Ask Felicia Joy: How to Find Grants For Your Business
I am interested in starting a day care center in Atlanta, Georgia. I am in school now for day care management, and I have over seven years of experience in the field. Where do I go to find grants to help me?
Ms. Q. Rucker-Woods
Dear Ms. Rucker-Woods,
You can find legitimate federal government grant opportunities online at http://www.grants.gov, which is the U.S. government’s portal for announcing competitive grant projects. Since you are planning to open a daycare, the Administration for Children & Families under the U.S. Department of Health and Human Services is the agency most likely to announce grant opportunities that you might be eligible for once your childcare center is open. You may want to join their e-mail list to keep up with news and announcements from their agency. For example, in 2010 they offered a competitive grant opportunity to boost the success of Head Start, an early childhood education program1.
Now that I have addressed your core question, I want to take this a step further and point out a few things because there is a lot of misinformation about grants.
People typically think of grants as free money to pursue their interests or business ideas. It is free money, but not really. Government grants will typically go to non-profits. They will also often require that you have matching dollars and an evidence-based plan for sustaining the program that those federal grant dollars help you create. To meet these criteria, you have to already have funding and documented results at your up-and-running organization.
Also, grants aren’t available for general business use. They have to be used for very specific projects and outcomes that the government wants to achieve. To compete for grant dollars, organizations have to submit a detailed plan that shows how their program, staff and skill sets can contribute to the overall objective. If an organization is awarded a grant, it has to submit detailed reports and keep up with a lot of compliance paperwork too. Because the government realizes that the compliance requirements could be burdensome to a small, individual organization, it often provides the grant monies to state and local governments and leaves it to them to disburse the grants further, hold grantees accountable and provide technical assistance. In the end, this means smaller grants for the organizations that are fortunate and skilled enough to get them.
If you are seeking grants to start your business, you are better off seeking an SBA-backed small business loan. There are several things in your favor. You have work experience in the child care industry, and you are pursuing an educational program that will further equip you with the skills to succeed. In addition, successful childcare businesses have an average profit margin of 39.1 percent—not the highest in the profit margin pecking order, but not the lowest.
Since you are still in school and know that daycare ownership is your goal, prepare yourself further with these steps:
1. Pull your credit record and make sure there are no errors.
2. Establish a relationship with a small business loan officer at a local bank that makes SBA-backed loans.2 Find out from this person what a dream file would look like and prepare yourself to present that dream file.
3. Consider alternative lending sources like Prosper.com.
4. Write a business plan; the process won’t guarantee your success but it will clarify your ideas.
5. Identify two or three successful daycare owners in other cities (so they won’t see you as competition) and interview them. Ask them about their ups and downs in that business and their advice for you. Do this after you’ve done the research for your business plan. Be prepared with solid questions, offer them lunch, wrap up in the time that you said you would and send them a handwritten note within a day of meeting with them.
Grace & Peace,
Felicia Joy is a nationally recognized entrepreneur who created $50 million in value for the various organizations and companies she served in corporate America before launching her business enterprise. She is often called on to discuss the ins and outs of entrepreneurial success and has appeared on CNN, FOX and in other national press. Felicia operates Ms. CEO Inc., a company that helps women entrepreneurs achieve more success, faster — as well as Joy Group International, LLC, a business development and consulting firm. Send her your questions at email@example.com or www.twitter.com/feliciajoy.