Department of Industrial Policy and Promotion (DIPP ) on 26th December 2018, introduced a press note proposing to make certain changes in the existing 2017 policy governing foreign direct investment...
Presently, we are living in an era where our lives revolve around technology-driven solutions. Nowadays, people prefer to shop online rather than hustling in traffic and going to a Mall. The E-Commerce industry has extensively grown over the years since it suffices the needs of the contemporary world. It renders a customer-friendly experience wherein one can buy anything just with a single tap on the smartphone. Anybody who wishes to commence the E-Commerce business model must accumulate sufficient capital to run seamless operations. In case, you have inadequate funds; this blog will be a savior for you as it will guide you about the steps to fundraise for E-Commerce business.
Best Ways to Raise Capital for your E-Commerce Business
As deficiency of money is inevitable in any business, one should know about the substitute source of raising funds to meet the daily operations. So, here is the list of top 10 methods to raise funds for E-Commerce business:
- Peer to Peer Lending– It is a robust online platform which directly connects lenders and borrowers. Thus, it eliminates the role of an intermediary. Peer to peer or P2P is an efficient source to fundraise for E-Commerce business as one doesn’t have to pay any additional fee to a broker. P2P is the fastest and secured borrowing
- Obtain Business Loans from NBFCs– Due to the stringent rules and regulations of banks; it has become difficult to take credit or loan from the tradition financial institutes. However, NBFCs caters a wide range of banking services without much legal restrains, which makes it yet another preferred choice of E-Commerce entities to raise funds.
- Leverage Government Scheme– There are numerous programs and schemes of Government which works explicitly to underpin startups. One such programme is the Micro Units Development and Refinance Agency (MUDRA). It mainly boosts innovative ideas so you can fundraise your E-Commerce business by providing a unique business plan. Once the Government approves your business plan, the loan shall get sanctioned.
- Crowdfunding-Internet is the biggest boon for the aspirants who strive to develop their own business. Regardless of the business type, an Entrepreneur has to collect adequate sum to bring his course of plan into action. Besides, the capital requirement increases when a person wants to run an E-Commerce business. A steadfast means of fundraising is the crowdfunding. It is a practice of funding a venture through raising a small amount of money from a large group of people via the internet.
- Bootstrapping– At an early stage of the business, it is prudent not to take any credit and loans from banks. Despite, you should opt for self-funding or bootstrapping. Therefore, it’s better to invest in your personal savings or access financial help from your family and friends.
- Avail Angel Investment– The most prominent companies, like Google, Alibaba, and Yahoo, deployed Angel investment to establish their business. The Angel investors are a group of people or individual with surplus cash and a keen interest to invest in potential startups. Whereas, one has to bear some shortcomings in this form of investment as Angel investors offer less money than venture capitals.
- Venture Capitals– It is a type of financing which is most suitable to fundraise for E-Commerce Business. In Venture Capital, companies grant financial help to those emerging firms who are deemed to have high potential growth in terms of workforce, annual revenue, etc.
- Business Credit Card– Even if you manage a particular amount of money to start your business, one may have to face some unforeseen expenses. Thus, to fulfil the additional expenditures of E-commerce business, you can employ a business credit card. Similar to a personal credit card, it enables the customers to cover all the business expenses, while relishing other perks such as protection against fraud and gaining bonus points.
- Friends and Family Funding– We can always count on our loved ones during thick and thin of life. Hence, if your family and friends believe in your dreams, then they will surely support you financially. However, it is important to treat your beloveds as professional investors. Though you don’t have to pay high-interest rate, you must fix some interest with mutual consent which you have to pay monthly.
- Take Loan from Banks– Taking loans from banks is the preliminary and a credible source of funding for Entrepreneurs who just step into the corporate world. The bank offers two kinds of financing, which includes working capital loan and funding. The capital loan facilitates a company to function a complete cycle of revenue by generating operations. On the other hand, funding from banks involves the process of sharing your business plan, project report and the evaluation of details to permit the loan amount.
Browse through our articles on services provided at Swarit Advisors, and just let us know if we can help you with your NBFC registration or NBFC for Sale or RBI Advisory Services.
An Ultimate Guide to Start an E-Commerce Business
Now that you are familiar with the best ways to fundraise for E-Commerce Business, you must be eager to start the process swiftly. However, there is a complete checklist of things which you should consider before setting up an E-Commerce business model. Follow this comprehensive guide to a successful E-Commerce venture:
- Identify the Niche of your E-Commerce Business– It is essential to determine a domain that will be an edge for your business. Since there is cutting-throat competition in the E-Commerce sector, one has to research and identity that product which has a global demand and can help you yield substantial margins. Also, do not choose that niche which is dominated by famous brands. Make a wise decision by bringing something unique in the market.
- Select Company Structure and Apply for Registration– After finalizing the niche, the next important step is to select the type of legal structure for your business. There are many types of companies such as One Person Company, Partnership Firm, Private Limited Company, etc., that provides different benefits individually. Besides if you have limited funds for your E-Commerce business, choose to register as a Partnership Firm. Your business expenses will also get equally divided under the Partnership structure.
- Set a Name for your Company– It’s now time to pick a peculiar brand name for the E-Commerce site. Ensure that your company’ name represents the niche of your business and do not mislead the customers about your products. Thereon get your company registered with its legal name.
- Obtain Employer Identification Number– To open a bank account for your business; you must attain an Employer Identification Number (EIN) first. It is a number which gives a unique identity to your E-Commerce firm and helps you in filing the necessary documents.
- Get Licenses– Running a business without a relevant license is a crime in the eyes of the legal bodies. Therefore, consult a legal Advisory and take assistance regarding the permits you may need for the E-Commerce business.