Opportunity Can Cost: 5 Things to Consider Before Applying for Business Grants & Pitch Competitions
As a small or growing business in a landscape where grant funding for people of color and women-owned businesses is at an all-time high, grants can seem like a magic bullet to instant business growth. However, we all know that magic bullets do not exist. Grant funding is one tool in a funding strategy arsenal, and here are five key things to keep top of mind before delving into business grant applications.
- Time is your most valuable resource. It cannot be recouped once it’s been spent, and therefore some grant opportunities may not be worth your time. If your business is grossing over $1 million in revenue, smaller capital grants ($5-20k) are a waste of your limited time and human resources. Due to the small percentage of your revenue the grant would account for, you’re unlikely to be successful, and that level of funding could more easily be accessed through other avenues like a line of business credit.
- Grant-making agencies want the most bang for their buck. When grantors are wading through grant applications, they often look for companies with the infrastructure and size to use their funds to make a substantial leap forward immediately. This means businesses that are too big would not be successful, and businesses that lack the level of capacity to use the funds quickly may also be ruled out. In most cases, and unless otherwise stated, companies should have easy-to-understand internal systems/processes for using and monitoring funds AND a specific vision for how the funds will be used—a clear articulation of the impact the money will make on your business.
- Aim to stand out. Keep your application answers short and sweet. Note that generic, one-size-fits-all all grant applications lack the level of detail and uniqueness that grabs the attention of a reviewer who will likely be looking at hundreds or thousands of similar applications. Customize the main ask section of your grant to incorporate language that signals to the application reviewer that you understand what they are looking for and clearly outline the synergy between their criteria, your business, and your need, but also how you will survive with or without this grant. Outline your growth strategy. Outputs–the products that will be produced or milestones that will be achieved–and outcomes–the long-term financial and infrastructural changes to your company that will be made possible through the grant funds–and other provided resources matter greatly. Outline/highlight your expected outputs and outcomes, clearly; connect the dots!
- Is your ‘Why’ sufficient or a signal? Beyond wasting time and human resources, establishing a pattern of applying to grants that are either too small or too large and wholly out of reach is a red flag to potential investors and should be one to you as well. It signals that you may be operating in survival mode—a space of desperation and lack— which will severely impact your ability to objectively look at your business’ health, needs, and growth. Survival mode leads to a fundamental lack of understanding of your business’s day-to-day needs and/or a skewed vision of effectively and efficiently scaling said business. Your ‘why’ is extremely important as you consider any funding opportunity. If the answer to “Why am I/are we applying to this grant?” is “because we can,” one must reevaluate your business development strategy. Consider sitting down with your key advisors to get a full picture of what you need to run your business and the best tools to accomplish that goal strategically.
- Grants are a value-add to your business, not a lifeboat. If your business is in debt or just beginning, it is important to remember that most grants are designed to support the growth and development of a business that is already up and running or on the road to functionality. Your business should be able to survive with or without the grant that you are applying for. In a grant application, you simply outline your business growth strategy and how an injection of cash will help bolster your existing plans. Therefore, if your business is in debt that exceeds the amount of the grant or lacks the capacity to spend the amount of money earmarked for the grant, consider whether or not a grant is what you actually need.