You’ve decided to start your own e-commerce business. You’ve done your research and you’ve found the gap in the market which you can fill. Now it’s time to think about the financial aspect of setting up a company. Depending on your goals, the expenses will vary. If you’re thinking about a low-cost drop shipping business, you’ll need anywhere between $2,000 and $5,000. On the other hand, if you have something more ambitious in mind and you plan on having a warehouse for your business, this can cost you up to $50,000. Therefore, you have to clearly define your goals to see which type of financing can help you reach them. Take a look at some of your options.
If you have been preparing for this step for a while, you might have saved up enough already. By using your personal savings, you will not have to worry about paying the money back. You will avoid all interest rates and credit score checks. This is the best option as you will have full ownership of your company.
Another option is to ask your friends and family for a loan. Maybe you’ve saved half of the needed amount and you just need a little help. However, regardless of how good your relationship is, always make sure to talk about the conditions of this agreement. Ask them whether they will impose an interest fee and how long you have to pay the money back. Furthermore, explain to them that, even though they invested in your company, they will not have a say in how you run it.
In case your business offers something very unique that people can benefit from, you can try presenting your idea on a crowdfunding platform. This can be a great way to get the money you need. If people realize how useful your company can be in the future, they might decide to donate. These donations are usually of the smaller variety, but seeing as how a lot of people may donate, you might even surpass the amount you intended to get.
Opting for P2P lending is also a great idea. By joining a platform such as OurMoneyMarket, you will get a free quote in a few minutes and it will not impact your credit score. The platform will match you with potential lenders and once you find an offer you like, you can apply for a loan. The great thing here is that the interest rates are specific to your circumstances and there are no prepayment fees.
Many governments offer business grants, so this is another option you might want to look into. While there might not be any grants specifically for e-commerce businesses, nothing is stopping you from using this grant for your online company. But to make sure, do your research and see what the requirements are.
Getting a traditional loan can also be the right way to go. There are plenty of options when it comes to these loans, from business credit cards to SBA loans. However, for most of these, a good credit score is necessary, so if you think you can improve yours, make sure to start as soon as possible. Whatever you do, just make sure you don’t miss payments and go into debt.
Apart from these six options, you can also get a mortgage on your home, opt for angel investors, or even sell an asset. If your business idea is well-thought-out and well-executed, you will have no issues with paying back the loan and achieving your goals.