Syndication09 Oct 2010
My Article Regarding Free MoneyThe late-night TV infomercial is so alluring: "Come to our seminar and locate out how it is possible to get your administration grant to start a modest enterprise!" a breathless announcer intones. "Just $300." A smiling entrepreneur assures in a taped testimonial: "I got $40,000 for my modest organization!"
The bright, red words: "Free Money!" fill the screen. It is an old story, and a single 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 free authorities cash - which does not exist. Why are men and women who supposedly desire to be hard-headed, no-nonsense enterprise varieties so gullible? This is really a subject the Smart Answers column has addressed before, but I periodically revisit it. That is due to the fact these aren't harmless hoaxes. Seminar sellers and ebook hucksters routinely con people today into shelling out hundreds of dollars to hear lectures or purchase directories that contain data readily readily available (yes, genuinely free of charge!) in any public library or on the web.
"I've been working in small-business improvement for 16 years, and this urban legend by no means goes away," sighs John Rooney, a professor in the Lloyd Greif Center for Entrepreneurial Studies with the University of Southern California. "Interest and calls peak when some new book or ad kicks in."
"BRIGHTEST TECH MINDS." Prevalent sense and the most fundamental awareness of business principles really should tell business owners that no 1 besides Mom and Dad (perhaps) will give you no-strings funds to start out a for-profit enterprise. "If the government was within the position of providing all from the funds for free to people today who begin their own organizations, we wouldn't last extended," says Mike Stamler, a spokesman for the U.S. Smaller Business enterprise Administration in Washington, D.C. "Not to mention that the American individuals would in no way stand for the federal government setting individuals up in business at no price, 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'll find a few highly specific grants for little enterprises. A look in the details shows the dollars is hardly cost-free. It comes with a host of restrictions and quid pro quos. As an example, some local agencies give tiny grants to organizations that locate in poor areas and guarantee jobs to men and women in an underemployed community, says Phil Borden, director of the Women's Enterprise Advancement Corp., a Extended Beach (Calif.) nonprofit organization assistance center.
You'll find also some quite restrictive, difficult-to-obtain grants given to tiny businesses to analysis new technologies for the authorities. "There is something referred to as the Tiny Business enterprise Innovative Investigation (SBIR) program that gives business owners as much as $100,000 to research an notion that is considered promising and as much as $1 million to create products from it, if the analysis pans out," Borden explains. "The problem is, the promising ideas have to do with things like how to capture a satellite in orbit and repair it. The people today 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 is usually a joke."
Prepared VICTIMS. Still, the free-money hucksters come across prepared victims mainly because people today wish to believe there's a way around the hard work of raising capital. "So several individuals say they heard it from a friend or saw it on TV. Of course, they've by no means really met anybody who got any cost-free cash. It becomes like the Holy Grail of little enterprise, and loads of business owners get caught up in this idea 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 at the heart of it implied that these grants were there, but the authorities didn't need to let everybody know about them," Stamler recalls. "He told folks not to take 'no' for an answer when they called us."
Rooney says he once ordered a "free-money" book advertised on television.The author claimed every single entrepreneur was entitled to a government grant. Rooney received a directory of farmer's subsidies, Housing & Urban Advancement programs, and government-loan applications.
What about those testimonials from happy business owners? Listen closely, Stamler says. They usually say they "got" so much govt funds for their smaller 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 smaller business, you will discover several sources of loans or equity financing for startups. "Money's not that very difficult to get from friends and family if you've got a actually good concept," 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 a lot of millions to get off the ground.
As Jim Weidman, spokesman for the National Federation of Independent Company points out: "Most new businesses are started with a incredibly little amount of funds, around $5,000. So people come up with it out of their personal savings or borrowing from their relatives, unless they are buying an ongoing enterprise or starting a business that needs a great deal of initial funding for inventory, working capital, or buying or leasing a building."
The bright, red words: "Free Money!" fill the screen. It is an old story, and a single 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 free authorities cash - which does not exist. Why are men and women who supposedly desire to be hard-headed, no-nonsense enterprise varieties so gullible? This is really a subject the Smart Answers column has addressed before, but I periodically revisit it. That is due to the fact these aren't harmless hoaxes. Seminar sellers and ebook hucksters routinely con people today into shelling out hundreds of dollars to hear lectures or purchase directories that contain data readily readily available (yes, genuinely free of charge!) in any public library or on the web.
"I've been working in small-business improvement for 16 years, and this urban legend by no means goes away," sighs John Rooney, a professor in the Lloyd Greif Center for Entrepreneurial Studies with the University of Southern California. "Interest and calls peak when some new book or ad kicks in."
"BRIGHTEST TECH MINDS." Prevalent sense and the most fundamental awareness of business principles really should tell business owners that no 1 besides Mom and Dad (perhaps) will give you no-strings funds to start out a for-profit enterprise. "If the government was within the position of providing all from the funds for free to people today who begin their own organizations, we wouldn't last extended," says Mike Stamler, a spokesman for the U.S. Smaller Business enterprise Administration in Washington, D.C. "Not to mention that the American individuals would in no way stand for the federal government setting individuals up in business at no price, 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'll find a few highly specific grants for little enterprises. A look in the details shows the dollars is hardly cost-free. It comes with a host of restrictions and quid pro quos. As an example, some local agencies give tiny grants to organizations that locate in poor areas and guarantee jobs to men and women in an underemployed community, says Phil Borden, director of the Women's Enterprise Advancement Corp., a Extended Beach (Calif.) nonprofit organization assistance center.
You'll find also some quite restrictive, difficult-to-obtain grants given to tiny businesses to analysis new technologies for the authorities. "There is something referred to as the Tiny Business enterprise Innovative Investigation (SBIR) program that gives business owners as much as $100,000 to research an notion that is considered promising and as much as $1 million to create products from it, if the analysis pans out," Borden explains. "The problem is, the promising ideas have to do with things like how to capture a satellite in orbit and repair it. The people today 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 is usually a joke."
Prepared VICTIMS. Still, the free-money hucksters come across prepared victims mainly because people today wish to believe there's a way around the hard work of raising capital. "So several individuals say they heard it from a friend or saw it on TV. Of course, they've by no means really met anybody who got any cost-free cash. It becomes like the Holy Grail of little enterprise, and loads of business owners get caught up in this idea 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 at the heart of it implied that these grants were there, but the authorities didn't need to let everybody know about them," Stamler recalls. "He told folks not to take 'no' for an answer when they called us."
Rooney says he once ordered a "free-money" book advertised on television.The author claimed every single entrepreneur was entitled to a government grant. Rooney received a directory of farmer's subsidies, Housing & Urban Advancement programs, and government-loan applications.
What about those testimonials from happy business owners? Listen closely, Stamler says. They usually say they "got" so much govt funds for their smaller 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 smaller business, you will discover several sources of loans or equity financing for startups. "Money's not that very difficult to get from friends and family if you've got a actually good concept," 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 a lot of millions to get off the ground.
As Jim Weidman, spokesman for the National Federation of Independent Company points out: "Most new businesses are started with a incredibly little amount of funds, around $5,000. So people come up with it out of their personal savings or borrowing from their relatives, unless they are buying an ongoing enterprise or starting a business that needs a great deal of initial funding for inventory, working capital, or buying or leasing a building."