The late-night TV infomercial is so alluring: "Come to our seminar and come across out how you are able to get your federal government grant to start out a little organization!" a breathless announcer intones. "Just $300." A smiling entrepreneur assures in a taped testimonial: "I got $40,000 for my tiny company!"
The bright, red words: "
Free Money!" fill the screen. It is an old story, and one that makes small-business consultants, counselors, and advice columnists (this one included) cringe. Whenever such ads run, we brace ourselves for calls and e-mail from entrepreneurs and would-be entrepreneurs who can't wait to get their hands on that no cost govt income - which does not exist. Why are men and women who supposedly desire to be hard-headed, no-nonsense business types so gullible? This is really a subject the Smart Answers column has addressed before, but I periodically revisit it. That is since these aren't harmless hoaxes. Seminar sellers and ebook hucksters routinely con individuals into shelling out hundreds of dollars to hear lectures or purchase directories that contain information readily accessible (yes, seriously for free!) in any public library or on the internet.
"I've been working in small-business advancement for 16 years, and this urban legend hardly ever goes away," sighs John Rooney, a professor on the Lloyd Greif Center for Entrepreneurial Studies with the University of Southern California. "Interest and calls peak when some new ebook or ad kicks in."
"BRIGHTEST TECH MINDS." Typical sense as well as the most fundamental awareness of company principles need to tell entrepreneurs that no one particular besides Mom and Dad (perhaps) will give you no-strings funds to start out a for-profit company. "If the government was within the position of providing all with the funds totally free to individuals who start off their own organizations, we wouldn't last lengthy," says Mike Stamler, a spokesman for the U.S. Modest Business Administration in Washington, D.C. "Not to mention that the American individuals would never ever stand for the federal government setting people up in business at no cost, and all at taxpayer risk."
Yet, the myth persists. Like most con artists, the free-money hucksters take a grain of truth and distort it. You can find a few extremely specific grants for modest enterprises. A look with the details shows the dollars is hardly totally free. It comes with a host of restrictions and quid pro quos. For instance, some local agencies give tiny grants to organizations that locate in poor areas and guarantee jobs to folks in an underemployed community, says Phil Borden, director from the Women's Enterprise Development Corp., a Lengthy Beach (Calif.) nonprofit organization assistance center.
There are also some very restrictive, difficult-to-obtain grants given to tiny organizations to analysis new technologies for the authorities. "There is some thing called the Smaller Organization Innovative Study (SBIR) program that gives entrepreneurs as much as $100,000 to study an thought that is considered promising and as much as $1 million to create products from it, if the study pans out," Borden explains. "The dilemma is, the promising ideas have to do with things like how to capture a satellite in orbit and repair it. The folks who compete with intricate, detailed proposals for these grants are experts in engineering and science and have the brightest technology minds within the country. The notion that this type of funds is readily available to folks off the street can be a joke."
Prepared VICTIMS. Still, the free-money hucksters discover prepared victims simply because folks need to believe there's a way around the challenging work of raising capital. "So numerous men and women say they heard it from a friend or saw it on TV. Of course, they've in no way truly met anybody who got any cost-free money. It becomes like the Holy Grail of little enterprise, and a great deal of business owners get caught up in this strategy that it's out there," Rooney says.
The true believers are amazingly persistent. "About six or eight years ago, there was a scam like this that produced a run of calls," says the SBA's Stamler. "The huckster on the heart of it implied that these grants were there, but the administration didn't would like to let everybody know about them," Stamler recalls. "He told men and women not to take 'no' for an answer when they known as us."
Rooney says he once ordered a "free-money" book advertised on television.The author claimed each and every entrepreneur was entitled to a federal government grant. Rooney received a directory of farmer's subsidies, Housing & Urban Advancement programs, and government-loan applications.
What about those testimonials from happy entrepreneurs? Listen closely, Stamler says. They usually say they "got" so much federal government cash for their tiny enterprise - they don't say how. Most of those featured business owners have gotten small-business loans, he says. The SBA guaranteed more than $16 billion in loans during fiscal 1999 through its three major financing programs.
LEGITIMATE SOURCES. The irony is that in this boom time for tiny enterprise, you'll find numerous sources of loans or equity financing for startups. "Money's not that difficult to get from friends and family if you've got a actually good strategy," says Rooney. "I've seen college students raise millions with their dot.com ideas. Why waste your time with the snake-oil salesmen when you could be talking to professionals who know what they're doing?" After all, it's not as though the average startup needs many millions to get off the ground.
As Jim Weidman, spokesman for the National Federation of Independent Business enterprise points out: "Most new enterprises are started with a really modest amount of dollars, around $5,000. So folks come up with it out of their personal savings or borrowing from their relatives, unless they are buying an ongoing enterprise or starting a organization that needs loads of initial funding for inventory, working capital, or buying or leasing a building."
