BusinessWorks Inc.- A dotcom in making

New BusinessWorks site is up and running.

2005-08-21T15:57:00.000-05:00

Finally, the new site is up and running. There are few updates left to be done, but it wont affect you, the readers. All previous posts are in the process of being categorized, but it takes time. Meanwhile, you will be able to search keywords and hopefully find what you are looking for in this blog. The conversion from Blogger to Wordpress was a relatively painless process, with some help from the online resources and my son.

Please note this website will remain online as long as possible. However new posts will only appear at the new website.

This transition changes few things:

Please update your subscriptions if you are using any RSS readers. Here is the link http://feeds.feedburner.com/BusinessworksInc .

New Url for the BusinessWorks Site is http://businessworks.ideologicllc.com. Please update your bookmarks.

A note to New Visitors:

BusinessWorks has moved to http://businessworks.ideologicllc.com.

See you all there!

Entrepreneurs Beware! Working long hours can be injurious to your health

2005-08-19T23:48:00.000-05:00

It is not uncommon for entrepreneurs to work long hours during start-ups and long time afterwards. This does take a toll on entrepreneurs. Long hours can increase the risk of injuries and health. Statistics are scary. 61% of people faced chances of injury during overtime and injuries were not restricted to any particular segment of the industry. It affected non-labor intensive jobs too. Read this article on Red Herring website.

Omaha - A Billionaire building City?

2005-08-15T22:11:00.000-05:00

My friend Jerry, passed an article to me from USA Today, Monday August 8, 2005 Edition about Omaha. This article is very interesting, so I thought of sharing with you, my readers. Although New York, Los Angeles and San Francisco boast of top 3 three positions in terms of number of billionaires, Omaha is eighth in terms of "per 1 million people", which is way above Los Angeles, Chicago and New York. Apart from numbers game, Omaha is a wonderful place for many things like raising a family, creating billionaires and generating entrepreneurs like me :-). Omaha has so far given 4 actors, 1 president, 1 baseball player,1 Civil Rights Leader and three billionaires to the world. Mention of Omaha is incomplete without the Sage of Omaha, Warren Buffet. So what is the secret of Omaha's success? Is it quality of life? Short commutes to work? Excellent ethics? Decide for yourself by reading the article or better still, by visiting Omaha. Do drop me a line when you visit the city famous for Omaha Steaks.

Changing gears, here is a screenshot of the new Businessworks site.

Visit the Preview site here. Please let me know your comments about this site at businessorati -at gmail -dot- com.

Carnival of Capitalist is up at Weekend Pundit - 15-Aug-2005

2005-08-14T17:04:00.000-05:00

Another excellent edition of Carnival of Capitalists is up a day early at Weekend Pundit. As usual we have excellent business posts from stalwarts like Anita Campbell of Small Business Trends, Wayne Hulbert of Blog Business World, Yvonne DiVita of Lipsticking and many others including yours truly with his post about Business FAQ blog at Ideologic L.L.C.

Transition from Blogger to WordPress

2005-08-14T12:11:00.000-05:00

BusinessWorks Blog will be celebrating it's First Birthday on September 24th, 2005. It is already experiencing growing pains. Google's Blogger is my current Blogging Engine and it has served me well, but it lacks a few critical features like Categories, Search facility, trackbacks that a Blog like mine needs. I am planning to move the blog to a different host and use WordPress as my Blogging Engine. To better serve my readers, each post will be categorized and search will be embedded in the page to find the content you need. There will be lot more features added, with a new theme, current month calendar to find the posts and much more. Current Blog will remain active during the process and once the transition is complete, it will redirect visitors to the new blog.

Please bear with me for the inconvenience caused, until this transition is completed. The posts will be sporadic and few in coming week, but once the transition is complete, it will be atleast one post per day as usual.

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-13T18:03:00.000-05:00

Venture Capitalists, in absence of a solid predictable path, rely on these popular methodologies to arrive at crucial decisions about investments. Discounted cash flow and compound interest are two sides of a coin.

As we know, a dollar you have today is worth more than a dollar you'll have at some point in future, because you can invest today's dollar and earn interest on it starting today. Inflation hasn't eroded today's dollar yet.

