Budget: Salary 


Budgets are treated as an administrative aspect of the review. The budget is not a score driving item. In fact, the budget is not discussed until after scoring is completed for each application.

Nonetheless, if you pad your budget you risk incurring some wrath, which could affect your score. If you annoy a reviewer by asking for unwarranted funds, this can affect how the reviewer approaches the rest of your application. Some costs are easy to estimate. Some costs are difficult to estimate. For difficult to estimate costs, it is a common practice to estimate your costs and then add 20-50% more. But be forewarned about adding too much extra into your budget items.

Reviewers are picky about budgets, but they are also fair. They know what it takes to get studies done, but they also know how to pad a budget beyond what is reasonable, so, while being fair to ones self, still be cautious about asking for far too much.

PI Salary: The maximum salary is about $186,600 per year. This is a lot of money. It is unwise to ask for this amount unless you are very senior and have an MD or similar degree, you work at a medical school in a clinical and research situation. Unfair? Perhaps, but most full professors do not earn any where near that much and unless you are more qualified than they are, it might be best to ask for less than the maximum amount.

So how much is right? It depends. If you are a one to three person entity and you are the founder, then $90K-$120K is about right, if you also have over 10 years of successful experience beyond the post-doctoral level.

In order to ask for more than $120K, you have to be quite accomplished and quite senior working at a small but established company that is earning a living beyond SBIRs. Under such circumstances it is understood that higher salaries are the norm.

It is a hard sell for a person a few years out of a post-doctoral position to be asking for a salary of over $90k for their own personal start-up company.

On the other hand, you can ask for a 7% fee for the whole project, which can be put toward anything, including a bonus paid to your self.

A Phase I SBIR is usually 150K-200K ($100K and 6 months is an old guideline that is no longer followed). That is not a bad bonus for 6-12 months of effort. On top of that you can ask for fringe benefits of up to 50% of your salary, as long as you can justify the fringe benefits. That is not a bad living.

For SBIR/STTRs you can leave the Fringe Benefits section of the Budget blank and incorporate them into Indirect Costs. Your fringe benefits will be a small percent of the total Indirect Costs, which can be up to 40% of the Direct Costs. This is advantageous because you can give yourself realistic but generous Fringe Benefits and it will not be a red flagged by reviewers. Be realistic in what you ask for as Fringe Benefits because you will have to itemize the Fringe Benefits for the program officer once your grant is funded, especially if you ask for the full 40% in indirect costs.

Fringe benefits: this can include many things such as matching contributions for your 401K. Do you know what you can do in terms of a 401K for a single proprietorship LLC? Look it up on the web-it is very generous. Taking any courses? Use fringe benefits to pay for these. Get the best medical and dental that you could imagine. In terms of life insurance, whole life is frowned upon, but if paid for by fringe benefits from SBIR/STTRs it is an incredible deal, it is like a free extra 401K. Look carefully on the web and consult a good accountant or financial planner to learn how to take full advantage of the SBIR/STTR fringe benefits package that you design.

With a salary of $80K you can do quite well when all of your fringe benefits and the 7% fee are added in. Base salary + fringe benefits + fee= 80 + 40 +10 =$130K. That is not too bad.

It is easy to justify the fringe benefits, so do not be greedy on the salary and annoy reviewers unnecessarily.

Let the writing and the merits of your application do the work for you, do not work against yourself. Good-luck!

If you have any questions, please feel free to contact me or go to SBIR-STTRgrantshelp.com.

Click on this link to read about my E-Book: High Level SBIR/STTR Grant Writing Techniques.

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