The late-night TV infomercial is so alluring: "Come to our seminar and come across out how you are able to get your federal government grant to start out a little organization!" a breathless announcer intones. "Just $300." A smiling entrepreneur assures in a taped testimonial: "I got $40,000 for my tiny company!"
The bright, red words: "
Free Money!" fill the screen. It is an old story, and one that makes small-business consultants, counselors, and advice columnists (this one included) cringe. Whenever such ads run, we brace ourselves for calls and e-mail from entrepreneurs and would-be entrepreneurs who can't wait to get their hands on that no cost govt income - which does not exist. Why are men and women who supposedly desire to be hard-headed, no-nonsense business types so gullible? This is really a subject the Smart Answers column has addressed before, but I periodically revisit it. That is since these aren't harmless hoaxes. Seminar sellers and ebook hucksters routinely con individuals into shelling out hundreds of dollars to hear lectures or purchase directories that contain information readily accessible (yes, seriously for free!) in any public library or on the internet.
"I've been working in small-business advancement for 16 years, and this urban legend hardly ever goes away," sighs John Rooney, a professor on the Lloyd Greif Center for Entrepreneurial Studies with the University of Southern California. "Interest and calls peak when some new ebook or ad kicks in."
"BRIGHTEST TECH MINDS." Typical sense as well as the most fundamental awareness of company principles need to tell entrepreneurs that no one particular besides Mom and Dad (perhaps) will give you no-strings funds to start out a for-profit company. "If the government was within the position of providing all with the funds totally free to individuals who start off their own organizations, we wouldn't last lengthy," says Mike Stamler, a spokesman for the U.S. Modest Business Administration in Washington, D.C. "Not to mention that the American individuals would never ever stand for the federal government setting people up in business at no cost, and all at taxpayer risk."
Yet, the myth persists. Like most con artists, the free-money hucksters take a grain of truth and distort it. You can find a few extremely specific grants for modest enterprises. A look with the details shows the dollars is hardly totally free. It comes with a host of restrictions and quid pro quos. For instance, some local agencies give tiny grants to organizations that locate in poor areas and guarantee jobs to folks in an underemployed community, says Phil Borden, director from the Women's Enterprise Development Corp., a Lengthy Beach (Calif.) nonprofit organization assistance center.
There are also some very restrictive, difficult-to-obtain grants given to tiny organizations to analysis new technologies for the authorities. "There is some thing called the Smaller Organization Innovative Study (SBIR) program that gives entrepreneurs as much as $100,000 to study an thought that is considered promising and as much as $1 million to create products from it, if the study pans out," Borden explains. "The dilemma is, the promising ideas have to do with things like how to capture a satellite in orbit and repair it. The folks who compete with intricate, detailed proposals for these grants are experts in engineering and science and have the brightest technology minds within the country. The notion that this type of funds is readily available to folks off the street can be a joke."
Prepared VICTIMS. Still, the free-money hucksters discover prepared victims simply because folks need to believe there's a way around the challenging work of raising capital. "So numerous men and women say they heard it from a friend or saw it on TV. Of course, they've in no way truly met anybody who got any cost-free money. It becomes like the Holy Grail of little enterprise, and a great deal of business owners get caught up in this strategy that it's out there," Rooney says.
The true believers are amazingly persistent. "About six or eight years ago, there was a scam like this that produced a run of calls," says the SBA's Stamler. "The huckster on the heart of it implied that these grants were there, but the administration didn't would like to let everybody know about them," Stamler recalls. "He told men and women not to take 'no' for an answer when they known as us."
Rooney says he once ordered a "free-money" book advertised on television.The author claimed each and every entrepreneur was entitled to a federal government grant. Rooney received a directory of farmer's subsidies, Housing & Urban Advancement programs, and government-loan applications.
What about those testimonials from happy entrepreneurs? Listen closely, Stamler says. They usually say they "got" so much federal government cash for their tiny enterprise - they don't say how. Most of those featured business owners have gotten small-business loans, he says. The SBA guaranteed more than $16 billion in loans during fiscal 1999 through its three major financing programs.
LEGITIMATE SOURCES. The irony is that in this boom time for tiny enterprise, you'll find numerous sources of loans or equity financing for startups. "Money's not that difficult to get from friends and family if you've got a actually good strategy," says Rooney. "I've seen college students raise millions with their dot.com ideas. Why waste your time with the snake-oil salesmen when you could be talking to professionals who know what they're doing?" After all, it's not as though the average startup needs many millions to get off the ground.
As Jim Weidman, spokesman for the National Federation of Independent Business enterprise points out: "Most new enterprises are started with a really modest amount of dollars, around $5,000. So folks come up with it out of their personal savings or borrowing from their relatives, unless they are buying an ongoing enterprise or starting a organization that needs loads of initial funding for inventory, working capital, or buying or leasing a building."