You don’t just need funding. You need it at the right time.
Trying to secure it too early can lead to unfavorable conditions. Or you may simply get rejected outright.
On the other hand, waiting for too long can stunt the growth of your business and prevent it from being as successful as it can be.
So when should an eCommerce startup seek funding?
Let’s take a look at the timeline of a hypothetical eCommerce business:
Phase 1: Research
You come up with a business idea - let’s call it Shirley’s Shoes, and yes, you’ve guessed it, you sell shoes.
Then you do research to determine if you should give it a go:
- Market research. What is the market for your shoes? Why are they special? Who is your target audience? Who are your competitors and how much market share do they own?
- Customer research. Who are Shirley’s Shoes’ ideal customers? What are your consumers struggling with, and how can your product help them?
- Logistics research. How can you create a prototype? Can you use Kickstarter? How can you manufacture the first batch? How can you market the product? What would all this cost?
You may realize that the idea simply isn’t viable and move on to something else.
However, if you come to the rather exciting conclusion that Shirley’s Shoes may work, then the next step is…
Phase 2: Validation
At this stage, your aim is to validate the idea. This means you can prove that you build a sustainable business plan for Shirley’s Shoes.
So you create a business plan, bootstrap a minimum viable product, and launch your eCommerce store.
Other than keeping an eye open for specific government initiatives, crowdfunding or looping in with opportunities provided by The Princes Trust, you probably shouldn’t spend too long looking for funding because an early stage online business is unlikely to be eligible for it. To be honest you’ll be too busy bootstrapping!
Phase 3: Growth
Once you have created a proven system for profitably generating revenue, it’s time to take your business to the next level. Exciting - you’re ready to level up!
Seeking funding makes sense now because your business - Shirley’s Shoes - is finally growing. This means you need capital to hire the right people, scale up manufacturing, roll out new product lines, market more, and speed up customer acquisition.
You are also in a great position to secure financing because you can show that your business has a proven track record of turning profit. This makes it a safe and attractive investment.
It’s also at this point, when we at Business Score are best placed to help you find a financing option that suits your needs - whatever that might be. We’re here to chat!
How Long Will It Take Until You Are Eligible for Financing?
Every business is different, so it is very difficult to give you a hard and fast answer for this.
However, by subscribing to Business Score Connect on Day One of your business’ life, then you can rest assured in the knowledge that we will let you know when funding options become available for you. When you’re eligible - we’ll let you know.
You may also want to subscribe to our Knowledge Hub to learn more about financing for small eCommerce businesses.
Conclusion
It’s best to build a sustainable business plan before you seek funding.
That way, instead of betting borrowed money on untested ideas, you will be able to put it to a good use by scaling business processes that are already working.
Moreover, having a sustainable business means that you will be seeking funding from a position of strength, which tends to lead to much more favorable financing conditions.
We can talk you through the financing options that are available to you.
