The Hidden Millions

Grants are pretty cool. After all, when push comes to shove, grants are free money. There are billions of pounds worth of grants distributed each year. Over 600 organisations offer more than 4000 grants to businesses in the UK.

Grants can help you do stuff that otherwise you're not going to be able to do, as well as helping you do what you are going to do, just better.

Bad press

It's fair to say that grants haven't had a great press. Everyone is interested in them: but over the years they've become perceived as something a bit murky.

It's probably because they come associated with bureaucracy, inefficiency and waste. There are cases of useless businesses being kept alive by grant handouts.

You might have heard about scam merchants offering to find grants for businesses, pocketing a fat consultancy fee and disappearing into the distance without lifting a finger.

You might also have heard about how much money floods in and out of the EU - and you might well wonder where it all goes.

The bottom line is that you should check out grants as a way of funding your business activities, even if it means you'll have to jump through a few hoops to get the money.

Good news

Let's be clear what a grant is. It's a sum of money that is given to your business. That's right - it's given to your business, not loaned.

You don't have to part with any equity, you don't lose any control and you don't have to pay it back. Not unless you really mess up, or you're caught using it for something illegal, or you agree to spend it on something and instead put it on the dogs and blow the lot.

So, that's great, isn't it? You get awarded a grant, nip round to the UK plc hole-in-the-wall, withdraw the cash, then get on with things. Sorted. Not quite.

Strings attached

Two key things to bear in mind.

One is that your grant is usually going to come with plenty of strings attached. It's going to be earmarked for a specific project or a specific thing.

This can be good or bad.

During the foot-and-mouth crisis there were recovery grants available from some organisations for businesses affected by the crisis: businesses with dwindling customers and no cash.

The bank manager wanted loan repayments. The overdraft was looking horrible. The businesses needed cash.

The grant allowed the businesses to purchase laptops. Or do publicity. Great. They could sit on the beach and do spreadsheets to work out how much money they were losing. Or write leaflets: "Come to our area. It's all shut, but come anyway."

Sometimes grants might not be that helpful.

Back to the project. This is key - if you're doing a project, the grant is rarely going to pay for it all. You need to put some of your own money in as well. Or borrow some.

This lovely concept is called 'match funding'. The grant provider wants to see you taking some risk. The nearer your own backside is to the heat, the more you move forwards. That's the theory anyway.

As a rule, most schemes will fund no more than 50% of the cost of the project. So at the same time as thinking about the grant, you need to think about where the rest is coming from. This could be work in kind though - i.e. you cost yourself and your team in as your contribution. Then it all looks more attractive�

Needle in a haystack

I mentioned before there are over 600 organisations you can go to for grants. Some give out the money directly, others can offer help and advice on big national schemes as well as administering some of their own.

Grants can come from the EU, UK central government departments, trusts, charities and private sector organisations. It also comes from regional and local government.

To pretty much anyone this lot represents a bewildering, tangled, confused maze of information. Not only is it hard to track down all these organisations, it's even harder to find out about all the schemes that they might offer.

The fact that it's so difficult to wander through this maze of information puts many businesses off even finding out about schemes. But don't be put off. ideasfactory does the work for you - and it's free.

Show me the money

In the main, grants range from from £50 to £500,000 - usually in the lower orders.

If you're one of the Fords or Nissans of this world you'll probably be able to wrangle something in the meaty tens of millions to encourage you to locate somewhere new in the UK rather than overseas, or stay producing right where you are in the UK. But that's a different story!

How much you can get depends on a number of things - where you are, what you're doing, how big your company is, and how big the specific project is.

Categories

Schemes tend to focus on specific purposes. This means certain schemes will encourage businesses to invest in training (particularly vocational training for staff, although there is also support for management training in some areas) and recruitment through project-based placement schemes.

Others - particularly the Chambers of Commerce, UK Trade Partners and the DTI's International Technology Service, will focus on export and international trade, subsidising missions to new markets and secondments overseas.

The promotion of energy efficiency and environmental issues ranks highly, as do schemes designed to encourage building renovation and sector diversification. Schemes are available to help purchase new IT equipment - both hardware and software, and to encourage film making and creative arts businesses.

One of the biggest areas of focus is to encourage businesses to innovate.

Innovation is seen as the lifeblood of economic development. And you're people with innovative ideas. So you should check out in particular the SMART scheme - it has several levels, from initial market research and feasibility studies to chunky development project schemes to commercialise new processes.

Startup is also supported through grants. Of note is the Prince's Trust, who through their Startup Finance scheme offer assistance to help disadvantaged young people set up there own business where it is especially difficult to get going. Up to £3,000 can be offered for groups (1,500 for individuals) to start their own business.

Spin it

Remember that grant providers have an overall strategy they are trying to deliver. It might not exactly match your project - but how you present what you want to do will make a big difference.

In other words: spin is all important.

A good example is football clubs. Football clubs are unlikely to get handouts for building bigger stadiums. But they are likely to get grants for extending business and commercial activities; providing conference facilities; developing a youth academy etc. And of course, all of these will require a bigger stadium.

The process is usually pretty slow. It can sometimes be bureaucratic, even when things are going well. It's hard work and will require a lot of your time and there's no guarantee of success.

An example of the work involved: we have applied for a European grant. We started the process in October 2001.

It required several weeks' work to complete the paperwork, one trip to London and two trips abroad - one to Brussels and one to Madrid to meet with our partners in the project.

And that's just to get us to the stage where we put our application in at the end of January 2002. Now we're involved in negotiation - more trips, more work - and still no guarantee of success.

On the other hand we also got a £1000 grant from Business Link one week after applying. So you never can tell.

You might have to work hard for it, but it's free money. You stay in control - and it helps you get where you want to be.

Ten top tips

Talk to the grant provider before applying. Have a chat and get to know them. Find out about the chances of success before you do too much work.

Don't plan on using the money next month. It'll take a while for everything to go through - even if you're successful.

Have a good business plan - you'll need to back everything up with research and figures. The business plan might well be part of the application. And like any kind of funding, if you hand in something on the back of fag packet covered in beer and coffee stains, forget it. You might have a genius idea, but if you don't present it well, you're wasting your time.

Use the grant to support a project you want to do - rather than thinking up a project to enable you to get a grant. Otherwise you'll end up, at best, running to stand still.

Make sure you can commit the time to the application. Always make sure there's a good pay off for the time you have to spend on the project. 10 days work for a £500 grant? Don't think so.

Don't rely on getting it. Grants are competitive. That's why they're still often called awards.

Make sure you can actually do the project. If you don't achieve your agreed deliverables, then no grant. Oops.

Consider getting involved in partnerships. Public/private sector partnerships can be very strong (and sometimes essential). For a European grant, overseas partners will be essential.

Think about how you're going to match fund the grant. Think about that before you do too much work on applying.

Read the small print, and get someone else to read your application. It always helps to have someone point out where you've written gibberish and pluck out the spelling mistakes.
And finally, number 11...

Don't give up, even if you get rejected. Everyone gets rejected now and again. The people who succeed just grit their teeth and keep on going.

Andrew Diggle

Andrew Diggle is Research & Publishing Director of j4b plc.

j4b is an innovative information, research and business services company. Central to its operations is its free-to-use grants search website - part of the DTI's 'BeyondBricks' e-enterprise portal and winner of the Blue Chip best b2b website 2001.

Check out which grants you could apply for with ideasfactory's free funding search

http://www.ideasfactory.com/funding_awards/database/index.htm (Website will open in a new window)