8 Ways Shopify Capital Can Help Grow Your Small Business

As a small business owner, you know that every penny counts. You also know that in order to grow your business, you need to spend money in the right places. But with so much economic uncertainty heading into 2023, and with priorities and opportunities shifting from day-to-day, it can be difficult to know where to invest your limited resources.

In this article, we'll share eight ways you can use Shopify Capital to grow your small business in 2023. From investing in inventory to expanding into retail, we'll cover all the bases. So whether you're just getting started or you're looking to take your business to the next level, read on for some helpful tips.

1. Purchase inventory

Keeping up with the ebbs and flows of the market allows you to make wise spending decisions. For example, if you know that the demand for your product will increase during the holiday season, it's important to purchase enough inventory to meet that demand.

However, purchasing inventory can be a tricky balancing act. You don't want to overspend and tie up too much of your capital, but you also don't want to underspend and run out of stock. Therefore, it's critical to find a happy medium that meets the needs of your business without breaking the bank.

There are a few things you can do to get an idea of how much inventory you should purchase:

  1. Look at your sales data from previous years to get an idea of how much demand there is for your product.
  2. Speak with your suppliers to get an idea of lead times and minimum order quantities.
  3. Factor in any seasonal fluctuations in demand you are aware of.

Once you understand how much inventory you need, you'll have to secure the funds to purchase it. That's where Shopify Capital comes in. 

Funding through Shopify Capital funding allows you to purchase the right amount of stock, streamline inventory management, and fuel your growth. It allows you to:

  • Prepare for peak season or big campaigns and buy the products you need to meet demand
  • Take advantage of bulk discounts from suppliers when restocking
  • Pre-order raw materials and products early to avoid potential supply chain delays
  • Invest in product development and explore new product options
  • Find new distribution channels and expand your business into wholesale

2. Spend on marketing

Once you have all the necessary items in stock, you'll need to invest in marketing to drive demand. 

One of the most significant costs you'll incur for your ecommerce business is advertising, hands down. So whether you're shelling out money on Google ads or hiring an agency to manage the ads for you, extra cash flow can help you execute your marketing strategy.

Take Hearthy Foods Founder Riaz Surti. He used funding he received through Shopify Capital for a rebrand. By revamping his existing packaging, he recaptured the essence of his value proposition as a first-of-its-kind vegan, plant-based flour company and a healthy alternative to wheat flour. The new packaging and marketing helped Riaz triple his sales.  

Marketing funding can help you:

  • Boost your ad budget
  • Refresh your brand by investing in new photography, design, or packaging
  • Prepare for a big marketing campaign
  • Host a contest to build engagement
  • Partners with an influencer 
  • Keep your ads running during peak seasons
  • Optimize your online store for SEO
  • Promote your brand on social media
  • Sell through stale inventory

3. Manage cash flow

Cash flow is one of the most important things to keep in mind when growing your small business. According to a U.S. Bank study, 82% of failed businesses cited cash flow problems as a factor. One major issue is that many traditional sources of financing don't offer the ability for small businesses to get their funds fast enough to reinvest and continue to grow the business.

Lending through Shopify Capital provides businesses with the funding they need when they need it most — now.

There are no weekly or monthly fixed payments. Instead, as you make sales, you make payments based on an agreed fixed percentage of your daily sales. This flexibility lowers your cash flow risks by removing the uncertainty of compounding interest rates.  

When you have positive cash flow, you have greater flexibility and can make the choices you want. You can reinvest the money into your business to help it grow by buying new equipment, hiring new employees, investing in new projects, or expanding your operations. You can also use the extra cash to pay down debt or build up savings, giving you a cushion in uncertain times or during slow periods of your business.

Learn more about Shopify Capital

4. Invest in creating new products/services

Creating new products or services is a great way to grow your small business. It allows you to reach new markets and customers, and it can also help you increase your revenue. 

When mattress brand Nest Bedding reached out to Shopify Capital for a new round of funding, the future of sleep innovation was top of mind. They were looking to secure additional funding to support new technology development for a cooler mattress without pulling from their existing budgets. Shopify Capital made sense–allowing them to start production before the holidays and stay ahead of the competition.

Having sufficient capital allows you to conduct research and development, which can reveal new products, SKUs, and services to add.

These additions bring significant benefits:

  • A broader selection that meets more needs and keeps your customers interested, especially in a constantly evolving market
  • A more diverse portfolio lessens your risk. When some of your products are out of season, you'll have others to offset that sudden drop in demand.

