A couple of weeks ago we organised a very popular business development day at the New Designers exhibition for recent design graduates in Islington, London. I had brought together a wide range of speakers and organisations from across the UK, to explain what they can offer to design and craft businesses. Especially in the current climate I think it is really important to let people know that there are still plenty of really good support organisations out there.
But one thing really surprised me.
I had organised two panel discussions: one with a group of organisations that provide funding and funded business support programmes, another one with organisations providing support and services around marketing and offering highly subsidised stands at trade shows.
The first panel discussion was packed, with nearly 80 people, and some sitting on the floor. The second panel discussion only attracted about ten people.
I was just stunned that the first workshop (with ‘funding’ in the title) attracted so many people, while the second one which I anticipated to be equally attractive to attract so few.
During the show I talked to many new graduates, and again the most asked question was: Where do I get funding?
I was surprised that this still is the number 1 question that creatives ask.
That creatives still somehow believe that there is this ‘magic pot with money’ that organisations will hand out to you to start your business.
I am upset that nobody has told them yet:
There is no general pot of funding like that!
And no, the recession hasn’t got anything to do with that … there hasn’t been any money like that for a long time!
There have only been a few organisations that provide funding for business start-ups in the last couple of years – The Prince’s Trust being one of the better known ones, and then only for very disadvantaged young people.
The majority of start up business funding in the last decade came from either European funding or local councils, with a couple of national programmes. The national government spent very little on start up funding. (Please note that most of the European Funding was stopped at the end of 2007, as part of a European Agreement in 2000 to provide more business support funding to Eastern European countries. It will be rare now to see any European Funded programmes in the UK, unless in severely economically depressed areas.)
The majority of this funding was and is spend on (specialist) business support organisations providing free business advice, support and training to people who wanted to set up or grow their own business. Experts like that need to be paid for, and that’s were a lot of funding went to. There have been very few programmes in the last ten years where you would get a grant to spend as you wished. If there was a grant then very often you needed to spend it on either (selected) training or equipment.
Just a bit of context – I have worked in creative business development advice and support for over 10 years, as a business adviser and an Executive Project Manager, in the non-profit and private sector. I have fundraised and managed some of the largest creative business training and programmes in London, with annual budgets of over a million pound. I have run many grant programmes, and I really know how much a cheque of £250 or £1,000 can make to a fledging business.
What you need to understand is, that if you are looking for funding, your funder is like a client. And like any other client they wonder why they should spend money with you.
Funding is there to support very specific government targets, such as employability. That’s why there was more business start up funding available in economically deprived areas of the country, such as East London were I worked.
Why should government give you money to start a business, which is tax payer’s money after all?
There is still some funding around, but it is much more specific then ‘this pot of money that you can tap into’. There is funding for social enterprises, for specific cultural projects, for young entrepreneurs, for high growth businesses.
Remember funding is there for specific purposes to achieve government’s targets, not to help you individually!
If you do your research you will be able to track funding down, as they constantly change.
But if you are a sole trader or haven’t got a track record then the chances of you getting any funding, are pretty slim. No client would offer you a major project when you are just starting out. Why should a funder trust you personally with £10,000 if you haven’t proven that you can actually deliver?
Funding comes with a lot of strings attached, and you will need to achieve specific targets in return for funding. Increasingly the still existing funding pots have been put together, and gone to larger businesses to deliver against large results.
So, what should you do if you need money to start your business?
First of all see how much money you really need. Do a budget. You might be surprised how little you actually need to get your business off the ground. I am currently reading Chris Guillebeau’s The $100 Startup: Fire Your Boss, Do What You Love and Work Better to Live More which has lots of inspirational stories of people starting very successful businesses on very low budgets (indeed $100!). Be inspired, get creative and become more pro-active!
Most businesses actually get started from own savings or loans from family and friends. Make sure that you have got a written agreement about the loan, when and how you will pay this back, and what happens if you aren’t able to pay it back. It is essential to be formal when you lent from friends or family to maintain a good relationship.
Get some clients and real life experience and feedback of your products or services, and create a business plan based on those figures. Then get a small bank loan or an overdraft to bridge any potential cash flow problems. Especially in combination with your own savings or borrowings, you will be more likely to get your loan.
Start small, get some clients, and work your way up from there. We live in a wonderful time where you can start an online business on a part-time basis with very limited start up costs. Have a go!
Be pro-active, be creative with what your business is about and get some clients – it’s a far easier to make money than waiting around for funding!