Getting Business Funding for a new Online Business

Many people dream of starting an online business and going to work for themselves. It is certainly possible to start an online business, but creating a successful one is another matter. Anybody can start an online business but most will fail because they fail to treat it like a business. Part of treating your online business like a business is making sure that you have adequate funding. Although you can start a an online business with very little money it is a lot easier if you have a source of funds. Fortunatly there are plenty of options to get funding for a new online business.

Business Funding

The source most people use when they are starting an online business is the bank. Banks lend money and most people have experience of borrowing from a bank, however borrowing to start a business is different than borrowing for personal purposes. When you want to take out a business loan you will normally need to submit a business plan. This tells the bank how you plan to make money, how much money you expect to make and how long you expect it to be before you start making money. A good business plan is critical to getting a loan so you need to make sure that yours is well written, there is plenty of information on the internet on how to write up a business plan. Getting a loan for an online business can be tricky because unlike a traditional business there are few physical assets to secure the loan. On the other hand because online businesses can usually be started without a large initial investment that may work in your favour.

The next major source of online business funding is investors. An investor is somebody who will provide you with money in exchange for owning a piece of the company. The upside to investors is that they don’t have to be paid back, which could be important if the business fails. The downside is that an investor will own part of the business and will be entitled to a part of the profits. He may also want to become involved in running the business and change the way you do things. In order to find investors you will need to have a business plan and you will want to contact the various venture capital firms. You may find it difficult to secure an investor if your online business is in the start up phase. Most investors prefer to wait until a business is up and running and making money before they start to invest. The prefer to invest in expansion rather than start up.

Another source of potential funding for your online business that is often overlooked is a grant. Governments and other agencies give out billions of dollars in grants every year to help people start their own business. On internet search should turn up lots of grants that you are qualified for if you are trying to start a business. In order to get a grant you will need to write up a grant proposal, which will be similar to the business plan. However since you don’t have to pay the money back a grant proposal should focus on how your business will help the community for instance by creating jobs rather than the profitability of the company.

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