How to get funding for your online business in 2024

BusinessCategory
5 min read
Selina Bieber

Statistics show that 82% of businesses that fail are because of funding problems.

Although a unique idea for your online business is important, however knowing how to get funding for your business is a must.

In this article, we are going to tackle some of the options that can help you start funding your online business successfully.

Related: Startup Funding: How can you prepare your business to raise fund?

This article will discuss three main areas of interest:

  1. Is the idea worth it?
  2. What’s a business plan and why create one?
  3. Where to get the funds from?

1. Make sure your idea is worth it

Making sure your idea is worthy is the first and most important step in your funding journey.

lightbulb representing a new idea

You must ask yourself if your business idea is unique enough to get the attention of the potential funders. You can start with 3 simple questions:

  1.  Am I introducing a new product or service?
  2.  Does the targeted market lack my idea?
  3. If my idea is not new, which new value I’m adding?

Investing in market research can help validate your idea and check if it's worth funding.

Related article: Here’s a list of 22 business ideas to start from home with a very little investment.

Related article: Start-up failures: What should you take care of in your first year? 

2. Business Plan

funding hand drawing

After making sure your idea is worth funding, the next step is to create a business plan for potential investors.

You can follow these steps:

  •  Create Company description: Who are you? What do you do?
  •  Make Market analysis: Discuss information and research your competitors and your target market.
  • Organization and management: Outline your company's organizational structure and have clear and defined roles for managers and other positions.
  •  Set up your Service/ product: Explain the products or services you’re offering
  •  Marketing and sales: How you’ll market your business and your sales strategy
  •  Funding: How much money you’ll need for the next 3 to 5 years. Calculate all the necessary investments, risks, and potential profit.

Related articles: How to write an effective business plan 

3. Where can you get funding?

This depends on different factors such as:

  • The stage your small business is at.
  • Is your business idea original?
  • Do you already have a business plan?
  • Do you have a prototype of your product/ service?
  • Have you secured any funding already?

In fact, you can get funding from multiple sources. We will explore four sources of start-up funding and then you can decide which one is best for your business.

  1. Loans from relatives
  2.  Crowdfunding
  3.  Angel investors
  4.  Pitching competitions

Let's discuss them in depth:

1. Loans from relatives

glass jar coins funding

Loans from relatives or friends have a unique advantage that it is more “flexible”.
The flexibility in this option is within the amount borrowed and payment arrangements with no interest between you and your loved ones that you may not get with loans from banks directly.
Loans from family and friends are usually in the very first phases of your small business.

When you just have an idea and need the funds to fuel it and work on formulating a business plan.

2. Crowdfunding

Crowdfunding is a great way to support the first stage of your start-up launch, empower you to make your minimum viable product, and be the perfect proof for investors that people are interested in what you are doing.

The emergence of crowdfunding platforms provided the founders of start-ups a unique opportunity to implement their ideas and deliver them directly to consumers.

You can check a list of top crowdfunding platforms here and all the detailed information you’ll need to start crowdfunding.

3. Angel investors

Angel investors stand out from other forms of funding choices because they are continuously there to support your small business and are in it for the long run.

An Angel investor is a high net-worth person who invests their money, often in start-up companies, to help them grow.

Numerous of the greatest tech companies nowadays, counting Google and Yahoo, were supported by angel investors.

Receiving funds from an angel investor requires you to give your investor some share of equity in your company. Angel investors and any related transactions must be registered with the Securities and Exchange Commission (SEC).

Related articles: What Are Angel Investors? 

4. Pitching competitions

The fourth option is funding through pitching competitions. They are a great chance to put your idea to the test. You will be put on stage, in front of investors and you will present your pitch.

There are plenty in the Mena region, like:

These competitions are usually attended by multiple investors and if you uniquely presented your idea, you might just get multiple funds.
To enter a pitching competition, you may need to pay a fee and prepare an impeccable pitch deck.

Remember that these investors get hundreds if not thousands of pitches, you need to present them with a unique idea and a well-thought pitch.

Try looking for pitching events happening around your city like the ones mentioned above.

Hopefully, this article will help you start your online business journey funding successfully.

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