#financing a business
Financing a business guide
Table of contents
Securing financial assistance to start your new business is directly related to the strength of your business plan and the research that you do. To be considered for funding from financial institutions or investors, you must demonstrate that you understand every aspect of your business, and its ability to generate profit.
What is a business plan?
A business plan is a written document that describes your business objectives and strategies, your financial forecasts, and the market you are targeting. Preparing your plan will help you focus on how to run your new business with the best chance for success.
For copies of sample business plans call us at:
To run a successful business it is helpful to know who your customers are, what they want and how to reach them. You can go directly to your customers for answers (primary market research), or you can use information that already exists (secondary market research).
CBO can help you with your secondary market research. Contact us directly for:
- information about business associations, manufacturers, suppliers and competitors
- articles about consumer, business and industry trends
- Canadian consumer spending statistics and demographic data for market research
- sample business plans
- international trade data
The secondary market research service is offered free of charge and is available for people at any stage of business in Ontario.
Note: Research requests may take up to seven business days to complete.
Business advisory services
Find information about Ontario’s small business community, attend seminars, and access business publications at various in-person locations across Ontario.
Services vary based on regional needs, so we suggest you call ahead or visit your local office s website for more detailed information for your area.
There are many different ways to finance your business. Canada Business can help you find government programs that are available in Ontario.
Common sources of business financing include:
The Canada Small Business Financing Program (CSBFP)
By sharing the risk with your financial institution, the CSBFP may help you get up to $1 million to start, expand, modernize or improve your small business. To be eligible your business should have annual gross revenues of no more than $10 million.
You can use the loan to finance the cost of purchasing or improving fixed assets. For example, you could finance:
- buildings and land
- commercial vehicles
- business equipment
- leasehold improvements for a franchise
You cannot use the loan to finance items such as:
- working capital
- franchise fees
- research and development
To apply for this program, contact an approved bank, caisse populaire or credit union. The lending institution has the final say on the loan approval.
The Business Development Bank of Canada (BDC)
If you can demonstrate that your business has realistic sales potential, you may be eligible for financing and management services from the BDC, Canada s bank for business. Learn about a variety of programs for business, including:
Ontario Community Futures Development Corporations (CFDCs)
You may be eligible for a loan of up to $150,000 to start or grow your business in Northern Ontario or in rural areas of Southern and Eastern Ontario. CFDCs provide financing to help new or existing businesses with start-up, expansion or stabilization plans that help maintain or create jobs. You can also take advantage of several business support services, including:
- business advice, counselling, information and referrals
- business planning
- export support
- entrepreneurial training
Please note that services vary based on regional needs. We suggest you call ahead or visit your local office s website for more detailed information for your area.
Futurpreneur Canada Start-Up Program
You may be eligible for a loan of up to $15,000 from Futurpreneur Canada.
To be eligible, you should:
- Be between the ages of 18 to 34
- Create a business plan for a business that will employ you full time
- Work with a mentor for two years
- Own at least 51% of your business
If you are approved for funding from Futurpreneur Canada, you may also be eligible for additional funding of up to $30,000 through a special partnership with the Business Development Bank of Canada (BDC).
For more information or to apply for the loan, visit the Futurpreneur Canada website or call them to find the nearest office.
For applicants aged 35 to 39, you can also apply through Futurpreneur Canada and work with one of their mentors, but your financing terms and conditions are from BDC for a maximum loan of $45,000.
Financing search tools
To search for other financing programs, visit the Canada Business website. There are programs that apply only to businesses in Ontario, and others that are available across Canada. Use the search tool or browse by type of financing.
Municipal business programs
Your local municipal office may offer financing and support for your area. You can find the number for your municipality on the Association of Municipalities of Ontario website. Contact them directly to find out what is available in your area.
You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Canada Business Ontario (CBO) community partner, contact us at 1-888-576-4444 .
Business planning FAQs Find the answers to questions often asked about preparing a business plan. Sources of private sector financing Find out about the debt and equity financing available from the private sector for your business needs. Financing from non-government organizations There may be not-for-profit or community-based organizations that can offer you financing or direct you towards financing.
