You’ve developed your stellar business idea, worked on your plan, but wait… what’s this? You still need funding?

You have a plethora of options when it comes to small business or startup funding: Traditional lenders, alternative lenders, grants, and then there’s another thoroughly modern way of getting funds — online crowdfunding.

As some loans are becoming harder and harder to acquire, crowdfunding sites are seeing an increase in usage and funding.

So, what is crowdfunding? How can it help you launch your small business? That’s what we’ll discuss in this blog post. Stick around to learn about crowdfunding, tips for crowdfunding success, and the top ten crowdfunding sites for small businesses and startups. 

Crowdfunding your small business

Crowdfunding “is the use of small amounts of capital from a large number of individuals to finance a new business venture.” A big issue with traditional lending methods is that it can be incredibly hard to receive the capital you need to succeed. Unless you have proven success in business, positive cash flow, and great credit history, banks aren’t likely to approve your loan requests.

Crowdfunding is a great answer to this problem as it allows you to get backing from friends, family, established investors, and complete strangers who believe in your business. Crowdfunding has really democratized the world of small business and startup funding.

Before starting a crowdfunding campaign, it’s important to note that on many sites (but not all), if you don’t meet your crowdfunding goal you won’t receive the funding. That said, here’s how you can boost your chances of meeting your crowdfunding campaign goal. 

Tips for crowdfunding success

A great business idea alone won’t help you get the crowdfunding results you’re seeking. We’ve put together the following tips to increase your chances of running a successful crowdfunding campaign so you can fund your business. 

Preparation and planning

Crowdfunding isn’t a shortcut to launching a business, and people are wary of investing in half-cooked business ideas as they’re too risky.

If you haven’t already, now is the time to develop and vet your business idea and create a small business plan. 

Review successful crowdfunding campaigns

Time is money, don’t waste yours by reinventing the wheel. Instead of striking out alone, look to other crowdfunding campaigns to find what worked and what hasn’t, focusing on campaigns in an industry similar to yours.

Can you find any similar traits among successful campaigns? Perhaps they offered equity stakes in their small business or offered big rewards to initial investors. How did they present their campaign? Did they use lots of images and videos to convey their message and appeal? After reviewing these campaigns, you should start to notice common themes and elements. 

Familiarize yourself with the Terms & Conditions

It’s your responsibility and in your best interest to review different crowdfunding sites’ terms before utilizing them for your campaigns. Each site has its own billing policies or ways of collecting revenue, some sites may prohibit certain industries, and others may have certain age requirements in order to use their services. As you review, you may find one site’s terms more agreeable than another’s.

Be your own PR person

When it comes to crowdfunding, you are your biggest advocate. If people don’t know about your business and crowdfunding campaign, how are they going to invest in it? Here are a few ways you can work on your business and brand awareness:

• Create a website.
  • Where should people turn if they need more information about your business? Creating a website establishes your digital presence and not having a site is pretty inexcusable these days. If you don’t have a product or service to sell yet, focus on your “About” and “Contact us” pages. If you’re really serious, create a “Press” page that offers images and information that journalists and others can use in their features.  
• Your domain name should be relevant. 
  • Help motivate people to visit your site by making your domain name short, memorable, and relevant. If the .com you want isn’t available, don’t panic — there are multitudes of available TLDs for all sorts of industries. Can’t find the .com you want for your new yoga studio? Try the .yoga TLD. Is the domain you chose for your e-commerce store unavailable? Try .store or .online.
• Leverage the power of social media.
  • Social media is a form of social proof and helps you build your brand while keeping you in touch with potential investors and customers.
  • Encourage your friends, family, and followers to share news and posts about your business. It’s called social media for a reason — networking is essential!

You want people to know about your business so it can gain traction and get funding, so don’t be shy in promoting it and your crowdfunding campaign. 

Back your campaign before it goes online

Being the first person to do something can be nerve-wracking, and that includes being the first person to back your crowdfunding campaign. However, it’s easier to justify doing something when you see that others are doing it, too. Use this to your advantage by having some investors already lined up before your crowdfunding campaign goes live.

You don’t need professional angel investors — having some friends and family willing to donate at the beginning of your campaign works just as well to lend credibility to your business idea. 

Add a little character

Every good campaign uses facts to help support the appeal, but the great ones know that emotions matter, too. When a person finds your crowdfunding campaign, what do you want them to feel? What emotions should your campaign elicit? Excitement? Desire for your product? Write your crowdfunding appeal to influence the emotions you want someone to feel when reading it.

Show the people behind the scenes making it happen. Your investors want to know about the team that’s turning ideas into reality just as much as they want to know about your business. Ideas are great, but it’s the people that make them happen. 

What are the different types of crowdfunding campaigns?

Crowdfunding campaigns can be broken out into four main categories:

• Donation – when people donate money to your crowdfunding appeal and are promised nothing in return.
• Debt – any money pledged by your supporters is paid back (usually with interest) by a certain deadline. This is a lot like a traditional loan.
•  Rewards – in this scenario, you promise a certain reward based on the amount of money someone pledges to your crowdfunding campaign. You can offer services or products as rewards to entice people to donate funds. Consider offering different reward tiers with corresponding pledge tiers. For example, you can offer one reward to people who pledge between $10 – $100, a better reward for people who pledge $101 – $500, and so on.
• Equity – this is exactly what it sounds like. When you perform an equity crowdfunding campaign, you’re giving an investor a percentage of ownership in your business in return for funding. 

Top Crowdfunding Sites

GoFundMe

Since launching in 2010, GoFundMe is one of the most widely-used crowdfunding platforms. They describe themselves as the “world’s largest, free social fundraising platform.” However, one thing to note is that the platform is only free for campaigns in certain currencies and countries. Also, they apply standard transaction fees to debit and credit card transactions.

Unlike some other platforms that return funds to donors if you don’t meet your goal, GoFundMe allows you to keep whatever amount you raise. With “over $9 billion raised from more than 120 million donations,” you should take the time to review the platform to see if it’s a good fit for your needs. 

Kickstarter

Do you have an innovative product or service that you know will make a difference in your industry? Kickstarter is a crowdfunding platform that helps “make ideas into reality.” Their mission is to “help bring creative projects to life.” This crowdfunding platform launched in 2009 and since then $5.3 billion has been raised for different projects with 188,101 of them being successful.

Kickstarter is all-or-nothing. If you don’t meet the funding goal for your project then your financial backers won’t be charged for their pledges and you do not receive any funds. Kickstarter charges a flat 5% fee from the funds your campaign collects, but only if it’s successful. If a project doesn’t reach its goal then no fees are charged. Also, they charge a standard payment processing fee of about 3%-5%. 

Indiegogo

According to their website, “Indiegogo is where early adopters and innovation seekers find lively, imaginative tech before it hits the mainstream.”

Indiegogo is both a crowdfunding platform and a marketplace. They help small businesses and entrepreneurs take their ideas from concepts to reality and even help you ship your products. They provide services and resources, including access to key partners for the duration of your project. Unlike some other crowdfunding sites, Indiegogo is there to support you for the lifecycle of your campaign and project. Since its launch in 2008 Indiegogo has successfully helped entrepreneurs bring over 800,000 ideas to life.

They charge a 5% platform fee, and that amount is based on the amount of funding you raise, not your ultimate project goal. They also charge a standard payment processing fee that’s dependent upon your location and currency, though it appears to hover around 3% for many currencies. 

Crowd Supply

Crowd Supply’s mission is to “bring original, useful, respectful hardware to life.” Like Indiegogo, Crowd Supply is dedicated to helping entrepreneurs from funding to delivery, and 100% of funded projects have been delivered to backers. They’ve got a great success rate, too — 70% of launched projects have achieved funding.

When you bring an idea or product to Crowd Supply for backing, you’ll see two “Launch Plan” options: Basic and Standard. Here’s how they differ:

Patreon

Patreon exists to “change the way art is valued.” Over 200,000 creators use Patreon to allow their “most passionate fans [to] support [their] creative work via monthly membership.”

