Copyright© 2008 by Greenwood Consulting Group, Inc.

The following proposal writing tip was provided by Gail & Jim Greenwood. Past SBIR proposal writing articles written by the Greenwoods are available on the Greenwood Consulting Group, Inc. (GCGI) website at http://g-jgreenwood.home.att.net.

You may have heard the term "SBIR mill" and wondered what it meant. Basically, this a less-than-complimentary reference to a small business that receives a lot of Phase I and II awards, but does not seem to do much with them in terms of Phase III commercialization.

SBIR mills are a bad thing. They are contrary to the intent of the SBIR/STTR programs, which is to support innovations that will become "useful" products and services for customers like the government, industry, and consumers. They also are often bad at math: given that many firms lose money on Phase Is and just break even on Phase IIs, an SBIR mill may never make money because it doesn't go to Phase III where profits are usually made.

The SBIR/STTR agencies don't like SBIR mills, and they are doing a pretty good job of ferreting them out and not giving them future SBIR/STTR awards. Ever wonder why some agencies ask you to disclose your prior SBIR/STTR awards and what became of them? Now you know.

Are all companies that receive multiple SBIR/STTR awards mills? No they are not. We know of companies that have received oodles of Phase I and II awards--what distinguishes the mills from the valuable SBIR/STTR competitors is what they do with these projects. Mills shove their final reports on a shelf, and push their prototypes into a closet after demonstrating them, while successful SBIR/STTR companies proactively seek Phase III opportunities for their projects. Some will license their SBIR/STTR technologies to third parties who commercialize them. Others form strategic partnerships with large industry. Yet others form spinoff businesses, perhaps in collaboration with other industrial partners, through which the SBIR/STTR technology is commercialized. These examples of valuable SBIR/STTR companies suggest that just because the firm does not build and sell the Phase III product themselves does not necessarily mean they are a mill: they may be simply following a business model that makes sense for them.

To make sure that your company is not mistaken to be an SBIR mill, we offer several recommendations.

First, decide your business model, in terms of how you intend to commercialize SBIR/STTR projects, and state it clearly in your Phase I and II proposals. That way the reviewer knows your model, and also is comforted to know that you have thought it through and decided what model best fits you.

Second, do not pursue SBIR/STTR topics that have little Phase III potential. We're suggesting that EVEN BEFORE YOU WRITE A PHASE I PROPOSAL, make sure that you have done some analysis (even if it is back of the envelope) to determine if there is a market for the outcome of the Phase I and II projects. Remember, there are lots of NEEDS that are not necessarily MARKETS--the latter are needs that can be met or satisfied profitably, and therefore should be the target of your company.

Third, realize that, even when you identified a reasonable market before you started a particular SBIR/STTR project, there are reasons why that market opportunity may evaporate before you finish Phase I and II and get your innovation to the market place. The world is constantly changing, including its economy, politics, and demographics. World events can cause dramatic shifts in priorities (take for example the level of concern for bridge safety before vs. after the horrible collapse of the Interstate bridge in Minneapolis). Competitors, even with clearly inferior products, may beat you to market introduction and capture a lot of customers you were counting on. Therefore, not all Phase I and II projects will lead to a viable market opportunity in Phase III.

Finally, educate reviewers of your SBIR/STTR proposals about your efforts to commercialize your innovations. If you only say that you previously received a Phase I award and the follow on Phase II award, then the reviewer is left to wonder about Phase III. Are you still trying to get the post-Phase II R&D finished so you can get it to market? Did the market shift while you were doing the Phase I or II project so there was no opportunity by the time you got to Phase III? Were you teamed with a big prime contractor on a major military or space system but the procurement was canceled so there's no short term opportunity to commercialize your technology?

Or, are you a mill, and you simply stopped any effort on the SBIR/STTR project once you finished the Phase II project? If you don't explain what has occurred since the end of the Phase II, most reviewers will assume the latter--that you have done nothing, or were too incompetent or lazy to follow through, or gave up the first time you got rejected by a potential customer, funder, or strategic partner.

Being called an SBIR mill is not a good thing, and certainly won't help your SBIR/STTR career. Make sure that your actions, as well as your words, tell the agency and its reviewers that you ARE committed to Phase III commercialization, and clearly differentiate yourself from the SBIR mills out there.

Gail and Jim Greenwood may be reached at the following address:

Greenwood Consulting Group, Inc.
1150 Junonia
Sanibel, FL 33957
(239) 395-9446 (voice & fax)
g-jgreenwood@att.net