Conversely it is true that a future dollar is worth less in today's terms so it has to be discounted to get it's present value. "Discounting" is a way of expressing the loss of interest income and/or erosion by inflation that you suffer by not getting that dollar until some point in the future.

There are ready tables available that shows how much $100, to be paid at the end of various periods in the future, is currently worth, with interest at different rates, compounded annually.

To use the table, find the vertical column under your interest rate (your cost of capital). Then find the horizontal row corresponding to the number of years it will take to receive the payment. The point at which the column and the row intersect is your present value of $100. You can multiply this value by the number of dollars you expect to receive, in order to find the present value of the amount you expect.

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

So for example if a Venture Capitalist has to wait for 6 years before he can expect any profits from the venture. Next he assumes 10% interest (cost of capital). After 6 years, his capital of $1,000,000 will be worth $564,400 in today's dollars! That is the time value of the money.

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-13T17:57:00.000-05:00

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

Investment Analysis Methodologies - Discounted Cash Flow

2005-08-11T23:47:00.000-05:00

net present value of $100 table
years	9.0%	9.5%	10.0%	10.5%
1	$91.74	$91.32	$90.90	$90.49
2	$84.16	$83.40	$82.64	$81.89
3	$77.21	$76.16	$75.13	$74.11
4	$70.84	$69.55	$68.30	$67.07
5	$64.99	$63.52	$62.09	$60.70
6	$59.62	$58.01	$56.44	$54.93
7	$54.70	$52.97	$51.31	$49.71
8	$50.18	$48.38	$46.65	$44.98
9	$46.04	$44.18	$42.40	$40.71
10	$42.24	$40.35	$38.55	$36.84

Investment Analysis Methodologies - Internal Rate of Return

2005-08-09T22:13:00.000-05:00

Time value of money is one of the most important yardstick used by Venture Capitalists before investing. The internal rate of return (IRR) method of analyzing an investment utilizes the time value of money. This parameter provides you an option of calculating interest rate that is equivalent to the dollar returns that you expect from an investment. This helps you in comparing to the rate you can earn by investing in projects of similar merits.

Lower Internal Rate of Return with respect to cost of borrowing indicates a money losing proposition. So typically a Venture Capitalist will be looking for reasonably high Internal Rate of Return when compared with Cost of borrowing. This is expected as Venture Capitalist is in the market to make money for the risk taken, time spent and trouble taken.

Let us consider an example. A venture capitalist is studying an investment where initial cost of the project is $750,000 and expected return is $200,000 per year for next 5 years or $1,000,000 in total. So Internal Rate of Return here is 10%. Suppose cost of borrowing is 2%. That gives the Venture Capitalist has a margin of 8% which may be worth his while to invest in the project.

Cash flow evaluation and not income from investment is the goal of Internal Rate of Return Analysis, as Income from investment is a skewed figure as it includes depreciation etc.

Investment Analysis Methodologies - Payback Period

2005-08-08T21:56:00.000-05:00

If you enter the mind of a Venture Capitalist, you may find amongst other things, a formula that gives him an estimate about when he can realize some profits from a startup. It is called Payback Period. It tells you, how long will it take to recover your investments and be profitable. The formula to calculate Payback Period is simple enough.

All you do is divide Investment by Annual Cash flow to get Payback Period. So suppose if Investment cost is $1,000,000 and Annual Cash Flow expected is $125,000, then Payback Period is 8 years.

However in real world, you can never expect to have a constant Annual Cash Flow every year. So, expected return for each year is added until total cost of Investment is arrived.

Year	Return	Cummulative Project Cost
1	$125,000	$125,000
2	$175,000	$300,000
3	$225,000	$525,000
4	$250,000	$775,000
5	$250,000	$1,025,000

In the table above, Investment cost will be recovered just shy of Five years. So when a Venture Capitalist has three competing projects, he may consider Payback period amongst other things and go for the project that has the shortest Payback Period. As with any other method, this method has a disadvantage that it ignores time value of the money. However if this method is used in conjunction with the Net Present Value and Internal Rate of Return, it is a great tool for the Venture Capitalist.

As an Entrepreneur, when you prepare your projections, you must be careful with your calculations so that decision process is smoother and in your favour. Who knows, when a Venture Capitalist is comparing your project with other projects with similar merits, you may come out as a winner due to your realistic projections.