To use Patreon you establish a monthly subscription rate (you can create tiers) for your fans and followers. When that amount is paid, they receive exclusive access to your content. Your supporters join a community that supports you and receive a behind-the-scenes look into your creative process. Patreon allows you to make recurring income — it’s not a one time backing or funding for your creative pursuits.

Like Crowd Supply, Patreon has different pricing based upon the plan you choose:

Crowdfunder

Crowdfunder is a place “where entrepreneurs and investors meet.” When you choose to use Crowdfunder you’re joining a community of over 200,000 members and 15,000 accredited investors.

This site is based around equity crowdfunding, meaning that you’ll need to offer an equity stake in your business in order to receive funding. Like most other crowdfunding sites, Crowdfunder offers resources to help you create the perfect crowdfunding appeal.

They also offer a few plans at different price points:

CircleUp

CircleUp allows you to create two types of crowdfunding campaigns: equity and credit. They are selective about the businesses they work with, but if you make it through their approval process then you’ll find an array of services available to you.

CircleUp focuses on helping small businesses find the right investor. Many traditional funding and loan opportunities aren’t made available to small businesses, and so they seek to fill the gap, primarily focusing on consumer brands.

Before you can start using their services, you have to apply here. 

Fundable

Fundable is designed around business crowdfunding, and they’re “dedicated exclusively to helping companies raise capital.”

The team at Fundable takes a hands-on approach to help customers, “from profile creation to marketing, [they’re] there at each step.” To date, people have committed $615 million in funding on their platform.  

It’s free to set up a company profile on Fundable, and a flat fee of $179 USD per month to fundraise. If you choose to run a rewards-type campaign on their platform then there’s a standard credit card processing fee charged by WePay, their payment processor. 

Republic

Republic recognizes that “many startups’ success depends on their ability to get funded.” They built Republic to address that, and their “funding portal and broker dealer are SEC-registered and members of FINRA.” And they support diversity. “25% of investments on Republic have gone to companies with underrepresented founders of color and 44% have gone to companies with a female founder.” The industry average is 1% and 13%, respectively.

As an SEC-registered business, their cost and pricing structure is a bit different from other crowdfunding sites. Find out more about how much it costs to raise money on Republic here.   

Wefunder

Wefunder has helped fund 451 startups and raised over $164.5 million. They’re the self-described “Kickstarter for investing,” the difference being that Wefunder lets people invest in your company with small ownership stakes whereas Kickstarter allows you to sell products. Right now, Wefunder is only available to businesses and startups located in the United States.

They don’t charge any up-front fees and offer to price match if you find a better offer elsewhere. Wefunder collects 7.5% of your total fundraised amount if your campaign is successful.

Ready to crowdfund your small business funding?

Crowdfunding is a great and thoroughly modern way to find and raise capital for your small business. 

There are a multitude of crowdfunding sites, many of which cater to specific industries and products, so don’t despair if you didn’t find a perfect solution in the list above. 

If you’ve run crowdfunding campaigns before, share your best practices with us in the comments below!

Sounds too good to be true, doesn’t it?

Today, we’re talking about grants. Receiving a grant is a lot like getting free money to start your business, but here’s the rub — they’re not easy to land.

Don’t let that deter you. If you like the idea of getting free money to start your business, then keep reading as we explain what you can do to improve your chances of getting a small business grant.  

In this post we’re learning about who can qualify for a grant, how to prepare and apply for a grant, exploring the different factors that can increase your odds of successfully getting a grant, and sharing a list of small business grants worthy of consideration.  

Small Business Grants

What is a small business grant?

We referred to grants as free money, here’s why: Unlike a traditional small business loan, you don’t have to pay back a grant. A grant doesn’t come with monthly payments and APRs — it’s money freely given to you for your business and startup costs.

Yet, that doesn’t mean you can use the funds however you’d like. Grants are awarded for specific purposes, so if you receive a grant to cover marketing and advertising costs, that money can’t be used toward payroll, products, your next vacation, or for anything other than it’s intended and stated purpose. 

If you use grant money inappropriately you’ll likely have to pay it back, and what’s worse, you could face legal issues and be guilty of fraud.

The agency that awards the grant will provide instructions on accounting and reporting, and you must meet these guidelines and report on your progress and use of funds.

Who awards small business grants?

Grant money is awarded by various government-approved agencies (not the government itself), nonprofits, and even individual persons and businesses.

Money and grants can be found in the unlikeliest of places, so do your homework.

If you have an established relationship with vendors and banks then call them. Ask if they offer any grants and what the qualifications are. Most banks employ someone called a “Trust Officer,” a person in charge of the trust department. Their role is to manage the accounts for individuals involved in philanthropy and money-giving.

American Express’s Small Business Economic Impact Study found that two-thirds of every dollar spent at a small business ($0.67) stays within the local community. Most cities and towns have an economic development agency and it behooves them to promote small businesses and entrepreneurs so they’ll often have public funds available. If they don’t, call your governor’s office and ask about state-level agencies that offer grants.

These opportunities are unlikely to be advertised, so put yourself out there and ask around.

How do I qualify for a grant?

Well, that depends on the grant. Some grants are awarded only to female entrepreneurs, others to minority-owned businesses, whereas others are awarded based on industry. There’s a multitude of grants available with varying qualifications, so there are sure to be some you qualify for.  

When an organization or business decides to create a grant, they will set aside the funds and determine the necessary qualifications and application process.

How do I apply for a grant?

After determining whether or not you qualify for a grant, you’ll want to apply. This process is known as grant writing.

Grant writing is notoriously detailed and requires diligence. In fact, many nonprofits seeking grants often hire out their grant writing to professional grant writers. If you can’t afford to do that, it’s okay, you can write an awesome grant proposal all on your own.

Tips for Grant Writing

Every grant appeal or application contains the following three elements:

1. A need statement that is in line with the grant-making organization’s stated purpose for the grant.
2. An explanation of how your small business or organization fits the grant-makers’ qualifications.
3. Illustration of your need for the grant.

Increase your chances of landing a grant by using the following tips. 

Don’t go rogue.

Every grant will offer different instructions on how to apply. Follow these instructions meticulously. If you can’t follow instructions on how to apply for the grant, why should someone take the time to entertain your request? 

Don’t reinvent the wheel.

Instead of striking out on your own, look to previously funded grant applications. You can write to government funding agencies and request copies of these applications (the Freedom of Information Act, or FOIA, gives you access to these documents.)

As you read these funded grant applications, do you notice any common threads or information they all made sure to include? Make a note of it and include similar ideas in your application, just make sure they’re relevant to your small business.  

Talk to others.

You are not the first person to seek a grant. Leverage the immense power of social media or your local chamber of commerce to connect with others who have received grants. Ask for their advice and listen to it. 

Keep it focused.

Tailor your proposal to the specific grant you’re applying for, don’t use a carbon copy of an application you created for another grant. Writing a compelling proposal means you have to cater your message and appeal to the funder and their vision. How does your proposal align with the funder’s goals and intents? Acknowledge the funder and show your gratitude and appreciation for the opportunity they can provide. Make clear how your future success can be attributed to and enhanced by them. A personal appeal can go a long way in influencing someone’s willingness to award you a grant.

Be prepared.

Before sitting down and writing, think about what you want to convey in your proposal. You can use your business plan as a starting point for inspiration. Create a framework and work to substantiate it. 

Don’t be pretentious.

Your reader must understand what you’re saying in your grant proposal. You’re more than encouraged to use a thesaurus to add variety to your vocabulary but don’t choose big, cumbersome words in your proposal just because they look impressive. The goal is to use the right word to convey your thoughts, not lose your reader in a sea of jargon. 

Make it clear.

Use short and to the point sentences. Don’t lose sight of the forest through the trees. Set up your main ideas and expound on them as needed, making the connections clear. Your proposal should seamlessly transition from one section to the next, not leave your reader wondering where on earth that last idea came from. 

