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Wisely using grant money to start your first company

LaKlusek

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Apr 7, 2018
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Katowice, Poland
The town I'm living in sometimes holds grant programmes for starting your first business - I never qualified cause I was still in college but now that I've graduated, I can benefit from such a programme.

Now I don't know how (and if) it works in other countries but where I live, the tldr version is that you get ~$7000 which you can use for pretty much anything apart from taxes (which are a mandatory of cost of ~$150 a month here) and buying cars. Oh, and also you cannot use more than 20% of the money for any land/property/estate if your business needs one. The only requirement is that the company is operational for at least 12 months (which equals 12 months of paying this $150 tax) and you can't work anywhere during that time.

So since starting my business has been a dream of mine for a long, long time now, I wanted to apply cause it's always better to start with a free 7 grand than with nothing. However, I'm really stuck with regard to what kind of company would be a good fit for a first timer and the best use of that money. When thinking about it, I decided that the best way to go about it would be:

  1. the company should be something I _wouldn't_ be able to do without the money upfront; thus, even though I'm a CS major, starting a company with making software or games being the primary focus doesn't sound like a good idea because a) I can do that without any additional money if I want to do it solo and $7k is too little to get other people on board anyway and b) even though I have a few video game pet projects, making them something market-ready (not to mention marketing or monetization plans) would be at least additional few months - months with no income and the taxes eating me up, mind you
  2. it would be good if the company started generating some kind of revenue (albeit small) ASAP so that I don't have to empty my credit cards or beg Family, Friends and Fools for money to spend on taxes. I'm not talking about "I'm rich" money, just enough so that the taxes aren't a nightmare and I can kind-of sustain myself on it without a job (which I'm not allowed to do during that time). I can't use the money from the grant _directly_ towards taxes but I can use anything generated from that money however I wish.
Do you have any suggestions as to what might be a good business to start with this kind of money to get your feet wet and get a feel for this world? The only thing that came to my mind was selling something online, like electronics for example - this certainly involves the need for money and I wouldn't be able to do it without it AND if you set a right price, the items will sell quickly, allowing you to have money to pay taxes with and reinvest in something. The problem with that is that it's not really a sustainable plan with all the competition out there and while it would turn into money pretty fast so that you can reinvest in _anything_, there wouldn't be too much to reinvest in cause as soon as I would start trying to actually make a profit and not just "sell things fast" to have money available, the competition would offer better prices 100% of the time.
Any tips, suggestions and ideas would be very, very welcome :)
 

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Andy Black

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Hmmm... I wouldn't class that as free money. You can see already the price you're having to pay to get it. You're no longer thinking of who you can help and just doing it, you're thinking of how to get that grant.

Personally, I'd forget about grants and go find people you can help, and then ones that pay you.

There's grants available here in Ireland, but if I was to chase them then it would be at the price of not serving my clients.
I'd rather get revenue from clients than from the Government.
 
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LaKlusek

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Apr 7, 2018
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Katowice, Poland
Thank you both for the replies.

@ApparentHorizon - yeah, regretfully I can't use it that way. To get the grant, you have to specify how you're going to use it for your company, with estimates on marketing, estate, inventory/services and so on. It is free money but I can't use it literally _any way I want it_, like spending 100% on marketing or 100% or self-improvement ;)
 

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The town I'm living in sometimes holds grant programmes for starting your first business - I never qualified cause I was still in college but now that I've graduated, I can benefit from such a programme.

Now I don't know how (and if) it works in other countries but where I live, the tldr version is that you get ~$7000 which you can use for pretty much anything apart from taxes (which are a mandatory of cost of ~$150 a month here) and buying cars. Oh, and also you cannot use more than 20% of the money for any land/property/estate if your business needs one. The only requirement is that the company is operational for at least 12 months (which equals 12 months of paying this $150 tax) and you can't work anywhere during that time.

So since starting my business has been a dream of mine for a long, long time now, I wanted to apply cause it's always better to start with a free 7 grand than with nothing. However, I'm really stuck with regard to what kind of company would be a good fit for a first timer and the best use of that money. When thinking about it, I decided that the best way to go about it would be:

  1. the company should be something I _wouldn't_ be able to do without the money upfront; thus, even though I'm a CS major, starting a company with making software or games being the primary focus doesn't sound like a good idea because a) I can do that without any additional money if I want to do it solo and $7k is too little to get other people on board anyway and b) even though I have a few video game pet projects, making them something market-ready (not to mention marketing or monetization plans) would be at least additional few months - months with no income and the taxes eating me up, mind you
  2. it would be good if the company started generating some kind of revenue (albeit small) ASAP so that I don't have to empty my credit cards or beg Family, Friends and Fools for money to spend on taxes. I'm not talking about "I'm rich" money, just enough so that the taxes aren't a nightmare and I can kind-of sustain myself on it without a job (which I'm not allowed to do during that time). I can't use the money from the grant _directly_ towards taxes but I can use anything generated from that money however I wish.
Do you have any suggestions as to what might be a good business to start with this kind of money to get your feet wet and get a feel for this world? The only thing that came to my mind was selling something online, like electronics for example - this certainly involves the need for money and I wouldn't be able to do it without it AND if you set a right price, the items will sell quickly, allowing you to have money to pay taxes with and reinvest in something. The problem with that is that it's not really a sustainable plan with all the competition out there and while it would turn into money pretty fast so that you can reinvest in _anything_, there wouldn't be too much to reinvest in cause as soon as I would start trying to actually make a profit and not just "sell things fast" to have money available, the competition would offer better prices 100% of the time.
Any tips, suggestions and ideas would be very, very welcome :)
Your mindset is not right. You're looking at the wrong things.

