Small Business Start Up Grants
A small business start up marks the beginning of the company that is categorized as small business. A small business can be a corporation, a partnership, or an owner with limited human and financial resources.
In America, a small business has fewer than 100 employees, while in the UK it has fewer than 50 employees. In countries like Australia, a small business start-up starts with 1-19 employees. A small business start-up is characterized by low investment, low turnover and profit, and fewer staff.
Small Business Start Up Grants
The small business start up can start at home, which the World Bank calls micro-enterprises. They usually have fewer than 10 employees. Higher versions of small businesses can include general stores, law firms, clinics, private agents, restaurants, freelance writers, and small manufacturing industries.
The advantage of small business start up grants are that it requires less investment. The working hours of such a company are also shorter and require less workspace.
They have a closer relationship with their customers and clients. You are very independent and flexible for the changing market.
High Risk of Bankruptcy
The disadvantage of such small business start up grants are the high risk of bankruptcy. In the absence of strong financial security, the company can suffer heavy losses, which in the event of a loan can lead to legal action against the owner.
A small business startup should follow the following methods for greater success:
Creation of a Business Plan :
For any small business start up, a well-defined plan is a must. The company’s ultimate goal should be precise and clear. The requirements should be formulated and the money to be invested carefully calculated. Almost the same amount of invested money should be available in the event of severe losses. The required number of staff and their required qualifications and skills should be specified.
Implementation of the Plan:
The business plans initially drawn up should be implemented and all goals set should be achieved. Financially, loans should be taken out if self-financing is not possible. Most banks give loans to businesses. It is easier to get loans for partnerships. After the main amount has been reached, workers are hired. This is followed by the purchase of all raw materials that are needed to start business. The small business start-up can now be fully operational.
Customer Acquisition and Marketing:
Finding the right customers is the key to success for any small business start up. A little research on market trends and customer needs will help change business strategies for higher profits. Marketing the business product to the target customers is optional depending on the type of product. Marketing for a small business startup can be limited to brochures, newspapers, and small billboards.
If the set goals are met, the small business can increase its investment, manpower and productivity. This can be achieved if the small business owners make a substantial profit. This can push the boundaries of the business and reach a larger group of customers to increase the profit margin.
How to Apply for a Small Business Start Up Grants?
Work smart AND hard. Instead of filling out an individual small business start up grants application, do what each applicant does and create a “resume” for your company that provides answers to the frequently asked questions grantors ask their applicants. While grants are truly free money, that doesn’t mean they can be made without any hard work on your part.
Some applications vary depending on your needs. For example, a grant from a local government will likely require an explanation of how your business’s growth and development will directly benefit local commerce, while a small business start up grants from a private company like FedEx might require a compelling video.
Here is some general information you may need to provide when applying for business aid:
- Time in business
- Number of employees
- Monthly or yearly sales
- How will the funds be used?
- Your company’s elevator pitch
- Your Employer Identification Number (EIN)
- Your social media handles (LinkedIn, Facebook, Twitter, Instagram, etc.)
- A photo of you (and your partners or offices, if applicable). Tip: A professional photo can go a long way, especially for companies that want to use your picture in advertising awards on their website.
- A business plan. You should already have one, but if you don’t then you can speak to an SBDC advisor or your accountant to find out the numbers, forecasts, and statistics that reflect the current state of your business and where to go down the street.
Consider Your Financing Options For Small Business Start Up
For a small business start up you need a Start-up capital for your business which can come from a variety of sources. The best way to get funding for your business depends on several factors, including creditworthiness, the amount needed, and the options available.
If you’re in need of financial assistance, a business loan through a bank is a good place to start, although these can often be difficult to come by. If you cannot get a bank loan, you can use the U.S. Small Business Administration (SBA) or another lender to apply for a small loan. [Read the Related Article: Best Alternative Small Business Loans]
Small business start up grants are similar to loans; however, they do not have to be repaid. Business grants tend to be very competitive and have requirements that the company must meet in order to be considered. When trying to get a small business grant look for grants that are specifically tailored to your situation. Options include grants for minority owned businesses, business grants for women-owned businesses, and government small business start up grants.
Startups that need significant upfront funding may want to attract an investor. Investors can lend millions or more to a start-up company in the expectation that funders will have a practical role in running your small business start up .