Make room for white space.

Use different sized headers and include space between major ideas or shifts in thought. Leaving white space on the page helps your reader understand the break between ideas and makes your proposal easier to read. 

Make it memorable.

Use supporting details, graphs, and charts when necessary. And don’t underestimate the value of creating an emotional connection with your reader.

The person reading your proposal isn’t always the person who awards the grant. Oftentimes, the person reading your proposal will report back to the awarding organization’s board of trustees. They will present a condensed version of your proposal, boiling it down to the main ideas and the information that’s most important to the foundation. What information do you want them to share? Focus on supporting those ideas.

Appreciate the power of persuasion.

How do you persuade a reader to your cause? Grantsplus.com writes about three different “modes of persuasion”: Ethos, Logos, and Pathos.

• Ethos — this relates to ethics. Your writing should convey that you are credible and trustworthy. What credentials or qualifications do you have to support your trustworthiness?  
• Logos — this relates to logic. You should support any claims you make in your appeal with data and facts. Do you have any customer testimonials you can include? Give your reader a reason to believe what you say.
• Pathos — this relates to the heart and appeals to emotion. Use your business story to further your appeal, making sure to illustrate your points with words that evoke imagery and quotes, if you have them.

Proofread and edit. Then do it again.

It’s 4 o’clock in the morning and you’ve stayed up all night and finished writing your appeal, which means it’s time to submit it, right? Absolutely not!

Don’t even think about submitting your grant application if you haven’t proofread and edited it. Read it out loud so you can hear any mistakes in grammar or spelling and fix them accordingly. After you’ve done that, take it a step further and ask someone else to review your grant application. Sometimes, an impartial set of eyes can find issues that you’re otherwise blind to.  

Small Business Grants available in 2020.

Now that you know what a small business grant is, how to qualify, and how to write an appeal for a grant, it’s time to explore the small business grants available to you. The following list is by no means exhaustive — there exist grants for almost every niche and industry, but these resources can help jumpstart your search for the perfect grant. Keep in mind that the government itself doesn’t provide money to your business, but it does partner with numerous agencies that can help you seek grant funding.

Grants.gov

Here, you’ll find information on grants administered by government agencies. You can search through a wide variety of grants and filter your search and results. To access the full eligibility details of the grants listed, you’ll need to register an account with grants.gov.  

This site doesn’t just help you find a grant, it offers resources and guidance for both applicants and grantors. If you’re on-the-go and can’t sit down to peruse their site on your computer, download their app. 

Challenge.gov

Got a great idea? Check out this site to determine if it could be of use to the government. At Challenge.gov, “members of the public compete to help the U.S. government solve problems big and small. [They can] browse through challenges and submit [their] ideas for a chance to win.”

Most of the challenges offer a cash prize, so go ahead and take a gander to see if your small business or idea solves any of the problems listed there. 

The Minority Business Development Agency

This agency is dedicated to assisting minority-owned businesses find the grants and resources they need. It’s managed by the U.S. Department of Commerce. 

National Minority Supplier Development Council

The NMSDC “advances business opportunities for certified minority business enterprises and connects them to corporate members.” You can receive capital loans through the NMSDC and grant funding through the Business Consortium Fund, which is a network of suppliers and vendors that work with the NMSDC. 

Verizon Small Business Recovery Fund

Verizon recognized early on that the Coronavirus pandemic would greatly affect small businesses. They developed this fund to provide, “…grants of up to $10,000 to small businesses, particularly in historically underserved communities hit hard by the pandemic.” 

Small Business Innovation Research & Small Business Technology Transfer Programs

These programs are “highly competitive [and] encourage domestic small businesses to engage in Federal Research/Research and Development with the potential for commercialization.”

4.0

4.0 is an organization that “invests coaching, community, curriculum, and cash in promising leaders to test tomorrow’s learning models with students and families in their local communities.” You can apply for a fellowship on their site. 

The Small Business Administration

The SBA offers various grants and cooperative agreements to help fund your small business. Just as with every grant, there are specific requirements to apply, so check out their site for more information on specific grants and eligibility standards. 

GrantWatch

GrantWatch is a great site to use to locate your next funding opportunity. They list grants available in both local and international communities. They currently have over 25,000 grants listed on their site for your perusal.

If you didn’t find the right grant or solution for your needs in that list, here are a couple of things you can do:

• Google it.
  • There’s a vast amount of information online. Use search engines to find the right grant for you.
• Consider other forms of funding.
  • Have you thought about applying for a small business loan or alternative lending?

Apply for your grant and put it to work

We hope you found this guide to small business grants helpful.

If you have any grant-seeking suggestions for other small business owners and entrepreneurs, share them in the comments below! We’d love to hear from folks who have sought grants to learn what has and hasn’t worked for them.

Have you received a grant and are you ready to take your business to the next step? If so, don’t forget about your business’s digital presence.

Today, more than ever, having a digital presence for your business is essential. Start by claiming your domain name and then building a website where your customers and clients can interact and transact with you. You can start today at Domain.com.

First, you need a good idea that solves a problem, then you need to test your idea, and ultimately, you need a way to fund your business.

In our last post we looked at different funding options for your small business, and today, we’re going to dig into small business loans. Read on to learn what you need to apply for a small business loan, how to get a small business loan, and what can prevent you from receiving a small business loan.

Small Business Loans

Many business owners struggle with financing at some point during the life of their business. For one business owner, it could be needing funds to get started and for another, it’s about having enough money available to cover day-to-day expenses.

It isn’t necessarily easy to get a small business loan and that’s largely due to the restrictive lending rules most banks abide by. Let’s look at what you can do to help increase your odds of getting a small business loan.

Prepare for your small business loan application

Before applying for loans, you’ll want to work on a business plan. Lenders won’t entertain your request if you don’t have a business plan they can review. No one wants to lend their money to a risky venture, so take the time to flesh out your business plan before going any further. 

Clearly state why you’re looking for a small business loan

Banks want to know that their borrowers will use the money wisely. If you can’t tell them how you plan on using the funds they loan you, chances are, you won’t be getting that loan. 

As part of your business plan, consider why and where you need extra funding. Will you:

• Be using the money to get off the ground?
• Request funds to maintain payroll and other regular expenses?
• Need money to introduce a new product or service to your business?

Your ask and reasoning should be clear to the lender, don’t leave them guessing as to how their money will be used.  

Do your small business loan homework

Small business loans come in a great variety of types, not all of them being perfect solutions for everyone. For example, many banks won’t loan money to a new small business. This is because they want to know that you already have cash coming in the door (a positive cash flow) so they can rest assured that you’re able to pay back your small business loan. It’s a big risk to loan money to someone that doesn’t have proof of income to pay it back.

If that’s the case, new business owners may have better luck seeking funding through alternative lenders, like friends and family or crowdfunding.

If you’ve been in business for at least a year and can prove you’re making revenue, you’ll have an easier time receiving a traditional small business loan from a bank or a Small Business Administration approved lender. 

Review the Terms and Conditions 

Here’s a piece of advice that extends well beyond getting a small business loan: Don’t sign your name to something without reading any applicable terms and conditions first.

There are many places you can seek small business loans, but they all offer different terms. Some might offer deferred interest, and others might charge so much interest it makes the loan very unappealing. Do not sign and accept a loan without first understanding the terms of it, and if necessary, bring someone with you who can help explain the terms. 

Nerdwallet suggests that you, “Approach small-business-loan shopping just as you would shopping for a car. … Once you determine which type of lender and financing vehicle are right for you, compare two or three similar options based on annual percentage rate (total borrowing cost) and terms. Of the loans you qualify for, choose the one with the lowest APR, as long as you are able to handle the loan’s regular payments.”

Identifying the right lender

Small business lenders tend to fall into three categories: traditional banks, microlenders, and alternative lenders.

