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What keeps small businesses small?
3 things that might help SMEs seize government grant opportunities
I watched the BBC comedy docudrama ‘Micro Men’ last week, following the fortunes of the two inventors behind the home computer boom of the 1990s. There was plenty to make me smile, quite apart from the carefully crafted comedic script; I have, after all, served my time as a project manager for mad inventors. As Acorn Computers grew into a mighty oak, before being cut down to size as computing went global and the big US firms took over the forest, it needed an injection of cash from time to time.
Acorn was based in Cambridge, made good use of the locally grown boffins and, if the BBC version is to be believed, took advantage of wealthy benefactors willing to support spin out companies from the colleges. All that was required to secure the capital was a cosy chat in a stately study as the benefactor wrote out the cheque - oh happy days.
Now to be fair, government and the European Commission are falling over themselves to be benefactors giving money to small companies today. Particularly if they are developing Renewable Energy or Clean Tech products. They are desperate for them to work away in their micro labs coming up with the next big thing that will save the world, employ highly skilled graduates and raise the average salary in lower income areas, such as there are in some parts of the South West region. And the entrepreneurs and inventors are equally keen to have the money to use for just that purpose. So what’s the problem? Well, it’ s the administrative process, which is a long way from that cosy little chat.
Now I’m not suggesting that taxpayers’ money should be handed out liberally without a proper assessment of return on investment but, for funder and applicant alike, the process is a time consuming, and therefore costly, business. Would be entrepreneurs describe the lengthy documents requested of them, with pages of repetitive description and endless forms. They point out that it can be months before they know whether the money will be forthcoming and, if it is, they face hours of work on extra evaluations and reports to secure the next tranche of funding. In short, for many of those that the grants are meant to support, cost benefit analysis shows little, if any, net benefit by the time they’ve sent in the final report.
Here are three small changes that might make a big difference:
Application – a lighter, more focussed approach
UK government has made some great steps in this direction. There is now a more limited number of grant types to choose from, making it easier to select the right one, and they have tightened up the timescales for application and decision making; the Technology and Strategy Board (TSB) in particular make much of their changes. European grants such as FP7, though simpler than previous programmes, still require a substantial commitment from small businesses. Let’s hope they keep moving in the right direction.
Reporting – better briefing and an integrated system
I’ve come across cases where, after a tortuous application process, the euphoria of receiving the letter saying ‘yes we’ll give you the money’ seems to erase all memory of the monitoring and evaluation plan that needs to be implemented. The plan needs to be an integral part of the business process, not just a bolt-on to keep a particular funder happy. Keeping a dialogue going between both parties always helps and good review processes are valuable business development tools.
Support – expertise and an extra pair of hands
The larger grants usually fund some, if not all, project management costs. To help with your application process some funders will offer a project development grant. This is usually a small scale grant, with a small scale application procedure so you can buy in someone to put your main application together for you. Unfortunately there aren’t as many of these about as there used to be, so it’s worth looking to trusts and charities for this sort of thing. Which brings us back to that cosy chat in a stately study……
So, in a nutshell, funders report slow take-up of the grants on offer and innovators are frustrated at the time and expertise required for applications and ongoing reporting. What’s been your experience and what changes would you like to see?