Investment Analysis Methodologies - Net Present Value

2005-08-07T20:44:00.000-05:00

We all know, task of a Venture Capitalist is not an easy one. It is not an easy job to calculate the risk in investing in a start-up, but they have to start somewhere. Net Present Value is one such method that is used to analyze the profitability of an investment.

The Net Present Value method (NPV) of evaluating a major investment allows you to consider the time value of money. Essentially, it helps you find the present value in "today's dollars" of the future net cash flow of a project. Then, you can compare that amount with the amount of money needed to implement the project.

If the NPV is greater than the cost, the project will be profitable for you (assuming, of course, that your estimated cash flow is reasonably close to reality). If you have more than one project on the table, you can compute the NPV of both, and choose the one with the greatest difference between NPV and cost. Let us take an example here:

Project	Initial Cost	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Present Value	Net Present Value
Startup One	$10,000	$2700	$2600	$2400	$2800	$1342	$1444	$13,286	$3286
Startup Two	$10,000	$2000	$2000	$2000	$500	$500	$3000	$10,000	$0
Startup Three	$10,000	$4000	$500	$500	$500	$500	$1000	$7000	-$3000

As an example of how NPV works, let's say you're looking at a project "Startup One" costing $10,000 that is expected to return a total of $13,286 in a period of 6 years. Using NPV analysis you can determine that if the discount rate on the project was 10 percent, the net present value of the expected returns would be $9,967.28. In other words, if you had $9,967.28 today and invested it at 10 percent, after six years you'd wind up with $18,116.67, much more than your return on your project. Thus, it looks as if the expected additional return on the project has shrunk to about $4,830.67, which may not be worth all the time and effort you'd have to put in. Although Startup One seemed to be a profitable proposition as per the table, you just saw it was not very profitable.

NPV analysis is generally used to evaluate the project's cash flows. Although NPV is widely used in Investment decisions, it has disadvantage of not being flexible enough to account for flexibility / uncertainty associated with the project decision.

How do you compute NPV? The easiest way is to use a good financial calculator or Microsoft Excel Spreadsheet's Financial function (NPV). There are online calculators available to perform this calculation.

Investment Analysis Methodologies - Introduction

2005-08-05T22:57:00.000-05:00

We have learnt a lot about "What and How" to pitch to Venture Capitalists, but have you ever wondered what is going on in Venture Capitalist's brain? What is the math and science behind VC's investment decisions? Would it not be great to understand the basis of VC's decisions? So I decided to go behind the scenes and get those formulae and present them here and try to explain them in layman terms. Please remember there are other criteria used by investors, my purpose here is to help entrepreneurs tailor their projections in such a way that it increases the probability of their success.
Here are some of the popular methodologies:

* Net Present Value (NPV) - Capital budgeting where the present value of cash inflows is subtracted by the present value of cash outflows
* Payback Period - Initial Outlay Recovery Period
* Internal Rate of Return (IRR) - the return that a company would earn if they expanded or invested in themselves, rather than investing that money abroad.
* Book Rate of Return - Profit from Investment to Initial Capital Outlay Ratio
* Discounted Cash Flows (DCF) - Attractiveness of an Investment opportunity.

I will be discussing each methodology in upcoming posts in layman terms. Have a wonderful weekend.

10 principles of Money Mastery

2005-08-04T22:58:00.000-05:00

This is actually a review of a book that I came across other day. It is a very relevant book for entrepreneurs as well as anyone else who is trying to fight a battle against debt or simply trying to get best value for their dollar. Book is divided in two parts, one is Money Mastery Principles and other is Tax Strategies. I will review this book from entrepreneur's point of view.

If you read the titles of ten chapters, complete Part One can be summarized as "Money is emotional, track it, control it! There is no such thing as savings, To power down your debt, you got to know the rules of the game as the rules are always changing, So always look at the big picture, organize the wealth, understand taxation and put your money in motion".

As reasonable human beings, we know money is important and it should be spent with care, but we being emotional, spend money emotionally. Men spend on Gadgets and cars and women spend on clothes. This book teaches commonsense principles about money. Authors advise to track what you spend and control the emotions and savings is defined as "delayed spending", which is a very interesting concept. An entrepreneur is a family person too. He / she has obligations towards family, pay mortgage and other bills. This book promises to get the reader out of debt, pay off mortgage in nine years or less and teaches how to reduce taxes by 50% legally, using "Power down" method. Authors Alan M. Williams, Peter R.Jeppson and Sanford C. Botkin also conduct "Money Mastery" classes. If you think, this reasonably priced book will help you achieve control over money, buy it from your nearest store or click the link below.

