Starting up a business from scratch is an exciting opportunity. Everything that an owner does in the beginning primes the business for success. There’s quite a bit of initial business activity to attend to, including taking care of legal and compliance matters. The scariest part of starting a business is having enough startup funds and cash flow to get the business going before it can actually start to turn a profit. There are many important financial decisions for business owners to consider. Every decision must consider issues like current costs, future costs, repayment terms, and any trade-offs for ownership and control.
Business startups should be aware of the pros and cons of grants and other potential funding options. One of the wisest decisions that startups can make is investing in board management software, which will create efficiency from the start.
What Makes Grants So Attractive for Startups? Is There a Downside?
The simple answer to what makes grants so attractive is that business owners don’t have to pay the grant money back. Essentially, it’s free money. Startups won’t have to pay interest, APR or any other fees for refinancing.
Is there a downside to seeking grant funding?
Grants are a good thing for those that can get them. One of the downsides is that it’s difficult to find grants for which you qualify. If you do find some grants, you’ll find that they’re highly competitive and not at all easy to get.
If you’re fortunate enough to get grants, you may find that the grantor limits what you can spend the funds on. If the limitations prevent the grant from supplying the need that you have, the grants are of little use. It’s also important to read the grant rules and the fine print to make sure that you’re not trading away a stake in your company in exchange for grant money.
There’s just one more word of caution. The internet is fraught with scams and fraudulent offers, and grant offers are no exception. Do your research on grant-makers carefully to ensure that they’re legitimate.
Using Databases to Find Grants
Databases can be a good place to find individuals and groups that offer grants. Be aware that this option can be a time-consuming process. There may be thousands of grantors listed and the databases can be confusing to use. You’ll be able to cast many of them out immediately, as these lists are often outdated. You’re sure to find defunct websites and much misinformation.
Government grants may be easier to get, but they often have complicated government rules and restrictions and may contain terms and language that’s hard to understand.
Are There Any Viable Alternatives to Grants?
It’s not possible for all startups to qualify for grants, but there are a number of other ways to help new businesses get off the ground financially.
Business loans or lines of credit are good options for some startup businesses. Be careful to use the funds sparingly, especially in the beginning. It’s also wise to set some goals for paying the loans back.
Before there were borrowing options, business people bartered many of their services. The practice of bartering isn’t common, but many businesses find ways to make it work. Owners may be able to swap legal or accounting services in exchange for whatever your business offers. There might not be any takers, but it doesn’t hurt to ask.
Other companies that you work closely with may have a vested interest in your business if it complements their business. This is a prime opportunity to ask if another company finds enough value in your company to warrant giving you advance royalty payments so you can get started and benefit both companies.
In some areas, communities offer a business incubator that offers assistance to startups, such as free business space, consulting and seed funding. These services may be provided in conjunction with a university, by community development departments or by large companies.
If you’re interested in more of a partnership, you’ll also find opportunities to work with venture capital partners or local angel investors. Again, be aware that they’ll usually expect some stake in the company for their trouble.
You may be able to find state or federal grants to help your startup. Try searching grants.gov for a searchable directory of over 1,000 federal grant programs. The process of applying for federal grants is long, but it’s well worthwhile if you get one. The bonus is that they won’t expect to receive any of your hard-earned equity.
If all else fails, check out one of the many crowdfunding sites like Kickstarter, GoFundMe, Indiegogo, RocketHub, Razoo or CrowdRise. If your family and friends are excited about your startup, consider making a pitch for funds to them.
The most popular method of funding is plain-old self-funding, which is also called bootstrapping. About 90% of startups use their own personal money to get started. The obvious advantage is that you won’t have to give up any equity.
Getting Help for Startups From the Small Business Administration
Business startups may find some confusing or conflicting information about the type of help that their local Small Business Administration (SBA) can offer them.
The SBA doesn’t offer grants for startup businesses or expansion, but that doesn’t mean they can’t help. They do usually offer business loans at lower lending rates than most businesses can get elsewhere. The size of the loans ranges from $50,000 to $20 million. You may also be able to get a revolving line of credit, as well as grants for conducting research.
Grant Funding for Board Management Software Solutions
A board management software solution is one of the most valuable purchases that you can make as a startup, and it’s a prudent and reasonable product to request funding for as part of a grant application request.
A board management software program by BoardEffect provides a multitude of benefits, including top-level security and secure communications. The platform streamlines board agendas, board books and meeting minutes. It has unlimited cloud-based storage capability for listing and tracking grants for startup business opportunities. A board management software solution supports all aspects of good governance, which will help startups get the best start possible.