Traditional banks

Small businesses can have a tough time getting approved for a traditional loan through a bank. Banks often require that you have a good credit history, aren’t in desperate need of funds, and that you have enough collateral to make the loan less risky to them.

Bank loans tend to operate on a debt financing model, where you’ll need to pay back the loan, instead of an equity model where you can sell stock or ownership in your company for funds.

The Small Business Administration (SBA) partners with banks and lenders across the nation to provide small business loans. These loans range from $500 USD to $5.5 million USD, and “can be used for most business purposes.” Check out their site to find a lender that works for you. 

Microlenders

Bad credit? Fledgling business with no consistent revenue stream? These things can make a traditional bank turn their nose down at you and refuse to lend. However, that doesn’t mean you’re entirely out of luck when it comes to getting a loan.

If you’re not a good candidate for a traditional loan, look into microlenders. Microlenders are often nonprofits that issue smaller, short-term loans. While you may not receive as much funding from a microlender, it can be just enough to get you on your feet or launch that product you’ve been testing and are ready to release. 

Since microlenders work with people who are newly in business and those with poor credit, they often have a longer application process. Keep your business plan handy, because without one your chances of getting a microloan decrease. 

Alternative Lenders

If the term “alternative lender” intimidates you, relax. Alternative lending encompasses everything that isn’t a traditional bank loan, but that doesn’t mean it’s held in less regard than a traditional loan. If you don’t have the business tenure or credit score to land a bank loan, and you’re looking for more than what a microlender can offer, alternative lenders can be the perfect solution. 

Alternative lenders can take many forms: Friends and family, crowdfunding, and angel investors are just a few.

Instead of a debt financing model, many alternative lenders offer equity financing. This means that instead of having to pay back a debt according to specific terms, you offer the lender a stake or ownership in your company in exchange for the funding.

You can read more about various alternative lenders in this post.

What prevents you from getting a small business loan?

Competition in business is fierce, and not everyone will receive a small business loan to help them succeed.

Wondering if you’ve got what it takes to be approved for a small business loan? The following things can make or break your chances of securing a loan.

1. No Business Plan

Not having a business plan isn’t an option when applying for small business loans. Your business plan is your blueprint for success. Think of it as a road map that you and your lenders can follow to make sure you’re achieving your business goals.  

Why is a lender going to waste their time and money on your business if you haven’t bothered taking the time to create a plan? Not having a plan is risky business, and sets you up for failure.

Here’s where you can learn how to write a business plan.

2. Bad Credit History

Banks won’t offer a small business loan to someone with bad credit. In fact, most banks insist your credit be at least in the 680-700 range (if not higher) before they’ll consider you a viable candidate for a small business loan.

If you don’t know your credit score, the time to find out is now. TransUnion, Equifax, and Experian are three credit-reporting agencies that all offer a free yearly personal credit history report. You can apply to receive yours at annualcreditreport.com.

3. No collateral or cash flow

Banks want to be assured that you’re able to pay back your loan before they’ll approve you for it. They’ll be interested to know what collateral you have and what your cash flow is so that they can better assess their risk in lending to you.

It’s a good idea to regularly calculate your cash flow so you’re always prepared in case of emergencies, and so that you can approach lenders with confidence.

4. General apathy and disorganization

Banks aren’t lending to a nameless, faceless entity — they’re lending to you, a living, breathing human being.

When making your appeal for a loan, don’t forget to include some emotion and make a human connection. Lenders are constantly approached by people looking to get a small business loan, so come prepared with an organized plan and appeal, and let your personality shine through to set yourself apart from the rest.

Putting it into practice

Now that you know what lenders are looking for when you apply for a small business loan, and what to have prepared before you apply, it’s time to shop around for the right lender and get your small business loan.

We’d love to hear about what has and hasn’t worked for you when applying for small business loans, so let us know in the comments below!

And if you’re ready to take the next step and get your business online, we’re here to help. 

Get started with a domain name and web hosting at Domain.com, and check out our easy-to-use WebsiteBuilder to build a beautiful, customizable site in minutes.

As you plan for and start your business, it’ll be your job to figure out how to realize that potential. Many times, small business owners discover that in order to make their business dreams come true, they need to seek external funding and financing.

If you’ve never done that before, don’t worry, you’re not alone. As of 2019, there were 30.7 small businesses in the United States, making up 99.9% of all US businesses. Many of these small businesses sought or are seeking funding to help start and run their business.

In this post, we’re discussing why a small business might seek funding and the different types of small business funding options available to you. With this information, we hope you can make an informed choice in the future of the business.

Small Business Funding

Small business owners don’t have small dreams. Across the nation and world, small businesses are addressing vital issues and problems and coming up with solutions for them. Despite having big dreams and big goals, most small business owners don’t have access to big accounts with unlimited resources. Let’s look at some of the reasons why you might want to seek funding for your business.

Reasons to Seek Small Business Funding

Here are five reasons why your small business may seek funding.

• Startup Costs

Starting a business isn’t free — to do so, you need money to cover a variety of expenses. You’ll need funds to pay for your incorporation fees, insurance costs, office or retail space, taxes, website, and a variety of other common business startup costs.  

• Working Capital

Capital is another way of saying financial assets. Working capital, as defined by Investopedia, “is the difference between a company’s current assets, such as cash, accounts receivable (customers’ unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.” If you have more in liabilities than assets, then you don’t have a positive working capital, which means it can be tough for you to pay back any existing loans and you can even risk bankruptcy.

• Business Growth

After you’ve started and established your business, you’ll want to grow it.  Maybe you’re looking to serve a new market, are buying assets, want to increase your sales, or hire additional help. Whatever your needs, growing a business costs money.

• Products and Services

From ideation to execution, product and service development cost money. You’ll need to validate the idea for your new product which could involve market testing, then cover the costs of production, inventory, and shipping. There’s nothing worse than identifying the perfect product or service for your market and not being able to fund it.

• Debt Consolidation and Restructuring

It may seem counterintuitive to receive funds or take out a loan to pay off your debts, but loan consolidation often helps to make your finances more manageable. Loan consolidation can increase your working capital by reducing the number and amount of your monthly payments.

Types of Small Business Funding

Just as everyone’s need for funding is different, so too are your financing and funding options. What may be a great fit for one business isn’t necessarily the solution for yours. Luckily, there are many types of funding to serve a variety of needs and types of business. But before you apply for funds, make sure you know how much funding you need.

Traditionally, there have been two main kinds of small business funding: debt financing and equity financing. Debt financing means that you’re funding your business by borrowing money, whether it be in the form of a traditional bank loan or borrowing from friends and family. Equity financing is a way to gain funds by selling stock or ownership in your company. This type of financing often means you establish a long-lasting relationship with the lender who may also serve as a business mentor.

Let’s explore different types of small business funding so that you can make the best decisions for your business.

Bootstrapping

When you decide to bootstrap your business, you’re not turning to external sources for help. Instead, you’re acting as your own investor. If you have a 401(k) or savings that you can tap into, and you want to maintain complete control over your business and finances, then bootstrapping may be the best fit for you.

Unfortunately, not everyone has money saved and invested, and that can be due to a variety of reasons outside of their control. If bootstrapping isn’t an option for you, don’t worry, that doesn’t mean you can’t start a small business.

Traditional Business Loans

What are traditional business loans? They’re bank loans, plain and simple. There are different types of bank loans and the terms of your financing can vary greatly depending on the lending institution.  

Before accepting any loans, you’ll want to review two things: The loan terms and what collateral you’ll need to obtain it. Oftentimes, banks won’t issue loans for small amounts of funding, so you need to consider the longevity of your business and accept that you may be paying back your loan for a long time to come.

Here are some ways that banks traditionally lend money to businesses:

Revolving Loans

A revolving loan usually takes the form of a line of credit or business credit card. Instead of a fixed-term installment loan that starts on a specific date and must be paid back by a specific date, revolving loans give you access to funds as you need them. With a line of credit or credit card, you can access money up to a predetermined limit (your credit limit.) As you borrow and pay back the funds, that money again becomes available for use.  

