As a small or growing business in a landscape where grant funding for Black 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 but one tool in a funding strategy arsenal. Before delving into business grant applications, keep these five key things in mind.

1. Opportunity Cost of Time
Time is your most valuable resource, once spent, cannot be recouped. It is important to understand that not every opportunity is 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 they would account for, you’re unlikely to be successful. Other avenues of capital, like a line of business credit, might be a better use of time and focus.

2. Internal Controls and Use of Funds
Grant-making agencies want to make the most impact. As agencies wade through grant applications, they look for companies that have the infrastructure and size to immediately use their funds to make a substantial leap forward. Businesses that are too big would not be ideal grantees 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 and processes as it relates to using and monitoring funds.

Have a specific vision for how the funds will be used—clear articulation of the impact the grant will make on your business is a plus to reviewers.

3. Standing Out
Aim to stand out. Keep your application answers short and sweet. Note that generic, one size fits all grant applications lack the level of detail and uniqueness that grabs the attention of a reviewer who likely reviews hundreds or thousands of similar applications. Customize the main ask section of your grant to incorporate language that signals to the application reviewer that your business meets their criteria. 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 a great deal. Outline/highlight your expected outputs and outcomes, clearly; connect the dots!

4. Is your ‘Why’ sufficient or a signal?
Establishing a pattern of applying to grants that are either too small or too large 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 look at your business’ health, needs, and growth objectively. Survival mode leads to a fundamental lack of understanding of your business’ day to day needs and/or a skewed vision of how to effectively and efficiently scale 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 strategically accomplish that goal.

5. Nice to Have vs. Need to Have
Grants are a value-add to your business, not a lifeboat. Remember that most grants are designed to support the growth and development of a functional business or one on the road to functionality. If your business is in debt or just beginning, will the grant truly make an impact your business. Your business should be able to survive with or without the grant that you are applying for. In a grant application, you are outlining your business growth strategy and how an injection of cash will help to bolster your existing plans. Therefore, if your business carries debt exceeds the amount of the grant or lacks the capacity to optimize grant, consider whether or not a grant is what you actually need.

Before you fill out your next business grant application, consider these five points to assess your readiness to receive and/or need for a grant.