Every once in awhile we see an ad running on television or hear one on the radio that talks about “free money” that is available from the U.S. government for the purposes of starting a new business. When I was a small business counselor, I cringed every time that little gray haired man danced around on the screen in his question mark suit. I knew my day was headed for big trouble.
Invariably right after such commercials aired, I would receive hundreds of phone calls from people who, of course, wanted me to help them take advantage of some of that “free money.” I unfortunately then had the pleasure of being the wet blanket who had to tell them that it wasn't quite as simple as it seemed.
It would be easier if the advertisement was just plain false. However, the truth is that it is not. The gentleman in question doesn't lie in what he says. He simply doesn't bother to tell the whole story. Therein lies the problem.
It is true that the federal government gives away hundreds of thousands of dollars of grant money every single year, specifically for the purpose of starting new businesses. However, often times such money is slated for specific types of industries, certain locations of the country, and/or certain groups of people. And a set of restrictions is also established with regard to “how” and “when” the grant money can be spent. Those minor details are not found out until the book - which the ad was crafted to sell - is purchased. Only then, do people find out that most average citizens just don't qualify.
For the most part, people must realize that pinning their hopes on “free money” is not particularly realistic. Think about the old saying “you don't get something for nothing.” It definitely applies here. Even those types of businesses that are actually eligible for grant funds will be expected to risk something of their own.
Even businesses seeking grant funds or a small business loan, may be expected to provide some equity into the deal. For the purposes of a small business loan that is at least 20%. Sometimes the equity can be in the form of tools, equipment, inventory, or other goods that the business already owns. Sometimes, however, it must be cash. Either way, there is almost never a totally free ride. Nor should there be!
Anyone wanting to start his or her own business must be willing to sacrifice something. It they don't, chances are they won't ever take the business 100% seriously. If it is too easy to back out when the going gets rough, that is exactly what some people will do - run.
Real entrepreneurs understand this concept and embrace it willingly. The risk is, after all, half the fun and half of the reward. Building something out of nothing is one of the greatest pleasures that life has to offer. It gives human beings a sense of self-satisfaction that cannot be easily matched. On the other hand, if they allow someone else to take all of the risks, it is unlikely that the end result will be as satisfying at all.
“Free money” sounds like a great concept, but it isn't really what is needed. Successful businesses are built on the blood, sweat, tears, and, yes, even the money of their owners. It is the very fact that sets them apart from all the rest.
Don't get me wrong, those who fit within the parameters of small business grants can - and should - take advantage of the money. Just don't rely solely on “free money” as the means for starting a business. Doing that is shortsighted and takes away a lot of the fun of building something all on your own.
Look for my next article “It's Not Raining Loans, But They Do Exist” for more information on obtaining money to start a new business.