Installment Loans

When you think of traditional business loans, installment loans are what first come to mind. In most cases, installment loans are secured, meaning that the lender requires some form of security, i.e. collateral, before they’re willing to lend funds. However, if you’re taking out a traditional installment loan for the purchase of a specific asset (like a company vehicle or building), that asset often acts as the collateral.

Installment loans have specific terms that are covered in something called an installment agreement and can include things like a repayment amount and schedule. Installment loans often take the form of commercial loans or equipment financing, and they fall into the category of debt financing.

Traditional lenders usually require that you have good credit before issuing any type of business loan. If that isn’t the case for you, you may want to seek alternate funding.

Alternative Loans and Lenders

Alternative lending is an umbrella term that describes loans and funding options outside of your traditional bank loans. We’ll list some common forms of alternative lending below.

Friend and Family Loans

There are pros and cons to borrowing money from friends and family, just as there are with every type of funding.

Borrowing money from your familiars can be a great way to save on interest and you already have an established relationship with your lender. However, keep in mind that the success of your business can greatly affect these relationships. If your business does well and your friends and family see a return on their investment then all is well. But what happens if your business is stagnant or fails? That can lead to a relationship turning sour, no matter your original relation to the lender.

Grants

A grant is money given to a person or business from the government, a private business, or a corporation. Unlike traditional loans, grants do not need to be paid back. Contrary to popular belief, the U.S. government doesn’t give grants to individuals looking to start a business. Instead, you can turn to private corporations or an entity like the Small Business Administration (SBA) to help with seeking a grant.

Business Cash Advance

A Business cash advance, also known as a merchant cash advance or an account receivables factoring, is when you receive a lump sum of money and in return, you promise the lender a percentage of your future revenue or sales.

Business cash advances are like the “payday loans” of the business world — they’re easy to come by, but the terms are often steep so stay alert and always review the terms and conditions. If you have bad credit but good sales projections, this may be a great solution to your small business funding needs.

Small Business Administration Loan

With a name like SBA Loan, you might think that the SBA lends money directly to businesses, but that’s not quite how it works.

Instead of lending money directly, the SBA has a network of lending partners that they work with to provide loans to small businesses. These partners include “community development organizations and micro-lending institutions.”

Depending on the SBA loan you qualify for, you may also receive education and support to run your business and benefits like lower down payments and no collateral. SBA loans can range anywhere from $500 USD to $5.5 million USD.

You must meet certain eligibility requirements to apply for and receive an SBA loan, so take a look here to get matched with a lender and see if an SBA loan is right for you.  

Private Investors

According to Biz2Credit’s July 2020 Small Business Lending Index, only 13.8% of small business loan applications were approved at big banks. That’s not a particularly comforting success rate, and if you can’t get a traditional bank loan, you may want to look for a private investor.

Private investors can be anyone — friends and family fall into this category, along with your professional network and business capital brokers. If you’re looking for a local private business investor, try speaking to your Chamber of Commerce or any relevant trade associations as they may be able to point you in the right direction.

Oftentimes, private investors (you may hear them referred to as angel investors) will give you a lump sum of money (known as venture capital) to invest in your business in return for ownership equity. Private investor terms vary from investor to investor, so do your homework and contact multiple investors to make sure you’re getting the best terms.

Invoice Financing

Invoice financing can be a great small business funding option for those already open and in business. It’s a way of improving your cash flow (so you can pay employees and stay on top of other expenditures) by borrowing against your open customer invoices.

Depending on your small business structure, you may find that you’re selling goods and services based on credit (invoicing your customers) instead of receiving the money up-front. In this situation, your client is given an invoice that tells them the total amount due and the due date. If you have unpaid invoices, you can approach an invoice financing lender and borrow against those open invoices. In this situation, your open invoices act as the collateral for the funding.

Crowdfunding

As you’ve perused social media you’ve no doubt seen people crowdfunding money to pay for surprise expenses, like medical bills or funeral costs. But have you ever given serious consideration to crowdfunding your business?

Crowdfunding is exactly what it sounds like — raising funds from a crowd. Instead of having one or two large investors, anyone can contribute a small (or large) amount to a crowdfunding campaign, thereby helping you raise the money you need to launch and maintain your small business.  

Crowdfunding campaigns fall into four main categories:

• Donation – when people donate money to your crowdfunding appeal and are promised nothing in return.
• Debt – any money pledged by your supporters is paid back (usually with interest) by a certain deadline. This is a lot like a traditional loan.
• Rewards – in this scenario, you promise a certain reward based on the amount of money someone pledges to your crowdfunding campaign. You can offer services or products as rewards to entice people to donate funds.
• Equity – this is exactly what it sounds like. When you perform an equity crowdfunding campaign, you’re pledging a percentage of ownership in your business in return for funding.

There are many different crowdfunding sites, all with different terms of use, so do your research before deciding on the best crowdfunding platform to raise your small business funds.  

Ready to fund and launch your small business?

We hope this post has helped you understand the different types of funding your small business can leverage. If you have any questions or comments, post them below!

As you prepare to launch your small business, don’t neglect your digital presence. Your customers are online and you should be, too. Your online presence starts with your domain name and website, and we offer the perfect solutions for both. 

Get started today at Domain.com.

Yet, that’s exactly what will happen if you rush headlong into opening a business without first creating a small business plan.

Think about it: You wouldn’t decide to build a house without a blueprint or take a road trip without a map. Your business plan serves as the blueprint and map for your business. It’s a foundational document that entrepreneurs and small business owners can’t risk ignoring. Once you’ve worked on validating your business idea, it’s time to create a plan.

In this post, we’re going to explore why you should create a business plan for your small business, different types of business plans, how to create a business plan, and provide sample business plans.

Creating a small business plan.

Why do I need a plan for my small business?

Your small business plan is an essential document that helps you plan and start your business. It assists you with:

• Testing the practicality and feasibility of your business idea.
• Making it easier to secure funding and investors.
• Growing your business.

You might think of a business plan as a static document, something that once it’s written, you don’t have to touch again. Yet, that couldn’t be further from the truth. Think of your small business plan as a living document, one that grows and changes with your business. Many business owners find that they need multiple business plans as their business objectives change over time.

Your business plan allows you to formulate and plan out your goals in a way that’s both intelligible and trackable. As your business grows, you can refer back to it to make sure you’re hitting the milestones that you need to be achieving. Investors will also look to your business plan to determine if your business is achieving its stated goals and worthy of their investments.

How do I create a small business plan?

Different types of small business plans.

Before creating a business plan, you’ll need to identify the type of business plan that best suits your needs.

The US Small Business Association describes two different types of business plans: traditional or lean startup. The difference is that “traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. A lean startup business plan is “less common … They focus on summarizing only the most important points of key elements of your plan.”

It’s a good idea to create both types of business plans. A more traditional business plan acts as a working, living document, it’s something you refer to throughout the life of your business for guidance as you work toward your business goals. Lean startup business plans are a fantastic tool to have in your business arsenal, too. They can be used to determine potential interest in your business — share them while doing market testing to determine the viability of your idea or with investors when seeking funding.

What’s included in a traditional small business plan?

The SBA recommends that a traditional business plan include the following elements:

• Executive Summary.
• Company Description.
• Market Analysis.
• Organization and Management.
• Service or Product Line.
• Marketing and Sales.
• Funding Request.
• Financial Projections.
• An Appendix.

We know, that seems like a lot of information, but trust us when we say that this document is vital to the success of your business. The work you put in now to create a business plan will save you from unnecessary mistakes and risks in the long run.

Let’s look at the individual components of the traditional small business plan as described by the SBA so you know exactly what each section entails.

Executive Summary

Your executive summary is the first part of your business plan because it summarizes the essence of your business.

