Hunter Stunzi is the President and Co-Founder of SnapCap – a web-based company headquartered in downtown Charleston that is helping lead a revolution in small business finance by reducing the complexities found in the traditional lending process. Here in his guest post, he shares four catalysts to funding your startup.
A startup is generally viewed as a company that’s at the idea stage and has little to no established client base or revenue. If you’re trying to fund a company with no revenue, your sources of capital are finite and limited. No established lender will fund a business without an operating track record, as most lenders base their decisions off the company’s year-over-year revenue and financials. True to the startup core, flexibility and creativity are key drivers to attaining capital.
Here are four catalysts that will transform your idea into a company:
1. Create a simple, well-articulated business plan to communicate how you will achieve profitability. This plan should contain some real-world, immediate term ways to move the business forward while conveying some big picture long-term goals. It should communicate a well thought out value proposition for your investors and clients with the goal of inspiring your audience to write a check. If it’s overly complicated, your audience will be lost. Don’t project beyond the first year or two—you don’t deserve to look farther than that at the start. You must hit your one-year mark before you can hit your two-year mark, and so on. Crawl before you walk—that old adage.
2. You need a strong network that will support you financially. Banks won’t lend you any money for a business, so skip that stop unless your father is the bank president. Receiving a grant is also a longshot, so your network of friends, family, former co-workers, etc. will be your starting point. Communicate your business plans to incubators, like Harbor Accelerator, which is backed by private investors; go where the money is. Explain your idea to people and clearly articulate how they get their money back with upside. They will likely trim your projected upside so don’t be afraid to work in some flexibility.
3. The best place to source funding: Collaborate with another successful entrepreneur. Be an augmenter. Partner with someone who can quickly bring recognition to your endeavor. That person should have expertise in the industry you are entering. For example, I’m a salesman, so I found a partner who knows marketing. We were both in the same industry—Chris founded Comparecards.com—so we complemented each other. If you collaborate at an early stage with someone whose knowledge complements yours, they’ll be much more apt to recognize the idea you already have. If they buy into your plan, they are likely to also write a check.
4. Put your money where your mouth is. No startup gets off the ground without an idea person investing his or her own money. You’ve got to be tenacious. The person leading the charge has to put money into the business. If you’re out trying to raise $1 million, be prepared to invest $100,000 of your own money into the business on day one.
After you’ve received the necessary funding to take off, be prepared to run fast and lean. The first two years are the most critical. Don’t raise more money than you need—eat Ramen noodles and do not pay yourself well; when the first two years don’t go perfectly to plan, you’ll be glad you took this approach. Work hard, stay humble and establish a supportive network, and one day, your idea may become reality.