Grants are a terrible business model

A grant looks like free money.

Ours turned out to be very expensive. And we never saw a single euro of it.

Here's what happened.

Kit Digital is a public programme that helps small businesses pay for digital services. Agencies apply to be "digitalising agents" and then sell those services with the grant.

On paper it was perfect for us. We already did websites, shops and bookings for small businesses. The grant would just make it easier for them to say yes. Like being offered a fast lane on the motorway you were already driving on.

So we applied.

In April it was still "in progress". In June, finally, we were in. By summer we were working out how to sell it and what the paperwork for each client would cost us.

And in December the resolution arrived. We were removed as a digitalising agent.

Over a piece of paper

The reason, as I read it, was a paperwork detail. Our 2021 invoices should have been included when we joined, or in the correction we submitted. They had arrived. Just not at that stage.

Months of work, undone by the order in which some files arrived.

That week I wrote to our advisors. One sentence summed it up: we had already spent a lot of money and hadn't obtained any income. We talked about changing advisory firm and applying again.

But the paperwork isn't the lesson. Mistakes like that happen. Delegating the task doesn't delegate the consequences, though, and from now on I want to hold the list of what's requested myself, even if someone else submits it.

The real lesson

The lesson is how much of my attention went into that programme.

Months of forms, follow-ups and plans. All aimed at a door someone else controlled.

Without noticing, I let a grant start to feel like a sales strategy. I was thinking about how many clients the programme would bring, instead of how we'd find them ourselves. Like someone who stops looking for a job because they've bought a lottery ticket.

That's the trap. You don't pay for a grant in euros. You pay in time, attention and dependence on rules you don't write.

A grant can help a business that already works, but it can't be the reason a business works.

And for a company like ours, it hurts twice as much.

We started Foxnice in 2014 with 300 € and no outside money. Every euro we spend comes from a client. So what we spend on a programme that brings nothing back doesn't come out of a budget. It comes out of the same patient money that pays for our products and our freedom.

That's why I'm wary of anything that makes us depend on a decision outside our control. Not because grants are bad. Because our model only works if we stay in charge of our own income.

Will we apply again? Maybe. More carefully, and perhaps with different advisors.

But next year's plan won't depend on it. The plan is clients, products and patience. And selling as if the grant didn't exist, because the clients you find on your own are the ones who stay when the programme changes or disappears.

A grant looks like free money.

Ours cost us most of a year. And it taught us more about our business model than the grant ever would have.

P.S. Next time someone tells me "it's free money", I'll ask how many hours are inside it.