As well as allowing companies to invest in new equipment, premises or staff, business loans can also enable the R&D and innovation that can help drive growth.
Innovation costs money – and it's not just about paying for materials, components and prototypes. Companies should never underestimate the costs involved in thoroughly researching a market and product, according to Michelle Trench of manufacturing firm Haystack Dryers.
"You can all pull together in-house and build the perfect machine, but it's only by understanding the needs of your market in detail that you can turn that machine into something that sells," says Trench.
Haystack Dryers, based in Ringwood, Dorset, has been manufacturing body dryers for the leisure industry since 2000. Paul Thomas joined the company as MD in 2006 and has taken the business from a solely UK- and Europe-based operation to a fast-growing, worldwide brand.
While the company works hard on expanding its reach for existing theme park dryers, there are other innovations afoot. With seasonality an issue and a finite number of leisure clients, healthcare could be a breakthrough for Haystack. It's a diversification that involves the team immersing itself in a new market and even a new terminology, parallel with designing a smaller, more streamlined drying unit.
In a small business, R&D is part of everyone's job, and it's easier and speedier to move a project from good idea through to product. The constraints on time and resources, though, are far more palpable. Helping to fund the innovation is a term loan from HSBC, which frees up time and cashflow so that the company can concentrate on development.
"We were already working on a smaller unit for gym environments when we saw the possibilities of healthcare – both for care homes and for at-home use by people with disabilities," explains Trench.
"The HSBC loan has helped us take the time to research the market, to get out there and talk to people, to meet with occupational therapists and other advisors, to attend and exhibit at trade shows and to buy in the engineering design time and components we need.
"It takes so much time to research, test and trial that we needed the funding to give ourselves space without disrupting existing operations. If we weren't able to dedicate resources to innovation, we'd lose focus and, six months down the line, we could be back at square one with the project."
Instead, Haystack already has a test unit going out through a disability aids company in the Netherlands and is getting valuable feedback as well as their first sales.
"We're now working to make the unit perfect for its use," say Trench. "Because they'll be in bathrooms or in care homes with limited space, we want them to be as unobtrusive as possible.
"We're currently trying to get the depth down from 350mm to 240mm. The smaller size means changing internal components and that means more redesign. We also want to make them as fast and efficient as possible to get the drying time down."
"There's still a way to go in the leisure world," she adds. "China is especially exciting in terms of the number and size of theme parks, but we also want to set ourselves apart and have alternative sources of income – and that means innovation."
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