If I were you, I'd get a real job during or after university and gain a better understanding of how business works and what the market will pay for.

You're asking the wrong questions and looking at the wrong things. That comes because of inexperience and lack of understanding. You need to gain experience and understanding.
 
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LaKlusek

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Apr 7, 2018
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Katowice, Poland
If you classify a mere $7k from the state as a notable business incentive, you should not start a business.
Well I guess it depends on where one lives. Where I live, this $7k would be something along the lines of 10 months worth of my salary as a junior programmer right after graduating from uni - which I'm sure still is very little in terms of serious business but at the same time, it sure is a lot of money to me for my first business when I compare it to starting out completely broke or working well over a year to save the same amount of money from that regular job (as of course I wouldn't be able to save 100% from each monthly salary).

What about a pawnshop/check cashing hybrid model.
That's an interesting idea, thank you. However, I'm a bit reluctant towards anything requiring me to have an actual, physical location, which this would have to. Costs of a premise, the bills there, the risk of it getting vandalized are all things I'd rather avoid for my first business with the whole bureaucracy and fighting for customers already eating me up.

If anybody has any idea, shoot - I'll be very grateful for all the input :)
 

GoGetter24

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Where I live, this $7k would be something along the lines of 10 months worth of my salary as a junior programmer right after graduating from uni
Fair enough. In either case, you can start that grant any time, right? And you'll need a business idea before you can begin, if you want the business to end up being a going concern (and thus paying beyond those 10 months). So probably best spend some time doing rigorous, honest, and realistic market research with intent, to discover a compelling play, before you apply for the grant.
 

Parker fields

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@LaKlusek
If you haven't started generating any income yet then taking out a business loan to get started could be counter-productive. You're wanting to generate income and not go backward. It doesn't make sense to start off with a loan if you are not already investing your time and efforts into some forward direction. Bypassing some of the efforts and getting the money could lead to bad investments with no traction. Why not get started in something first with some traction and then contemplate taking the leap first?

As for some ideas. I've spent months looking what direction to jump into and the lowest entry cost and highest margin would be something like consulting or services. Take any skills and experience you have and try to direct towards a market you can sell it helping businesses or consumers.
If that doesn't do it for you then you could maybe find a company to work for making software or video games to really gain more experience and knowledge in that field to become more competitive and then build your startup in your free time and transition from there.

Just ideas, at least what I would do in your positive.
 
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LaKlusek

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Apr 7, 2018
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Fair enough. In either case, you can start that grant any time, right?
Well, that's regretfully a bit more tricky - the whole application submitting and grant giveaway period takes place twice a year, and even that is not a given. There's no explicit schedule for the future so the only thing to go with is how it used to be in the past years. So about that, normally they're held twice a year - in March/April and October/November. However, this year marks the end of their contract with some European Union agency which funded at least one of these two every year (sometimes both of them) so there's no way to know for sure what the future brings. Maybe there'll be another grant program this autumn, maybe not. Maybe they'll renew the contract and it'll still be two programs a year, maybe they won't and it'll be only one, on some random month. That's why I'm thinking heavily about this one - because of the uncertainty of the future ones + it being in the right time for me (i.e. I've graduated so I qualify for it).

If you haven't started generating any income yet then taking out a business loan to get started could be counter-productive. You're wanting to generate income and not go backward. It doesn't make sense to start off with a loan if you are not already investing your time and efforts into some forward direction. Bypassing some of the efforts and getting the money could lead to bad investments with no traction.
Yep, I do 100% agree with that but the grant I'm talking about isn't a loan - if you sustain the company for the aforementioned 12 months, you don't have to return a penny. That's why it's interesting - if it was a loan, I would be of the same opinion as you of course.

As for some ideas. I've spent months looking what direction to jump into and the lowest entry cost and highest margin would be something like consulting or services. Take any skills and experience you have and try to direct towards a market you can sell it helping businesses or consumers.
If that doesn't do it for you then you could maybe find a company to work for making software or video games to really gain more experience and knowledge in that field to become more competitive and then build your startup in your free time and transition from there.
I see, thanks a lot for your input :)
 

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Parker fields

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Yep, I do 100% agree with that but the grant I'm talking about isn't a loan - if you sustain the company for the aforementioned 12 months, you don't have to return a penny. That's why it's interesting - if it was a loan, I would be of the same opinion as you of course.
Epic miss on my part, In that case, find your market and maybe work in that market and get your traction first. Know the requirements and restrictions of the grant and transfer over accordingly.
 
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LaKlusek

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Apr 7, 2018
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Katowice, Poland
Epic miss on my part, In that case, find your market and maybe work in that market and get your traction first. Know the requirements and restrictions of the grant and transfer over accordingly.
Yeah, I guess this may regretfully be the way to do it (i.e. not blindly going in head-first) :( Thanks for your input :)
 

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