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Start Your SBIR/STTR Budget by Knowing the Basics

February 9th, 2015 | by Kris Bergman

budgeting-basicsWhat’s your opinion? Does your SBIR/STTR project drive the budget or does the budget drive the project? Yes, this is a trick question. Actually, an appropriate budget is one that is in harmony with the proposed work, serving as an important guidepost in assessing a project’s feasibility in light of company resources. So the answer is neither; they are intrinsically connected…or should be.

When I counsel entrepreneurs as they build budgets for their SBIR/STTR proposals, I start with a mantra of:

KEEP IT REAL – Veteran reviewers can smoke out an inappropriate budget.

KEEP IT ACCURATE – Budget items can raise questions that cause reviewers to take a second look at the proposed work for compliance.

KEEP IT HONEST – Don’t pad the budget. It offends the intelligence of the reviewers.

Budget Basics for Getting Started

Costs types form the backbone of your accounting system, so before you begin, get familiar with what they are and what they include:

  • Direct Costs – Items, services or labor used solely for your project and not for any other contract or corporate purpose. Examples include: salaries, equipment, travel, supplies, consultants and sub-awards/consortia.
  • Indirect Costs – Items, services or labor used to support or complete your project, but also used for the other projects/activities. Indirect costs are things like fringe benefits (payroll taxes, insurance, pair leave, etc.) and overhead expenses (office supplies, rent, phone, etc.)
  • Unallowable Costs – The cost of things like patents, interest expense, advertising and marketing that are necessary for business but can’t be paid for with federal SBIR/STTR dollars.

Understand the different roles on the project; who does what? These can include:

  • Senior (PD/PI) and key (senior scientist, programmer, etc.) persons
  • Other personnel like administrative assistants, technicians, etc.
  • Consultants, who provide advice or services for fees
  • Contract employees, who are self-employed and paid by the hour, and
  • Sub-awards that, by agreement, do a portion of the project work vs. fee for service organizations that are vendors providing routine services.

Educate yourself on any limitations or guidelines specific to the solicitation; i.e. salary limits, indirect rates, budgets caps, project length and so forth.

Armed with an understanding of these basics you can proceed with planning your budget, which should reveal whether your company can take on the project at hand without losing money in the process. Remember that you will need to prepare a detailed, written justification for the budget you submit and it will need to be appropriate and convincing. To repeat BBCetc’s oft sited advice on the bottom line of budgeting:

  • Start Early
  • Read The Solicitation
  • Understand the work to be done, who will do it and all associated costs.

Purchase Kris Bergman’s full webinar on SBIR/STTR budget development.

~~~~~~~~~~~~~~~

Kris Bergman is BBCetc’s Consultant for Grants & Contracts Management.

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Our TOP 10 TIPS FOR SBIR/STTR SUCCESS

January 16th, 2015 | by Jayne Berkaw

We prepared our top 10 tips to have at our display table at the National SBIR/STTR Conference in Austin, TX, last November. We received lots of nice comments on it and with 2015 just getting underway, we thought it a good time to share them on our blog. 1. TEND TO THE BASICS EARLY Take care

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Policies & Procedures are a Must, So Buckle Down and Get it Done

October 24th, 2014 | by Kris Bergman

Most Policies & Procedures (P&P) manuals sit in a corner collecting dust and are pulled out only as a reference of last resort. But take note, SBIR/STTR applicants and awardees, agencies expect you to have P&Ps in place to serve as your bible for managing your funds and activities. And practically speaking, if you ever

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Market Research is Key to Commercialization Success

September 26th, 2014 | by Michael Kurek

Articulating a compelling commercialization strategy in your SBIR/STTR proposal is more important than ever for funding success. A credible commercialization plan must be built on a foundation of current and relevant information about the commercial opportunity you’re pursuing. The process of gathering, analyzing and interpreting that information is called Market Research. Market research is used

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Check Out New Subtopics for Latest NSF SBIR/STTR Cycle

September 3rd, 2014 | by Michael Kurek

The National Science Foundation (NSF) has released its latest SBIR solicitation with a submission deadline of December 2, 2014. We can expect the STTR solicitation to be coming shortly. In the meantime there are some new technology subtopics that you should check out: Biomedical Technologies (BM) BM5. Noninvasive Imaging of Brain Function Educational Technologies and

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Broad Area Announcements Offer an Additional Funding Source

August 18th, 2014 | by Becky Aistrup

Although they are not generally small business set-asides, Broad Area Announcements (BAAs) can be an R&D funding source for small companies to consider in addition to the various agency SBIR/STTR programs. The BAA is a competitive solicitation process used to obtain proposals for basic and applied research, as well as for that part of development

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Budget Justification an Important, yet Underutilized Part of Proposals

July 16th, 2014 | by Kris Bergman

If you’re preparing an SBIR/STTR proposal for the upcoming Aug. 5 NIH or other agency deadline don’t underestimate the power of your budget justification. Numbers on a spreadsheet are only half of the story. Reviewers need to see WHY you are spending money on the things in your budget. Here are some important things to remember:

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What to Do — and Not Do — to Get Your Technology in Front of DOD

June 30th, 2014 | by Jayne Berkaw

Chad Darr, Director of Product Development for Loc Performance Products, Inc. knows a thing or two about getting products in front of the Dept. of Defense. Located in Plymouth, MI, Loc is an SBIR awardee and a full-service manufacturer of large CNC (Computer Numerical Control) machined components and mechanical assemblies for military and commercial applications.

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Strategic Partnering for SBIR-Stage Companies: Finding Your Strategic Partner

June 11th, 2014 | by Michael Kurek

This is the third in a BBCetc series on various aspects of finding, consummating, and maintaining a productive inter-company partnership. Part one / Part two In many ways, the process of finding the right strategic partner is not much different than finding the right customer for your product. Both involve identifying and understanding a problem.

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Telling Your Story: Formatting and Readability Tips for SBIR/STTR Proposals

May 30th, 2014 | by Andrea Johanson

A good SBIR/STTR proposal is made infinitely better by writing and formatting that enhances readability and showcases your technology to its best advantage. So, before you dig in, start by knowing who it is that you are writing for. Depending on the agency, SBIR/STTR proposals may undergo an internal review, an external review, or a

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