This is a brief section that doesn’t mince words: Describe what your company is about and why it will succeed. This is a great time to rely on your mission statement or unique value proposition.

Include basic information about your company like who leads it, your product or service, and high-level financial information if you intend on seeking financing. But keep in mind that brevity is the soul of your executive summary, so don’t get lost in the weeds.

Company Description

This section allows you to go into more depth about your business and requires specificity. Describe the problem(s) that your business solves and your competitive advantages. And remember that it’s not just your business idea and viability that’ll attract interest, it’s also the people behind the scenes making things come together. Use this section to detail your team or the team that you will hire, the legal status of your business (if you’re up and running), and where you’re located.

This section is your time to shine so go ahead and tout the benefits of your business.

Market Analysis

 A market analysis is integral to any small business plan.

Your business isn’t operating in a bubble sealed off from the rest of the world. Unless your business idea is truly original, you’ll be competing in a crowded marketplace.

This section is your chance to explain the opportunities in your market and necessitates some competitive research. The SBA recommends expounding on market trends, and answering the following questions:

• What do successful competitors do?
• Why does it work?
• Can you do better? How so?

Organization and Management

Here’s your chance to go into detail about the people who are going to make this business idea a reality and the structure your business will take.

Investors and others will want to know about the legal status of your business — are you a registered LLC or do you plan on becoming one? Is it a partnership or are you the sole proprietor? If you don’t have a legal status yet, this is an opportunity to lay out what the plans are for gaining one and the type of legal status you’ll establish.

As we’ve mentioned, it’s not just about the type of business you’re starting, it’s also about the people making it happen. Think about including a chart of your organization detailing people’s responsibilities and what they bring to the table. You can even choose to include (or link to) the resumes or CVs of integral team members.

Service or Product Line

What are you selling? Here’s your chance to regale us with all the details about your products and/or services. In this section, be sure to answer the following questions and include the following information:

• What benefits do your products or services provide?
• Describe your product or service lifecycle.
• How will you manage your intellectual property (copyrights, trademarks, patents)?
• What’s your research & development (R&D) look like?

Marketing and Sales

Your marketing strategy isn’t going to be static. This section of your business plan will change and evolve as your business does. However, you’ll always want to include the following information in this part of your plan:

• How will you create and engender customer interest?
• How do you plan on retaining your customers?
• What is your sales process?
• Have you thought about your marketing funnel?

This section will inform how you make your financial projections and decisions, so don’t skimp on your market and sales research. Try making market research a continuous habit so you always have your finger on the pulse of what’s happening in the market and can adapt accordingly.

Funding Request

Will you seek funding for your business? If so, make sure this section of your business plan is thorough. Details and specificity will help you make your appeal.

Detail your funding requests and requirements:

• How much will you need over the next few years? Think of this as a five-year funding plan.
• How will you use the funding you receive (salaries, equipment, materials, marketing, etc.)?
• What are the terms under which you seek funding?
• The type of funding you’re seeking, i.e. debt or equity.
• How you plan to pay back the funds you receive.

Financial Projections

This section of your business plan is meant to back your funding requests but is essential to your plan even if you aren’t seeking funding.

Your goal: “Convince the reader that your business is financially stable and will be a financial success.”

If you don’t have an established business you should include what you believe your prospective financial outlook to be. This means including (data-driven) income forecasts, big expenditures, and balance sheets. If you have an existing business, this is information you should have available. If that’s the case, include your actual cash flow, income, balance sheets, and expenditures.

If you’re seeking funding, this information should support and match your requests. Don’t forget to mention any collateral that can help make your case for receiving a loan.

If possible, use graphs and images to help support the information you include in your financial projections.

Appendix

Your business plan appendix should include any information that supports your small business plan and funding requests. Here are some things to think about including:

• Resumes and/or CVs.
• References and letters of reference.
• Credit history(ies).
• Licenses, permits, or patents that you have.
• Legal contracts.
• Examples of your product — photos or links to digital demonstrations should suffice.

And there you have it — a thought-through and effective guide to creating your traditional business plan!

Now, let’s see what a leaner, startup business plan looks like.

What’s included in a lean startup small business plan?

Why would you consider creating a leaner business plan for your small business? A lean business plan is perfect for you if your business idea is simple, you plan on changing your business model, you’d like to start your business quickly, or if you want a shorter, condensed business plan to share with others.

Once again, we’re going to look to the SBA, a trusted institute, to help us understand what a lean business plan looks like and what type of information should reside therein. Keep in mind that since this is a lean startup plan, it should be kept succinct and to the point.

The SBA recommends that your lean startup business plan include the following elements:

• Key Partnerships.
• Key Activities.
• Key Resources.
• Value Proposition.
• Customer Relationships.
• Customer Segments.
• Channels.
• Cost Structure.
• Revenue Streams.

We understand that this might not appear to be leaner than a traditional small business plan, but you’d be surprised — stick with us as we dive into it to learn what it entails.

Key Partnerships

Who is going to help you achieve success with your business? Think strategically: Will you have partners? Who are your manufacturers and suppliers? Succinctly explain these partnerships in this section.

Key Activities

How is your business going to gain a competitive advantage over other businesses in the same market? Is it your sales model? Your technical expertise and tools? Those who read your business plan will want to know what your plan is for gaining an advantage over the competition —no one wants to support or invest in a risky business.  

Key Resources

What resources will you use to create value for your customers and your business? Whether it’s your team, available funds or capital, patents and trademarks, or third-party business resources, list them here. 

Value Proposition

Your unique value proposition should describe what differentiates you from other competitors in your market. What value does your business bring to the table that others don’t? Describe it clearly and concisely.

Customer Relationships

What will your interactions with customers look like? Will you offer personalized services or automated? Think about the first touchpoint someone will have with your business through to the last. You can use your marketing funnel to help inform this section of your business plan. 

Customer Segments

You can’t please everybody. That’s as true in business as it is in everyday life. Use this section to describe your ideal customer and target market as that’s who your business will be designed to help.

Channels

Where will you promote and market your business? Where will you have a business presence and communicate with customers? (Hint: it should be where your customers are.)

Cost Structure

What is your business or company going to focus on: reducing your overall cost of operations or maximizing your business value? After thinking through your business strategy, detail it here, and don’t forget to include any significant costs you’ll encounter along the way. 

Revenue Streams

How is your business going to make real, tangible revenue? If you’re a retail business then you’ll likely be making direct in-person or online sales. If you’re opening a gym or yoga studio you may charge subscription fees. Either way, potential investors want to know how you plan on making money so they can rest assured their investment isn’t a waste.

And there you have it, folks — a succinct guide to creating a lean startup business plan.

Example Small Business Plan Templates

It’s one thing to read about creating a business plan and another to see what one looks like in practice. If you’re intimidated at the thought of creating a business plan from scratch, don’t worry, there are plenty of templates to help.

Here are two business plan examples provided by the Small Business Association that’ll guide and assist you as you start writing your own plan:

• Business Plan A.
• Business Plan B.

What happens after you create a small business plan?

First off, congratulations on completing your small business plan!

Now that you’ve created your plan and laid the foundation for your business, it’s time to put it into practice. As your business evolves and grows, make sure to revisit your business plan. This plan is a living document and a great guide to helping you understand what business goals you’re achieving and where you may need to improve your performance.

Don’t forget to revisit your business plan regularly to make sure it’s updated as your business changes and adapts to the market.

We wish you the best of luck with your business and don’t forget that we’re here to help! If your business is ready to get online and create a digital presence, we’ve got you covered. Let us know if you have any questions or comments below!

While hair grows back and you can recover from a bad idea like that pretty quickly, it’s another matter to invest in and proceed with a bad business idea. That always guarantees a loss of time and money. 

The best business ideas solve problems. We’ll say it again for the people in the back — the best business ideas solve problems.

So how do you know if you have a great business idea or a dud? In today’s post, we’re going to discuss the process of business idea validation and you’ll learn how and why you should validate your business idea.

