Shopify

If you ship products to customers, you know how hard it can be to reduce shipping costs, especially for merchants selling bulky items like suitcases, body pillows, or furniture. 

Since shipping carriers consider the size of packages as well as their weight, you might be paying for the volume of the box rather than the actual weight of the contents, leading to surprisingly steep shipping costs. For businesses trying to maintain competitive prices and healthy profit margins, understanding and mitigating the dimensional weight pricing structure is absolutely critical.

Learn how dimensional weight differs from physical weight, how to calculate it, and how you can reduce dimensional weight to lower your shipping costs.

What is dimensional weight?

Dimensional weight, also known as DIM weight or volumetric weight, is a pricing technique that shipping carriers use to determine billable weight based on size in relation to the package’s actual weight. 

Shipping carriers calculate DIM weight by multiplying a package’s length, width, and height and dividing that by a dimensional factor (DIM factor) chosen by a shipping carrier. 

The DIM factor is used by shipping carriers to convert a package’s volume into a chargeable weight. By using this method, carriers like UPS and FedEx can assess how much space large packages take up in delivery vehicles—even if they’re lightweight—and charge for them accordingly.

Dimensional weight vs. physical weight

Dimensional weight derives from the size of a package, while physical weight refers to the actual weight of the package (typically in pounds or ounces). 

Shipping companies use DIM weight pricing for large shipments that take up a lot of space and use actual package weight pricing for small or heavy shipments. 

Shipping carriers including FedEx, UPS, and the United States Postal Service (USPS) pick the pricing structure based on which one is greater. So an ecommerce merchant selling large art prints online will likely pay for dimensional weight, especially if the prints are lightweight. Meanwhile, a merchant shipping small and heavy items like dumbbells or laptops will likely incur shipping costs based on physical weight.

How to calculate DIM weight

To calculate dimensional weight, find the cubic size of your package by multiplying its length, width, and height. Divide that product by your shipping carrier’s DIM factor. Here’s the calculation as a formula:

(Package length x width x height) / DIM factor = DIM weight

Since each shipping carrier chooses their own DIM factor, dimensional weight calculations can vary between carriers. Here’s how three of the largest shipping carriers in the US handle DIM weight calculations:

FedEx

Fedex uses a DIM factor of 139 for most shipping services. The shipping carrier picks whichever number is higher between physical weight and DIM weight, rounding up to the nearest whole number. So let’s say you have a package with the dimensions 24 by 18 by 5 inches that weighs three pounds.

The dimensional weight will be:

(24 x 18 x 5) / 139 = 15.54

Since this is more than the physical weight of three pounds, FedEx will charge for the dimensional weight. You can use FedEx’s dimensional weight calculator to estimate prices for specific shipments.

UPS 

UPS applies a DIM factor of 166 for retail rates and packages that weigh less than one cubic foot. Retail rates apply to individual, non-contract customers. 

For UPS retail rates the calculation will be: 

(24 x 18 x 5) / 166 = 13.012 

For packages over one foot from business accounts, UPS applies a DIM weight of 139 (known as daily rates), which means the same package would have a weight of 15.4 with the daily rate. 

While it seems that the daily rate for businesses leads to a higher shipping cost than for individual customers, businesses often have access to discounts through their ecommerce platform or logistics partner. For example, you can opt into a program that offers exclusive discounted shipping rates like Shopify Shipping—Shopify’s built-in shipping software.

USPS

The United States Postal Service (USPS) uses a DIM factor of 166 to calculate dimensional weight, though DIM weight applies only to packages that exceed one cubic foot in size. This means a package of 24 by 18 by 5 inches, will have a dimensional weight of 13.02.

The USPS dimensional weight model applies to Priority Mail, Priority Express, Parcel Select, and USPS Ground Advantage. DIM weight does not impact packages shipped in USPS-provided flat-rate boxes or envelopes. 

You can use the USPS Retail Postage Price Calculator to estimate the potential costs of your shipments.

Ways to reduce dimensional weight

Following these shipping best practices can help you reduce the dimensional weight of your package: 

Use the correct size box

Determine how much room your products require and choose boxes in which your products will sit comfortably but snugly. Minimizing empty space reduces DIM weight and costs. 

Keep boxes in a variety of sizes to go with your product offerings and bundles. For example, if you sell dinnerware products online, you could keep different sizes of boxes based on your top sellers, like large plates, bowls, or cutting boards, and if your bestselling bundle is six soup bowls and six soup spoons, have a box size (or combination of boxes) that can accommodate both without too much empty space. 

Opt for lightweight packing material

Research thin, lightweight packing material to protect products within packages. Thicker packing material like corrugated cardboard, packing peanuts, or plastic sheets can take up unnecessary space. By contrast, thinner material like thin foam sheets or a small amount of bubble wrap can protect non-fragile items without expanding DIM weight.

Maximize the use of space

If you’re handling your own order fulfillment process, try different product packaging arrangements to reduce the size of your packages. For example, you can disassemble products like furniture to make them fit into smaller boxes, or package each piece separately. 

If you’re shipping non-fragile items like books or clothes, consider using an alternative lightweight packing option like poly mailers to minimize the empty space. 

Work with a 3PL or shipping program

Third-party logistics (3PL) companies can help bring down the shipping cost of packages using DIM weight since they have their own shipping infrastructure and materials. 3PL companies negotiate lower rates with major carriers through high-volume contracts. They can also optimize packaging with the right-sized boxes and advanced software, minimizing wasted space. Some 3PLs also use their own regional networks, bypassing standard carriers for certain deliveries. These actions collectively lower shipping costs for their clients.

Similarly, programs like Shopify Shipping can help you get pre-negotiated discounted rates. It allows Shopify merchants to manage order fulfillment from one dashboard and get access to pre-negotiated discounted shipping rates from major carriers like FedEx and UPS.

The internet is primarily a visual medium. For a person with a visual impairment, most websites would be difficult, if not impossible, to navigate if it weren’t for specific accessibility features built right into HTML. That’s where Accessible Rich Internet Applications (ARIA) come in. 

ARIA features tell screen readers what is on the page, allowing them to interpret web interfaces for people who are blind or visually impaired. It helps create a richer and more functional experience for people who use screen readers and other assistive technologies to access the web. 

If you run a website, adding ARIA properties can make it easier for visitors to access and interact with your web content. 

What is ARIA?

Accessible Rich Internet Applications (ARIA) is a set of attributes you can add to HTML elements on a website to improve accessibility for people who use assistive technology like screen readers. ARIA is especially useful for dynamic or custom web interfaces with interactive or changing content. It can tell a user what is a clickable button or dialog box, and it can explain the state of dynamic elements like drop-down menus. 

The World Wide Web Consortium (W3C), the international standards body that governs web standards like HTML and CSS, also develops and maintains ARIA. A working group within the W3C called the Web Accessibility Initiative (WAI) focuses on making the internet easier to use for people with disabilities. The W3C is not a regulatory body, so it can’t enforce compliance, but many countries follow the recommendations from the W3C standards, including ARIA, to inform their accessibility laws and guidelines. 