5Get the funding to purchase new equipment

Do you plan on making your own products? If so, you may need to invest in equipment that will help you start, maintain or grow your operations. But the key is that this investment should show a return in the long run.

Investing in new equipment can help increase productivity and efficiency in your small business, leading to growth. However, to get the most out of your investment, it's important to do your research and purchase the right equipment for your needs.

Before making any major purchase, it's essential to have a clear understanding of your finances and what you can afford. Once you know how much you have to work with, you can start looking at different options and comparing prices. It's also important to consider the long-term costs of owning and operating the equipment. For example, if you're considering a new computer system, you'll need to factor in software, licenses, and maintenance costs.

It's also important to consider how the new equipment will fit into your current workflow. For example, will it be compatible with your existing systems? Will it require special training for your employees? How will it impact production? Answering these questions can help ensure that the new equipment is a good fit for your business.

Once you've done your research and are ready to make a purchase, it's important to take the time to shop around and compare offers from different vendors. Getting multiple quotes can help you get the best price on the equipment you need.

When evaluating offers, look at more than just the up-front cost. You should also consider factors like warranties and service contracts. Taking the time to compare offers from different vendors can help you save money and get the best deal on new equipment for your small business, and financing through Shopify Capital can help you fund it. 

6. Fund your retail expansion

Many successful online merchants are looking to move into physical stores. Expanding into a brick-and-mortar location can be a great way to reach new customers and increase sales. It also makes your business/brand experiential, giving your customers the ability to touch and feel your products. However, before you expand into retail, you should consider a few things. 

  1. Determine if there is a market for your product or service and if it's feasible to invest in expanding into retail. 
  2. Create a marketing plan for the retail market. 
  3. Identify the best location
  4. Obtain licenses/permits and insurance
  5. Hire staff
  6. Set up a system for tracking your progress to ensure that your expansion into retail is profitable and successful.

And so much more.

Expanding into retail can be a great way to grow your small business. By doing your research and planning ahead, you can ensure that your expansion is successful and profitable.

Tracey Jewel, Manager at Batherapy, achieved growth via Shopify Capital. Thanks to two funding rounds, Tracey expanded her business from selling her DIY bath kits online only to launching in-studio bath and body product workshops across Perth, Australia. 

"The first round of funding helped to quickly boost supplies to support the opening of our first studio space in inner-city Perth, and we've since repaid the first round and accessed an additional round to fast-track the opening of three new studios across the city," said Tracey.

7. Expand to new countries

Commerce is a global industry with global opportunities. But entering new markets can be slow and expensive. 

Tax and duty compliance are different in every market and can often change; currencies fluctuate; negotiating affordable international shipping rates can be difficult; and merchants need to be cautious of increasing fraudulent orders. Customers also prefer to visit shops in their native language, so translation and localization are key. 

These obligations and complexities can make it difficult for merchants to expand their business internationally. But realizing your dream of cross-border commerce could be closer than you think. Funding through Shopify Capital could help you invest in expanding to new markets while offering flexible, automated payments that are made with a percent of your store's daily sales.

8. Hire staff and fund payroll

Alison Ables runs Prelude and Dawn, a modern bohemian boutique in Los Angeles that carries a diverse selection of clothing and handmade goods. Alison has taken advantage of Shopify Capital several times since joining the platform in 2016. She has used the rounds of funding to hire more staff, purchase inventory, and move her physical store into a highly desirable neighborhood. 

Prelude and Dawn was mainly a brick-and-mortar store at the beginning of the pandemic, so she had to shift gears and spend more of her Capital funding on online advertising. The funds she applied toward marketing helped her get through the pandemic and grow her business.

Business financing can help you get the funds you need to invest in your people and hire superstars by:

  • Building your dream team - When running a business, it's hard to justify making a new hire until your revenue stream can support that salary. With extra cash flow, you can expand existing roles, bring on new people, or make your staff full-time.
  • Funding payroll - Paying on time is critical for retaining your workers
  • Hiring contractors - Bring on experts or freelancers to help you get the job done.
  • Focusing on growing your business - Invest in your people so you can focus on your next growth stage.

Take control of your business with Shopify Capital

Chances are you've got lots of priorities on your to-do list, but you're not quite sure what to tackle first. One of the seven opportunities above may be right for your brand. From inventory and marketing to payroll and more—make your next move with funding you can use your way.

If you're looking for access to financing to kickstart your next project, you can check your eligibility directly from the Capital page of your Shopify admin.

All loans through Shopify Capital are issued by WebBank.