E-commerce entrepreneurs: Their funding strategies for growth

E-commerce business is one of the most flexible businesses in the UK. The biggest advantage of it is that you can access it online. Mobile transactions made it easy even to shop online.

This has been the major contribution of the e-commerce business. You can be anywhere and with any device, like a mobile or a laptop. You can place an order online by making a few clicks on the mouse.

The pandemic has accelerated the growth of this business. Although creating an e-commerce venture might be easy, sustaining it will need you to go through a lot of hurdles. One of the significant catalysts majorly responsible for the growth is finances.

The business cash flow should not be compromised at any cost. Despite all the precautions and preparations, some funding gaps might arise at any time. Assistance of external funds might be required at any time.

Finding the best financing option at the right time might be tricky. You can contact the business direct lender in the UK for guidance in finding the funding solution that would work best for you. As an entrepreneur, you have to navigate the funding landscape to support your venture for its betterment.

At different stages, your requirement for funding will vary, and so as the options. Take a tour of this blog to see the variety of alternative solutions you can check out.

Top funding alternatives for e-commerce start-ups

You cannot skip the step of securing funding to help your start-up run and survive. There are standard solutions also available which are required for the business. However, not always considering these options might not be feasible.

They have standard features that let you borrow money under strict conditions. On the other hand, you might need flexible features to get through the financial crunch occurring in the business. Get an idea about them from the below pointers.

Ø Bootstrapping

It would be great if you could start your business with your own finances. For that, you must prepare in advance while doing a job and saving from it. Besides, if you run a business already, you can stash money from it to launch a new e-commerce business.

Finances will be in total control of your business. This is because less debt will be accumulated. Here, you will access your personal savings. Besides, the revenue produced from the business can be utilised to cover the operation costs.

The best thing about this funding solution is that you do not have to share profits with the investors. You can keep the profit for the business. Having a huge amount of money as personal savings is difficult.

Relying just on bootstrapped finances to support the business will limit the resources. You cannot have access to unlimited cash. Furthermore, your savings will be at risk and you might not have emergency funds to fetch during personal requirements.

Ø Bridging finance

If you are in between the process of selling the existing commercial property and buying a new one, you can get this funding solution. This is a short-term source of financing that you can use to solve any temporary financial crisis.

For example, you have to buy a new commercial space or even a small office for your e-commerce business. Because of the funds problem, you want to sell the previous large space. However, it is taking time while you need to shift to the new place right now for the business’s sake.

In this situation, you can take advantage of bridging finance to start using the new space. Meanwhile, when you are operating from the new space, you can keep looking for buyers for the old property.

Ø Angel investors

They are finance providers who will hand over money to entrepreneurs in return for occupying some percentage of the business equity. Thus, here you will have to share your ownership with them up to a certain percentage. You should give them some portion of the profit that has been generated from the business.

There can be two reasons for considering this borrowing option. One is to obtain the much-needed dose of cash for your business from a legitimate source despite being a newbie business. Besides, you will get the opportunity to ask for any advice from the investors.

They are experienced business owners who have spent many years running their businesses. Their knowledge can be a goldmine of wisdom for you, provided you point out the ideal angel investor. Getting in touch with them will open new networking opportunities for you.

You should be ready to give up some percentage of your possession of the business. Do not choose this funding option if you do not want to share ownership of your business. You will always be under the pressure of delivering returns to your investors to be able to free up the portion of business occupied by them.

One of the major roadblocks that you might face is finding the right investor. You will come across a lot of options but you need to locate someone who is perfect according to you.

Ø Unsecured business loans

When you start a business, you might not have security or assets to put up against loans. In this scenario, getting unsecured business loans would make sense. This financing option will let you obtain a trivial amount of cash that can fulfil any small necessity.

You cannot have these loans to materialise any major financial requirements. The borrowing range will be set accordingly, and you will have the liberty to choose any amount. However, it should be based on what you need and not something that has been picked up randomly.

You will have no fear of losing any of your precious business assets. This is a great relief, but repaying on time is still an obligation. Otherwise, you will have to accept a heavy burden of extra charges like penalties or fees.

Starting an e-commerce business can be full of challenges. However, if you are free from the compulsion of arranging costly assets as security for loans, it makes the process burdensome for you. From this perspective, this is a very good option for your venture.

§ Various reasons for requiring finances for an e-commerce business

Any business would need funds as fuel to go ahead with operations. Lack of it can hamper the usual running of the basic activities. Besides, sudden payouts might surface thereby making it difficult to carry on the various tasks.

Thus, the significance of finances cannot be overshadowed by anything else.

· Inventory management

You need to build and maintain stock and inventory in order to keep selling. Besides, you must focus on upgrading the inventory from time to time to be able to satisfy your customers.

· Staff and overhead cost

You have hired some staff to run your business. Managing their salary and the overhead cost will require you to hold a fixed amount of money always. You cannot compromise on that as this cost cannot be reduced to cost in any manner.

· For marketing purpose

Once you have established the business after completion of the initial steps, you need to pay attention to its marketing. This will be another sector that will demand some amount of cash.

The bottom line

When you opt for financing for e-commerce, you must focus on a few things. This will mainly depend on the business type and size. You should not overlook the kind of financial requirement you have.

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