Seeking seed money: grants for starting a small business are available through a variety of local sources. Here's how to get them.

ROZALIA WILLIAMS RECALLS THE DAY she was awarded a small business grant in 2001 from the Miami Dade Empowerment Trust. She and the other eligible competitors had given presentations and she was now sitting with her fingers crossed under the table, waiting anxiously for the vote on which entrepreneurs would take home grants. "When the vote passed, I wanted to get up and do a happy dance, but I restrained myself. It was an awesome feeling," says Williams, founder and president of Hidden Curriculum Education Inc., a company that offers a college life skills course. She started the Miami-based business in 2000 and her 26-year-old son, Myron Davis is her business manager.

The $72,500 grant Williams received was a godsend. With it, she was able to go into the most disadvantaged neighborhoods in Dade County and give her two-day college prep course, which focuses on topics such as choosing a college, campus life, setting goals, and more. Prior to receiving the grant, Williams, 51, was financing Hidden Curriculum out of her own pocket. "Each pay period I would buy something. First I paid for the brochures and then I paid for my business cards, letterhead, and envelopes. And when I had enough people for a class, I would run out and buy just enough binders and get the inserts printed," she recalls. Williams estimates that she spent some $2,500 of her own money to get her business off the ground.

She got the grant on her first attempt after seeing an advertisement about the grant competition in the Miami Herald. A former higher education administrator with an Ed.D. from Harvard, Williams wrote the grant proposal herself, relying on her experience with grant writing for the Department of Education. "The grant selection process was very formal. I had to have my act together before I even started writing," says Williams.

Just reading the 25-page application was a task Even though she had experience with grant writing, Williams was amazed at how much was required. She needed to produce affidavits and notarized documents, and provide her federal employer identification number and corporate certification. She had to write about her company's history, goals, and track record, and explain why she was qualified to provide the service. Then she had to explain why her services were needed, how they would address the needs of the neighborhood, who would be served, how much it would cost, and how the program would be implemented and evaluated. A specific number of words was required for each answer. "Every t had to be crossed and every i dotted," remarks Williams. Working on the application was stressful, but Williams says she "was very excited because I felt like I had a chance, that I was qualified, that I just might get the grant." It took her the better part of a month to complete the process.

After being awarded the grant and conducting her college prep course in four neighborhoods over a three-year period, Williams applied for a $100,000 loan from the Miami Dade Empowerment Trust and got approved. "I would have never gotten the loan without the grant. I established a relationship with them. They saw that I delivered and they grasped the potential of my company," she says.

The loan breathed new life into Hidden Curriculum. Williams plans to use part of the money to launch a major advertising campaign and has already begun working on The College FAQ Book, which will supplement her course. She's projecting revenues of nearly $165,000 this year, almost five times more than what she generated after her grant money ran out in 2004.

Williams is one of the fortunate entrepreneurs. Saying that startup grants can be hard to find is an understatement. Many entrepreneurs think business grants are free money--funds that don't have to be repaid, no questions asked. Nothing could be further from the truth. And while there is money for small businesses out there, especially from the government, there's often a lot of red tape. If you pay a no-interest loan faithfully for the first three to five years, the rest of the loan is forgivable, says Jerry Kolo, professor of urban economic development at Florida Atlantic University in Fort Lauderdale.

If you're not up for the task of mining for seed capital, you may as well forget about finding a grant for your startup. "This idea of free, plentiful grants for business startups is one of the most frustrating misconceptions of business financing, especially for aspiring minority entrepreneurs," says Kolo. In short, you have to know where to look and be ready to spend the time and effort to get what you need.

Here's what you need to know:

Dig deep. Grants are often buried within other programs used as incentives to attract, retain, or grow small businesses such as enterprise and empowerment zones, says Marie Gill, president and CEO of M. Gill & Associates, a Miami-based firm that provides consulting and grant writing services for small and minority businesses. Incubators, universities, small business development centers, and business information centers, as well as your local chamber of commerce and professional organizations, are also good starting points for getting leads on grants.

Consider contracts. Government money can sometimes come in the form of a contract. "If you can demonstrate that your company can execute a budget line item, if you can shape part of your idea to what the government wants done for a particular project--say something educational or construction-oriented--if you can fill a need, you can compete," says Francie Ward, CEO of the Business Owners' Idea Cafe (www.businessownersideacafe.com).

