7 Fundraising Sources To Boost Your Small E-commerce Business

May it be a multi-million dollar organization or a mere startup, all businesses need monetary support at all times.

Funds are the lifeline of any business and are much required at each forward step. Business owners are looking for funds anytime, from homemakers to store owners to giant businesses. Everyone is always searching for funds to fulfill one or the other requirements.

Fundraising activities must be carried out when you intend to do something or implement new ideas that would positively push your business. A continuous flow of funds is vital to ensure your online business grows and expands. An ample amount of funds at all times is necessary to keep your eCommerce business stable and running.

Well, Why Do You Need Funds For eCommerce?

Funds are primarily required to keep the operations running, keep up with inventory for a smooth manufacturing process, and expand your current business. All these activities boost your business and help you achieve new levels.

There was a time when the eCommerce business threatened retail shop owners and local grocers. Many local businesses have shut down because they have no online presence.

With everything going online now, people are reluctant to go to physical stores and prefer shopping online from their comfort zones. Due to this, many local businesses have shut down because they have no online presence.

The circumstances created by the pandemic have opened avenues for new eCommerce businesses and even supported existing eCommerce businesses. Funds are the primary basis for both businesses and need to be raised from time to time to keep the business going. And this is especially applicable in the first five years of the new business.

Fundraising Methods for Small eCommerce Businesses

Running an eCommerce business means building a website, web app, or mobile application. So, the question is how to get investors for an app. Our next section explains more details about how to fund your eCommerce business.

1. Crowdfunding

Crowdfunding is raising funds from similar groups with common goals. Crowdfunding is mainly of two types:

• Personal Crowdfunding

When we think of fundraising, the first thing that comes to mind is personal savings and borrowing from family and close friends. Our personal savings and business profits are two reliable sources of funding for your business. Next is our funds from our family members and close friends. These sources of funds are safe, and we need not pay extra amounts as they are interest-free.

• Professional Crowdfunding

Here the fund is raised from professional groups like investors and other businesses interested in your business segment. What you offer in return is a percentage share of the annual profits of your business.

2. Bank Loans

Almost all banks provide loans to small businesses at minimum interest rates. The funds received from bank loans can be put into quality investments, such as you may create a shopping app for your eCommerce, with the certainty of getting ROI in the future. Business loans offered to small businesses are tied to special rules. Make sure to read all regulations of the shopping app carefully before taking a bank loan.

3. Equity Shares

Raising funds by giving equity shares to the general public is a standard business practice. Your business shares are offered and can be bought by anyone interested in investing in your business. You need to pay annual dividends to your equity shareholders against their capital invested.

4. Government Grants

Grants from government authorities and the economic department are given to support your budding business. The government grant is free and needs not to be paid back. To receive this, you need to present your business plan to the concerned authorities and get it approved by them. The grants are given depending on the economic benefits your business provides to the economy. The grant can even be in the form of discounted registration fees or no license fees.

5. Venture Capitals

Financing companies offer finance to small businesses to help them grow in all directions. Venture capital is funds obtained from finance houses against a share in your business venture. The finance house also reserves the right to have its say in critical business decisions.

6. Inventory Loan

You can opt for an inventory loan when you are suspicious about running out of stock during an upcoming busy season. Financing your inventory stocking for future business is a positive step toward your growth. An inventory loan is a lump sum used to buy more inventory ahead of time.

7. Invoice Financing

Almost all businesses are irritated by late payers of due invoices. If not received promptly, the due invoices can cause a shortage of funds and hinder the smooth running of operations and cash flow in the business for daily activities. Invoice financing helps here; your business can get funds against these unpaid invoices, which you are sure to receive shortly.

Conclusion

Regularly funding your eCommerce business is significantly essential for operating your business. With sufficient funds, it becomes possible to reach your business objectives.

This article explains the 7 best practical funding ideas you can apply to improve any part of your business. Small eCommerce businesses need these funding options on various occasions in their business.

All funding options mentioned above have pros and cons, and while some funding options would suit your business needs, others may not. When taking up a fundraising option, you need to consider aspects like your business’s credit history, how much capital and quickly your business needs funds, preferred interest rates on loans, and what share of equity you are planning to give up.

Finding an appropriate answer to all these detailed questions will help you decide on the best funding option for your small eCommerce business.