When you're a small business, cash is king. But you know what's even better? Free cash! However, unless you are a trust fund baby or lucky enough to win the lottery, then free cash is hard to come by. Aside from the two previously mentioned methods or a rich uncle, your main option for free cash is small business grants.
Don't get too excited yet though. Small business grants have their pros and cons. Free money is usually a good thing, but just keep in mind, there are some hang-ups that come along with "free" stuff. So, before you decide this is the best funding for your small business let's take a closer look.
First, what is a small business grants anyway? Think of a grant like a scholarship for small businesses. They usually come from national, provincial and local governments, but some private businesses or corporations will offer them as well. Just like a scholarship, there are a bunch out there, and they are usually set aside for "persons" that meet a certain criteria. Some are for online companies, some are for veterans, some are for the youth, others for women and/or minority owned businesses. The list goes on and on, and they all have different application requirements.
Here's the key to getting that grant. It all comes down to research. There are thousands of grants available out there, but your chances of getting one really comes down to two things; how much work you will put into finding one that you qualify for, and how much work are you willing to put in throughout the application process. Are you seeing a theme here?
Let's get you up to speed on the process. A good place to start are SMMEs related government agencies websites. This is where you will find a lot of helpful information to start your search. Just make sure you are eligible for a grant before you spend too much time applying.
Now let's talk about what you need to know as you begin your hunt for free money.
1. Small business grants take A LOT of you and your staff's time!
Like most government processes, getting a national or local government's grant is very time consuming. It's important to understand how much your time is worth, and then evaluate how much your time is worth, and how much time it's going to take you to get the money. There is a lot of paperwork and a lot of required documentation/market reports/demographic reports etc that will have your staff jumping through hoops. Just make sure it's all worth it before you dedicate all that time - time you could be spending on your own strategy or business development
2. Don't expect the money anytime soon.
Don't expect things to move quickly. Once you submit your application, it can take weeks, or even months before you are approved. Yes, it's frustrating, but if you understand that's part of the game, you won't lose as much sleep over it.
3. The competition for small business grants is stiff.
This is FREE money. You won't be the only one applying. The brightest and the best will have their teams working to this money, so be ready for fierce competition. The key is to know how you can present your business in the best light possible. Show them why you deserve it more than anyone else! Another thing... make sure you're applying for grants that fit your strengths as a company. That will significantly improve your chances.
4. Grants come with strings attached.
If you are lucky enough to be one of the few grant recipients, remember this usually comes with strings. Be ready to sacrifice a little privacy and understand you will have to do a little better job of keeping your "house in order". Many grant issuers like to check in on your progress. This often means monthly or quarterly "check-ins" where they will ask for proof that you are meeting the requirements as outlined in your grant. Also, there can be other strings such as contingency agreements. That is national and local programs will give you the money contingent on matching funds or a loan to supplement the grant.
5. Small business grants may not be the money you want.
Grants usually comes with rules on what you can use the money for. If you think it's a get out of debt card, think again. Government's grants are funded with taxpayers money so they do their best to ensure it's used for purpose that will benefit the community as a whole, and not just to pay down debt for your business. (They want more jobs, improved technology, etc). It's not a loan. It's generally a gift with a specific purpose.
Wrapping it up.
Small business grants can be incredible opportunities for your business, but they can also be money pits that don't have the ROI you imagined when you heard the words "FREE MONEY". To determine if they are right for your business, do some research and keep all those factors in mind. Now that you are informed, you will make the right decision!
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