How Small Businesses Can Secure the Capital Needed to Start a Successful eCommerce Venture
Ecommerce has been booming for years as the technology becomes more widely adopted and secure. In 2020, COVID-19 accelerated this growth. Due to lockdowns, people who were stuck at home turned to online shopping as a secure and safe way to get what they needed.
If you’re considering starting an eCommerce business, one of your biggest challenges will be securing funding. The good news is that there are a lot of options available, even for new business owners.
What are some ways you can get the finances you need to succeed in eCommerce? Here are some ideas.
Start With Your Own Capital
The first thing to do is to evaluate your own financial position. Having enough of your own money to start a business is essential before you fully commit. If you’re not in that position, consider running your eCommerce company as a side-hustle to a full-time job until you can save up.
Understanding your credit rating is vital as well. Your personal credit will impact how much funding your business will qualify for in the beginning. If you have poor credit, make sure you avoid common borrowing mistakes. It may be worthwhile to take some time to repair your credit before your company is your primary source of income.
Having a personal financial investment helps you impress investors when you’re trying to raise outside capital. When they see that you believe in your idea enough to put your own cash behind it, they’ll be more comfortable investing as well.
Take Advantage of Crowdfunding
Crowdfunding is an excellent way to raise money for your business while also proving out your business concept. Crowdfunding allows you to test your marketing methods as you promote the campaign, and if it doesn’t go well, you can make adjustments before committing to a significant production run.
Don’t be shy about using pre-orders to test your eCommerce ideas. If it does well, you’ll have both the funding and the data you need to plan a successful first production run. If it doesn’t, you haven’t invested thousands of dollars in a product that doesn’t have a market.
Crowdfunding allows your ideal customers to provide the money you need directly. It’s an excellent way to fund your business.
Consider a Small Business Administration Loan
The Small Business Administration (SBA) has a lot of funding options available to new businesses. These options are designed with entrepreneurs in mind, so they don’t have the same requirements as a conventional bank loan.
Funding is a key challenge when you’re creating a business plan and setting your goals and benchmarks. The SBA can help with loan products with low-interest rates, no ballooning costs, and longer repayment periods.
Putting an SBA loan to good use can help you focus on growing your business without worrying about money.
Enter a Pitch Contest
Honing your pitch is essential if you want to win funding from investors. What if you could practice your funding presentation in a low-stress environment — with the possibility of winning financing if you do well?
A pitch contest gives you exactly that opportunity. You can get in front of investors much more easily than setting up a traditional pitch presentation. Practicing your presentation in front of a real audience can help you gain confidence.
Best of all, winning the competition can result in funding your company needs. You don’t necessarily need to win, either. If you do well, investors may seek you out directly. This is so much better than having to chase funding sources!
A pitch contest is a great opportunity to practice your pitch, refine your sales skills, and gain attention from investors at the same time.
Have a Clear Plan for Using the Money
Almost every entrepreneur understands they need funding, but sometimes people focus more on raising money than planning how to use it wisely.
Having a clear plan for the capital will help investors feel confident about investing in your business. Once you receive the money, sticking to the plan enables you to grow your company and stay on track.
You don’t want to use the money frivolously on vanity items like an expensive office lease. Instead, focus on the factors that will help your eCommerce business stand out. Build up your online presence and make the most of everything from your color scheme to your shopping cart.
When you focus your attention on what truly matters, you avoid burning through your capital and failing as a company. With effective planning, your business will thrive.
It Takes Money to Make Money
Every entrepreneur has heard that it takes money to make money, which’s true even in today’s digital environment. The good news is that there are more ways than ever to fund your company.
From investing your own cash to crowdfunding to practicing with pitch contests, you can prove your concept and raise the capital you need to grow. If you’re ready to succeed, take advantage of these funding options today!