Unlike many others I don’t take the standard view that grant funding is the default way to start your social enterprise.

I believe if you’re going to run a viable and sustainable business you should have a business model based on generating revenue through trading (or where relevant crowdfunding), and use this to start generating income from day one of running your business.

Yes like other businesses you may need to invest your own funds, get a loan or seek out investment to cover the start-up costs, and sometimes grant funding might also be a solution to this but generally I think you should seek to generate income like any other business who’s just starting out.

Why do I suggest this?

Because if you start with grant funding the risk is you become reliant on it and continue to use it as a way to fund your business. And at the end of the day if grants are funding your business, you’re not actually a business but a charity or not for profit organisation, you’re not a trading, viable business.

But I do recognise grant funding is helpful and I have used it myself at times for the following three reasons, so I share here when I think grant funding is a useful way to pump-prime your activities on the proviso that you also have a business model and business plan that enables you to generate income through sales.

When to apply for grant funding in your social enterprise:

1.       When you first get started and want to test out what you do, need seed funding or a small investment to buy equipment

If you can get started without it, don’t apply. Too many people assume grant funding is the way to start a social enterprise, it’s not. Or at least it doesn’t have to be. If you’re not sure how to get started generating an income as a social entrepreneur check out this blog: 7 ways to start generating an income straight away as a social entrepreneur (that doesn’t include grant funding)

2.       To pilot a new project or initiative

If you have an idea for a new project or want to pilot something different to what you already do as your core business or services, grant funding can be a great way to support this with a little bit of seed funding to get started. I think this works particularly well where the funding is used to trial a new service or programme for beneficiaries (who are in need, the core to your social mission, or unlikely to pay for the service themselves).

However you still need to consider how this activity, project or service will be delivered beyond the pilot / seed-funding. Most funders require you to consdier this as a social enterprise.

3.       To innovate or build capacity

At times in my own social enterprise we have applied for funding to build capacity, recruit new team members (who would then enable us to generate more income through trading), or innovate in some way or another. I think f there is funding available to support this in your area / niche then it’s worth exploring because I recognise capacity if one of the biggest limits to growing a social enteprises’ impact and at the end of the day that’s exactly what we’re all about - creating more positive change in the world for people and planet.