Why is web accessibility important?

Web accessibility is essential for people with disabilities who need to use the web, sometimes the only place to find important government and community resources. Effective accessibility allows people with visual, hearing, mobility, or cognitive disabilities to access the web as fully and independently as someone without disabilities.

Equal access to businesses for people with disabilities is a civil right in the US, as required by the Americans with Disabilities Act, and web accessibility can be as important as accessible bathrooms, curb cuts, braille-labeled public buildings, closed captions, and elevators. According to the US Department of Justice Civil Rights Division, “the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web.” The Department notes that businesses may choose how they provide web accessibility, and ARIA is a common method. 

Effective and thorough web accessibility benefits everyone, often helping people beyond the targeted accessibility need (e.g., low-bandwidth users and mobile device users). Plus, it contributes to cleaner, faster, and more user-friendly websites overall. From a business perspective, an accessible website also broadens your audience—15% of the world’s population has a recognized disability. When people find a business that considers their needs, they’re more likely to stay and shop. 

How does ARIA impact accessibility?

ARIA improves accessibility. It lets screen readers and other assistive technologies understand what custom elements on a web page do by defining roles and behaviors. It can help describe dynamic changes, like when content updates without a page refresh. It also improves labels and makes the relationship between visual elements clearer. It communicates hidden or inactive states on the page so the screen reader doesn’t read them out loud if they’re not necessary. This makes the page less “cluttered” for the user.

How does ARIA work?

ARIA adds extra layers of meaning to web elements through three main components: roles, states, and properties. These components describe what an element is, what it’s doing, and how it relates to other elements, ensuring users get the full picture of what’s happening on a page. 

Let’s break down how each of these ARIA elements functions in practice:

ARIA roles

ARIA roles define what an element is or what it’s supposed to do. For example, role=“button” tells a screen reader a specific HTML element behaves like a button. A modal window might be called out with role=“dialog,” while a group of navigational links can be labeled with role=“navigation.” 

ARIA states

States describe conditions that can change with interaction. For example, aria-pressed=“true” means that a button element is toggled on. A collapsed menu state would be aria-expanded=“false,” while aria-disabled=“true” means the element defined is not interactive. You can update states with JavaScript to reflect changes in the user interface (UI). 

ARIA properties

Properties are ARIA elements that provide additional information about elements so screen readers can have more context. The property aria-label creates an accessible name for a given element, while aria-labelledby can link to another element that then labels this one. The property aria-describedby will point to descriptive help text, and aria-controls indicates that the element controls a different one, like a button that controls a panel. 

Let’s explore how you might use each in practice.

aria-label

Aria-label adds a custom label directly to an element, as in the following example. It’s used when there is no visible text. 

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aria-labelledby

When you already have visible text acting as a heading or title, you might use aria-labelledby to point to another element’s ID that provides a label, like this: 

Payment Options

aria-describedby

If you want to add hints, explanations, or warnings that add extra context to a label, you could use aria-describedby, like so: 

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ARIA best practices

ARIA is a powerful tool for enhancing web accessibility, but with great power comes great responsibility. While ARIA can make complex, dynamic content more accessible, misusing it can actually harm accessibility rather than help it by overcomplicating page elements. Here are some core guidelines to ensure you’re using ARIA in a way that supports users who rely on assistive technologies:

• Use native HTML first. There are plenty of basic HTML elements accessible to screen readers by default. It’s a best practice to use those first, and only use ARIA code when HTML doesn’t include an accessible element. 

• Don’t add ARIA where it isn’t needed. The WC3 says, “No ARIA is better than bad ARIA.” That’s because misused ARIA code can confuse a screen reader or even entirely break the accessibility of the web page. 

• Always update ARIA states dynamically. The ARIA states of an interactive element need to reflect the actual state of that element. You don’t want a dropdown that has been opened to still have code that says aria-expanded=“false” because someone using a screen reader won’t know that it has been opened. You can use JavaScript to update ARIA states as the UI changes.

• Make sure all ARIA references are valid. If you use an ARIA attribute like aria-labelledby or aria-describedby, you’re pointing to other elements. You want to make sure the ID you use is correct (and exists), or your screen reader will not get any usable information.

• Use pattern guides. Pattern guides (also known as design patterns or widget patterns) are detailed implementation guides for common interactive user interface components. They help ensure that custom widgets are keyboard accessible, screen reader compatible, built consistently (to reduce confusion), and designed with advanced user interface controls in mind. You can access these via the Patterns menu on the WAI-ARIA Authoring Practices website.

In August of 1910, President Theodore Roosevelt delivered a speech outlining his vision for a New Nationalism in the United States. He described a future with equal opportunities and a fair playing field for all citizens, saying:

“Practical equality of opportunity for all citizens, when we achieve it, will have two great results. First, every man will have a fair chance to make of himself all that in him lies; to reach the highest point to which his capacities, unassisted by special privilege of his own and unhampered by the special privilege of others, can carry him, and to get for himself and his family substantially what he has earned. Second, equality of opportunity means that the commonwealth will get from every citizen the highest service of which he is capable.”

Roosevelt used this promise to call for an end to special government protections. By focusing on his ideal outcome, he imbued a policy issue with relatable, emotional significance. This is an example of visionary leadership. 

Visionary leaders lead through imagination. They see a distant, possible future, create a plan to achieve it, and inspire others to believe in that plan enough to work toward it alongside them. This style is often associated with progress and change—it’s popular with activists and in the tech world—but visionary leadership skills are versatile. Visionary techniques can help spark inspiration in any industry. Learn about the key elements of visionary leadership and decide whether it’s right for your company.

What is visionary leadership? 

Visionary leaders dream big and lead through inspiration, using storytelling and strong communication skills to paint a picture of the future. Their passion and compelling vision can generate excitement, motivate employees, and create a powerful company culture that embraces new ideas. Visionary leaders are also creative thinkers who consider alternative approaches to achieve growth. 

Visionary leaders focus on ambitious, long-term goals, and innovation, and their leadership style prioritizes bringing employees into the “why” behind company decisions.

Characteristics of visionary leaders

1. Future-oriented
2. Innovative
3. Resilient
4. Inspirational communicators
5. Emotionally intelligent
6. Empowering

In visionary leadership, leaders use their vision to inform daily operations and guide employees toward success. Here are the key elements of the visionary leadership style:

Future-oriented

Visionary leaders believe their ideas can improve an industry, society, or even the world. They focus on long-term goals and think far into the future. Leaders use their vision for the future to unite and inspire team members and help integrate that vision into daily operations.

Innovative

Visionary leaders adopt a growth mindset and embrace change. They encourage employees to question the status quo, innovate, and brainstorm unique approaches, establishing a culture of experimentation and creative problem-solving. 

