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E-Commerce Financing Options, Essay Example

Pages: 1

Words: 317

Essay

Online businesses have the characteristics of fast growth and expansion. When an e-commerce site becomes popular and profitable, maintaining the gained competitive advantages is essential to retain customers and build a strong brand. The below detailed options are related to obtaining further finance for financing an e-commerce site.

The first step that needs to be taken in order to obtain finance is to keep track of the financial records and the profits. Further, a new business plan needs to be developed to be submitted for the financing companies.

Traditional lenders. Banks usually require a financial and business plan to prove the profitability of the new venture or investment. The credit check will also determine how likely the e-commerce site is to be able to pay back the amount borrowed. Profitability predictions can be created using online tools. (Small Business Development Center, 2013) Banks would need business account records, as well as personal guarantee if the e-commerce site does not have a high market value.

Business Angels. Politis (2007) The institution of business angels is not widely known by small business owners. There are international organizations that provide not only investment but advice and support as well. Value added contributions of business angels range from expertise to technologies, as well as business management skills. Business angels can also help increasing profits and reducing operational expenses through their expertise.

Business Partners. E-commerce sites can benefit from investment coming from existing business partners. Collaborative projects with suppliers and manufacturers, as well as trade organizations can be beneficial when looking for extra finance for expansion. Venture capital investment can come from large suppliers, payment processing services and even new prospects looking to collaborate in online marketing ventures.

References

Politis, D. (2007) Business angels and value added: what do we know and where do we go? Venture Capital. Vol. 10, No. 2, April 2008, 127–147

Small Business Development Center. (web) Start or grow a business. Retrieved from http://www.nyssbdc.org/startgrow/faqs-start/faqs-start.html

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