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Patents key to business stability, research finds

How can your great idea secure your business?

It's one of those situations most businesses hope to never find themselves in, but when times get tough, there needs to be some sort of strategy in place for them to get back on their feet. 

Of course, business issues are rarely simple enough for a one-size-fits-all solution. However, research has found there are certain tactics companies can capitalise on if the right situation arises.

After all, businesses need to take into account more than just their own performance when planning for the future. The health of the markets they rely on are just as important, if not more so.

How can patent registration help with business stability?

According to research from the Institute for Operations Research and the Management Sciences (INFORMS), research and development and patent applications are the keys to business survival when a market is "turbulent".

The organisation even goes so far as to say that patents can offer bankruptcy protection, provided the market is accommodating. Despite these being intangible assets, the research shows they can have a positive effect on the stock price of the firms that possess them. 

INFORMS compares the role patents play for business success with stock prices, where the latter is a mark of long-term earnings potential and the former encourages quick success.

The reason patent applications can prevent firms from going into bankruptcy is because they prove a company's ability to encourage cash flow over the short term at least – a key criteria in keeping businesses from going bankrupt. 

This study reinforces the role that intellectual property services in Australia play in keeping the country's innovators on the move. It also highlights the flexibility in the way patent applications react with business success. Not only do they protect hard-earned research and development outcomes, they also allow for support when market conditions shift unfavourably.