Resources for Market and Industry Research

2005-08-03T22:21:00.000-05:00

I have gathered few resources for my personal use, but would love to share with my readers. I hope this will help busy entrepreneurs as I think time spent on research is time well spent.

My first resource is EBSCO Information Services. This website catalogues business journals, magazines and trade journals. Many local and regional business publications are included. There are quite a few full text articles to read. Subscription is required.

Other resource is ABI / INFORM. This site has a database covering business, management, economics and a wide range of related fields. It provides abstracts of material from 1971 onwards and full text (various formats) from 1987. Subscription is required.

Lexis Nexis Academic is another excellent resource which has full text information of newspapers, news magazines, trade and industry publications. Subscription is required.

For a reason, I have not included any free resources. For serious research, one must go to a reliable source.

20 Questions to ask before starting a business

2005-08-02T23:09:00.000-05:00

Starting your own business and becoming an entrepreneur is no easy task. As I said in my previous posts, a would-be entrepreneur need to evaluate himself/herself before actually starting the business. Here is a handy list of questions to ask and answer convincingly and in great detail.

1. What is the product or service?
2. Can I describe the product in three to four sentences?
3. What is the target market for the product or service?
4. Is this product or service practical? feasible?
5. Is there a demand for the product after discounting for existing suppliers?
6. What is the price I can get for the product?
7. What are the qualities that will give me an advantage over other businesses?
8. Where will the business be located?
9. What is the advantage in locating the business in a particular location? Availability of raw material? close to target market?
10. Do I need to consider any zoning or fire regulations or restrictions before opening the business?
11. Is any permit or license needed to start the business?
12. What will be the legal structure of the business? 'C' corp., 'S' corp., LLC or Sole Proprietership?
13. What equipment, plant, machinery, raw material and supplies needed?
14. What type of commercial and professional insurance is needed?
15. What is the inventory of skills and experience? self? in surrounding areas?
16. How much capital is needed for startup and maintenance of the business?
17. What are the financial resources available?
18. How do I identify and reach my customers? marketing? website? weblog? mailings?
19. What will be my day to day operations plan? procedures?
20. How and when do I compensate myself?

Skype - Indispensable tool for an Entrepreneur

2005-08-01T23:29:00.000-05:00

A dollar saved is a dollar earned. An entrepreneur has to be spendthrift where possible. I am always on lookout for low-cost or almost free, time saving, efficiency improving tools. Today I came across Skype, which is one such tool.

Skype has been around for quite sometime. I know, I am late to the game but I discovered today, how indispensable Skype is for an entrepreneur. For those of you, who are like me, late to catch on to the Skype wave, this is a tool to make free calls over the internet to anyone else who also has Skype and believe me there are lot of people around the world who do have Skype. I tried out Skype half way accross the world and voice quality was amazingly crystal clear like a conventional phone. This services is free. There are other value-added ancillary services by Skype which are of great value to an entrepreneur. First one is SkypeOut which you can use to call any ordinary phone from Skype. Then there is SkypeIn, which is a real phone number your business contacts can call . You can pick up this call in Skype. Skype Voicemail lets you direct calls when you are offline or busy to your voicemail.

I am particularly excited by the news today where a start-up company is piggybacking on Skype to bring free international phone calls from cell phones. They plan to offer this service free initially and eventually charge $9.95 a year. I also came across a Skype related service called Skypable that informs a caller about your status. All you got to do is put a link on your website to display your status.

You can reach me via Skype using my ID: Businessorati or simply click on the "Skype Me" button on the left.

Other great resources from FORBES Best of Web - Small Business Blogs

2005-07-31T15:29:00.000-05:00

BusinessWorks is a would-be entrepreneur's blog. Today I would like to share with my readers other great blogs which are on FORBES-Best of Web list under Small Business Blog Category. These blogs have contributed towards business in general, marketing and entrepreneurship with their excellent posts and informational material. I am honored to find my blog in the elite company of these blogs. Visit them and find out for yourself:

Duct Tape Marketing by John Jantsch (rated Forbes Favorite)
All Business Blog Center
Church of the Customer by Ben Mcconnel and Jackie Huba
Fresh Inc. by Inc.com
Small Business Trends by Anita Campbell
Entrepreneurial Mind by Jeff Cornwall
Small Business Brief by Linda Riley

Thank-you Forbes!