Date modified: 2016-01-28
#advertise your business
3 Ways To Advertise Your Business Without Spending a Dime
As a business owner, you already have a lot to worry about. From meeting deadlines and exceeding expectations to making sure all of your expenses are paid, it’s hard to wear so many hats at once. Add in a whole marketing plan and budget. and the costs can quickly get out of hand.
Luckily there are many ways to advertise your business without spending a dime. Here are some examples:
Every business website should have a blog attached to it. A blog enables a business to connect with their customers. You can show some behind the scenes action at your business, describe your products, and introduce your team. Starting a blog is very simple and if you have an already established website, you can typically download a blog template for free and get started right away.
Once you get more proficient with your blog. you can learn about search engine optimization and how to leverage your blog to ensure your customers can find you easier through a Google search.
Learn Pinterest Marketing
Pinterest is quickly becoming one of the most important social media sites out there. You can learn how to create images for your blog posts or your business for free with a service like Canva. and then post those images on Pinterest for free.
Watch free videos on how to use Pinterest effectively, join group boards, and regularly pin every day to find the marketing plan that works best for you. The best part is that this strategy will only cost you your time, not your money. and it can dramatically improve the traffic that goes to your website.
Word of Mouth Marketing
It might seem old school, but word of mouth marketing is still one of the best (free) ways to market your business. You can start by asking your current clients or customers to tell their friends and family about you. Lots of business owners don’t think to ask their clients to write a testimonial or offer to give a discount to them if they send business your way. For example, if you’re a hair stylist within a salon, you can tell your customers that you will give them a free haircut for every three new customers they send you. It’s a simple way to market that again, only costs you your time.
You should also regularly build your business contacts through attending networking events in your local area. Join your chamber of commerce, attending networking dinners, and hand out your business cards when you strike up a conversation with someone new. Remember, you are your best asset when it comes to your business and you’re also your own best salesperson because you know your business best.
Ultimately, you don’t have to spend thousands of dollars on marketing for your business. With a little bit of time and focused effort, you can absolutely grow your business without spending a dime by networking with other business owners, optimizing your website, and learning social media strategies to grow your business.
From Our Partners
#free online business
Starting A Free Online Business, Step by Step
Every day, thousands of people search for information on starting a free online business. They are looking at online business systems, searching for free online business opportunities, and basically looking for legitimate home business ideas so that they can work from home .
That’s what I do, and I love it. That’s a photo of me above. It was actually taken several years ago – this is my 12th year working from home. And it was taken at a friends house too. I love being able to work anytime, anywhere!
Anyway- yesterday I had opportunity to meet two such ladies who were searching for that very information, and who happen to live in my town. They found me on MySpace. so we talked there and then decided to meet for lunch and discuss what it takes to start an online business.
I’ll share the same details with you here that I shared with them over lunch, which were simple steps for starting a free online business. I cant share the fabulous spinach salad, or the great conversation we had, but hopefully this will prove useful to you if you are searching for internet business ideas yourself.
Home Business Ideas
There are so many home business opportunities and internet business ideas, that it can be a little overwhelming to figure out where you should start. We talked about a few of the different business models – from ecommerce sites that use wholesale dropshipping. to offering a service or starting your own blog.
You can make money online in a variety of ways. Just a few examples include: sell your own product, offer services, sell advertising on your website or blog, or promote other people’s products and/or services.
That last option is called Affiliate Marketing. It’s basically commission-based sales, and I compare it to the offline model of selling Kirby vacuum cleaners. When you make sales, you make money. You can sign up as an affiliate for a company and they will give you an Affiliate Link. You promote that link, and anyone that goes through your link to make a purchase will be tracked – resulting in a commission to you for that sale.
This is the internet business model that I focused on during our conversation over lunch yesterday. I actually use a variety of internet business models to make money online myself, but Affiliate Marketing seemed to be a perfect match for my new friends.
