Busting the myth of funding

I once organised a Start-Up Day at New Designers, a major exhibition for new design and craft graduates in London.  It’s a full-on day with loads of different speakers, experts, successful creatives and organisations that can help new graduates start their own craft or design business.  I always think it is really important to let new creatives know that there are still plenty of really good support organisations out there. And I am very happy to promote other experts and suitable creative business organisations too.

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 100 visitors.

The second panel discussion only attracted about ten people.

I was 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, attracted so few. During the show, I talked to many new graduates, and again the most frequently asked question was: Where do I get funding?

I was surprised that this is the number one question that new creative graduates ask. That creatives still somehow believe that there is a ‘magic pot of money’ that organisations will hand out to start a business.

I am upset that nobody has told them …

There is no magical pot of money for you!

The recession, Brexit, nor the pandemic have anything to do with that … there hasn’t been any money for a long time!

There have only been a few organisations that provide funding for creative business start-ups in the last couple of years – The Prince’s Trust is one of the better-known ones, and that is 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 only a couple of national programmes.  The government has spent very little on startup funding. (Please note that most of the European Funding was stopped at the end of 2007. Of course now post-Brexit there is hardly any European funding left in the UK, and none of that has been replaced by the UK government. Most local councils have very limited resources to provide support or funding for local businesses too).

The majority of this funding was and is spent on (specialist) business support organisations providing free business advice, support and training to people who want to set up or grow their own business.  Experts like that need to be paid and that’s where a lot of funding went on.

There have been very few programmes in the last ten years where you could get a grant to spend as you wished.  If there was a grant, then normally you’d have to spend it on either (selected) training or equipment.

A bit of context –  I have worked in creative business development advice and support for over 20 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 pounds.  I have run many grant programmes and I really know how much a cheque for £250 or £1,000 can make to a fledging creative 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 want to know why they should spend their money with you. Especially now when money is tight.

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 where I worked or Wales and Cornwall where a lot of European funding was spent.

Why should the 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 than ‘this pot of money that you can tap into’.  There is funding for social enterprises, for specific cultural projects, for young entrepreneurs, and for high growth businesses. For a list of our recommended funding for creative businesses and projects click here.

Remember funding is there for specific purposes to achieve government targets. NOT to help you individually! But if you do your research you will be able to track some funding down.

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 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, existing funding pots have been put together and gone to larger businesses to deliver against larger results.

 

So, what should you do instead if you need money to start your business?

1. First of all, see how much money you actually need. Create a budget. 

You might be surprised how little you need to get your business off the ground. Check out Chris Guillebeau’s book The $100 startup full of inspirational stories of people starting very successful businesses on very low budgets (like $100!).  Be inspired, get creative, and become more pro-active!

2. Most businesses actually get started from own savings or loans from family and friends. 

If you are borrowing from friends and family, 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 borrow from friends or family to maintain a good relationship.

3. Get some clients and real-life experience and feedback about your products or services.

You might have a great business idea and think that your business will fly, but please try it out first! Start small and start selling. Then create a business or financial plan based on your actual sales figures. Then get a small bank loan or an overdraft to bridge any potential cash flow problems.  In combination with your own savings or borrowings, you will be more likely to get your loan.

Another great way to test your market and to get some orders and sales is to do a crowdfunding campaign.

4. 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.  Most of our start-up clients have other commitments or a part-time or full-time job while setting up their own creative business. Start selling online – it’s a great opportunity to try your business idea out without having to spend too much money. Have a go!

To sum up what you REALLY need to do if you need money to start your own creative business is;

Be pro-active, be creative with what your business is about and get some clients – it’s a far easier way to make money than waiting around for funding!

Want to get more practical tips on getting funding for your creative business? Click here.

Want to find out how to make more money as a creative? For 8 strategies click here.

What did you learn from this article on ‘Busting the myth of funding’? Let us know in the comments box below.