Resilient

Visionary leadership requires persistence to overcome obstacles. These leaders are passionate believers who remain committed to their core values and ideas when faced with challenges or even failure. This confident leadership style bolsters employee morale. When leaders show resilience, they communicate their continued belief in the company vision, helping employees endure uncertainty.

Inspirational communicators

Visionary leaders need strong communication skills to inspire others to see and buy into their vision. Leaders practice inspirational communication to generate excitement, using imagination, enthusiasm, and optimism to describe what they hope to accomplish. Telling a powerful story about your company’s future may help motivate employees, attract investors, or draw media attention.

Emotionally intelligent

Emotional intelligence is the capacity to be aware of, control, and express your emotions, and to handle interpersonal relationships with empathy. Strong interpersonal skills help leaders generate goodwill and build loyalty with employees. When team members feel connected to leadership, it can motivate them to contribute to the company vision, seek mentorship opportunities, and grow their skills. 

Empowering

Visionary leaders recognize and foster talent and the potential for the greatness of others. They strive to create an environment where employees feel respected and valued so that they can do their best work. Delegating work, granting autonomy, and recognizing accomplishments are all ways of empowering others.

Pros and cons of visionary leadership

Visionary leadership can be impactful, but it may not be effective in every instance. Here are the pros and cons of applying visionary leadership:

Pros

• Unites employees. A clear vision provides a rallying point—employees will understand they are working toward a shared goal. 

• Encourages innovation. Building a culture of experimentation makes space for innovative ideas.

• Provides clear goals. The leader’s vision acts like a compass—it provides clear direction and enables consistent decision-making. 

• Encourages growth. Visionary leaders help employees learn and grow. Leaders encourage team members to step out of their comfort zone and take on challenging tasks. 

• Builds a positive environment. Providing support and embracing employee ideas helps build a strong company culture.

Cons 

• Dependency. Organizations may become too dependent on the leader’s vision. When this happens, employees may struggle to make decisions without input. 

• Burnout. Visionary leaders provide inspiration and encouragement for the entire organization—the pressure to support others may increase the risk of burnout. 

• Tunnel vision. If leaders become too fixated on their goals, they can overlook issues or dismiss important feedback.

• Not always practical. Visionary leadership encourages innovation and disruptions—this may not be effective in highly regulated industries. 

Visionary leadership vs. other leadership styles

The most effective leadership style depends on business goals, industry, and team needs. Visionary leadership is uniquely future-focused—it emphasizes change and long-term goals. Here’s how visionary leadership differs from other management approaches:

Visionary leadership vs. bureaucratic leadership

Bureaucratic leadership is structured and well-organized. It uses a hierarchical management system in which the leader retains ultimate decision-making power. Bureaucratic organizations use rules and standardized procedures to achieve consistent results. Unlike visionary leadership, bureaucratic leadership emphasizes following protocol and discourages questioning the status quo. 

Visionary leadership vs. democratic leadership

Democratic leadership is collaborative and engaging. Leaders work closely with team members and incorporate their opinions into the decision-making process. Democratic and visionary leadership both support employee development and engagement. In democratic leadership, leaders and employees work together to define goals. With a visionary approach, employees may work collaboratively with management to set goals, but the leader’s vision ultimately determines the broad direction.

Visionary leadership vs. autocratic leadership

Although both autocratic and visionary systems place an emphasis on strong leaders, implementation and practices are very different. Autocratic leadership is rigid and inflexible, with leaders making unilateral decisions without incorporating employee feedback. These organizations have strict rules and demand compliance. Autocratic leaders discourage questioning. Visionary leaders, on the other hand, are flexible and open-minded. They encourage employees to question decisions and processes in pursuit of innovative solutions.

Visionary leadership vs. transformational leadership

Visionary and transformational leadership share many similarities. These styles use charismatic leadership to spark excitement and motivate employees. Both systems embrace change and encourage innovation. However, visionary leadership focuses on outcomes and an ideal future state, whereas transformational leadership emphasizes investing in individual employee development to facilitate the changes necessary to reach goals.

Ever notice a small padlock icon in your web browser’s URL bar? That means you’re on a site running HTTPS, a secure way to allow websites to handle personal and financial data. If you run an ecommerce business, the protocol behind that little padlock icon is also what’s protecting your customers’ personal information.

Using HTTPS signals to users and search engines that you’re a legitimate, trustworthy business that invests in protecting its customers. In addition, if you aren’t running HTTPS, Google and most other search engines will flag your site as “not secure”—not a great first impression for potential customers.

If your store is still running HTTP, this guide will walk you through how to successfully migrate your site to its more secure alternative and why doing so matters for anyone in business on the internet.

What is HTTP?

Hypertext Transfer Protocol (HTTP), is what the web uses to communicate. It lets users and their web browsers request information from web servers. It underlies the whole process of accessing and providing information on the web, from loading websites to clicking on links, submitting forms, or loading images. 

When you access any website using HTTP, all the information transmitted to your browser is sent as plain text. There’s no security or encryption for your data, making it vulnerable to malicious parties between you and the server. There’s also no built-in system for verifying whether anyone is tampering with the data, nor is there any encryption to protect personal information.

Except for the most basic informational websites, HTTP has become fairly outdated as a way to transmit information. In fact, web browsers like Chrome, Safari, or Firefox, discourage people from visiting unsecured websites that only use HTTP. 

What is HTTPS?

Hypertext Transfer Protocol Secure (HTTPS) builds on the standard HTTP protocol by adding encryption. It creates an encrypted communication channel through an SSL or TLS certificate as you make a connection between your browser and the website you’re accessing. That “S” at the end of HTTPS (and the little padlock in the browser’s address bar) signifies a world of difference, ensuring your customers feel safe sending credit card information or other private data through an ecommerce site. 

All the data sent between your browser and an HTTPS website is encrypted, authenticated, and verified. HTTPS ensures data integrity, can prevent man-in-the-middle attacks (i.e., when someone inserts themselves between the browser and server) when properly configured, and ensures the website is actually the one you intended to visit.

Why convert to HTTPS?

Not only does HTTPS provide the necessary protection for your users, making sure they can trust your e-commerce site, but it can also help in other ways as well.

Security and data protection

Running a secure shop and protecting your customers’ data are by far the biggest reasons to migrate your website to HTTPS. Any private data you need from your customers is secure due to the encrypted protection of HTTPS. Any site that handles user logins, payments, or other personal data should use HTTPS for security.

SEO performance

Google has made HTTPS a priority since 2014. It wants any site its users find through Google search to be secure, so site security is an element of the Google Search algorithm. Factors like trustworthiness and page speed sit right alongside site security as a current ranking factor. Having a secure site makes it easier for potential customers to find it via search.

Credibility

Browsers use different signals to warn users of unsecure sites: the padlock icon, a page warning, or even red/green URL bar color coding (i.e., red means stop and green means go).