Some business models are active, while others are more passive. An active business model requires a more active role on your part. A membership site for example is high maintenance. If you offer services, then you need to interact with clients and take phone calls on a regular basis. I prefer passive income models, which allow you more freedom and flexibility.
That’s not to say that active business models cant be incredibly profitable and successful, just that something more passive seemed like a good fit once I got to know her a bit.
To clarify, when I say passive I dont mean that you wont have to work at it. I think we’ve all kind of figured out by now that “get rich quick schemes” dont really work. And we were discussing real, legitimate ways to make consistent income online. Not spotty one-off ways to make a few bucks here and there.
We discussed the realistic investment of time and money, and I confessed that I put a lot of time in upfront to get each of my internet business models up and running (some more than others). I explained that you could invest money to get sales rolling in quicker, or you could invest time (up to 6-12 months even) to get your sales up to a good level on a consistent basis. You’ll make money along the way of course, but geting that consistent income is the key.
Going that route, you can get started for less than $10. Yes, literally.
The passive part comes in after you have your affiliate site up and running – once you’ve done that groundwork. With affiliate marketing the merchant is handling orders, shipping and customer service. All you have to do is send them traffic through your affiliate link.
Once your site is up and running, you’ve set up your systems (such as a newsletter, blog, or whatever fits your model), and you’re driving traffic to the site. most of the “work” from there can be automated, and maintained in very little time. For example, I can usually run a site like that in as little as 5 hours a week. That frees you up to create more just like it, and duplicate your income
Starting a Free Online Business
I mentioned above that you can get started for less than $10. I know that a lot of people are interested in starting a free online business, but this small investment is well worth it. Especially if you are serious about making a consistent income with a real online business.
You could actually spend a lot more than ten bucks, but if you take my advice you’ll save a lot of money – and still end up with a solid internet business model.
What are the steps in creating an online business?
Your first step is to decide what niche you will target. Meaning: what are you going to sell, or what topic is your website going to be about? You might start with the product, or you might start with the topic – it doesnt really matter as long as you get that initial idea.
To help you, here are some of my own mini-tutorials on keyword research. Keywords are simply the words or phrases that people are searching for online. If you read through the links on that page, you’ll have a much better understanding of how you can research keywords to choose topics or products.
Once you decide what your website will be about, you’ll need two things: a domain name and a hosting account. The domain name is your website address (like www.ClickNewz.com is mine) and the hosting account is the space online where you will put your website.
I use GoDaddy.com to register my domain names. For hosting, I use HostGator – they allow you to host multiple domains or sites on the one account (saving you money when you start duplicating!) and they have tons of cool features that save you time & money too.
The domain name will cost you $8.95 for the first year. The HostGator account is $9.95/month, but I have a coupon code you can use to get your first month free. And that’s all you really need upfront to get started – so start up cost is actually less than $9, and then 9.95/month.
So you’ve picked a topic for your website, you registered a domain name, you set up your hosting account. now you need to create a website. (This is the hard part for most people)
It might be tempting to just hire a web designer, and that’s certainly an option, but you really want to learn some things yourself if you are going to be running an internet business. Creating your own website will also save you a lot of money.
You’ll find some tools in your hosting account to help you develop your website. You can also find all kinds of free resources online by doing a search. If you decide you need some help, consider hiring someone to design a template for you – not an entire website. Its much cheaper to just outsource the template design and do the rest of the work yourself.
You’re going to run into questions along the way. But dont let that stop you! I have an online business discussion forum where you can stop in and ask any questions you have, and get help from others who have already gone through these steps themselves.
Go back through the steps and check out some of the links. Read my keyword research tutorials, and then join us at the forum if you have any questions before you get started.
If you liked this tutorial, be sure to sign up for my free weekly tips. It’s the best way to get the current scoop on free resources, and new online business tips!
#online home business
Building a Successful Online Home Business
Photo: Ed Yourdon via Flickr
Would you love to run a flexible business from home? Or how about a business you could pop into your handbag and operate from your coffee shop of choice? It s possible. Lots of people have made it happen. All you need is a laptop and a reliable internet service like home internet by Sonic in place. This article, and the infographic below, will help you to think about which business ideas you can use and what you can learn from women who ve made it with their own successful internet business.
