An interesting anomaly about government funding is that, on the one hand, it is such an attractive source of cash but, on the other hand, statistics show that about 70% of eligible Australian companies either are unaware that they are eligible or simply don t know how to go about accessing the funding available.
If I were to simplify government grants I would explain them in two points, the first being grants supporting innovation and the second being assistance for bringing foreign revenue to Australia.
The benefit involved in attaining government funding can be quite large and potentially could amount to between 40% - 50% of funds spent in innovation or marketing to foreign markets.
The main innovation grant available in Australia is the R&D Tax Incentive and can be applied to all industries should the project be eligible.
The beginning of assessing an activity that may attract government assistance or could be eligible for the R&D Tax Incentive is quite simple. Ask yourself the following question: Are you doing something different that you believe your competitors aren t doing and that is new in the space?
If the answer to that question is yes then the next step would be to consider the 3 basic principles of innovation grants which are:
These three principles all flow into each other, as is illustrated by the following case studies:
New KnowledgeNew knowledge begins by identifying a gap in the market.
A software company (Innovation Pty Ltd) had an idea to assess the food levels in a person s fridge. Through the use of different cameras installed into a fridge, the homeowner is notified when certain food stocks in their fridge become depleted. Some web searches indicate there is no 'off the shelf' product available in the world that solves this problem.
An organic beverage manufacturer and formulator (Organics Pty Ltd) realised that the short shelf life of organic beverages is a limiting factor for exportation. Some web searches indicate that there is no 'off the shelf' product available in the world that solves this problem.
ExperimentationInnovation Pty Ltd put some of their developers on the project. The developers looked at many different methods of getting the product to work optimally. Mistakes were made along the way and valuable lessons were learned in order to arrive at a final operating product.
At this point Organics Pty Ltd started developing a solution to fill the gap that was found. The development process required experimentation and different iterations of the product. The process is an ongoing process as Organics Pty Ltd is continuing to improve their findings in this area.
UncertaintyBoth Innovation Pty Ltd and Organics Pty Ltd didn t have certainty at the outset that these new projects were going to work. They did believe that each would be a success but the final products were achieved through much trial and error.
These final products are the items that filled the initial gap and are now the new knowledge that each company has brought to the world.
This avenue is simpler to explain than that of innovation grants.
There is funding available for exporters who are spending money on marketing their products to foreign markets. Again, 3 basic principles apply, the first being an Australian product, the second being that revenue flows to Australia and the third being that marketing expenses are recognised in Australia.
Australian ProductThe product needs to be either completely made in Australia or the majority of the product made in Australia. If the products have an element made in a foreign country e.g.China it could still be considered an Australian product.
Revenue flows to AustraliaThe revenue gained from the Australian products being marketed abroad needs to be recognised in the Australian entity. An entity need not have actual revenue in the first two years of applying for this grant.
Marketing expenditure being recognised in AustraliaExpenditure spent on marketing to foreign markets needs to be recognised in the Australian entity.
These expenses could include staff and consultants employed in the foreign country, flights, conferences attended, google and facebook advertising, websites targeted overseas, trademarks and patents, pamphlets and flyers made and free samples being given to enter a market.
The incentive described above is known as EMDG (Export Market Development Grant). The grants offered under this scheme will cover up to 50% of the expenses described above.
Best practice would be to consider the principles explained above and enquire as to a possible benefit and eligibility.