Validating your business idea

The worst thing you can do when making business decisions is guess. Guessing is not a good strategy when it comes to your business, your livelihood, and your income.

Idea validation is the process of testing and validating your idea with feedback and data before you start developing a new product or service, or starting a business. This process is essential to developing a business or product that people actually want. If your idea is self-serving and doesn’t help solve the problems of others, it won’t go far.  

Large companies and corporations call this process “Research & Development,” and while you won’t need to do anything at such large a scale, there are a few things you can do right now to validate your idea.

By validating your business idea you’re going to save yourself from a future headache and loss of money. So, let’s dig in and figure out how to validate your idea.

The business idea validation process

Identify your ideal customer

Do you know who your ideal customer is? That’s as good a place to start as any when you’re trying to validate your business idea. If you don’t know who your ideal customer is, who are you supposed to ask for feedback and validation? Sure, you can ask your friends and family, but let’s be honest: They’re likely to sugarcoat things so as not to offend.

Your ideal customer is the person whose needs are met by what you’re offering. To identify those people, you’ll need to know your products and services from your customer’s point of view. Think from their perspective: What sets you apart from competitors? What problems of theirs does your business solve?

Identifying your ideal customer isn’t about identifying who you want as a customer, it’s about identifying who benefits most from your product or business as it is.

Think about what you’ll ask when validating your idea

In order to validate your business idea, you’re going to have to present it to people to get their honest feedback. You don’t want to inundate them with a massive presentation; instead think about how you can present a handful of ideas, the best ideas and solutions your business aims to provide.

If you start with your life story and amble into a presentation about your business, you’re going to lose your interviewees’ attention (yes, interviewing is part of the process.) You’ll want to keep your presentation short so that it doesn’t get confusing and focus on the core of your business or products.

Reach out for interviews and feedback

Once you’ve identified what your ideal customer looks like and know what you’ll be asking, it’s time to do some reachout. Make a list of potential customers or clients that you think fit your ideal customer profile and ask for their time. You’ll want to set expectations with them: Let them know you aren’t trying to sell anything, why you’ve contacted them, and that it won’t take much of their time.

As we said earlier, friends and family are likely not great candidates for interviews. They’re personally vested in you and may gloss over issues they see in your product or business idea. It’s not because they’re trying to be unhelpful, but more often than not, they won’t want to hurt your feelings.

The business idea validation interview

When you start your interview, remember that these people are giving up their time to try and help you succeed. So, say “Thank you” and let them know how much you appreciate their time. Explain that their feedback is essential to you designing and creating something people will actually benefit from. People like to know that they’re important and valued, and assuring them of their importance during this process can help them open up to you.

Give them a brief rundown of your business, but don’t get lost in the weeds or use technical terms that they’re unlikely to understand. Then, launch into the core aspects of your business idea that you need their opinion on. Present these ideas individually and allow people to give you their thoughts on one of them before proceeding into the next. The interview is a back-and-forth between you and the other person, not a one-sided soliloquy.

Once you’ve completed the interview, thank them for their time and again reinforce the importance of their opinion and insights. You may find that you’ve just earned yourself a future customer or client.

Review your feedback and optimize your business idea accordingly

After your interviews, sit down and review what people had to say. Look for common themes and patterns in your feedback — is there anything everyone was excited about? What negative things did they highlight?

This process of validating your business idea isn’t designed to deflate anyone’s confidence, it’s designed to help you create the best and most effective business to suit your customers’ needs and wants.

Take what you’ve learned from the interview feedback and use it to modify and improve your business idea. Always keep the customers’ point of view in mind as you move through this exercise as they’re the ones who will be keeping you in business once you launch.

What happens after you validate your business idea?

After validating your business idea and making any necessary changes, it’s time to create a business plan and launch your business.

Keep in mind that it’s essential for businesses to have a digital presence these days. Online business has boomed throughout the Coronavirus pandemic, and we don’t see it going away any time soon. If you want to be competitive, be where your customers are — online.

Creating an online presence for your business starts with a domain name. Your domain name is your online address and will lead people to your site. You can easily create a beautiful website using a website builder once you’re ready to go live.

If you need help or have any questions, don’t hesitate to contact us or comment below. We wish you the best as you launch your business!

If you have been mulling over the idea of launching your online store, now’s the time to get started. However, be mindful and realistic about the stiff competition that you may have to face and how you plan to combat it.

One of the first things you need to consider is how you will design and develop your e-commerce website where you’ll deliver a seamless, easy and intuitive buying experience.

Mentioned below are eight things you need to keep in mind when creating your website.

8 elements of a successful e-commerce website.

1. Find the right online identity for your website.

There are thousands of websites selling similar products, offering impeccable services and aggressively vying for the attention of the customers. So, how do you differentiate?

Smaller details play a huge role here. For example, for two e-commerce stores selling similar merchandise, the domain name can be a key differentiator. One website could be www.comictees.com and another could be www.comictee.store.

Which one of these two websites would you say for sure is an e-commerce store?

A simple domain extension such as .store can help you stand out and create a unique space for yourself in the industry. With a category-defining domain extension such as .store, you immediately establish that you’re an e-commerce website that’s selling something.

It gives you a unique opportunity to brand and market yourself differently.

2. Match your website design with the products.

Every website needs to be aesthetically pleasing and easy to navigate. However, as an e-commerce website, it is even more crucial that its look and feel is in sync with what you’re selling.

For instance, if you are selling niche tech products, your website’s design should ideally include crisp visuals or animations, clean lines and digital fonts. A loud or cluttered design may not help you attract the right audience.

On the contrary, if you are selling casual apparel and home accessories, use of bold, bright colors and playful fonts will do a better job of reflecting your fun personality.

3. Showcase your products properly.

In a physical store, customers are able to see, touch and try out products and speak to experts to gain a better understanding. This is not possible on an e-commerce website. Therefore, it is your duty to make sure that the customers have all the information they need to be able to create an accurate picture of the product in their heads and make an informed decision.

• Use large, clear and high-quality images of the products you are selling.
• Include images in various angles so that people can examine the product properly.
• Ensure the colors and sizes in the images truly depict the actual product.

Apart from images, you must highlight the key features of the product such as:

• Different ways in which it can be used.
• Tips to take care of it.
• The audience it is intended for. 
• Its warranty period

For instance, if you are selling clothing, your product information should include size, material, washing instructions, brand name and information (in case you are selling multiple brands). Make sure to include a size chart because sizes vary across different brands. Images of models wearing the clothes will allow people to better picture what they intend to buy. Some items do not qualify for returns, so make sure you clearly indicate that information.

4. Provide an easy checkout process.

A lengthy and complicated checkout process can cause people to abandon their shopping carts without completing the purchase. Ideally, your checkout should include no more than three steps:

Step 1: Basic information such as name, email address and phone number

Step 2: Shipping address

Step 3: Payment information

You can provide customers with the option of creating an account on your website as it provides valuable information about them, allows you to track their purchases, customise your communication and personalize recommendations.

However, don’t make it mandatory. Several customers, especially first-timers, are wary of giving out too many personal details and forcing them to do so may make them abandon their purchase.

5. Provide multiple payment options

Different customers prefer different modes of payment. Many of them may only be comfortable using a credit card. Yet others will want to pay by an eWallet or by card on delivery. They may not feel comfortable divulging their card information on the Internet or they may want to receive and see the physical product before they pay. As a business, do the best you can to cater to all kinds of customers and thus provide as many viable payment options as possible.

6. Secure your e-commerce website.

Security is of utmost concern when you’re running an eCommerce website. Your customers are required to share sensitive information pertaining to their address and credit/debit cards and any compromise of such information can put them in grave difficulty. It can also potentially ruin your business.

Every website that collects the personal information of others needs a Secure Sockets Layer (SSL) certificate, this provides a secure channel over which sensitive information is transmitted. It will further assure customers that their private details are safe on your website. If your website URL begins with HTTP and not HTTPS (Hyper Text Transfer Protocol Secure), that’s another sign that your website is not secure. This may dissuade a customer from doing business with you.

