Funding a small start-up business is one of the most difficult hurdles a new business owner faces. At this point the financing options are limited. Usually either the 4 F's (Founder, Family, Friends & Fools) or SBIR/STTR money is the only way to fund a very early development effort. Since there is a limit on the amount of funding available from the 4 F's, the SBIR program was designed to help American companies get their technology funded in early stages. As a result, more and more small businesses are taking advantage of this non-dilutive source of funding. The cost of doing business with the Federal Government, however, is real, significant and many times non-compliance with regulations can spell disaster for a small business. Heck, it can be problematic for large companies too. So what is the small business owner to do?
At ReliAscent we have studied this process for many years and think we know a thing or two about how this process works. The SBIR/STTR process usually results in a fixed price award for a Phase I effort (lasting usually 6 to 9 months). A fixed price arrangement from the Federal Government comes with very few "strings" attached. The small business is responsible for performing the work for the amount of money given. The risk is on the small business, not the Federal Government. The program was designed this way. The Phase II efforts are entirely different stories however. The Phase II effort is normally a cost reimbursable type arrangement. In this type of contract (see our previous blog from Feb. 8, 2013) the risk is now on the Federal Government and they will put in place some regulations to try to mitigate these risks. So ReliAscent has designed a series of programs designed to install only the elements of a job cost accounting system when the start-up business needs the tools. In other words, don't put all the requirements into play until they are needed but install a base accounting system from which to build upon as the company grows. These series of programs are called the "Introduction to Government Accounting Program™". The first program in this series was introduced last week and is designed to meet the requirements that the Department of Defense would expect from a Phase II SBIR/STTR winner. The name of this program is the FAR Foundations Program™ since it is based heavily on setting up a program that meets the FAR requirements. Of course, only the elements that are absolutely necessary during Phase I are put in place to start with to make it very affordable for the start-up business. This program will also satisfy requirements from NASA, DHS and a few others. Other programs will be coming out in the next couple of months as other agencies announce winners in their SBIR/STTR programs.