Competitions can yield cash. If your grant application and presentation pass muster, there are organizations that will give you the cash you need. One such competition is the Miller Brewing Co.'s Urban Entrepreneurs Series Business Plan Competition (www.millerbrewing.com/iuthecommunity or call 877-493-4400). Once you've found grant opportunities that you want to pursue, get ready to work. You'll need to shine. The number of grant seekers can be great, particularly for federal grants where you may be competing with entrepreneurs from across the country.

Think private. Getting big bucks from the private sector, corporations, and foundations can be challenging and intensely competitive. A lot of the grants offered by foundations and corporations are tied to specific objectives or to a specific project, such as research and development in a given industry. They aren't looking to just hand out operating capital. Getting the money, though, comes down to connections. You need to be able to tap the right network of people, to have someone lobbying on your behalf. It's a mistake to think that getting a grant is based solely on merit. It's a very political process.

GETTING STARTED

Approach finding seed money the same way you would approach applying for a job. Learn as much as you can about the company, the CEO, the board of directors, and the grantors. You want to know who the key players are and what the goals, objectives, and mission of the grantors are, so you can shape your presentation or pitch.

For government grants, comb public records and look at previously approved grants to see what worked. You may even be able to find some grant applications that were rejected and learn from the mistakes of those companies.

You also want to be careful to avoid seams. "Beware of the unsolicited e-mails you receive about grants. [The people who send them] most likely want you to buy their book or e-book, which probably just reprints government material you could get online for free. Some e-mails are come-ons to have a telemarketer follow up and try to convince you to fork over thousands of dollars to get a grant from their company. They'll say, 'Don't worry, you won't lose money because you can just write our fee into your grant proposal,'" says Ward. She adds that if anyone promises to give you access to hundreds of business startup grants--it's a scum. There aren't hundreds of startup grants to be had.

Carol Hendrix, owner of consulting and training firm GIM Associates L.L.C., says there are a couple of things you should do before you submit a grant proposal. First "find out who is part of the process and request an informational meeting with them. This is your chance to learn about the organization. Do not be pushy; don't try to sell yourself yet. Sell what you are offering first. Get them interested [in your business,] and then get them interested in you. If you don't know who they are and what they are, your credentials won't mean anything if you can't address what they need," she says.

Secondly, make sure you are eligible to apply for the grant and that you are applying for an appropriate grant for your business. "rye seen someone with no military experience apply for a grant for veterans and a naturalized citizen from Eastern Europe apply for a minority grant," says Jerome Katz, of Saint Louis University's John Cook School of Business.

Beverly A. Browning, author of Grant Writing for Dummies (For Dummies; $21.99), offers the following suggestions to those applying for a grant:

* Begin by introducing your organization

* Write a compelling needs statement and include current data on the problem as well as the demographics of the people to be served

* Describe how the funds will be used

* Create measurable objectives that speak to who is being served, when, and for how long

* Emphasize the basic, beneficial changes the project will bring about

Call in your chips. Ask for at least three letters of support from other organizations, local business owners, and elected officials to go along with your proposal, advises Browning.

REAPING THE REWARDS

For Glenn Milus, the thrill wasn't as much about the $20,000 grant he was awarded as it was about winning, period. In 2004, Milus and his business partner, Reid Rogers, were the West Coast winners of the Miller Urban Entrepreneurs Series Business Plan Competition.

Winning gave Milus and Rogers confirmation, affirmation, that they had business skills. After all, they had already successfully launched MindLab Business Solutions in Century City, California, in late 2001. MindLab offers business plan writing along with a host of services such as financial planning, estate planning, budgeting, risk management, and tax planning to individuals and corporations. "Entering the competition was a gut check. We write business plans for clients. We waned to see how we measured up. We were confident we would win," says Milus.

Milus, 29, and Rogers, 28, are optimists. They had only two weeks from the time they heard about the competition until the deadline. They had started a business plan but still had a lot of work to do, and in very short order. The nearly 30-page document included, among other things, a company description, marketing analysis, competitive environment report, management team summary, and a set of financial statements.

