By Oliver Milman
Friday, 25 March 2011
Last week, the ACCC warned budding entrepreneurs to be wary of scammers that set up websites claiming to have access to government grant cash.
The rort, which involves paying a $199 fee to release the non-existent funds, is doubtlessly aimed at the thousands of start-ups that try, and fail, to get access to genuine grants.
“Start-ups always find it very tricky to get grants because of their lack of credibility,” says Peter Nolle, director of government grant consultancy Treadstone. Nolle started the business after experiencing his own frustrations in securing a grant.
“Start-ups in Australia are under-serviced when it comes to grants, compared to businesses in the US. The support, visibility and opportunities just aren’t promoted here as they are elsewhere in the world.”
Nolle paints a sobering picture for any start-up hoping to get their hands on a grant. But it’s not impossible. We outline 10 steps to help boost your chances of cashing in.
Grants, of course, aren’t open to every kind of business out there. Their ostensible purpose is to support industries that boost certain communities or Australia’s national interest. They aren’t meant to lavish you with a comfortable, risk-free lifestyle.
Before you apply for a grant, you need to see if you’re eligible. If you are, check on whether companies in your sector are currently enjoying a successful run.
“The money has been in solar, biofuels, water technology and manufacturing,” says Ben Cusack, grant specialist. “The government wants to be seen to be supporting these industries.”
Your business plan is the cornerstone of any grant application. Without a well set-out plan, you have little hope of securing any money.
“You need to show a clear understanding of your business, goals and direction, your marketplace, the problem you’ll solve and your competitors,” says Nolle.
Government agencies such as Commercialisation Australia, which offers matched funding grants of up to $2 million, are perennially inundated with applications for cash. What makes your plan stand out from the crowd? Without an answer to this question, don’t’ waste your time.
Your plan may need to be comprehensive, but that doesn’t mean that you need to give the government an overly detailed outline on every single aspect of the business.
“It’s all about succinct articulation,” says Cusack. “I’ve seen applicants put forward five pages where they only need 100 words and their applications have fallen over.”
And with this pithy advice, let’s move quickly onto the next tip.
The stark reality for start-ups is that, without some kind of demonstrated path to success, the Government is unlikely to part with its money.
“Money usually goes to businesses that need it the least,” says Cusack. “The Government is risk-adverse and wants to see experience before it gives away money. They probably worry that there will be a consumer backlash if they back a lot of start-ups that then fall over.”
“They want to back someone that has a project ready to go on day two. For example, to be eligible for money for a consultant to write you a business plan, you need to make $500,000.”
The situation may seem unfair, but there’s simply little alternative to working hard, proving your concept and pulling in plenty of sales. Once you’ve done this, be prepared to run the grant gauntlet again.
You may be able to catch the eye of a government apparatchik with your grant application, but can you actually back up what you’re promising to do?
“For matched funding, where the government typically puts in funding 50/50 with you, you need the money in the bank – it can’t just be a promise,” says Cusack. “I’ve seen companies that had great concepts fail because they haven’t got the money.”
The dissemination of information on grants to start-ups is, frankly, a mess. “It’s not easy to find new grants – you can’t just subscribe to an email service to find out when they come out,” says Cusack. “The Government portal often has old information on it. It’s not updated that often.”
This lamentable situation is compounded by the fact that the lead-up times for grant applications are relatively short. Provided that you’re lucky enough to discover a grant the day that applications open, you will probably only have a four-week window to compile your bid in before the deadline.
Keep an eye on sites such as Government Grant Guru for news on upcoming grants and if you miss a deadline, don’t despair.
Many grants, ranging from the Smart Water Fund to the Competitive Business Fund are annual. If you’ve missed out, save the date and give it a good crack next year.
Securing grants can be a bit of a geographical lottery. According to consultancy firm GrantReady, there are currently 47 grants available up to $1 million in NSW, compared to 109 in Victoria.
Queensland and South Australia trail in with 40 and 28, respectively. At federal level, there are 164 grants.
“All of the grants at state level are policy driven, in order to win votes,” says Nolle. “Queensland and Victoria are generally the two best places for grants as they both have had strong policies on job creation.”
“There’s also funding for businesses in regional Australia, designed to retain value in those areas. You can get a grant of up to $250,000 if you can show that you will create jobs in regional Australia.”
One of the major sources of grants outside the government is the university sector. Many universities hold entrepreneurial competitions, such as the University of Queensland’s business plan competition or Melbourne University’s Entrepreneurs Challenge, with cash prizes.
Cusack cites these two universities, along with RMIT and Swinburne, as having the best programs for fledgling businesses.
“You can get money and, almost as good, get students to write modelling and business plans for you,” he says. “It’s a win for you and for them.”
You can’t suddenly conjure up a lengthy business history in order to land a grant, but you can arrange your start-up’s personnel in order to maximise your chances.
“You need to demonstrate a viable business model to get a grant,” says Nolle.
“The government likes to back winning horses with a great track record. That’s difficult for start-ups, but they can leverage the experience of the owners.”
Like any other investors, the Government finds experienced, knowledgeable founders a reassuring factor when handing out grants.
If you or your co-founder aren’t steeped in corporate history, don’t fret. Attempt to form a board of directors, offering either equity or a profit share, that makes your business appear to be a serious heavy hitter.
Several industry groups either provide funding for members or assist them in securing grants from the Government and elsewhere. For example, the Australian Interactive Media Industry Association has links with trade and funding bodies for its members.
If you’re not a member of your relevant industry body, sign up. You may even find help from big-name businesses. While not quite at the level of IBM’s support for start-ups in the US, there are programs to help entrepreneurs, notably the Microsoft Biz Spark scheme and the Jumbuck-backed Launchpad program.