If you aren’t using HTTPS, potential customers getting a “not secure” warning via Firefox or Chrome is a red flag your business doesn’t prioritize security. When faced with an unsecure site, customers will likely bounce back to the search results to find a safer shop.

Site speed

While the basic encryption of HTTPS can introduce slight delays in loading, there are many ways to make your site faster to load, including features like HTTP/2, which optimizes resource usage and bandwidth efficiency and uses compression algorithms that make the content smaller and faster to download, and various compression techniques, like Brotli or HPACK compression.

How to migrate from HTTP to HTTPS

1. Buy and install a Secure Sockets Layer (SSL) certificate on your server
2. Check your internal and external links
3. Verify your site via Google Search Console
4. Redirect HTTP URLS to HTTPS
5. Update your XML sitemap

All Shopify stores use SSL encryption for all pages, not just payment processing. If your ecommerce store still uses HTTP, you can enable HTTPS to create a secure connection and protect communication between your site and your customers. 

Here’s how to migrate from HTTP to HTTPS on your own server. 

1. Buy and install a secure sockets layer (SSL) certificate on your server

Purchase an SSL certificate from a trusted certificate authority, like DigiCert, GlobalSign, or Let’s Encrypt. You’ll typically get a .crt or .pem file and an intermediate certificate or .ca-bundle file. If you generate the Certificate Signing Request (CSR) yourself, you’ll get a private key. Make sure you store that securely and don’t share it.

You’ll then upload the files you receive to your server in the following locations, depending on the type of server you’re running:

• Apache/Linux: /etc/ssl/certs/ and /etc/ssl/private/

• Nginx: Often in /etc/nginx/

• cPanel/Plesk: Use the built-in UI

• Windows/IIS:. Use the Microsoft Management Console (MMC)

Next, edit your virtual host file using Apache or Nginx. DigiCert has a helpful guide that lets you generate a CSR with OpenSSL and configure Apache with SSL.

2. Check your internal and external links

Make sure every link on your site uses https://, including internal and outbound links. Review your website’s HTML code to replace all http:// links with https://. 

Update external resources like images, scripts, and Cascading Style Sheets (CSS) files that might still reference non-secure URLs. Most web development tools offer a search-and-replace function to help with this, and automated tools like Screaming Frog SEO Spider, Apify, and Browse AI can scan your site for HTTP references, letting you replace them with HTTPS.

3. Verify your site with Google Search Console

Let Google know your site is secure by using Google Search Console to validate it. It’s a free tool that shows how your site appears in search results and flags issues that could hurt your rankings. Log into Google Search Console with the Google account associated with your website. Then add your site either as a Domain (recommended for full site coverage) or as a URL Prefix (usually used if you only want to validate a specific section of your site).

To verify your domain ownership, you’ll add a DNS TXT record provided by Google. Log in to your domain registrar (like Shopify, GoDaddy, Namecheap, or Squarespace), find the DNS Settings or DNS management section, and add the TXT record. Save it, go back to Search Console, and click Verify.

If you choose URL Prefix, you can either upload an HTML file to your site’s root folder (typically via FTP) or paste a meta tag into your site’s section. WordPress has SEO plug-ins that can do this for you, or you can edit the web pages yourself. After that, you’ll go back to Search Console and click Verify.

4. Redirect HTTP URLS to HTTPS

If you’re using a website builder like Shopify, Squarespace, Wix, or similar, your site settings typically have a section for enabling automatic HTTP to HTTPS redirects. Shopify, for example, includes a “Force HTTPS” option under Settings > Domains.

For WordPress, you’ll want to make sure you have an active, valid SSL Certificate (step one above), and then force HTTPS using a plugin like Really Simple SSL. You can also edit your .htaccess file manually. Download the .htaccess file from your server (usually in the public_html folder) via FTP or your host’s file manager, open it with a text editor, and add the following code at the top:

RewriteEngine On

RewriteCond %{HTTPS} off

RewriteRule ^(.*)$ https://%{HTTP_HOST}%{REQUEST_URI} [L,R=301]

This code directs the server to change all incoming HTTP requests to HTTPS using a permanent 301 redirect, which helps preserve SEO value by passing “link equity” from the old HTTP URLs to the HTTPS secure ones. 

5. Update your XML sitemap

A sitemap helps Google and site users understand and navigate your website more easily. Make sure all links in the sitemap point to HTTPS versions of your pages. You can regenerate your sitemap using your CMS (like WordPress), a sitemap tool (like Screaming Frog), or an SEO plug-in (like Yoast SEO).

Your sitemap is typically in the root directory of your site and named something like /sitemap.xml. Your robots.txt file might also refer to the URL where the sitemap is located on your server. 

Once you’ve updated the sitemap, you can log in to Google Search Console and paste the sitemap’s URL into the Add a new sitemap field. Hit Submit, and you’re all set.

The TV show Ted Lasso tells the story of an American football coach hired to lead an English soccer team. His coaching style seems unconventional at first. Lasso benches a star player whose ego threatens morale, shrugs off press criticism, and bakes biscuits for his skeptical boss. He urges players to support and believe in one another. Despite knowing little about soccer, his relentless optimism and passion inspire his team to greatness.

Ted Lasso is an example of a great leader—entrepreneurs can take a page from his playbook. Leadership qualities like humility, empathy, and encouragement work just as well in the office as on a pitch. Here’s what makes a strong leader and how to develop your leadership skills.

What does it mean to be a leader?

A leader is someone with vision, passion, and the ability to motivate people. They provide guidance and inspiration, and no matter their seniority level within a business’s structure, they set a standard for how people should act and make decisions. 

Strong leaders:

• Provide mentorship. Great leaders support lower-level employees by offering guidance and sharing their experience. For instance, a leader might notice a struggling team member and take the time to learn more about their needs and offer advice to help them succeed.

• Encourage employees. Encouragement helps motivate teams. A leader might boost morale by praising an employee who contributes an innovative idea during a meeting. 

• Foster a positive environment. Leaders set the tone for workplace culture. Being receptive to feedback or introducing employee-friendly policies like paid wellness leave or company-sponsored education, for example, can create a more welcoming, inclusive environment. 

• Share clear goals. Transparency builds trust. Sharing goals with your team promotes internal alignment and helps employees understand how their work contributes to the bigger picture. 

• Express appreciation. Leaders regularly acknowledge great work. Showing gratitude and celebrating wins makes employees feel seen and valued.

Why is strong leadership important?

Strong leadership creates a healthy work environment. The right leadership style can have a positive impact on everything from efficiency to morale. An effective leader empowers employees, provides the tools they need to succeed, and nurtures a culture where every team member feels valued. Leadership skills become more important as you move higher up the org chart because upper-level management shapes a company’s overall culture.

While an organization may have an ultimate authority figure—like a founder or CEO—they aren’t the only source of leadership. Individual contributors exhibit leadership skills when they take charge of projects, and managers use leadership skills to guide their teams to meet business goals.

