Don’t Wait Until the Last Minute to Plan Your Budget

Don’t leave your budget preparation till the last minute. This means, thinking early about activities required to complete a Phase 1 and to make a competitive Phase 2 proposal. Then consider the costs, partnerships, and other related business activities you can fund with this R&D budget.

Below are some resources to consider as you plan ahead on your budget:

1. Salary is more than direct salary.  The budget proposal includes both direct AND your calculated indirect rates. Indirect rates can be confusing, especially for new ventures. Essentially, indirect costs include rent, employer’s portion of payroll taxes, internet, and general management and accounting. You can google to find some calculations to estimate taxes such as this Investopedia guide. But it is best to consult with an accountant to be accurate. SBA and NIH offer some additional help here:
2. SBIR overview on indirect rates:  https://www.sbir.gov/tutorials/accounting-finance/tutorial-3#
3. Helpful NIH Q&A on indirect rates:  https://oalm.od.nih.gov/IndirectCostsFAQ
4. Don’t develop the budget all on your own. Yes, you are running a lean venture, but sometimes hiring a professional service OR purchasing necessary software will help you leverage this funding. Consider the SBIR accounting requirements and systems. https://www.sbir.gov/sites/all/themes/sbir/dawnbreaker/img/documents/Course8-Tutorial2.pdf
5. Seek access to services and equipment early! Finding lab space and equipment can be a challenge. With different SBIR agency budgets, finding the right partners for conducting the experiment depends both on the resource AND the cost of services. For lab space, consider Forward Biolabs in Madison or find a WI partner via the Wisconsin Supplier Network list.
6. Pick your small business partner, but always lead your project.  A common practice is to work with a university or non-profit research institution.  The STTR program, especially, is set up to encourage these relationships allowing for up to 60% of the STTR funded work to be completed by a research institution partner.However, your research institution has its own protocols, fee structure for lab collaborations, and considerations for intellectual property. Ask lots of questions from your university partner AND from affiliated financial offices so that you remain in compliance and are able to timely complete your R&D work. The SBA describes some common, university partnering pitfalls: https://www.sbir.gov/tutorials/university-partnering/tutorial-3 

Are you interested in an SBIR?  Consider the solicitation calendar here:  https://www.sbir.gov/solicitations.  And reach out to CTC to let us help you with budgeting and other SBIR needs. Have a question for us? Request a meeting!

Hear more about budgets from last week’s Idella’s Ideas.