Online Business Ideas
There are a number of business ideas you could consider for starters there is online sales of products or services, copywriting, online tutoring, subscription, affiliate marketing and advertising. In fact, most successful online businesses combine more than one income stream.
With the rise and rise of fremium it s not always straightforward! Fremium is where you provide a basic service for free. Sometimes everything is free and revenue comes from advertising or affiliate marketing moneysavingexpert.com and most news and information based sites and blogs are funded that way. Alternatively, you could provide a basic product for free and charge for the premium version hubspot, skype and mailchimp do this. The advantage of fremium models is that they allow you to engage a much larger audience.
How they Made it
Let s look at a few women who started from an online home business and have made it big. How did they get started and what can we learn from them?
Single mum Lauren Luke gave up her dead-end job to sell make-up on eBay in 2006. The business quickly took off and Lauren started making home-made YouTube videos to show customers how to apply her products. The videos become a YouTube phenomenon they ve now had over 75 million views. Lauren s personality is a large part of her success she s incredibly down-to-earth, nice and unaffected. She builds real relationships with customers and social media followers and has a natural marketing and customer service instinct. The business continues to boom: Lauren has launched her own make-up range which is on sale in 135 shops in the U.S. See here for a video of Lauren explaining the secrets of her success.
Business model: eBay shop, YouTube advertising and now direct production and high street sales.
Justine Roberts Carrie Longton, Co-Founders Mumsnet
For Carrie and Justine, having young children was the perfect time to start a business. Justine couldn t face going back to work after maternity leave. She met Carrie at antenatal classes and together they developed the idea of an online guide for parents. Mumsnet was born.
But it got off to a tricky start. They were starting in 2000, at the height of the dotcom bubble. Overnight the bubble burst and the advertising-based business model they hoped to entice investors with, fell apart. Instead they began with a small loan from a friend and worked out of a bedroom with no salary for the first few years. The site is now a thriving community of over 6 million parents, with a multi-million pounds turnover.
Business model: Advertising is the largest contributor of income, other growing streams include: surveys and consumer testing, books and events.
Holly Tucker and Sophie Cornish, Notonthehighstreet.com
Holly and Sophie were also mums who decided to start a business together. It started in 2005 around the kitchen table, with Holly s baby there in a playpen. Notonthehighstreet is an online shop front for around 1,800 independent creative businesses. Each partner is carefully selected for quality and originality. Partners pay a fee to be listed on the site and around 20% of each sale. For the first few years the pair poured all of their savings into the business. Since then they have had three successful rounds of venture capital investment. It s a high-growth route that resulted in a turnover of over £15 million in 2010 and 60 staff. VC is a hard-driving growth route, not for the faint hearted. See here for our review of Holly and Sophie s warts and all book about growing their business.
Business Model: Online sales, membership, revenue sharing, printed catalogue.
Where does your business model fit?
Fast Company have created a great infographic of the online business environment. It shows how all of those online business models fit together and how each of them can make money. It s worth bearing in mind though, that while all of the businesses we ve featured started online, all of them now also have growing off-line income streams.
As the first two case studies show, it is possible to grow a successful online business without external investment. But if you need investment, to start or scale, check-out the full range of funding options in our women s business finance guide .
The infographic can help you to decide where your online business best fits for now. But it continues to be a fast changing business environment. A change in the Google algorithm can make or break business models overnight. Last year Google brought in Panda a significant change to their search rankings. Overnight, several commercial sites dependent on affiliate links found themselves downgraded. So if your online business is dependent on Google search and I can think of few that aren t make sure that you keep abreast of their quality guidelines. Quality content is key. Above all, get to know your customers or visitors, provide a quality service and meet their needs.
