The E-Commerce Store Guide to Financing
by Emily / Posted
So, you’ve finally got your online business up and running. This has been an idea and ambition of yours for years and finally you’ve had the time, the money and put in all the effort to make it happen. Sales are gradual, the web design is functioning and attractive; everything is ticking over just fine.
However, fine isn’t what you want. Your sales figures, the aesthetics of the web design and your marketing strategies just aren’t up to the levels that you want and what you need to make this business as successful as you envisioned.
Unfortunately, no matter how fantastic your products are or how flawless your brand is, if your site isn’t boasting all the latest functionalities and your marketing isn’t screaming to the world how brilliant you are, chances are, competitors will outrun you. This is somewhat of a catch 22; if you’re not making money, how are you supposed to spend money on making the most out of your online store?
It’s no secret that the more money you inject into an online business, the better it will do and this is an issue a lot of our clients come to us with. They’re determined to do well and become a leader of their industry with keywords flying high in the ranks of Google, their website as easy to navigate around as possible with stunning designs on every single page. However, the majority of online store owners don’t necessarily know how to achieve this on their own or have quite the money to fund it.
It’s a tough situation to be in and one that we sympathise with. As an online seller, your time should be spent growing and optimising your sales, giving great customer service and ensuring that your products are top notch. As a result, it’s easy for administrative activities which drive your attention away from your sales to become somewhat of a chore; including financing. Whilst here at Shopify Builder we can help lift the burden of ensuring that web functionality, marketing and design are all in the hands of professionals, we can’t relieve you of all administrative duties.
In the past, financing, credit lines and loans have been a bit of an unfamiliar territory for e-commerce sellers but now, fortunately, there are options available to those in need of a little boost. The right financing and correct use of it can put a company at a significant advantage in comparison to competitors. So, for those of you unfamiliar with financing, we’re here to break it down a little bit and give you some advice on how a loan can help an online seller.
Finance can Help Revenue Growth
As your business does better and your sales increase, more money is required for your inventory. On occasion, the business cash flow just isn’t enough to finance your growth – this is a very common reason as to why an online store would reach out for finance.
So, when an e-commerce store is doing well and the owner wants it to carry on growing and expanding, a loan can be incredibly helpful in pushing it to the next level.
Help Short Term Liquidity Gaps and Revenue Spikes
Generally, on a graph, sales do not go in a straight line. There are many factors which influence what months are more successful than others; many of which are season dependant. In order to try and reduce this, owners take counter measures as a result of seasonal effects such as reducing inventory. However, despite owners’ efforts, revenue fluctuations will always result in a short term liquidity gap which needs to be subsidised.
One option to quick fix this, is to run a flash sale. Whilst flash sales can help, they don’t tend to be the most fruitful of strategies. Alternatively, you can get a finance loan to fill the gap. Instead of selling your products below the normal price in a flash sale, a loan can actually work out to be cheaper and support your company better.
Help Fund Large Orders and Exclusive Buying Opportunities
As a business owner, despite all your research, you can’t always predict the way the market is going to go, who is going to order what and what buying opportunities are going to come your way. Sometimes, you have to act fast in order to achieve a high sales volume and jump at opportunities when they come your way. If you do need to move quickly for exclusive buying opportunities, there’s a chance you will need financial flexibility.
This sort of finance is relatively simple; more so than dealing with liquidity gaps. These require a short term fix which will need a cost-benefit allowance before hand.
There are Lenders Specifically Tailored for E-Commerce Businesses
Unfortunately, banks can be reluctant to give loans for certain online businesses, partially because despite asking you for numerous data points, they won’t look at your e-commerce history. This makes it tough for them to assess your credit worthiness and thus, you’re more likely to be rejected. Because of this, we recommend heading for specific online business lenders.
These lenders who specialise in online retailers are experts in the online business field and are incredibly knowledgeable. They are able to access your online store history to grasp your creditworthiness more accurately, are easier and faster to apply to as well as more convenient.
One particular lender who are internationally accredited for their expertise in online business loans, are US based company, Lendvo. This website financing company specialise in lending to those business owners who need help funding a particular store website package, a domain name, run an advert etc; lending up to £100k.
Similarly, Lendvo tend to focus more on the business and the business potential rather than purely just a credit score which is hugely advantageous for stores that are just starting up and are forecasted to be very successful if given the help. Run by industry experts and university friends, Lendvo’s approach is personal, empathetic and perfectly tailored for a number of online businesses.
We hope this has helped you to get a better grasp of the benefits of using finance in order to support your store and help it reach its full potential.
If you would like anymore information on whether or not a loan would be right for you and your e-commerce business, drop an email to the Lendvo team on: [email protected]