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HomeeCommerceTop 5 Ways to Fund Your E-Commerce Business

Top 5 Ways to Fund Your E-Commerce Business

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It’s the start of the digital age. Every business has started to explore the online space. And yes, that includes the internet and cable providers as well! In fact, different companies like Spectrum have made it possible for people to subscribe to their services online. This means you no longer have to dial the Spectrum customer service phone number to get the service. Similarly, the e-commerce business is on the rise. People don’t have to visit the brick and motor stores anymore. Instead, they can just shop over the internet!

Although the internet has made it easier to start a business online, there are some factors that one has to consider before thinking about taking the step. And one of them is the capital! You will need funds to grow your business.

How to Fund Your E-Commerce Business

If you have decided to do an e-commerce business, you will need capital. But what for? Well, there will be a cost associated with everything. From creating a product and storing your inventory to shipping, everything will require you to spend some amount. But where will this capital come from? You don’t need to worry about that! This article is going to discuss five ways how you can fund your e-commerce business. Just consider any or all of them, and you will be fine:

1. Bootstrapping

If you are fortunate enough to have a nest egg, you may consider drawing the amount from it to fund your e-commerce business. As you are starting a business, there will be a cost for everything that you do. However, an e-commerce venture will take less capital to get off the ground. One of the biggest benefits of bootstrapping is that this will prevent you from taking loans. Hence, you will not have to pay any debts.

2. Crowdfunding

Not everyone has a nest egg. So, how to fund your business now? Crowdfunding! You may have heard of the popular platform Kickstarter. This is the place where you can raise funds with the help of other people. Over the years, many more crowdfunding platforms have surfaced. And today, they are using two models, which helps greatly in generating funds.

The first is the reward model. This method is used by both Indiegogo and Kickstarter. As the name suggests, people will donate in return for a pre-determined prize. As the donation amounts get bigger, the value of the prizes will increase significantly.

The second model is labeled equity-based crowdfunding. It might not be as popular as the reward model, but it certainly attracts a lot of donators. The reason why this model is getting more and more traction is that if the backers support a company in its early stages of development, they will receive a percentage of equity in the business.

3. Family and Friends Funding

If you have a supportive family who believes in your vision and wants to see you succeed, it’s not a bad idea to ask them for a financial loan. You can even ask your close friends for help! If you are going go this route, it is strongly advised to treat your family or friends as if they are professional investors. You will have to ensure that everyone is on the same page. And if they are, create a restructured repayment plan as well as strict deadlines. This will help keep the funding stress-free.

4. Business Credit Card

A business credit card is always helpful! How you ask? Well, you can cover up your small expenses easily. Plus, it will serve as a safety net whenever unforeseen expenses surface. If you opt for a business credit card, you will receive a credit limit that will allow you to meet your expenses. Also, there will be other perks like points and fraud protection which you will get to enjoy. When you are thinking about getting a business credit card, it is important for you to pick the one that provides 0% Intro APR.

5. Business Loan

If you require more capital, you can consider opting for a business loan. However, before you think about getting the loan, it is important for you to be in the business for at least a couple of years. Otherwise, you may not be eligible. Now, from where can you get the loan? One option is a traditional lender such as a credit union or a bank. If you take a loan from the bank, they will offer it with a lower interest rate. However, getting a loan from a traditional lender will require you to fill out lengthy applications. Plus, there will be lower approval rates and higher fees. The other option is to get loans from online lenders like Lending Club and Funding Circle.

Conclusion

The internet has helped a ton in making lives convenient. It is because of this tech people can easily do online business. Hence, it is no surprise to see e-commerce booming. So, if you already have an e-commerce venture or you are an aspiring entrepreneur who wants to start this business and the capital is the only thing stopping you from meeting your goals, consider the aforementioned sources. You can generate a decent amount from the aforementioned ways. This will help you take your business to another level of success.

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