Are subsidies 'free money?'

This week in Small Business Japan (12 Jan, 2025)

Looking back at my social media posts, I realised that I might have come across as not very enthusiastic about the subsidy, which wasn't my intention. However, if you do apply, it's important to understand the pros and cons of the subsidy. The cons, especially the fact that it is time-consuming, should not be overlooked. Taking that into account, I believe you can make better use of the subsidy. That's because most people, myself included, tend to get caught up in the idea of getting 'free money'.

Tokyo Startup Subsidy for small businesses

The Startup Subsidy offered by the Tokyo Metropolitan Government is to support new and small businesses less than five years old. This subsidy is highly competitive but applying can be worthwhile if you’re an (aspiring) entrepreneur tackling social challenges or have a very good business model.

Small Business JapanYumiko Horie

Even if you hire a consultant, Remember that various rules (especially regarding payments and purchases) must be strictly followed. Failure to do so could, in the worst case, result in the subsidy being withheld. Therefore, rather than simply outsourcing everything to a consultant, it's best to proceed with a good partnership with the consultant.

Based on my experience helping businesses apply for subsidies, I feel strongly about this. Remember that the journey doesn't end with a successful application. Be prepared for the implementation report, which requires thorough record-keeping.

Small business under 5 years old? Secure your advantage

Municipalities offer the ‘Business Support Plan for Startups’, which helps small businesses under five years old meet a key requirement of startup subsidies, such as the one of Tokyo, on more favourable terms. Pre-establishment businesses can also benefit from reduced registration tax.

Small Business JapanYumiko Horie

Developing a strategy that takes these cons into account is what will truly make the subsidy work for you. Perhaps this isn't the most exciting or original comment, but to truly grasp how demanding the reporting process can be for receiving a subsidy. I encourage you to read my upcoming article. Stay tuned!