Qualities of a leader

An executive may have impressive business acumen, but that doesn’t necessarily translate to strong leadership. Here are some of the leadership skills and human qualities that great leaders possess: 

• Empathy. Demonstrating compassion and understanding helps employees feel valued. 

• Integrity. Leaders act with integrity by communicating honestly, treating team members with respect, and demonstrating commitment to their core values.

• Vision. A clear, forward-thinking vision helps leaders make consistent decisions. 

• Adaptability. Leaders are nimble decision-makers and comfortable pivoting under shifting circumstances.

• Communication skills. Effective communication is essential for explaining leadership decisions and establishing a shared vision. 

• Confidence. A confident leader can inspire employees. 

• Reliability. Reliable leaders offer stability and support for employees—even in uncertain times.

• Grace under pressure. Leaders set a strong example by responding calmly to difficult situations.

• Decisiveness. Strong decision-making skills help organizations act quickly and confidently. 

• Humility. Leaders don’t seek recognition—they’re happy to share the glory and give credit where it’s due. 

🌟Discover wisdom from great leaders and thinkers throughout history.

Leadership vs. management: What’s the difference?

Leadership and management are often used interchangeably, but they’re not the same thing.

In business, management refers to a specific role within an organizational hierarchy. Managers are responsible for overseeing a group of employees, coordinating tasks, and making sure goals are met. A management position is sometimes labeled as a leadership role.

Leadership, on the other hand, is an action or behavior, though there are many ways to define leadership. In general, leaders are individuals with the capacity to inspire others. Every entrepreneur brings a unique style and may have their own personal definition of leadership. Employees at any level of an organization can demonstrate leadership qualities. 

How to become a better leader 

1. Request feedback
2. Provide feedback
3. Trust your team
4. Be a resource
5. Communicate
6. Set an example
7. Demonstrate flexibility
8. Be a cheerleader

Leaders always look for opportunities to improve. Becoming a better leader means listening to employees, practicing communication skills, and embracing change. 

Here are some of the human qualities and skills required to be a strong leader: 

Request feedback 

Solicit feedback and listen to your employees. Being open to constructive criticism helps you stay aligned with your organization’s changing needs. Employees involved in day-to-day operations often offer valuable insights that can drive growth. Gather feedback through one-to-one meetings or anonymous employee surveys and take the notes to heart. 

Provide feedback

Take the time to let your employees know how they’re doing. Recognizing hard work and accomplishments helps team members feel appreciated and can inspire goodwill. Offering constructive criticism can provide opportunities for employees to improve and help keep your organization on track. 

Trust your team

Great leaders delegate tasks. Trusting your team to make decisions can help them feel invested in their work. This has the added benefit of building a sense of ownership and engagement. Delegating responsibility also creates space for employees to learn and improve their skills. Micromanagement, on the other hand, can leave employees feeling disempowered. 

Be a resource 

Being a resource means giving your team the information and tools that they need to achieve success. Encourage them to come to you if they need help, listen to critical concerns, provide solutions, and eliminate roadblocks when necessary.

Communicate 

Leaders set goals, make decisions, and chart a plan for growth. Clear communication about these actions helps employees understand how decisions are made and why goals matter. Company-wide meetings and emails are good opportunities to practice transparent communication by updating your team and discussing progress. 

Set an example 

Effective leaders demonstrate the attitude, work ethic, and behavior they expect from their employees. Leading by example shows your team members how to act. If you model good communication and kindness, it can inspire people to follow suit. An authentic leader sets a strong example by acting with integrity, engaging with fellow employees, and delivering critiques respectfully and privately.

Demonstrate flexibility

Leaders adapt and respond to their circumstances. If, for example, early data suggests a business might not reach its sales goals, a flexible leader could decide to adjust their marketing or product position strategy. 

Flexibility, in the form of inclusive leadership, also supports employee well-being. Listening to your team’s concerts and making adjustments to goals or policies shows that you’re listening to feedback. Adjusting your approach based on employee needs can foster a culture of trust. For example, a flexible leader could decide to make an exception to a return-to-office policy for an employee with mobility challenges. 

Be a cheerleader

A good leader rallies people and spreads enthusiasm. Expressing excitement and optimism shows a team that their leader has a better vision for the future and the energy to see it through.

Generating accurate monthly financial reports depends directly on a well-executed month-end close. This accounting procedure aims to verify financial transactions, identify and correct discrepancies, and produce financial statements reflecting your company’s financial performance during the previous month.

Each step of a month-end close directly impacts the financial accuracy and timeliness of the information you’ll ultimately use to make crucial business decisions. Using a month-end close checklist that includes a few best practices is a great way to make your monthly closing process consistent and efficient.

What is the month-end close?

The month-end close is an important accounting procedure that companies perform at the end of each month to finalize and “close” their financial records for the previous month. It’s a systematic process of reviewing, documenting, and reconciling all financial transactions that took place before starting the next accounting period. 

A monthly closing process ensures accurate reporting, increases your company’s efficiency, and helps you identify errors and mitigate fraud risk, all while creating a clear audit trail.

Month-end close checklist for small-business owners

1. Collect all financial information and record transactions
2. Reconcile accounts
3. Review and adjust entries
4. Prepare monthly financial statements
5. Analyze financial performance
6. Perform final review and approve

A typical month-end close involves collecting and recording all your business transactions before reconciling accounts and reviewing entries. You can also prepare financial statements and analyze your financial performance before performing a final review and approving the month-end close. Here’s how: 

1. Collect all financial information and record transactions

This includes gathering data on income (revenue payments received), expenses (supplier invoices, payments made), and other financial activities. Your data will likely come from various sources, including sales records, bank statements, vendor invoices, payroll information, and more. 

Make sure every transaction is entered in your accounting system, paying attention to correct dates, accurate amounts, proper categorization of income and expenses, and clear descriptions. You may find it helpful to create recurring month-end journal entries for routine expenses, such as lease payments, internet service, and software subscriptions.

2. Reconcile accounts

Compare each transaction on your bank statement to the corresponding entry in your cash account to identify and resolve any discrepancies, such as outstanding checks, deposits in transit, bank charges and fees, and interest earned. Common reconciliations include bank, petty cash, accounts receivable and accounts payable, inventory, and other balance sheet accounts such as prepaid expenses, accrued liabilities, and fixed assets.

3. Review and adjust entries

Review your accounts for any unusual items or errors and make any necessary adjustments. This can include accruals, recognizing revenue earned or expenses incurred that aren’t yet recorded in cash transactions. Deferrals—adjusting for revenue and expenses that have been received or paid in advance but not yet earned or incurred—are also included. 

Don’t forget to recognize and record expenses related to the value depreciation of any long-term assets (such as equipment that will eventually need replacing) over time. 

4. Prepare monthly financial statements

Once all transactions are recorded, reconciled, and adjusted, you can prepare your financial statements. This includes your profit and loss statements, balance sheet, and cash flow statement. If you’re using accounting software, you can easily generate these reports and customize them as needed.

