More than anything, building a successful eCommerce store requires a strong financial footing. Without it, no matter how memorable your store’s name is or the quality of your products, there won’t be the foundation for long-term success. Yet, before you get the funding for your eCommerce store, there are important questions you need to ask. Let’s take a look at five of them!
What Type of Investment Should I Look For?
Given how many different types of funding you can get for an eCommerce store, it’s a good idea to consider what type of investment you want. Crowdfunding, for instance, might sound like a good idea, but what guarantees are there to generate sufficient interest. Likewise, is a secured line of credit or bank loan going to be sufficient to meet your needs. Ultimately, the most important factor is what will be good for your business over the short and long-term.
How Much Am I Willing to Relinquish?
There’s no getting around the reality that many types of funding hinge on you ceding some degree of control and influence in exchange for outside financing. For instance, equity funding typically requires you to allocate some degree of equity to an investor. Ask yourself how much influence and control you’re prepared to give to someone else if you go down such a route.
Is There Enough Spare Time to Devote to Fundraising?
Fundraising is a time-consuming process. After all, depending on the source of your funding, you’ll likely have to develop a solid pitch deck, a cohesive business plan, and more. That doesn’t even take account of potential commitments you’ll have to investors, such as organizing meetings and taking Zoom calls.
Am I Ready to Answer Any and All Questions to Get Funding?
No matter what type of funding you seek, whether it’s a traditional bank loan or revenue-share financing, there’s likely going to be a lot of scrutiny before any commitment is made. With that in mind, it’s important to be sure that you’ll be able to fully address any questions, queries, etc beyond the pitch deck.
Do I Have an Understanding of What an Investor Wants?
Beyond pitch decks, business plans, and meetings, there are other variables to factor in depending on the type of funding you receive. In fact, an investor’s expectations can evolve over time, particularly after the initial funding. For instance, you might need to provide concrete revenue estimates or evidence of a sustainable, long-term cash flow.