#lawn mowing business
Pros Cons of Starting a Lawn Business
Updated August 25, 2016
The smell of fresh cut grass is intoxicating, but it isn’t the only reason to start a lawn business or consider yard care as a home business idea. There is ample opportunity within this service sector and the ability to customize a business to fit your specific desires and needs. Consider the following pros and cons of starting your own lawn care home business:
- Stable Repeat Business: Lawn care accounts are perpetual, meaning ongoing and consistent. Your customer base will need their lawns mowed once a week, making for a stable book of business.
- Revenue Generating Consumables: Not only do people need their lawns maintained, they need special fertilizers and treatments for weeds and bugs nearly every 4-6 weeks. These treatments would be considered “consumables”, meaning reoccurring product usage, and this business feature makes for an attractive business model.
- Scalable: You can start by offering one service (mowing lawns) and build out to other service offerings like landscaping services, new sod installation, gardening, tree trimming, weeding…etc. The myriad of options available will allow you to scale up as customer demands change.
- Customizable: There are so many ways to tailor this business to fit your needs or expertise. You can choose to be a sole proprietor. who literally does it all, or you can be the marketing genius who manages multiple lawn care teams from your home office. You can decide to go after residential contracts (the B2C route ) or commercial building contracts (the B2B route ).
- Entry-Level Workforce: If you scale up and need employees, the majority of this type of workforce needs no formal education and is able to learn on the job. This means no expensive training or recruiting costs. Beware, however, this workforce typically comes with a higher turnover rate.
- Franchises Available: If you are interested in purchasing an existing model to work from, there are many proven and reputable lawn care business franchises available for purchase. Additionally, you can consider purchasing an existing business. which will provide you with an existing customer base and equipment.
- Seasonal: Excellent for those individuals who have summers off (i.e. teachers or full-time students or people whose professions revolve around winter climates).
- Seasonal: Unless you live in an area where winters aren’t bad, your customer accounts go into hibernation by mid-October. If you are looking for a year-round business, you will need to find something to diversify your product offering (i.e. snow removal) to keep business up and running through the winter.
- Start-Up Expenses: Depending on the type of lawn care business you decide to build out, you will need equipment and something to transport this equipment with. This may require up front cash and in some cases, a sizable amount.
- Competitive: Open your phone book and you will find a number of lawn care businesses in your area. If the market is too oversaturated, you will find the need to compete off price and this will cut into your gross margins. Research your area and if possible, speak to existing lawn care companies about what they are experiencing in your area.
- Some Economic Risk: When economic times get tough, existing residential customers may find the need to cut non-essential expenses, and for many, outsourced lawn care is one of those.
Now that you understand the pros and cons of a lawn care business. here is what it takes to fund, set-up and market a lawn care business out of your home.
Estimated Start-up Costs :
To start a business from scratch, you could range from $500 (cost of a lawn mower. trimmer and leaf blower) for a one-person shop up to $100k for an existing business purchase. A franchise purchase will vary. Lawn Doctor is one of the top ranked lawn care home business franchises and they charge approximately $80,000 to start-up one of their franchises.
According to figures from Entrepreneur.com, lawn care and landscaping business owners earned anywhere from $5,000 to $50,000 in their first year, and as much as $160,000 to $250,000 once they were in business a few years. They also indicated that businesses were charging anywhere from $20 to $85 per lawn cut (all dependent on size, slope and other factors).
- Check with your city government or local Chamber of Commerce to see about business licensing and insurance requirements.
- Find a separate area in your home to set-up your office .
- Prospect for initial B2B or B2C customers via mailers, cold calls. door-to-door visits and flyers. Consider setting up a booth at a local fair or community event to attract leads. Once you have some account prospects lined up, consider purchasing equipment (you don t want to jump the gun, purchase everything and end up realizing you can t get your business off the ground).
- Purchase or acquire needed equipment and supplies based off your product offering. Check for local wholesale/contractor rates on consumables and other needed tools.
- Provide excellent customer service and go above and beyond in your relationship marketing .
- Look for referrals from existing customers (this will be the blood line of your business)and always look for opportunities to up sell existing accounts with additional products or service (weed treatments, fertilizer, gardening. etc.)