Some more business basics

2005-07-30T16:29:00.000-05:00

My last post must have left you thinking, whether you are made for business and entrepreneurship? Today's post will make sure if you are ready for the most exciting, sometimes hardest, time of your life. So let us begin that journey towards that realization.

Gaining Real World Knowledge

There is a modern saying by yours truly, if you want to be in the business of RFID, you have to work in the field of RFID and gain some valuable experience or going by an older saying, you must learn to walk before you run. On serious note, if you already have the expertise in the area of technology on which your business will be based on, gain some sales and marketing experience. This experience will help you gain valuable insight to develop products with marketability value.

Finding Seed Capital

If there is a need for $1 million for your business, your options are to approach venture capitalist, maybe an angel investor or to the bank. Irrespective of which path you choose to raise capital, each one of this source will ask for your commitment in terms of money. They want to know your motivation to succeed in the business. Having an idea is not enough. You need to come up with atleast 20% of the funds to invest in the business. This 20% capital may be raised from your own savings or from your relatives and friends. Cut your expenses. However, do not touch your retirement savings. You will need those savings for your future.

Simplify..Simplify

At every moment in your entrepreneurial journey, try to keep things as simple as possible. Remember you have only 24 hours in a day, possibly have a family and a business to run. It is in your best interest to simplify the processes, do not try to do every small thing yourself, delegate as much as possible. Concentrate on your area of expertise, and leave other things to the experts in their respective fields. An entrepreneur is always working hard trying to manage money in an efficient way and in this effort he ends up doing everything himself and loses his focus. This is one of the most common reason of the failure of start-up businesses.

Plan before you Leap

Planning is everywhere in our life. To wake up in morning, you plan in night and set up alarm clock to wake you up. Business is same way, you must plan well in advance. Even if you do not have the seed money, you must have a business plan to have an idea about expenses involved. Business plan is a path for you to follow. So make this plan early and be on your way from Concept to Wall Street.

Back to Business Basics

2005-07-28T22:55:00.000-05:00

In my past posts, I have stated, Phase I grants can range from $70,000 to $100,000. If you think this amount is enough to get started and and sustain your business for a period of six months (time provided by federal agencies for completion of Phase I), then you have severely underestimated your budget. What I am getting at is, once you sit down to write a financial plan, you will realize Phase I Amount won't even last you for three months. When I sat down to write a proposal for a RFID based project, I was shocked to see calculated capital requirements.

Please read my post about Cost of business and subsequent post about Capital and Expense Projection, there is a minimum outlay of $2 million! There is a big gap to be filled and the question is, how do you bridge this gap? Let us go back to basics of business to find the answer.

Basic Business Requirements

You must have :
- a feasible and marketable idea, product or service.
- knowledge (or some one knowledgeable) of the product.
- access to working Capital.
- an operating, marketing, business and financial plan.
- Economic and emotional ability to withstand ups and downs of the business.

These requirements are valid whether you are starting a business, buying an independent business or a franchised business. You have to set realistic goals. Generally when it is your idea, you tend to be biased towards that idea and ignore certain critical things like Capital. Make sure you get your idea evaluated from your trusted source and not ignore things that are important. Do ask yourself following questions:

1. What product / service your idea will provide?
2. What needs does this idea will fulfill?
3. Who will be your potential customers?
4. How will you reach these customers?
5. Why will they purchase this product or service from you?
6. Where will the Capital come from?

When you can convincingly answer each of these questions, you can move forward and take your second, third and fourth steps.

Bottomline: When you solve the jigsaw puzzle of your future business, Phase I funding is just a small piece of this puzzle.

BusinessWorks featured on the Forbes Best of Web List

2005-07-26T22:13:00.000-05:00

My 15 minutes of fame! BusinessWorks is featured on Forbes.com, Best of Web under the Small Business Blogs category. Read the complete review here.

