A Narcotics called Subsidies


Subsidies are given every May as a seasonal tradition of the management consulting industry. Subsidies are a system in which the national and local governments review projects based on their business plans, and the national government later pays a portion of the necessary expenses to the project adopters. Although half to a third of the business expenses will ultimately be paid by the company itself, many sole proprietors and small and medium-sized businesses are taking the easy way out from the idea that they want it it they can get it anyway.

Also, although this is a self-discipline reminder to myself, the lower level consultants are more likely to rely on subsidy sales. What I mean by that is, if it’s about subsidies, there is a reality is that even any consultant with the least confident will be listened to first. In fact, there are many consultants who claim to specialize in subsidies.

Looking at the companies that have actually taken advantage of the subsidies, I believe that there are three requirements for companies that can take advantage of the system properly.
1. The company must be able to generate a business profit after proper depreciation each year.
2. The company must be able to afford to keep a reasonable distance from the subsidy.
3. The company must be able to keep the paperwork properly.

1. The basic premise behind the use of subsidies is that profits are increasing every year. Subsidies are a system in which the government provides money for something new and different from what has been done in the past. In other words, if the core business isn't doing well, any additional investment in new things will be a castle in the sand.

2. It means keeping a reasonable distance from the subsidies, but a business plan is just a plan. An adopted plan can quickly become outdated due to changing circumstances. If the adopted plan is such a good plan to begin with, then the judges should just run the business themselves. Although we think of a plan as a plan, for example, in the manufacturing industry, we have to examine properly whether or not it is going to be the equipment left it sitting in the warehouse, by looking ahead to after the production conversion, where the machines can actually be used for business activities.

3. A high level of paperwork is essential for practical operations. It may seem surprising, but in many small and medium-sized businesses, the unfamiliar subsidy paperwork tends to put pressure on their core business. Of course, but starting from organizing the documents properly in chronological order, or converting these documents into PDFs with a scanner, it is necessary to understand the financial statements and especially the meaning of depreciation (in case you don't know, whether you ask the expert questions until you can understand), and then how it works.

The thing to be aware of with subsidies more than anything else is that once you receive a subsidy, it's a narcotic-like quality that makes you want the next one and the next one after that. Narcotics can be used for anesthesia, so I'm not going to say that all subsidies are bad. But when you start looking at the subsidies more than your customer to receive a JPY500k as a sustainment subsidy, I don't think it's a business.

Especially, in "The Subsidies to Support Japan Traditional Craft Industries", a subsidy related to traditional crafts which is my area of expertise, the situation is even worse. The subsidy system itself is outdated and cannot be used for multi-year projects such as website development. Thus, despite the fact that it is ineffective, the reality is that the subsidized projects where artisans sell their products through demonstrations in department stores are repeated every year.

We can do it if we want to, but we don't dare to use the subsidy. I think those options are rather wonderful.