5. Analyze financial performance

Next, you can analyze these prepared financial statements to understand the financial health of your business, identify trends, and compare your actual performance against your goals. During this step, you may want to meet with your business’s accountant for any feedback or insights they have after reviewing your statements.

6. Perform final review and approve

Whether you are working on your own or need to consult with external experts or in-house finance teams, the final step on your month-end close checklist is to approve your financial statements to complete the monthly closing process. After the account statements are reviewed, the books can be officially “closed” for the month, meaning no further transactions can or will be recorded for that period.

Month-end close best practices

There are a few month-end close best practices that will give you the most accurate and efficient closing every time:

Set realistic deadlines and stick to them

Figure out a reasonable time frame for completing your month-end closing process (e.g., within the first few business days of the following month) and stick to it. Keeping a schedule means that every month, you’ll have timely financial insights for the many ongoing decisions involved in running your small business. 

To determine your target closing schedule, ask yourself how quickly you need each month’s financial data to make informed business decisions. Track the progress of each task on your checklist, and if certain steps consistently cause delays, try to identify the root cause behind the delay and find a solution.

Reconcile key accounts early

Avoid waiting until the very end of the monthly closing process to reconcile your critical accounts (such as your bank accounts, accounts receivable, and accounts payable). Performing these reconciliations early in the process allows more time to investigate and resolve any discrepancies, which is often a time-consuming process. 

Prioritize bank reconciliation to keep your cash balance accurate, and identify and resolve issues with customer payments early to improve your cash flow. Reconcile your accounts payable to understand your obligations and plan for upcoming invoice payments.

Review and analyze, don’t just process

The month-end close isn’t just about ticking boxes. Take the time to review your monthly financial statements and company metrics. Compare the current period to past periods, and analyze actual performance against your budget. Look for trends, anomalies, and areas that require attention. 

Taking the time to analyze the information is how you gain valuable insights into your company’s performance. Keep an ongoing record of your observations, findings, and any questions that arise during your monthly reviews.

Clearly document any entry adjustments

Any needed entry adjustments (accruals, deferrals, etc.) need to be well-documented. This provides an audit trail and makes it easier to understand your financial results in the future. For every adjusting entry, provide a clear and concise explanation of why the adjustment is being made (e.g., to record accrued salaries for the last week of the month). 

Link each adjusting entry to the relevant supporting documents, such as payroll reports for accrued salaries and vendor invoices for accrued expenses. Clearly outline how the adjustment amount was calculated, and always include the date it was made.

Automate repetitive tasks

Accounting software like QuickBooks Online or Xero often includes features such as recurring journal entries for predictable monthly expenses like rent or insurance, automated reconciliations, and report generation. This sort of accounting automation saves time and reduces your risk of manual errors. To figure out what you might be able to automate, look for manual processes that are performed every month, such as recording incoming cash and regular expenses, and generating recurring invoices. 

Establish a review and approval process

Whether you have a financial or accounting team in-house or work with an outside bookkeeper or accountant, implement a process for reviewing and approving your month-end close before finalizing associated reports. Specify which aspects of the month-end close will be reviewed (e.g., reconciliations, adjusting entries, financial statements, etc.). 

This adds a layer of oversight and helps catch potential errors. The reviewer should document their findings, any questions or concerns, and whether they approved the month-end close.

Maintain accurate financial records throughout the month

Your month-end close will run significantly smoother when you record transactions and organize supporting documentation throughout the month. Don’t let expense receipts, invoices, and other financial documents pile up. Enter them into your accounting system as soon as possible. Use clear and consistent names for customers, vendors, and accounts. Whenever possible, attach digital copies of invoices and expense receipts to the corresponding transactions in your accounting system.

A humanoid robot hands its operator a lush red apple after he asks for something to eat. This isn’t science fiction—it’s a scene from a demonstration by Figure AI, flexing one of the latest capabilities of artificial intelligence (AI): multimodal AI. 

When the robot handed its operator the apple, its multimodal models were interpreting multiple inputs: the voice command, the apple’s visual presence, and the operator’s visual presence. Humanoid robots are the flashiest use case for this technology, but multimodal AI also powers autonomous vehicles, interactive virtual characters, AI assistants, and search tools like Google Lens.

In ecommerce, multimodal AI enables visual search, augmented reality try-ons, and advanced customer support. Here’s what you need to know to unlock its potential for your business.

What is multimodal AI?

Multimodal AI refers to machine learning models built to intake, interpret, and process multiple forms of data simultaneously. These models can receive input and create output in different modalities—rather than being limited to just one type—including text, images, audio, video, numerical data, and sensor data like GPS or accelerometers.

For instance, given a text prompt and a source image, multimodal AI can generate a video, setting the image in motion or reinterpreting it (depending on the prompt). 

Three defining characteristics of multimodal AI are:

• Heterogeneity. This term describes diverse data types. For example, an AI-generated video output is different from the text input that prompted it.

• Connections. Multimodal models create connections between different modalities. For example, Figure AI’s humanoid linked multiple pieces of sensor data: visual data (an apple), language (“apple”), and auditory cues (a verbal request) to form a coherent understanding.

• Interactions. This refers to how different modalities respond to one another when brought together. In a self-driving car, the visual input of a stop sign interacts with the presence of an approaching intersection in its GPS input, reinforcing the decision to stop.

Multimodal vs. unimodal vs. generative AI

Multimodal AI systems are capable of integrating multiple types of data simultaneously and creating multiple types of output. When given text prompts, audio, video, and images, a multimodal model can interpret, analyze, and respond to multiple inputs at once (provided the model is designed to handle those modalities)—much like how the human brain synthesizes what it sees, hears, and feels in real time. This versatility makes multimodal AI more accurate, agile, and intelligent than unimodal AI.

Unimodal AI is limited to understanding a single type of data, usually textual data or visuals. While still powerful—natural language processing and unimodal neural networks used in chatbots are strong examples—it lacks the holistic comprehension that multimodal systems offer. 

Generative AI learns patterns from a vast dataset and uses them to generate new content. It can be either unimodal (like MusicLM, which generates music from text) or multimodal (like Chat GPT-4o). Multimodal generative AI models can generate visual content, translate between modalities, and respond creatively to real-world scenarios. 

How does multimodal AI work?

Multimodal AI relies on three primary components to process multiple types of data simultaneously: the input module, fusion module, and output module.

Input module

The process starts with the input module, where raw data from various data types—textual data, customer service audio data, product images, and videos—are ingested and processed by unimodal neural networks. These networks are often built on large-scale transformer architectures, which are proficient at spotting patterns and relationships within sequences and specialized for their respective modalities. Collectively, they allow the AI system to interpret multimodal data, making it possible to interact across diverse inputs from multiple sources. 

For example, a text model might predict missing words in a sentence, while a vision model can perform tasks like image inpainting to infer missing parts of an image. 

