Boost your e-commerce stores through proper funding
We all know that cash is king, as it keeps your business running. As long as you can pay your bills, manage your staff and earn revenue, everything seems fine. However, this pandemic has taught us that nothing is everlasting, not even your finances. So how do you keep sufficient cash flowing through your business? How can you boost the growth of your business with financing?
The last few years have seen an indispensable boom in the e-commerce market. In 2020, over two billion people purchased goods and services online, and retail sales surpassed 4.2 trillion US dollars. Having an e-commerce business can be exciting; however, maximizing its growth opportunities requires capitalization.
Therefore, you need to fuel your expansion plans through cash. This is why having the right financing or funding plans is exceptionally essential.
There are several scenarios where managing your finances can take your business up a notch. For example, you can hire new employees, increase your marketing budget. Expand your product line, purchase inventory, and so much more.
However, funding and managing your e-commerce finances is not always an easy task. If you remember your academic days, even writing your finance assignments was challenging, and you ran towards experts to get finance assignment help.
Therefore, to finance your business and manage your cashflows, we here have curated 5 ways or steps that will help you in the long run. Look at these recommendations and navigate through these uncertain times with ease.
5 Ways to Finance Your E-Commerce Business
Try Out Various Financing Options
When it comes to funding your e-commerce business, you need to have some variety. There are various financing options that can help your fund your business. For this, you first need to understand the financial state of your business and determine the best possible solutions required to keep your business afloat. It is essential to update your financial statements so that you have a clear idea of how and what type of funding options can fulfill your needs. Then, all you need to do is research the models and see what fits for you. Take a look at the 3 significant types of financing methods:
- Term loans are best for short-term cash flow needs and long-term investments. It allows high funding limits, flexibility, and reasonable interest rates for e-commerce borrowers.
- Accounts Receivable Financing is an excellent option for businesses having outstanding invoices and need to fund short-term loans. This has a shorter repayment period, so you need to have a reliable source of cash flow.
- A merchant cash advance is the best option for newly established e-commerce businesses. This offers convenience and speed to new firms with a steady flow of debit and credit card sales.
Inject Additional Help From Banking Partners And Investors
Taking help from investors is another excellent way to finance your e-commerce business. Share a detailed strategy for growth along with a plan of action with your banks or investors. This will enable them to understand your current status and your expected potential. Based on your plan, you will be eligible for schemes and packages from your investors. If you do not have a growth strategy plan, it is time to frame one now to avail the various financial benefits. Some of the finance programs are:
- Many banks offer short-term loans to meet the temporary shortfall in the liquidity of businesses. All small and medium scale businesses are eligible to avail of these loans and fund their capital requirements.
- Cash bank lending program is another type that provides buyer credits, bank guarantees, and non-fund-based letters of credit. E-commerce businesses can use this for capital goods or procurement of raw materials.
- Business growth loans are another financing option that can be used to fulfill all the different business needs. These sometimes can also be availed as working capital loans.
Monitor Relief Schemes And Measures Closely
Several emergency packages and schemes announced by the government or banks act as measures to ease liquidity. These packages allow you to manage your finances properly. For example, you can check the installment eligibility and repayment criteria for your term loans, capital loans, credit card dues, etc. however, there is a specific moratorium that needs to be followed while opting for these schemes.
You will have to approach the lenders to show them how and why your income has been impacted. Once they are convinced of your reasons, they will grant you the finances, and the interest will be accrued during the moratorium period only. Some relief measures are also seen to waive off chargeback fees while extending the seller protection that includes intangibles.
Determine Alternate Revenue Streams
Your e-commerce business has a particular niche that enables you to attract target customers. However, some niches are meant to do a little better than others. In case you find your e-commerce business is not doing well, you need to find other sources of revenue. For example, most brands manufacture essential items as a pivotal element of the business. Since these commodities are constantly in use, there is no offset or slowdown in your industry. Take a look at some things that you can do to manage alternate sources of revenue:
- Try to consider expanding your business to other relevant countries. Expand to areas where there are low or medium-level disruptions, and your revenue is not impacted much due to external or internal conditions.
- Explore any paid ancillary options that can be offered to cash in additional revenue. For example, you can plan consultation or counseling sessions to guide your customers to your business.
- Try to identify the spending patterns and trends of your customers. Then, determine their needs and see if it’s possible to expand your business in the high-demand goods and service categories.
Negotiate Payment Terms With Suppliers
If you have any set of standing instructions for your suppliers, then it is time to talk it out. Have a conversation with your suppliers and explain to them in detail your situation. Seek payment extension and if your supplier is also facing challenges with cash flow, then frame an agreement that will be beneficial for both. This will allow you to communicate ideologies and manage your expenses better. Here are some ways in which you can negotiate with your suppliers.
- Never compromise on communication with your suppliers, and start by maintaining excellent leverage for your future negotiations. Be responsive and attentive to the issues and gain clarity.
- Research about the actual costs for your products so that you have a much better idea of how to wiggle room regarding negotiations.
- Think from the seller perspective and pitch the supplier’s dream. They want to sell their products, and you need to present yourself as a resource that will boost their sales.
Parting Thoughts
Financing your e-commerce business can be daunting, and you can find yourself lost in the process. However, you can try out the tips mentioned above to find out which one works best for you. However, before you commit to any financing options, research about them thoroughly and know the nitty-gritty so that it pays off in the long-term.