Atlanta Business Chronicle Leadership Trust By Mary-Cathryn Kolb , Founder CEO at brrrº
The early years of most startups are lean and mean, with modest funding that probably came from friends, family, angel investors or good old bootstrapping.
Budgets are extremely tight, which means the office furniture is probably more shabby than chic. Everyone wears multiple hats and works long hours, and there is an obsession with stretching every single dollar as far as possible. That means printing on both sides of the paper and sending product samples with postage stamps instead of overnight express.
However you choose to scrimp and save, there is one budget line item that you should protect and grow no matter what: research and development. R&D should be one of your largest expenses because it is the lifeblood of a young company.
The innovation that comes from a robust R&D program gives you a competitive edge and helps improve the products and services that first inspired you to start your business. Simply put, R&D can make or break a startup.
If you cut back on R&D, you risk losing your competitive edge. Or worse, you could become irrelevant in a hyper-crowded marketplace. I learned that the hard way in my early years as an entrepreneur.
After successfully launching my company and receiving lots of press coverage and orders from major retailers, we got sucked into the siren song of the fashion world and started focusing too much on trending colors, hemlines and garment styles.
One day I had this lightning-bolt realization that we were putting our mission of developing better cooling fabric technology in the back seat and letting fashion take the front seat. I decided to do the unthinkable: I turned down orders from major retailers. I cut other budgets so I could shift more money back to R&D. I pivoted back to focusing on innovation.
In my experience, focusing on what makes your company innovative rather than keeping up with the latest trends is a great way to increase your intellectual property. In a more innovation-focused atmosphere, you’ll likely find — as I did — that your team is more creative and better able to come up with improved techniques. That can have a ripple effect, improving your relationship with your partners and vendors who can act as strong advocates for your brand.
People thought I was nuts, but it was absolutely the right thing to do — and sales numbers prove it. But none of this would have been possible if we had stayed the course and let ourselves stray further from what we originally set out to do. You have to recognize those lightning-bolt moments as huge opportunities to steer your company in the right direction.
People often ask me to share advice about starting a company, and there are so many important things to say about leadership, raising capital and having grit.
But one of the most valuable pieces of wisdom I can share is that you have to protect your R&D budget no matter what. Make it a sacred cow, and increase it steadily over time. To be successful, it’s as simple as this: Innovate or die.