Fusion module

The fusion module combines and aligns relevant data. The data is transformed into numerical representations—called embeddings—so that different modalities can communicate using the same language. This process involves translating words into tokens, images into visual embeddings, and audio into frequency-based features. 

The fusion module aligns diverse data types either through early fusion, where embeddings from each modality are combined at the start, or late fusion, where they’re integrated after being processed independently. In early fusion, a model might learn what an apple looks like and how the word sounds—all paired with text, “apple.” Early fusion helps models develop a richer, more holistic understanding of the concept at hand.

Output module

After integrating the data, the output model uses the system’s underlying neural network—often a transformer decoder—to synthesize insights and produce responses. Responses vary widely but include generative content, predictions, or decisions. 

To refine performance and reduce harmful outputs, models go through fine-tuning using methods like reinforcement learning with human feedback and red teaming (an adversarial testing exercise). This helps ensure the system performs well in real-world scenarios and responds with more accuracy, safety, and contextual awareness across all supported data modalities.

Examples of multimodal AI

If you’re online in any capacity, you’re likely interacting with large multimodal models more often than you realize. Examples include:

Gemini

Google’s multimodal generative AI platform, Gemini, combines vision, audio, and text to complete complex tasks. It can, for example, describe a sales funnel diagram and accompanying video out loud—interpreting multiple visual inputs at once.

GPT-4o

OpenAI’s large multimodal model can perform tasks based on textual and visual prompts. For example, GPT-4o can generate an image of an action figure in your likeness by ingesting a text prompt describing your accessories and qualities (text modality) along with an attached photo (visual modality).

Amazon StyleSnap

StyleSnap is an AI tool that uses computer vision technologies—which can analyze and interpret user-uploaded images—and NLP to suggest fashion items. The intuitive ecommerce tool makes connections between uploaded photos and its exhaustive inventory of clothing items. 

PathAI

PathAI supports diagnostics using multimodal AI models to interpret medical images, electronic medical records, and clinical data. For example, its PathAssist Derm tool helps doctors quickly identify skin malignancies, addressing a pressing dermatologist shortage and improving patient outcomes.

Waymo

Waymo’s self-driving cars integrate multiple sensors like cameras and radar for real-time driving decisions. Its end-to-end multimodal model reacts to sensor data like the visual cues of lane markers, radar-detected distances, and contextual map data to safely navigate dynamic environments. 

Benefits and challenges of multimodal AI

One of the most compelling advantages of multimodal AI is its ability to generate rich, context-aware content across formats. These systems can craft videos from text prompts, narrate images, and deliver insights that blend language with visuals or sound. 

Multimodal AI models interpret multiple data types simultaneously, enabling more human-like interactions and more accurate outcomes. In fields like health care, education, and autonomous systems, combining data from diverse sources enhances decision making and problem solving. 

However, building robust multimodal systems poses significant challenges. Aligning data from disparate modalities—like matching a voice clip with a facial expression—can be technically complex. Ensuring the model fully grasps the semantics of each data type and how they connect is equally difficult. Reasoning across diverse data sources, especially when interpreting things like intent or emotion, remains an evolving capability.

And then there’s the issue of data: Training these models requires high-quality, representative, and ethically sourced multimodal data—something not always readily available. Missing data, biased samples, or poor data quality can all weaken performance and trust in the system.

Predictive analytics killed Subway’s $5 footlong. While the retirement of the sandwich chain’s famed economical menu item was bad news for sandwich fans, it provided a significant upside for Subway: increased profits.

Predictive analytics gave the sandwich giant an unexpected insight—the increased sales brought about by the promotion weren’t offsetting the discounted price. As a result, Subway raised its sandwich prices and leaned into deals with add-ons, which analytics predicted would improve profits.

With the rise of artificial intelligence (AI), advanced analytics technology has opened up new decision-making avenues for businesses in nearly every sector. Companies across industries can use AI predictive analytics—powered by machine learning—to unlock market and individual customer insights at unparalleled speeds with unprecedented accuracy. 

What is AI predictive analytics?

AI predictive analytics leverage machine learning models to seek out patterns in current data and use those patterns to forecast future outcomes and predict trends. Predictive models are trained on historical data gleaned from data mining and various modes of data collection.

For business owners, AI predictive analytics can translate raw data into actionable insights. For example, AI predictive analytics can provide data analysis based on a customer’s buying history, predicting future purchases and providing personalized shopping suggestions. 

AI predictive analytics vs. predictive analytics

Traditional predictive analytics is the process of using data to forecast future outcomes and form data-driven insights. Data scientists take care of data collection, prepare it, and then use predictive techniques like decision trees (to map individual decisions) or regression models (to analyze large datasets) to detect clear patterns. 

In AI-powered analytics, data scientists automate data collection, train machine learning models using the collected data, validate insights using manual or automated methods, deploy the model, and iterate over time. The primary difference between traditional and AI-powered predictive analytics is automation and intelligence. Both predict future events, but AI-powered analytics unlock insights at a much faster cadence.

While tedious for the data scientists running them, traditional predictive analytics are the cornerstone of AI-powered predictive analytics. It builds on its predecessor using machine learning models to process massive amounts of unstructured data. Backed by powerful algorithms and advanced neural networks (which can identify nonlinear relationships in large datasets), AI predictive analytics can identify trends with minimal human effort. It can also become more accurate over time and create adaptive predictions across complex data environments.

3 components of AI predictive analytics

Here’s how data, algorithms, and predictions power predictive analysis: 

Data

AI models—including those using predictive analytics—use data to make constant adjustments to become better at simulating human intelligence. For ecommerce businesses, input data might be customer data points like purchase history, demographics, and shopping experience preferences. Whatever your business, you’ll need historical data to fuel your predictive analytics tool.

Algorithms

Predictive AI models use advanced algorithms—which power technologies like deep learning and neural networks—to make sense of complex data and uncover impactful insights. When applied across disciplines like mathematics and computer science, an algorithm can be defined as a chain of steps that complete a task. They are the building blocks of computers, software, and artificial intelligence. 

Predictions

Predictions are the ultimate outcome of AI algorithms. Predictive models are used to forecast future outcomes, to predict the likelihood of specific possibilities by detecting patterns. You can use actual outcome data to improve predictions over time. 

4 benefits of using predictive analytics

1. Increased efficiency
2. Better decision making
3. Improved risk management
4. Enhanced customer service

In the face of dynamic market conditions and quickly evolving customer needs, predictive analytics have become foundational to business operations in multiple industries. The key benefits of predictive analytics include:

1. Increased efficiency

AI predictive analytics can increase your operational efficiency by reducing your team’s manual workload, analyzing data, and allocating resources more effectively. Famously, FedEx uses predictive analytics to map the most efficient routes for its drivers. In turn, this reduced travel costs, increased shipment volumes, and optimized its employees’ time.