They impressed the judges on the regional level and moved on to the national level where they had to present to judges who were mock investors and who grilled them relentlessly. Three weeks later, Milus and Rogers learned they were winners. In May of last year, they were among those feted at Miller Brewing Co.'s headquarters in Milwaukee with a dinner and awards ceremony. "What I remember most about that evening was the Miller assemblyline workers who told us how proud they were of us, how inspired they were to see two young black men trying to do something positive," says Milus.

According to Milus, having been successful at finding financing the first time was an incredible experience. The impact of the $20,000 was significant. "It helped us make exponential growth in our business," says Milus, who has three employees.

Milus and Rogers used the proceeds to develop collateral material and a high-end, top quality brochure for their firm, something that would attract the attention of high-net-worth individuals and those in the entertainment and sports industries. When the partners met with officials from the NBA to discuss doing business together, the officials requested about 30 of their new brochures to distribute to the teams. Furthermore, to stay competitive and ensure the best services to their clients, Milus and Rogers used some of the grant money to take investment and tax classes and other professional education courses.

Milus offers two pointers for entrepreneurs interested in entering business plan competitions, "Make sure the sections in your business plan about your management team and financials are airtight. No matter how great your concept, if you don't have qualified people with you, you won't get off the ground. And the financials count because an investor wants to see how you will have the ability to give them their money back."

When you're seeking money, it's important to keep trying. MindLab is expecting to hit revenues close to $1 million this year, so Milus knows that dreams are worth pursuing: "Entrepreneurship isn't easy, but it's very rewarding."

Writing a grant proposal is an art. And it's probably best left to a professional, especially if you're short on time and writing talent. AllWrite Communications Inc. (www.allwritecommunications.com), with offices in Rahway, New Jersey, and Atlanta, is a company that specializes in grant writing. Simone Joye, president of AllWrite, offers these tips:

Do research to identify the appropriate funding organization. Read the guidelines. "If they are looking for an environmental related concern and you're trying to start a day care, you're wasting your time," she says.

Cultivate relationships with potential donors. Get them on the phone and ask them to visit you if they are nearby. You can also send out a letter of inquiry, which is essentially an executive summary about your company. It shouldn't be more than two pages. Joye says use it as an opportunity to introduce your company to prospective financiers.

Get a professional. He or she will often charge you a flat fee or an hourly rate. You can find grant writers through professional and industry organizations or your local chamber of commerce. "A professional will know the buzz words that get attention. One of them is evaluation. You should have a section that discusses how you will track your results, which will demonstrate how you know you are getting results," says Joye. "It's this sort of thing that separates winners from losers."

Write in the first person. "Say we are going to do this or that, be positive and upbeat in your language," says Joye.

Numbers matter, but don't go overboard, "Do give numbers that will show, for example, how you will change a negative stat in the community or some similar scenario," Joye says.

Forget about generic proposals. Boilerplates waste your time and the time of the prospective financier. Joye explains, "Know who funds what and what they believe in. The more you can write to appeal to that, the greater your chances of getting money."

Be optimistic, but realistic, about your goals for grant money. "You have to be able to achieve what you say you can and ask for an appropriate amount of money," says Joye.

Where To Find Grants

Idea Cafe's Biz Grant Center (www.businessownersideacafe.com/business_grants/index.html) lists private grants currently open to small business owners and startups.

The U.S. Small Business Administration does not offer general business grants, but they do provide a page of links to federal grant/contract resources: (www.sba.gov/expanding/grants.html)

Catalog of Federal Domestic Assistance (www.cfda.gov) offers a database of all federal programs. Most of them provide funds to state and local governments or other organizations to manage the distribution of the funds granted. Also, Developing and Writing Grant Proposals offers tips from the CFDA. It's aimed at organizations that can show they have community support. From the home page, click on the link to Writing Grant Proposals.

The Foundation Center (www.fdncenter, org) offers extensive links to foundation grant maker Websites. Many of the links are to private foundations, corporate grant makers, and community foundations

Grants.gov (www.grants.gov) offers tips on applying for the federal grants and contracts offered by the 26 grant making agencies.

FederalBizOpps.gov (www.fedbizopps.gov) is a site where government buyers can publicize their business opportunities and commercial vendors can searcn, monitor, and retrieve opportunities solicited by the entire federal contracting community.

The National Institute of Standards and Technology (www.atp.nist.gov) offers funding for advanced technology projects.