Explore Funding Options to Start Your Online Business
One key aspect of leading an online business to success is your ability to acquire sufficient funds.
The one key aspect of starting an online business and leading it to success is your ability to acquire sufficient funds to keep the business growing. With the right injection of funds and a robust business strategy, one can start an online business and earn handsome profits
How can lack of stable funding impact online SMBs in the long run?
A recent study
suggests that almost 94% of startups fail during the first year of business and the main reason behind it could be the lack of a stable funding.
By keeping handy financial backups and contingency plans, you will not only execute your business operations with ease, but also make steady profits.
How to identify and find the right funding option for online business?
Identifying the most suitable funding option for your online business is extremely crucial. You can have the best business idea and lack sufficient funding for it or you can have a simple business idea and perfect funding for it. The latter may potentially have higher chances of success because good funding is the backbone of any business.
Let us discuss the following steps in a more elaborated way to explore and identify several funding options for starting an online business:
- Analyze your business requirement: Analyzing your business requirement includes the number of workers you need, the amount of space that is required for your business, the amount of time needed, and the overall cost of production. If your business is small, an option is to go for a bank loan, but if you require a relatively high capital for your online business, it may be better to look for an investor.
- Determine the budget: It is unnecessary to spend more than your startup online business requires. Calculate the amount of money needed for your business because every business has different needs. If your business needs three workers, it is illogical to rent an office space for 30 people. Just determine the necessary budget for your business.
- Consult a financial advisor: There are a lot of funding options for startups these days. Discuss your needs and the various available options with a financial advisor before choosing the most suitable funding option for your business. Financial advisors are recommended because there are a lot of rules and regulations that a business must adhere to, to unlock funding opportunities and it is better to get advice from an expert.
- Make a list: Jot down the possible options as per your funding necessities. Make sure that you rank your options as per the convenience of the funding. It is advisable to opt for a funding option that is more accessible to you.
- Approach financiers with right documents: When you have completed the earlier steps, it is finally time to approach your potential financier. Each funding option may have different rules, and it is important to make sure that you approach the right person with the right set of documents. Also, it is extremely necessary for them to trust you. So, provide clarity with conviction and be comprehensive in your conversations.
Funding options that SMBs can consider for starting an online business
Let us now look at a few popular ways of funding an online business, which can help you to succeed in your funding pursuit:
- Bootstrap: If you have saved enough for your business or you have the savings of your family and friends invested in your business, bootstrapping can be one of the better approaches. You may opt for investors in later stages, but in the beginning, bootstrapping could be a better idea because self-financing is the least complicated way of funding your business.
- Small Business Loans: A large group of traditional and non-conventional lenders provides small business loans, which can help your business to grow and expand while increasing its footprints beyond the limited geographical territories. There are several choices for opting a small business loan, broadly listed below:
- Small business line of credit
- Accounts receivable financing
- Working capital loans
- Small business term loans
- SBA small business loans
- Equipment loans
- Crowdfunding: As the name suggests, crowdfunding is acquiring small capitals from a large number of people more often than not over the internet. Since crowdfunding is an online funding option, it is extremely easy and convenient for any online business. Crowdfunding helps upstart entrepreneurs raise funding for their business, and also enables the company to promote its products or services. Some of the crowdfunding sites which can list your campaigns (against charges) are:
The above are only some of the options which we have collated. You can look for your own source.
- Online Incubators and Accelerators: Online incubators are very common in almost every country now. They will help you nurture and take care of your business in the initial stage, which is convenient for a startup. Whereas, accelerators will help in accelerating your business and it is extremely important for your business growth after the initial phase. You can read more about online incubators and accelerators here.
- Angel Investment: Once your business has started, you can always look for angel investment. According to Forbes, an angel investment typically ranges between approximately INR 18 lakhs and INR 72 lakhs per company, but can go higher as per business prospects and investors’ discretion. These investors are risk takers and more likely to get interested in your business by looking at its potential.
Every business requires working capital to flourish. With the lack of suitable business financing options, startup businesses are likely to fail early. Though avoiding the traditional bank loan road might seem difficult, a plethora of small business financing options voluntarily available for entrepreneurs is now creating a possibly steady pathway to success. Assembling the appropriate market data and availing the best funding option ensures the long-term wellbeing of your business.