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Ring-fence spending on research and development annually

How to establish a research and development budget and strategy.

Ensure spending on future research and development (R&D) is built into the business plan and accounted for in each year’s financial planning. Without taking this into consideration, other business costs are likely to erode the amount a company puts towards improving its offering and building out new products and services. Consultancy firm Gill R&D advises businesses link R&D to revenue growth. Expenditure on R&D projects, it concludes, is rarely confined to one fiscal year and it can be a number of years before a new product is finally manufactured. By breaking down the budget into product-related and yearly investment streams, the link between revenue growth and R&D spend can be modelled.

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