7. Be accessible to your customers. 

Unlike in a brick-and-mortar store, people shopping online do not have access to a salesperson or an expert to address their queries. Nevertheless, it is your duty to assure them that you are there to help them out at every step of the way.

Apart from sending regular and accurate updates about the status of their order, you should also provide contact information for your customer care team that can promptly address their concerns.

Create a full-fledged “Contact Us” page on your website where you provide clear details and a variety of ways in which people can contact you, including email, phone number and/or a contact form. Make sure to include your social handles because a lot of people use social media channels to contact businesses or raise their concerns. If you have the manpower for it, a built-in live chat is the best and fastest way to address a customer’s query.

8. Encourage and publish reviews.

According to a BigCommerce study, 69% of online shoppers want more reviews from e-commerce websites, while 77% say that they read product reviews before making a purchase. If you have been receiving positive feedback on your products and your customer services, it will serve you well to highlight these on your homepage as well as on specific product pages.

Encourage people to write reviews for you by sending them follow-up emails after their purchases, thanking them for shopping with you and letting them know that you value their feedback.

Ready to launch your e-commerce website?

An e-commerce website needs to be the right blend of aesthetics, easy navigation, robust security systems and relevant and accurate information which can translate into a wholesome shopping experience. By ensuring that you incorporate the tips mentioned above into your website design, you increase your chances of converting visitors into revenue-generating customers.

You can launch your e-commerce website today using Domain.com’s AI-powered WebsiteBuilder.

Author Bio

Alisha is a Senior Content Marketing & Communication Specialist at Radix, the registry behind some of the most successful new domain extensions, including .STORE and .TECH. You can connect with her on LinkedIn and Twitter. 

Yet, for all that time set aside, 61 percent of managers admitted that the time they spent making business decisions was used ineffectively.

When the decision-making process lags, productivity loss isn’t the only issue. The subsequent opportunity loss is also staggering. Considering these numbers, the researchers estimated that the decision-making process could cost a typical Fortune 500 company a collective 530,000 days of managers’ time every year. In annual wages, that equals around $250 million.

The Importance of Strategic Business Decisions

Building a strong brand is a combination of a lot of great strategic decisions. Delegating the right decision to the right team and making those decisions at the right time is crucial.

For example, deciding on the domain name of the company. It’s a small decision but management often delegates it to the IT department. The conception of your brand happens with its name. For something that is at the core of your brand’s identity, often entrepreneurs underestimate the importance of a good name.

Often when the first-choice domain name isn’t available, people tend to add a hyphen or change the spelling or add a number to find a name that’s available. They completely ignore new domain extensions such as .TECH, .SITE, .SPACE, .STORE, .ONLINE, etc. that give you the opportunity to get a great name that’s meaningful and contextual.

Choosing the right domain name is a crucial decision. New domain extensions allow you to get domain names that are more relevant to your business and your industry. They help you get a meaningful online identity and offer a great deal of support in your marketing and branding efforts.

4 Keys Ways to Make Better Decisions for Your Small Business

You want to drive your company forward, but your time is valuable. That’s why it’s important to deploy smart strategies that can help you reach the right decision sooner.

Read on to learn about four key ways you can optimize and improve your decision-making process, starting today.

1. Perform a Marginal Analysis

A marginal analysis measures the cost of activity against incremental changes in volume, determining how the overall change in costs will affect your bottom line. To perform this analysis, you’ll weigh your marginal benefits against marginal costs.

To find your marginal benefit:

1. Determine a variable to change (for example, the volume of output produced.)
2. Determine your increase in total benefits if you add one more of that unit (marginal unit.)

To find your marginal cost:

1. Determine your current costs associated with that variable.
2. Determine how that cost would increase if you added the marginal unit.

Does the marginal benefit outweigh the marginal cost? If so, you’ve reaped a net benefit, and it’s wise to add the marginal unit of that variable. Conversely, the opposite also holds true.

For example, assume you manufacture a product that sells for $100 and costs $75 to produce every 50 units. You’re wondering if you should increase production to 51 units. If you do so, the anticipated revenue will remain $100, and your potential profit is still $25.

However, when you do the math you realize that there will be an uptick in overhead and labor costs. This will increase your production cost to $105 per unit, and you’ll lose $5 on every extra item you manufacture.

In this scenario, your extra costs now outweigh your potential sales revenues/profits. That makes it easier to see that increasing your manufacturing output is an unwise move.

2. Create a Decision Matrix

Listing the pros and cons of a potential decision can be helpful. Yet, the procedure becomes complicated when you have myriad variables and choices to select from. This is where a decision matrix comes into play.

In short, this is a pros/cons list that allows you to rank each factor by its level of importance. This way, you can understand which option is the clear winner.

You can create your matrix manually or in an online spreadsheet. Let us consider a situation where you have to select an IT vendor based on certain parameters. Have a look at the table below. 

Here are some steps that you can follow:

1. List your decision options as columns.
   1. (Vendor A, Vendor B, and Vendor C)
2. List all your relevant factors as rows.
   1. (Capabilities, Reputation, Technology, and others)
3. Create a scale to assess the value of each option/factor combination.
   1. (2 for the Price and 1 for the rest)
4. Assign weights to each factor depending on their level of importance.
   1. (Any value between 1 and 10. For the Price factor, double the weightage value)
5. Add up the factors under each option.
   1. (36 for Vendor A, 37 for Vendor B, and 45 for Vendor C)
6. Now calculate the score for each vendor by using the formula:
   1. (Score obtained/Total score) ✕ 100
   2. In the above example, that would be – Vendor A: (36/70) ✕ 100 = 51 percent
7. The option with the highest score wins (Vendor C).

You can apply this matrix to a variety of scenarios, including:

●  When you can only implement one solution or problem-solving approach.

●  When you can only select one new vendor.

●  When you can only develop one new product.

Have a look at some examples for a better understanding.

3. Make a SWOT Diagram

Are you planning to make a substantial change to the infrastructure of your business? If so, a SWOT diagram can help you break the situation into four actionable pieces, helping you analyze:

●  Company strengths (internal).

●  Company weaknesses (internal).

●  Company opportunities (external).

●  Company threats (external).

To create the diagram, draw a grid with four quadrants. Assign one quadrant to each of the above sections. Bring in team members, partners, and other key stakeholders to help you determine the data that fits into each one. Together, you can analyze the finished diagram to draw comparisons and better understand the long-term impact that your decision will have.

4. Perform a Pareto Analysis

This analysis is often referred to as the Pareto Principle or the 80/20 rule. It states that 80 percent of a project’s benefits are derived from 20 percent of its work. At the same time, 80 percent of a problem traces back to 20 percent of its causes.

You can use a Pareto Analysis to identify the problem area or task that will have the greatest impact on your business. Benefits of performing this exercise include:

●  More efficiently optimized workloads.

●  Improved productivity.

●  Improved profitability.

Wondering why your sales are lagging and trying to decide what to do about it? This analysis can help. To create one, follow these steps:

1. Identify and list your root problem.
2. Identify the root cause behind each problem.
3. Score each problem by the importance.
4. Group like problems together.
5. Calculate your scores for each group.

Have a look at an example for a better understanding of the concept.

With these numbers in mind, you can prioritize your efforts and take action. You’ll begin by tackling the most important causes, dealing with the top-priority problem first.

Make smarter, data-driven business decisions

Better business decisions start with better data. When you allow emotional or impulsive thinking to dictate your next move, it can exacerbate confusion and muddle outcomes. These four steps allow the information to take center stage, revealing the key insights you need to make a well-informed next step.

Author Bio

Alisha is a Senior Content Marketing & Communication Specialist at Radix, the registry behind some of the most successful new domain extensions, including .STORE and .TECH. You can connect with her on LinkedIn and Twitter.