There is free money out there for your business, but the trick is learning how to ask for it. If you are looking for money for an existing or new enterprise, you're likely to encounter difficulties finding grant funding, but it's not impossible. Grants are generally given to non-profit organizations for programs and services that benefit the community or specific group of the general public. Most funding institutions don't provide grants to individuals who will use the proceeds to start or develop a for-profit business.

As with any rule, there are exceptions. But usually when an individual does secure a grant that assists his or her enterprise, it is typically for a very specific objective—such as developing products that improve the quality of healthcare—and not general operating purposes, says John G. Porter, Ph.D., a certified grant writer (CGW) and executive director of the American Grant Writers Association. Various government agencies offer grants for business activities that fit their specific missions.

Last year, Durham, North Carolina-based start-up PlotWatt, which created a service to help home homeowners save on their electric bills, received a $40,000 development grant from the North Carolina Green Business Fund, under the American Recovery and Reinvestment Act. Using existing electric home monitors and an internet connection, PlotWatt analyzes data to show how much electricity is consumed and wasted. This lets homeowners know exactly how much each household appliance is costing them—from running the air conditioner to using the clothes dryer.

PlotWatt's grant application bested hundreds of businesses applying for the North Carolina Green Business Fund, which awards individual grants totaling up to $500,000 for the select purposes of saving energy, generating renewable energy or promoting energy efficiency. For Luke Fisback, founder and CEO of PlotWatt, the first step in writing a winning grant proposal he says was to "thoroughly read and reread the grant application, which was posted on the internet."

Fishback believes that most grants very explicitly state how to meet their requirements. "You have all these check boxes to go through when applying for grants. It is important that you follow the rules and you don't leave any box unchecked," he says.

A crucial second step: Fishback contacted the administrator of the grant to find out if there were any additional training sessions. "I attended one of their information sessions to learn about the do's and don'ts of this particular grant."

No matter if you are seeking government or private funding, a well-written grant proposal clearly states your objectives, sets forth a plan, and provides a realistic budget.

The following are eight more tips on how to write a winning grant proposal.

1. Don't Chase the Money

You have to qualify, qualify, qualify. "Make sure your mission and purpose fits closely with the funding entity's mission and purpose," says Porter. Don't apply for a grant because your business sort of, kind of fits it. Don't tailor what your business does to get the funding. In hindsight, Fishback learned that very important lesson: "Only apply for grants that look like they're specifically written for you, your business," he says, about having applied for many other grants and being turned down because he didn't fit their mission.

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2. Prepare to Do Extensive Legwork

Identifying state agencies, private foundations, and other organizations that give grants to individuals or small businesses requires considerable time, effort and research. For starters, look in your own backyard to find grant-makers that have previously funded projects or services for businesses like yours. Many state economic development agencies provide small business grants and other types of financial assistance. The Small Business Administration offers information about government agencies. Another resource is, which is the U.S. government's official site for small businesses. Also, visit the web sites and The Foundation Center, which list directories of foundations.

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3. Determine Your Approach

Once you identify potential funders, determine how you intend to approach them. Make a personal contact and cultivate relationships by e-mail, telephone call, office visit and/or letter of inquiry, advises Beverly A. Browning, Ph.D., author of Grant Writing for Dummies (Wiley, 2009) and director of the grant writing training foundation in Buckeye, Arizona. Browning says during this stage you want to determine 1) their interest in your project or company, and 2) what they would like to see first as the initial document of entry (i.e., letter of inquiry or concept paper). Many funding organizations now prefer that requests be submitted first in letter format before accepting a full proposal, according to The Foundation Center, a national resource service for grant-makers and grant-seekers.

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4. Get to Know the Funder

Don't write the proposal first and then go looking for funders, cautions Browning. "Your grant proposal has to be prescriptive to what that funder is seeking." Get to know potential grant-makers better by obtaining copies of their annual reports. Scrutinize their website. What buzz words do they use. You can even incorporate that funder's colors into the fonts and graphics that you use in your grant proposal, advises Browning. "We made our table of contents in our proposal look a whole lot like that scoring criteria listed in the grant application," says Fishback.

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5. Do Whatever the RFP Says

Most importantly, request a copy of the grant guidelines. Follow the requirements of the funding notice or application to the letter, advises Porter. Your guide for what to include or not to include in your document is the request for proposal (RFP) or grant application. "Give the funder exactly what they ask for, no more and no less," adds Porter. "If it says give a brief statement, you write a paragraph. If is says give us two to four pages that is what you will provide"—not one page or four and a half pages, he explains.

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6. State Measurable Not Fluffy Objectives

In general, your proposal will start with an introduction, which includes the amount requested, followed by a description and brief history of your company and its products, services or programs. Your proposal should describe anticipated and immediate short-term and long-term results, proposed implementation, staff or key personnel, budget, methodology, benchmarks, and timetable. A common mistake in writing a proposal is failing to distinguish between a goal and objective. To provide energy efficient appliances to homeowners helping to cut costs is a goal not an objective. Says Browning, your objective must be S.M.A.R.T, that is specific, measurable, obtainable, realistic, and time bound. A measurable objective will have a subject, an action, a location, a timeframe and a percentage, Porter adds. For example, at the end of 2010, you intend to increase the number of homeowners in X county using Y energy efficient product or service by Z percent.

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7. Spell Out How You Intend to Spend the Money
The person giving you the money has to make sure you know how to spend it Fishback was explicit about how PlotWatt's anticipated budget broke down and how he would spend the grant money—line item by line item. Some reviewers look at the budget first to gauge applicants. People often are disqualified for providing an improper budget, says Porter. They usually get tripped up by either over estimating or underestimating their costs, he explains.

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8. Consult a Professional Grant Writer

Don't be fooled by advertisements and promotions for granting writing. There are a lot of scammers, especially on the internet. The Better Business Bureau is a good resource for checking the references of a grant writer. The American Association of Grant Professionals has a list of grant consultants on its site. Grant writers charge anywhere from $40 to $150 an hour, depending on the location (i.e., it's likely to cost more if you are located New York or San Francisco), Porter says. Expect to pay from $1,000 to $3,000 for a grant proposal for private or foundation funding and $4,000 to $15,000 for a grant proposal for government funding, since such grant applications tend to be more intricate.  Even if you don't hire someone to write it, you should consider hiring someone to review it, Porter suggests.

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