Seven Tactics To Fund Your Online Business

Seven Tactics To Fund Your Online Business

In a space with 5.5 billion people, all your business ideas can become a reality. Within a few months, you can start selling products to customers in the United States,…

In a space with 5.5 billion people, all your business ideas can become a reality. Within a few months, you can start selling products to customers in the United States, Germany, and most countries around the world. But while online businesses have a bigger reach, they also face issues that offline businesses face.

Now, one of the biggest challenges your business can have is funding.

Whether you’re just drawing your business plan or have 20,000 customers, you can have funding problems at any stage of your business.

Rest assured, such a prevalent problem comes with many solutions. But how do you identify the right funding solution that fits your business’s current needs?

In this guide, I’ll explain 8 funding options for your online business depending on the stage of your growth. You’ll also learn the pros and cons of each option.

Without further ado, let’s go into the details. 1. Crowdfunding

50 years ago, it was almost impossible to run a crowdfunding campaign. But recently, Statista estimated that North American crowdfunding platforms raised $74 billion in 2020.

Crowdfunding is a type of funding that allows people with an internet connection from any location to invest in your business. All you have to do is sell your idea of an innovative product that can make a positive change.

With crowdfunding , you can get a feel of what people online think about your business. So, apart from the money you raise from campaigns, you also obtain insights about your product and its marketing.

What do crowdfunding investors gain from your campaign? This depends on your crowdfunding type. There are three common types including: Donation-based crowdfunding: in this crowdfunding type, investors believe so much in your idea that they’re willing to part with their money for nothing in return.

Rewards-based crowdfunding: in this campaign type, investors expect to receive your product as a reward.

Equity-based crowdfunding: in this crowdfunding campaign, investors expect to receive equity in your business. Again, this is relatively new and attracts more traditional investors.

With crowdfunding, you can exploit the power of the internet to fund your business.

To illustrate, Peak Design is a popular brand that exploits crowdfunding to create its products.

Some popular crowdfunding platforms include Indiegogo, Kickstarter, Crowdfunder, and more. Best for: a growing online business trying to take their innovative product into the mainstream.


There’s no need for collateral.

Your business’s credit rating has no impact on funding. It helps you to raise money fast compared to other options. Cons There are more failed crowdfunding campaigns than successful ones, so there’s a low probability of success. There’s a risk of getting nothing from your campaign if you fail to reach your target. 2. Friends and family No matter how bad you are, some people believe in you. For your online business, they can show that belief through their investment.What’s your awesome business idea? First, it’s important to tell people close to you about this new endeavor you want to embark on. And if you need cash, your friends and family can support your business to grow .However, you need to treat your friends and family funds just like a traditional investor. Furthermore, you need to be clear about their investment structure.Is it a gift? Is it a loan? If it’s a loan, what’s the payback structure?Since money can destroy personal relationships, you need to be transparent and accountable with this fund. If you grow your business successfully, you can even foster a stronger relationship with your friends and family. Best for: a new business, often without a minimum viable product. Pros You need no collateral. There’s little or no paperwork involved. You’ll retain the decision-making of your business. Con The funds may be insufficient to meet your needs. 3. Bootstrapping In most cases, the first person that needs to invest in your business is yourself. After all, the idea starts with you. You need to put your money where your business plan is.Therefore, you can start saving once you start refining your business idea. In another case, you can take from your 401K account. While this is not always possible, it’s an option you can explore.Bootstrapping will likely help you reflect on your business idea. Let’s face it, putting all your life savings on the line is a challenging task. Therefore, bootstrapping can […]

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