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Going local for your start-up funding

Monday, 29 October 2012 | By Alexandra Cain

feature-community-thumbFrankston City Council recently announced a new grant scheme for start-ups, one of the few local councils around the country to offer grants to early stage ventures.


The Victoria-based council is offering a suite of three grants, one of which is aimed squarely at start-ups (applications are open until November 12).


While such grants are rare, Frankston is not unique. So which councils are doling out cash to start-ups, how does the process work and how can you increase your chances of being a recipient?


In Frankston’s case, the grants are part of the council’s economic resilience program. Successful applications will receive up to $10,000 in grant funding. The council will look to offer fewer than 10 grants in this first round.


Frankston City Council’s Jonathan Reichwald, whose title is ‘city centre place maker’, says the scheme aims to increase local employment opportunities, to help revive the city.


“The program has six objectives,” he says.


“These include employment creation, to build a resilient economy through sustainable and diverse industries, to improve commercial occupancy rates, to develop a creative hub, to reactivate the commercial precinct and to shift perceptions about Frankston.”


What this means is that successful grant applicants need to demonstrate how their business will help Frankston achieve these objectives.


For instance, to meet the sustainability objective, successful applications might demonstrate they have a certain amount of negotiating power with suppliers and customers, or be able to withstand the threat of new entrants into their market.


“If a business just has one customer, or if suppliers can dictate terms, this doesn’t offer business sustainability,” Reichwald explains.


Aside from the grant, successful applicants will receive a $3,000 marketing package, including a one-month campaign in the local newspaper, a YouTube video and membership to a local business association.


“The grant is not a cash handout – it’s a reimbursement model. Recipients have to provide invoices for business growth ventures, so funds can’t be used for day-to-day expenses, they must be used for things like business development, web site development, marketing or to purchase specialist equipment,” Reichwald says.


Frankston is not the only council to offer grants for start-ups. Its start-up grant funding model is based on a similar program developed by the City of Melbourne.


Reichwald says the application process for one of Frankston’s grants is much easier than the City of Melbourne’s.


“We’ve made the application process 60% easier. But we require all successful grant applications to sign a commercial lease,” he says.


The City of Melbourne’s program has been running since 1996. Applications for its next round of funding grants for start-ups will be open between February 2013 and March 2013, with grants starting from July 2013.


The council offers grants of up to $30,000 for start-ups. Similar to Frankston’s grants, Melbourne’s grants aim to ‘increase the diversity of the city’s business community’.


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Successful applicants can use the grant to fit out business premises, to build a web site, to buy IT or specialised equipment or to help expand the business.


Like Frankston, the City of Melbourne is looking for businesses with a strong point of difference, a product or service that is well thought-out and which will deliver an economic benefit to Melbourne.


Applications from industries including advanced manufacturing, biotechnology, finance and business services, environment services, creative industries, higher education, information and communication technologies, hospitality and retail will be looked on favourably.


Past grant recipients have included, Electron Workshop, a co-operative workspace for digital businesses, City Handyman, a mobile property maintenance service and Gumbo Kitchen, a food van that specialises in dishes from New Orleans.


The City of Sydney also has a program to help fund start-ups, originally borne of its initiative to revitalise Sydney’s laneways.


The ‘fine-grain’ initiative awards funding of up to $30,000 to young businesses that are located in underutilised spaces that have not previously been used by businesses of the type that are applying for grants.


The City of Sydney’s business adviser, Richard Roberts, says successful grant applicants have to demonstrate their business is unique.


“An example is the Absinthe Salon in Surry Hills. It’s the only business of its type [in that it] only sells absinthe-based drinks,” he says.


The City of Sydney grants program has been running since 2008 and has awarded $245,000 in grants to date.


One of the successful recipients of the City of Sydney’s grants is Yu Sasaki, who runs a macaron business Café CreAsion.


Sasaki heard about the program when one of his staff saw it featured in the free newspaper mX, and encouraged him to apply. He says he was awarded the grant because of the unique nature of his shop: it’s solely focused on handmade macarons. Customers come from all over Sydney to try one of his macarons.


The shop also meets the council’s criteria of helping to revitalise Sydney’s laneways.


Sasaki has used the grant to fit out the shop and buy kitchen equipment and his involvement in the program has also assisted him to learn better business principles to help lift sales.


His advice to other businesses wishing to win a grant is to focus on differentiating the enterprise from other similar businesses.


“It has to be a very unique concept which attracts people from other areas,” he says.


Tips to being a successful council grant applicant:

  • Know your business – be clear in your application about what you are trying to achieve and your strategy.
  • Be concise and honest in your responses.
  • Make sure your point of difference is front and centre in your application.
  • Take part in council-sponsored information and advice sessions to learn how to properly structure your application.
  • Talk to other winners about what led them to win their grant.