One of the questions we’re asked the most is, “How much money should I apply for?” It’s a great question. If your business is generating $500K a year in sales, a million dollar grant would be a tremendous liability instead of an asset for at least two reasons.
The first reason is that every dollar granted must be accounted for and reported to the grantor. Landing an enormous grant would require your operation to instantly hire high quality people in high visibility positions. If there is anything small business owners agree on, it’s that finding high quality people is one of the more difficult challenges in business.
The second reason is that your business needs to operate more or less within the parameters of business growth as defined in your business plan. Windfalls of revenue have closed more than a few businesses. Your business plan will include not just vital info on markets, products, and support, etc, but also policies, procedures, and an organized approach to manage every situation and change.
It normally takes years to go from $500K in revenue to one or more million dollars in revenue. It takes many, many small bricks to build a business. Receiving a windfall of funding without a plan and ready resources to execute the plan would be stressful in the least, and at worst, a liability to your business.
My rule of thumb for how much funding to seek is a grant equal to approximately half of your current year’s revenue. This should allow you to make relatively modest changes to your operation from the receipt of a grant that is “right sized.”
Knowing how much funding to apply for is part of the growth elements of your business or non-profit operating plan. The better the plan, the more likely you’ll derive maximum benefit, in a timely manner, from the right grant.
We’d love to hear your story. Reach out to us at grantsforyou.org.
Warm Regards,
Neil.