Business expansion is an exciting prospect. It proves that your initial idea paid off and that you are ready to grow to the next level. However, this can also be a stressful time, as this is when finances need to be charted out. Having the capital to launch or expand a business is essential, and there are multiple ways in which you can fund your e-commerce business. Look at 5 of them below.

Bootstrapping
Bootstrapping happens when the owners use their funds and the company’s profits to fuel business growth. It allows the business owners to retain 100% ownership and control over the company. However, this is not a very popular method, as it can limit business growth to the funds that are currently in hand.

Crowdfunding
It involves raising capital from public campaigns on crowdfunding websites in exchange for complimentary products or services. It is a great way to raise money and awareness regarding your brand. A successful crowdfunding campaign costs approximately $7000 on average and lasts about nine weeks. This fundraising method helps you test the market and have a real-time evaluation of how your product will be received. On the other hand, it leaves your business exposed to competition in its nascent stage. On average, the success rate of using a crowdfunding campaign for fundraising is 50%.

Grants
Depending on your location, you will find various grants to help fund your e-commerce business. Several grants are offered by corporations that want to support small and emerging enterprises. Many are also provided based on eligibility (particularly to members of minority groups). They are a great way to acquire a considerable sum since grants generally don’t need to be paid back. However, not all grants are the same, and the money they offer may vary. Those applying for grants must look at the details and adhere to deadlines.

Equity financing
When you sell a part of the ownership of your business to someone, it is known as equity financing. Friends and family, angel investors, private equity or venture capital firms, and IPOs (Initial Public Offering) are the most popular equity financing sources. While equity financing is an ideal way to be well-funded, some risks are involved. Given the risk associated with the funding, equity funds, on average, can take a 20-30% stake in your company, which may become an ownership or decision-making issue in the future.

Debt financing
Debt-taking involves taking on debt to generate business capital. It also includes an interest payment over time. Debt financing can be done via business credit cards, term loans, or revolving lines of credit. The principal and interest payments for debt financing can be written off as tax-deductible business expenses. No ownership needs to be given up for this kind of funding. The biggest drawback of this type of financing is that all loans must be repaid, even if the business fails. Another issue is that defaulting on regular installments can severely impact your credit score.

Revenue-share financing
Revenue sharing has become increasingly popular of late. It is an attractive option for e-commerce businesses that involves predictive models and machine learning methods to analyze a business and generate business offers based on its performance. It is more accessible and can be done over the phone/internet. Revenue sharing does not involve signing over a part of your business, signing any risky guarantees, or making long-term interest payments, making it an appealing option for many small e-commerce businesses.