A startup is generally viewed as a company that’s at the idea-building stage and has little to no established client base or revenue. If you’re trying to secure funding for your company with no revenue, your sources of capital are limited. No established lender will fund a business that's lacking a good 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 4 catalysts that will transform your idea into a company.
- 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 providing a bigger picture to some 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 need 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. You first must crawl before you walk.
- You need a strong network that will support you financially. Banks won’t lend you any money for a business, so don't bother stopping there 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.
- Collaborate with another successful entrepreneur, which is often the best place to source funding. Be an augmenter. Partner with someone who can quickly bring recognition to your endeavor. That person should be an expert 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 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.
- Put your money where your mouth is. No startup gets off the ground without the entrepreneur 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 remain 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.
This post originally appeared on siliconharbormag.com.