Referral Rebates: This is a word-of-mouth marketing business. Most customers will come via referrals from your existing customer base. Incentivize your customers with a bonus or an account credit to encourage them to tell everyone they know about your great service.
Lead with a Loss Leader: What is a loss leader. It is essentially giving something away in hopes you snag a customer for life. Offer a promotion where you give away a lawn treatment at cost or give the first month of mowing free. Your initial revenues will be slow, but your goal is perpetual income and long term accounts.
For more in-depth information, check out this great lawn care business article from Entreprenuer.com.
#business plan pdf
Example of a business plan
A finance provider will review any business plan submitted; it is essential that your plan relates to your business and you do not rely on a generic document.
A finance provider will review any business plan submitted; it is essential that your plan relates to your business and you do not rely on a generic document. After understanding the requirements of a business plan here is a useful guide from Barclays’ which highlights the relevant sections that you need to consider when writing your business plan.
- Barclays Business plan
Here are three further example business plans. The first one is a comprehensive example of a fictitious airport café business looking to open a new site. The second is of a fictitious stone import business looking to cover the shortfall of working capital as they plan to expand and the third is of a fictitious fuel efficiency business looking for debt factoring finance.
- Airport Café
- Stone Importers Ltd
- Smith Fuel Efficiency Ltd
You can download all of these from ‘Related documents’.
#business development plan
How to Create a Business Development Strategy
The Business Development Strategy is used to underpin your main Business Plan and essentially it sets out a standard approach for developing new opportunities, either from within existing accounts or by proactively targeting brand new potential accounts and then working to close them.
This document highlights the key issues you should consider prior to compiling your own plan and will hopefully guide you logically through a proven framework.
The key word is Strategy. because you are creating a workable and achievable set of objectives in order to exceed your annual target.
Your Starting Point :
The key words are Who? What? Where? When? Which? Why? How?
Who are you going to target?
What do you want to sell them?
Where are they located?
When will you approach them?
Which are the appropriate target personnel?
Why would they want to meet with you?
How will you reach them?
If you have conducted regular account reviews with your key accounts during the previous twelve months, you should be aware of any new opportunities that will surface during the next twelve months. You will also, when assessing what percentage of your annual target usually comes from existing accounts, need to review data over the last two or three years. (It is likely that you can apply Pareto i.e. 80% of your business will probably come from existing accounts and in fact 80% of your total revenue will come from just 20% of your customers/clients)
You will be left with a balance (i.e. 20% of my business next year will come from new opportunities) therefore you can then begin to allocate your selling time accordingly.
Next: Ideal Customer Profiling
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#drop shipping business
Running a Drop Shipping Business
The following Q A answers many common questions associated with starting and running a drop shipping business. For a real-world example, you ll want to read this post which details the fulfillment process in one of my own businesses. TrollingMotors.net.
Jump to questions/answers:
What do I need – and much does it cost – to start a drop shipping business?
To properly set up a drop shipping business in the U.S. you ll need:
- To incorporate a business with your state (Approximately $150 to $300)
- Request an EIN number from the IRS (free)
- Request a sales-tax ID from your state (if your state charges sales tax, usually free)
- Find and establish a relationship / open an account with a drop shipper (free)
- (Recommended) Create your own eCommerce website (Approx. $10 to $50 per month)
The costs will vary based on your circumstances, but in most cases you should be able to get a drop shipping business up-and-running for less than $400. For more information on finding suppliers, please see the section on finding drop shipping companies.
Do drop shippers provide customer service and/or talk with my customers?
No. As the retailer, you re 100% responsible for dealing with customers. You ll need to build and market your website, handle customers support issues, solve problems and deal with any issues that arise. You ll act as the intermediary between your supplier and your customer.
How do I submit orders to suppliers?
Each drop shipping wholesaler will be different. Most suppliers (but not all) will accept orders via email. Many will accept them over the phone, and those with more advanced websites will accept them online. A few sophisticated suppliers will even allow you to submit your orders in bulk via a specially formatted XML or CSV file.
What is the turnaround time for fulfilling a drop shipped order?
