Project support for businesses – what can Leader support?

Leader can support businesses that want to develop, test, and demonstrate new ideas that contribute to local development. However, project support is not a startup grant or support for purchasing everything needed to establish a business. Here we explain where the line is drawn – and why it is important.

New for the business is not automatically a project

For a newly established business, almost everything is new. Machinery, equipment, premises, marketing, and other resources may be needed for the operation to get started.

Therefore, it is easy to think:

”We are starting something completely new and need these investments to be able to implement the idea – then they should be able to be included in the Leader project.”

But that something is new for the business is not the same as it being development in the sense of the Leader method.

The important question instead is:

What is it that the project is supposed to develop, test, or achieve that goes beyond the business's regular operations?

Leader finances the development leap

A business fundamentally needs to be able to bear the costs of its own operations. This also applies to a newly established business.

Machinery, equipment, raw materials, production, maintenance, and other resources that are normally needed for the business to produce its goods or services do not automatically become project costs just because the business is new.

The Leader project needs to contain a development step beyond the actual business startup or the regular operations.

It may, for example, involve:

• developing and testing a new method, product, service, or business model,
• conducting a pilot or demonstration activity,
• trying a solution that is new to the area or target group,
• developing something together with other actors,
• following up and evaluating a new method,
• documenting experiences so that others can use them,
• creating new collaborations, networks, or solutions that provide benefits even outside the individual business.

Business investment or Leader project?

The difference can sometimes be razor-thin.

Example 1 – business investment

A newly established business needs to purchase equipment to be able to start producing and selling a product. The equipment will then be used in the business's ongoing operations.

That the equipment is needed for the business to be able to start is not in itself sufficient to make it a cost in a Leader project.

Example 2 – pilot project

A business wants to test a new production method together with others. Special equipment is needed during the trial. The method is tested systematically, the results are followed up and documented, other actors are invited to demonstrations, and the experiences are compiled and disseminated.

Here there is a significantly clearer connection between the cost and the actual development, testing, and demonstration work.

The same type of equipment can thus be assessed differently depending on why it is needed, how it is used, and what development benefit the project creates.

Three questions help to draw the line

When we assess a cost in a business project, it is good to ask a few simple questions:

Would the company need to purchase this even if the Leader project did not exist?

If the answer is yes, it may be a sign that the cost actually belongs to the company's establishment or regular operations.

What should be developed, tested, or demonstrated through the cost?

The clearer this can be described, the clearer the connection to the development project becomes.

What is the benefit for more than the company itself?

Leader is based on local development. Therefore, it is important that the project's results create added value even outside the individual company.

Particularly important for newly established companies

For an established company, it is often relatively easy to distinguish between regular operations and a temporary development project.

For a newly established company, the boundary is more difficult. Almost every investment and activity is new.

But that does not mean that the entire business start becomes a Leader project.

We need to distinguish between:

what is needed to build and run the company

and

what is needed to implement the specific development effort that Leader will contribute to.

A newly started company can thus be an excellent environment to test a new idea. However, the project still needs to be distinguishable from the actual establishment and the future regular operations.

Why is the broader benefit important?

Leader is about locally led development. The purpose is therefore greater than for an individual grant recipient to be able to make an investment.

A good business project can for example create a new solution that others can use, build new collaborations, create new markets, contribute knowledge, or demonstrate that a new method works in practice.

Therefore, feel free to ask already when you start developing the project idea:

What remains for the community when the project is completed?

Who besides our own company benefits from the investment?

What do we learn that can be used or spread further?

A simple rule of thumb

Leader should help finance the development leap – not the company's basic equipment and regular operations.

Do you have a business idea where the boundary feels difficult to draw? Please contact us early. Often it is possible to together identify which part of a larger investment can be developed into a clear Leader project.