Lea Goldman of Forbes has pointed out a couple of things, that I definitely need to work on. First is "big gaps between posts". I am guilty as charged. I agree, I was busy developing my other weblog about Business Blog Process Outsourcing. Lea also says "while Keshwani is exceedingly detailed about the nuances of starting a business, where's the heart? You don't get a sense of the blood, sweat and tears involved in the start-up process.". While it is true online, real life is different. Nothing is achieved without blood, sweat and tears.

Components of an Effective SBIR/STTR funding proposal

2005-07-24T17:26:00.000-05:00

Your proposal is the first and one of the most important step towards SBIR/STTR Funding. So it better be effective. Today I will write about components of a SBIR/STTR funding proposal.

1. Title - This is self-explanatory, but extremely important.
1.1 Project Summary - Write one page of summary to provide overview of your idea and the project.
1.2 Project Description
1.2.1 Identification and Importance of the Innovation - Identify and explain the significance of your innovation and how it improves existing environment or the current process. No more than 1.5 pages.
1.2.2 Background and Technical Objectives - Describe the background and define technical objectives of your innovation. Upto 3 pages
1.2.3 Research Plan - Details of hardware/software you plan to use for the research. Can be upto 2-3 pages.
1.2.4 Company Information - Describe in a page about your company, its past achievements etc.
1.2.5 Commercial Potential and Feasibility - Provide commercial potential and most important, feasibility of your idea within provided time frame of the project. About 1.5 pages.
1.2.6 Consultants required for the Project - List names and brief resumes of consultants required for the project. 1 or 2 pages.
1.2.7 Overlapping or Equivalent Proposals to other Federal Agencies, if any. - Many a times, two federal agencies may have solicitations which are similar in nature. You may propose to both agencies, but you must mention it on the proposal.
1.3 Cited References - Provide your sources of information, research here.
1.4 Biographical Sketch - List your technical staff, with brief resumes here.
1.5 Budget
1.5.1 Personnel Budget - Provide yearly salary for the required personnel, with their roles clearly defined.
1.5.2 Hardware/Tools Resources Budget - Provide hardware, software and miscellaneous supplies and material costs over here.
1.5.3 Consultant Budget - list Consultant salaries here.
1.5.4 Travel Budget - Amount reserved for travel purposes must be listed here.
Provide justifications for each budget and a work breakdown structure. Try to keep the budgets very close to the funding available for the Phase that you are proposing for. If your budget exceeds the funding available with agencies, provide details about how do you plan to bridge that gap.

Tips for writing a Proposal for SBIR/STTR solicitation or grants

2005-07-20T23:18:00.000-05:00

A proposal is a response to SBIR/STTR grant or solicitation, which may either result in funding of your project or a rejection. This underscores the importance of the proposal for an enterprenuer. In a way, a proposal is no different from creating a Business Plan, except that it is more focussed on the solicitation. Here are few tips in creating a winner proposal (These tips apply to all three phases)

1. Search for the solicitation that best suits your skills on SBIRWorld. Download the solicitation from the Agency's website. Thoroughly read the solicitation. If you do not meet the requirements, do not submit the proposal until you fully meet the requirements of the solicitation. You may lose out on one solicitation, but there are many more opportunities from various agencies with many of them releasing solicitations every three months.
2. Never go for creating a proposal alone. There are financial and technical components involved. Involve your qualified personnel to help you create projections. If possible, hire an experienced proposal writer. It is money well spent.
3. Be ready to spend 250+ hours in creating a proposal. Although it is a 20-24 pages of proposal, there is lot of work involved in proposing a feasible idea.
4. Be open to collaboration with corporations and universities. Universities are a great resource of research talent and corporations are a great source of additional funding.
5. For each solicitation, there is a Program manager assigned to it by the agency. Sometimes written word must be supplemented with spoken word. Ask Program manager about what agency is looking for in the proposal. Program Manager is there to help, so utilize this resource well.
6. If possible, attend a SIBIR/STTR conference to increase your knowledge and understanding of the process. You can meet program managers, Grant and contract awardees face to face and learn from them. Once again great resource for the conferences is SBIRWorld.
7. Learn from the success stories found on each agency's website.
8. Be very clear while presenting your ideas. If you cannot explain your idea in less than 4 lines, you need to work harder on clarifying your idea.

I hope these tips help you in creating that winner proposal. I wish you luck and feel free to write to me if you have any questions about these tips.

