We are in 2020 where eCommerce has captured the global market. Every traditional business is working on the business model and arriving on eCommerce. With the internet, the world has come closer and with the right internet tools, businesses are expanding rapidly.
For successfully running an eCommerce Business you need to keep an eye over inventory, suppliers, employees, shipment, etc. Often investing in business makes a lot of things easy but also need to look over the business budget, cash flow, profit & loss.
Ecommerce is expected to grow more than $6.5 billion by 2023. Ecommerce trends have evolved significantly in 2020 that makes it the hottest business industry right now. Here is the guide about how a small eCommerce business can grow exponentially with the right type of Finance:
1. Traditional methods
– Friends & Family: This is one of the best options when in need of any fund may be for personal use or business use when an entrepreneur needs funds on an urgent basis and in a risk freeway. This option excludes all the formal processes of funding and documentation. Usually, Friends & family understands the situation and will always run for help.
– Personal savings: When a Business needs finance it always starts with the entrepreneur. When working as an employee you might have saved some money. Also, there is a chance that you might have small assets that can be sold to get some extra money for the business and don’t need to ask for money from anyone.
2. Angel Investor
Angel investor is the investors which support the new business by providing seed money for starting a business also some investors support the company through financial crisis also. This support is possible only when you have unique business products and completed the part of “How to pitch business idea” to angel investors.
If investors can see the uniqueness of business ideas and business models they are more likely to support you. Angel investors can be easily sourced through the internet and thousands of websites can show you investors list but the only successful way to grab their attention is how are you pitching your business idea. Angel investing is a good preferred choice for a small eCommerce business.
3. Crowdfunding
One of the most used methods of funding for eCommerce businesses is undoubtedly Crowdfunding. Crowdfunding specifically shines out when the products offered are unique and creative. This is because it creates goodwill and trust and individuals are more likely to help you in Crowdfunding as they will also receive the product they want.
Therefore a good example can be a new product after launching can be sold to these individuals who helped in Crowdfunding or even freebies. Here are some companies that got successful with Crowdfunding: OpenaCase, Goldieblox, Real Food Blends, Pebble, Tile, Play-I, Vibease, Macaw.
4. Credit Card
The best thing a credit card does is that it allows you to make purchases even if you don’t have money that too immediately. Though it does have its own pros and cons. Even if you can get instant money the interest rate is sky high for that. So currently if a business is not making enough money it’s better to think twice for this option. Business credit cards can help if you need to buy stock or pay invoices, therefore this can be a smart option for financing business.
5. Venture Capital
There are certain entrepreneurs who have amazing game-changing eCommerce business ideas and their goal is to dream big earn big. These entrepreneurs don’t settle for little amount or compromise for anything. For such entrepreneurs, Venture capital is the best option. Venture capitalists are wealthy investors and they have a high filtration rate for selecting the company.
If your eCommerce business is different from the rest in the market and has that flare to be Multinational company Venture Capitalists can not only invest but also help you In business decisions to make the startup grow into the next MNC. Unlike angel investors venture capitalists are wealthy are very picky.
6. Term Loans
A term loan is an option which can help eCommerce business in short term loan as well as long term loan. This option gives flexibility and a good funding limit for start-up businesses. Remember that for a long term loan you need a strong insightful result-driven business plan and needs to showcase accordingly. Term loans are therefore best for short term cash flow needs and long term investments as well.
7. Home Equity Loan
This option for those entrepreneurs who don’t want to borrow any money from anyone. A home equity loan is a type of loan in which the borrower uses the equity of his/her home as collateral. Ultimately the loan amount is dependent upon the total amount of property. Ultimately this allows you to raise the investment to fund your business. This is a risky option because if you fail to pay the amount the lender can foreclose the property, but because there is collateral on the loan the rate of interest is low.
These are feasible options for investment to grow your eCommerce business. But remember you should only borrow money if it is needed. Business is not the process where you invest thousands of dollars and earn millions out of it. It’s a long way so it’s better to start in a risk-free way. It’s better to go slowly but surely go ahead.