Small e-commerce businesses have always had a hard time getting funding. However, what about small e-commerce businesses? The majority of lenders typically give preference to large corporations with strong histories and record-breaking sales. If you have the right skills, you can. You can look good to lenders, speed up your business’s funding, and stay afloat as a well-funded e-tailer by following these four quick tips:
Make Sure You Have an Offer That Converts & A Profitable Track Record Before Seeking Funding
An offer depicts the pivotal moment when you attempt to persuade your customer to make a purchase right away. It is where you present your product or service and present an extremely convincing case for its purchase. In his podcast from 2017, James Schramko coined the term “offer that converts.” He talked about making offers that get people who are just looking to see what you have to offer into paying customers.
For instance, if you run a business that sells beer subscriptions, you might be able to provide customers with a supply of classic beer recipes that haven’t been seen since the 1800s for a price of $500 per year (for a total of $1,000). That would attract beer connoisseurs as well as bar owners and encourage them to quickly purchase your product. It is an offer that converts if it sells. You can’t run a business that works if you don’t have an offer that works. Few people will be willing to lend you money if your company is not profitable. This brings us to a second point on how to get your business the money it needs: a track record of success. Lenders and backers would be happy to lend you money if they saw that your store had a lot of paying customers for a long time. In return, they would offer you better terms.
Maintain a Detailed & Updated Set of Financial Records
When applying for a job, think of your financial records as your resume. Investors and lenders would investigate these to determine whether everything is in order. Investors may interpret a messy financial record as evidence of incompetence or even unethical business practices, which is not a good sign. You can get expert bookkeepers to help with this by hiring them to organize and clean up your disaster-related financial records. If you have clean financial records, lenders and investors will be more likely to offer you the best financing deal. EtailExpress.com is a good option if you want to outsource your bookkeeping.
Bank Debt is Your Friend
To obtain additional funds, bank debts are a simple and convenient option. When you get a bank loan, you can quickly start your business plans and take advantage of upcoming opportunities, allowing your business to grow consistently. Compared to equity financing, which requires you to give up a significant amount of ownership in your business, the cost of equity financing is extremely high, particularly when you are just getting started. It could cost millions of dollars in ownership losses.
With today’s interest rates, debt financing, on the other hand, is nearly free, allowing you to keep more of the business’s eventual profits. Again, if your business is well-established and has a good financial history, banks are a particularly cost-effective option. Banks are more likely to offer you attractive interest rates the more secure and successful your business is. A startup loan from the United States government is one alternative to bank funding that is both convenient and less expensive. They typically offer more benefits to borrowers and can be more accommodating to startups than banks.
When You Take on Investors You Become an Employee
It is similar to taking on new, nagging, and demanding bosses when you take on investors. Investors will want to control what you do and how you do it, so say goodbye to three-day workweeks, random vacations, and working at your own pace. In addition, you won’t be able to slack off as much because you could be replaced if you give up majority control, and then you’ll have to leave the company you started.
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