This will vary based on the quality of the supplier, and their location. Most decent suppliers should be able to process, pack and ship out an order the same-day if it s received by noon their local time.
How do I get tracking information for orders?
This will also vary by drop shipper. A quality drop shipping wholesaler will provide tracking information via email in plain text or in a specially formatted .CSV or .XML file. Tracking information should be received immediately after the shipment is processed or by the end of the day the order was shipped. Once you receive a tracking number, it s your responsibility to pass it along to your customer usually through your shopping cart interface.
One mark of a poor drop shipper is delays in sending you order verification and tracking information and/or making you log-in to their website to retrieve tracking numbers.
How do I pay my supplier?
Starting out, a drop shipper requires you to have a credit card on file to pay for orders. When getting a business credit card, make sure you get a Visa or Mastercard as many suppliers won t accept Discover or American Express.
Once you ve built up a relationship and track record, you may be given the option of Net 15 or Net 30 terms. This means that the supplier will extend you credit, and simply keep track of what you owe. Then, you ll need to pay them by check within 15 or 30 days.
I have established, multi-year relationships with numerous drop shipping suppliers and still prefer to pay by credit card over Net terms. Why? It s more convenient, I don t have to write and mail a check, and I can rack up some serious reward points using the right rewards credit cards. In fact, I was able to accumulate enough rewards to pay for a trip around the world .
Who pays for the shipping costs on orders?
While a drop shipper will usually use their own UPS/FedEx/USPS account to pay for shipping, they ll pass along the cost to you when billing you for the order. It s up to you how much to charge your end customer for shipping.
Do orders appear like they came directly from my company?
Yes! This is one of the great things about the drop shipping model. Most drop shippers will put your company s name and logo on packing slips and invoices, as well as your return address. So it appears like the package was shipped directly from you.
How do returns from customers work?
Most drop shipping companies will have restrictions on what can and can t be returned. So you ll need to make sure you clearly communicate (both before the purchase AND before accepting the return from the customer) that it meets these criteria.
Most suppliers will issue you a RA (Return Authorization) number. This unique number will identify the return in their system. Once received, simply pass along this RA number along with the address of the warehouse to your customer.
Once the supplier receives the return, they should send you a notification along with a credit invoice showing that they ve credited you for the item. Then, you in turn refund the customer who purchased from your store.
Who pays for return shipping on returns?
This will vary from retailer to retailer, but here are the policies I have in place and highly recommend:
For Defective Items: If a customer received a defective item, I feel it s my business responsibility to pay all the associated costs to get them a working product! Some store owners will argue:
“We didn t make the product! It s not our fault! A defective item is the risk a customer takes for purchasing.”
but I think that s a poor way to do business, and provides a very bad experience for your customer.
I recommend paying for the return shipping costs incurred by the customer to send back the item, as well as the costs involved with shipping out a new replacement. In the event the product is very low-value (costs $20 or less), I ll often ship the customer a free replacement without requiring them to return the old product. This is often easier, faster and cheaper than paying to have a customer return a cheap defective product.
On the bright side, if a product is genuinely defective, most drop shipping wholesalers will pay for the shipping cost of sending out a new item, which means you ll only need to cover the cost of shipping from the customer to the warehouse.
For Non-Defective Items: If the customer decides to return an item due to incorrect selection – or because they simply changed their mind – they will usually be responsible for paying for return shipping fees. However, if the product was incorrectly advertised or presented on the website, the business should cover return fees if this was the cause of the problem or incompatibility.
Do drop shippers ship internationally?
This varies widely by drop shipper, so you ll need to check. I would say approximately half of the drop shippers I work with will ship internationally.
International shipments can quickly get expensive, and getting accurate quotes regarding shipping fees, customs and duties for hundreds of countries is complex. It also takes a drop shipper significantly more time to process an international order as there is more paperwork involved. Some will charge an additional fee while others simply won t bother.
Also, issues with returns and fraud get a bit more complicated with international shipments. If an international customer receives a defective product, getting them a replacement will be significantly more expensive. And the likelihood of fraud and abuse increase with international shipments.
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