Alternatively, you can start a crowd investing campaign to raise small amounts of money from multiple supporters. Crowdfunding has helped numerous businesses over the past few years, and there are dozens of reliable crowdfunding platforms designed for different types of businesses.
Brand Your Business And Advertise
Before you can start selling your product or service, you need to build your brand and gain a following of people ready to open your literal or figurative doors to business.
Take your reputation online and create a company website. Many customers turn to the internet to learn more about a small business start up, and a website is a digital proof that your small business exists. It’s also a great way to interact with existing and potential customers.
Use social media to promote your new business, perhaps as a promotional tool to offer coupons and discounts to your post-launch followers. Which social media platforms you use best depends on your target group.
The best CRM software solutions allow you to store customer data in order to improve your marketing for them. A well-designed email marketing campaign can do wonders for reaching customers and communicating with your audience. To be successful, you should strategically build your email marketing contact list.
Create a logo that will help people easily identify your brand and use it consistently across all of your platforms.
Keep these digital assets up to date with relevant, interesting content about your company and your industry.
Ruthann Bowen, EastCamp Creative’s chief marketing officer, said too many startups have the wrong view of their websites.
Small Business Start Up Grants vs. Business Loan
While both of these can help you get cash for your small business start up, small business start up grants and business loans are different beasts. The main difference between a grant and a loan is whether or not they need to be paid back. In the case of loans, you have to pay back the money you borrowed; not a grant. Grants can be made by government agencies, trusts, or corporations, and can be given to individuals, businesses, educational institutions, or nonprofits.
Grants can be notoriously difficult to come by. So if you apply for funding and get rejected, consider other funding options, including business credit cards.
Here you can find more information on the differences between grants and loans.
1. Grants are Taxable Income
The IRS generally regards corporate grants as income for tax purposes. How your small business start up and how you report income to the IRS will determine how this will affect your tax time, but generally, you expect some of the grant to go to Uncle Sam.
You can avoid this potential downside of corporate grants by planning ahead and asking your accountant or tax advisor to include any grant money you receive in your estimated quarterly payments (if any) or to help you estimate tax owed and set those funds aside to lay down you don’t have a bill that is larger than expected when you pay tax. However, loans are not considered income in the eyes of the IRS.
2. You Pay Interest on Loans
Small business start up grants are free money for all intents and purposes. But even a low-interest loan is associated with costs. Depending on the type of corporate financing, you can expect an APR of between 5% and 150% depending on your personal and business creditworthiness, cash flow, business activity, collateral and other factors.
3. Grants won’t Help you Build Business Credit
It is one of the things that frustrates borrowers of all kinds – it takes credit to build credit. Building a business credit history with the major commercial credit bureaus (especially Experian and Dun & Bradstreet) requires some sort of tradeline.
While small business start up grants are not to be sniffed at – it’s free money, after all – once it runs out, you may still need extra funding to grow and expand your business. And a business grant is not reported to any person or business credit bureaus.
4. Small Business Start Up Grants are a Direct Competition. It’s not Loans
There is no guarantee that you will receive a small business start up grants or be approved for a business loan. But lending is not an either-or scenario where you compete directly with another company for the same pot of money.
If you can demonstrate to a business lender that you are creditworthy and your business finances are solid, you will likely be approved for a small business start-up loan whether or not another company in the community is applying. However, corporate grants usually have one or a handful of winners – the offer is limited. Sometimes women entrepreneurs are also likely to start their businesses. So they can know how they can get help for women business start up plans.
Not only do you have to be a great company, you also have to be the best company according to the funding parameters. For many scholarships, for which the application requirements are broad, this is no easy task.
5. Loan Can Have Consequences
If you can’t make a payment or you default on your credit, you will face consequences. The ramifications will vary depending on the type of loan and what you’re putting at risk for approval, but it can also include jeopardized equipment, a business lien or UCC filing, damaged personal or business credit, or bankruptcy.
Generally, if you’re using the money imprudently and spending it on something your business wants but may not need, your greatest risk with a small business start up grants are the opportunity cost. (Keep in mind, however, that larger grants – and federal grants especially – may have specific reporting requirements and may only release funds after certain milestones are met.)