D tax credits. Even though growth to Google’s level can seem unrealistic, all business owners can take these three lessons to help increase their success and revenue.
Search for new revenue streams
Google isn’t afraid to try out new concepts to create additional revenue streams—and your business shouldn’t be either.
While they’re best known for their search engine, Google also gets some major revenue from their subsidies like Android, Chromebook, YouTube, Nest, and Adwords. Their parent company, Alphabet, has even more diverse revenue streams, owning companies in the biotechnical, automotive, and internet provider industries.
These acquisitions and developments weren’t random, and Google leveraged them to own the internet searching process from top to bottom. Now, when you search for something online, Google has the power to provide you with an android device to access the internet, a fiber optic network to connect you to its search engine, and recommended ads and videos on platforms they own.
Even without the buying power to absorb another company, your business still has the power to break out of your comfort zone and explore new revenue streams. Although it’s a lofty goal to double your revenue in a year, innovative thinking can guide you towards meeting your business goals.
When you decide to try to increase your revenue streams, you need to:
- Set a revenue goal—and don’t be afraid to be ambitious!
- Determine what kind of growth you expect to see from existing business.
- Brainstorm ways you can leverage your existing customer base, technologies, and team skills in new ways to create additional revenue.
- Estimate how much needs to be invested to fully realize your ideas (and the potential revenue from each).
- Keep going until you have a plan that can potentially double your revenue!
Google’s ability to innovate new revenue streams is exactly why they’re such a dominant force in the technology sector. By following their lead, you, too, can establish your business as a go-to in your respective space.
Focus on OKRs
OKRs—short for “objectives and key results”—is a collaborative goal-setting protocol for companies, teams, and individuals that Google implemented in the early days of the company.
John Doerr, the legendary venture capitalist and author of Measure What Matters, introduced the concept of OKRs to Google. In turn, co-founder Larry Page set aside two days per quarter to personally scrutinize the OKRs for each and every software engineer to ensure they were collectively reaching Google’s goals—and it’s this kind of measurement and alignment that your business can adopt as well.
To implement an OKR management system in your business, you need to first identify them for your contributors: your objective is what needs to be accomplished, and your key result is a specific, time-bound goal for meeting it. Together, these are your OKRs.
When you collaborate with your employees to set OKRs, make sure your timeline for meeting them is aggressive but achievable and includes a clear measurement system. By using OKRs and Doerr’s Measure What Matters, everyone at your business can work together to achieve your goals.
Save money with R&D tax credits
While research and development (R&D) might not sound like something your business inherently does, you don’t have to be a laboratory or a big tech company to benefit from R&D tax credits—it encompasses a lot more business expenses than you might think and can provide a considerable return on money you’ve already invested.
Last year, Alphabet, Google’s parent company, spent over $27 billion in research and development, and although they have not publicly disclosed how much they received in R&D tax credits, we know they currently have $3.7 billion in state tax credits on the books, and rest assured it wasn’t all spent on groundbreaking tech. Research and development costs can include anything from improving existing products or processes to any innovative ideas a business has put into motion, so there’s a wide net of qualified activities businesses commonly overlook.
Everyone knows that increasing your cash flow can have an enormous impact on your business, so getting awarded $100,000 in tax credits for every $1,000,000 you spend on innovation is an easy way to infuse more cash into your business and ultimately increase your revenue.
Whether you’re developing new ideas to increase your revenue streams or updating your current practices to achieve your OKRs, you’ll save money with the R&D tax credit.
With a plan to increase revenue streams, focus on OKRs, and save money using R&D tax credits, your business can take a page out of Google’s book and set itself on a path to increased success and revenue, regardless of what industry you’re in.
Looking to better understand the Innovation (R&D) Tax Credit? Click the button below to get our visual guide on how it all works.