SBIR, STTR and RFID

2005-07-19T23:21:00.000-05:00

My last post, was about SBIR funding. Today, I will write about funding opportunities available in the area of RFID and Wireless Sensor Networks (WSN), but first let me mention few resources available for SBIR. One of the most comprehensive resource is SBIRWorld. It is a warehouse of SBIR/STTR related conferences, open and past solicitations and federal agencies. Search feature helps in searching open and past solicitations for projects of special interests. For example, I searched for "RFID" and found 14 past solicitations in near past.
Second resource is a regular E-mail alert received roughly every three weeks with open solicitations and due dates for the solicitations. Send an email to lyris-at-lyris-dot-pnl-dot-gov (replace -at- with @ and -dot- with .) with words "Subscribe sbir-alert" in Subject of E-mail.

Federal agencies like National Science Foundation, Department of Defence - Army and Department of Defence - Navy are major funding agencies for RFID related grants and solicitations. Sometimes RFID related solicitations can come from unexpected sources like Department of Agriculture-for tagging the poultry and other farm animals, especially in the wake of mad cow disease.

National Science Foundation (NSF) has one of the most open ended grants, where you can provide a proposal about your unique idea based on the general guidelines provided and get funded. Ofcourse your idea should be practical and feasible. However, as more and more people become aware of SBIR grants and solicitations, competition increases and it gets relatively hard to get funding. One key thing to remember, SBIR funds may or may not be enough to completely finance your business operations, so it is prudent to have other financing resources available for your business.

In my next post, I will provide some tips on writing a proposal for the grant or solicitation.

What is SBIR funding?

2005-04-09T08:38:00.000-05:00

I am back from SBIR conference, held in Omaha. There is lot to share for days to come. SBIR Conference was a great networking event apart from being a excellent learning experience. In coming days, I will be sharing my knowledge that I gained in these 3 days.

What is SBIR funding?

SBIR stands for Small Business Innovation Research. US Federal government has set aside 2.5% of it's research budget for small businesses.
Small businesses are defined as follows:
* less than 500 employees
* 51% owned by American citizen or Permanent Resident Alien
* It is a for profit business
* business must be in United States
* Principal Investigator for research must be an employee of the business during project.

Why use SBIR funding?

Venture capital financing is hard, if not impossible, to get at initial stage. SBIR funding, gives businesses access to funding at the stage of feasibility study.

Who provides SBIR funding?

SBIR funding is provided by various federal agencies like Department of Defence (DoD), NASA, National Institute of Health (NIH), National Science Foundation (NSF), Department of Transportation (DoT) and many others. For our purpose, I will refer to them as "agency"

How does it work?

SBIR funds are of two types: Grants and Contracts.
Grants: Agency defines a wide scope and invites proposals from small businesses. If a small business has an innovative idea that falls within that scope, it can propose the idea within the guidelines provided by the agency.
Contracts: Here agency defines a specific problem in the form of solicitation and small business has to come up with an innovative idea that resolves the problem.

SBIR funding is divided into three phases:

Phase I: A proposal needs to be submitted to the agency detailing the solution to the problem or an innovative idea, with a business plan and commercialization potential. If the agency likes the proposal, small business is awarded a grant or a contract worth upto $100,000, depending on the type of agency. Small business is expected to conduct feasibility study for the solicitation provided by agency and provide this study within 6 months from the date of award.

Phase II:In this phase, small business conducts research. Goal is to come up with a prototype. This grant or contract is awarded only if the small business has provided an excellent feasibility study in Phase 1. This phase has a life span of two years and can be worth upto 1 million dollars depending on the agency.

Phase III: This is the phase where small business is ready to go to a Venture capitalist. With a prototype ready, business plan made and commercial potential documented, small business is well equipped to approach a Venture capitalist. Many agencies do NOT fund the phase III. However, recently some of the agencies have started to match 50 cents for every dollar provided by VC funding upto $500,000.

SBIR Conference in Omaha

2005-03-08T21:01:00.000-06:00

I had not posted for nearly a month now, but I wanted everyone to know, I had taken a short break to focus on "real" business. Currently I am attending Small Business Innovation Research (SBIR) conference happening right now at Qwest Center, Omaha. I am planning to write series of blog posts about SBIR / STTR financing, once the the conference is over.