2. Better decision-making

Predictive analytics help companies across all industries make informed decisions by giving you access to actionable insights that are constantly adjusting to new learnings. It can also simulate outcomes from different decisions—as Subway did when it retired its beloved-but-unprofitable $5 footlong campaign to make way for higher-yield ideas.

3. Improved risk management 

In risk reduction, predictive analytics expedites fraud detection, flags suspicious activity in contexts like financial institutions, forecasts risks before they escalate, and streamlines fraud prevention. HSBC, a British bank, claims predictive analytics reduced its false positives in fraud detection by 60%, freeing up resources to focus on urgent instances of fraud. 

4. Enhanced customer service

Predictive insights help you understand customer behavior and identify ways to enhance customer service. You can improve customer interactions by responding in real time and offering solutions based on the customer’s preferences and purchasing history before a question turns into a complaint. 

Predictive analytics can also help forecast future behaviors and offer relevant products or services to meet the customer’s emerging wants and needs. Netflix’s AI-powered content suggestion is an example of predictive analytics improving customer service—in this case, by serving customers personalized content based on their watch history.

4 ways to use AI-powered predictive analytics

1. Logistics
2. Finance
3. Retail
4. Health care

AI predictive analytics have become relevant across many industries, including:

1. Logistics

Predictive analytics is a key facet of supply chain optimization—forecasting demands, identifying bottlenecks, and ensuring materials arrive at their destination. Predictive maintenance reduces downtime and improves operations. For example, DHL invested millions of dollars into integrating predictive analytics into its supply chain, which helps its operations adapt to real-time demands. 

2. Finance

When it comes to risk management, financial institutions rely on AI predictive analytics to improve fraud detection, create financial projections, and make informed decisions ahead of market shifts. On an individual level, financial institutions use predictive analytics to assess creditworthiness. 

3. Retail

Ecommerce and in-person retailers lean on predictive insights to better understand customer behavior, personalize shopping experiences, and improve inventory management. For example, Walmart uses AI predictive analytics to predict demand and maintain relevant stock. By analyzing purchasing patterns you can anticipate trends, improve sustainable practices, and hone your marketing strategies. 

4. Health care

In the health care field, predictive analytics are utilized to maximize patient outcomes. Medical data analysis identifies risk factors, personalizes treatments, and predicts disease progression. For example, Mayo Clinic uses predictive analytics to analyze its electronic health record data, predicting the likelihood of chronic diseases like diabetes.

High-quality, up-to-date website content is important for all businesses. It’s particularly critical in the ecommerce space, where it functions as a storefront, greeter, sales team, and customer service desk. Strong site content can also support your digital marketing strategy by improving your performance in search results and encouraging your target audience to convert. 

Ecommerce businesses use something known as a content audit to organize and manage existing content and optimize their content strategy. Here’s what content audits are, why they matter, and how to run a comprehensive content audit for your ecommerce store. 

What is a content audit?

A content audit is the process of gathering and analyzing your business’s content to evaluate its performance and gauge alignment with your business goals. Successful audits provide a complete picture of all the content on your website. They’re a key part of any search engine optimization (SEO) strategy and can help you ensure brand consistency across content assets. Content audits help you identify content to retain, remove, improve, and repurpose so you can improve your site’s overall performance—and usefulness.

Why is a content audit important to ecommerce?

Content audits provide insights into the effectiveness of your content strategy and improve your understanding of your target audiences. SEO content audits, which focus on website content, aim to improve your site’s search engine visibility and increase your volume of relevant web traffic. SEO content audits can help you do the following:

• Evaluate content quality. Content audits identify high- and low-performing content, enabling data-driven decisions about your content marketing efforts.

• Identify opportunities to improve page performance. They also help you find and fix broken links and uncover any technical issues relevant to search engine performance.

• Optimize existing content. Content audits address on-page SEO, evaluating a page’s structure and keyword use to identify opportunities for improvement.

• Understand audience needs. An audit can reveal how your audiences interact with different subjects and content types, helping you focus your efforts on the content that drives engagement and conversions.

How often should businesses run content audits?

Best practices include performing content audits on a set schedule, such as quarterly. Annual site audits are typically considered the bare minimum. You might also consider a content audit in any of the following situations:

• Your content marketing efforts aren’t yielding results.

• You’re significantly changing your content marketing or brand strategy.

• You feel your site content is disorganized, or you’re unsure where new content belongs in your existing structure.

• You’re updating your content management system (CMS) or redesigning your site.

How to perform a content audit

1. Set goals and define the scope
2. Create a content inventory
3. Add performance metrics
4. Analyze content
5. Create an action plan
6. Implement changes and evaluate results

Comprehensive audits require time and resources, but they’re a critical element of any content strategy. Here’s how to set audit criteria, collect data, analyze findings, and use the results to meet your business goals:

1. Set goals and define the scope

An effective content audit process starts with defined objectives. Identify the end goal of your content audit process—or the results you’d like to see after you complete the audit. Examples include increased site traffic, improved conversion rates, or lower bounce rates. 

Use the SMART goal framework (specific, measurable, attainable, relevant, time-bound) to structure your goals. If one of your goals is boosting brand engagement, for example, your SMART goal might be to increase average session length by 20% by the end of the fiscal year. 

Your larger content audit goal can also help you define the scope of your project. A comprehensive content audit can address every page and asset on your site. A more focused content audit might zero in on a specific content format or asset type, such as blog posts, product descriptions, landing pages, or videos. SEO content audits typically address an entire site and analyze content at the page level, meaning that they evaluate all the content on a given page through SEO metrics like search rankings. 

2. Create a content inventory

A content inventory is an organized list (typically a spreadsheet) of every piece of content on your website. Content audit spreadsheets include the following details:

• Content title (or H1)

• URL

• Focus keyword

• Topic, pillar, or content or product category

• Meta title

• Meta description

• Content type (e.g. blog post, product description, case study)

• Content format (e.g. long-form or short-form text, video, infographic, etc.)

• Date last modified

• Call to action (CTA)

Use free content audit templates and digital tools like Screaming Frog or Google Analytics to jumpstart the process. These tools inventory your entire website, eliminating the need to manually pull web page URLs and ensuring that you don’t miss any hidden or unlinked content. Some tools can also pull other page details. Screaming Frog, for example, fills in URLs, page titles, meta descriptions, header tags, and focus keywords.

3. Add performance metrics

Use your audit goals to identify the performance metrics you need. A business that wants to increase brand awareness might use Google Analytics to measure traffic volumes and search rankings for each page, for example. SEO software tools like Semrush and Moz can also provide advanced metrics like keyword optimization and domain authority scores. 

Add a spreadsheet column for each performance metric relevant to your goal. Here’s a list of common metrics:

• Organic traffic volume

• Keyword rankings

• Keyword optimization score

• Domain authority score

• Average time on page

• Number of backlinks

• Bounce rate

If you’re performing a qualitative brand audit, add categories like accuracy, relevance, and brand consistency. That said, resist trying to include too many performance metrics at once, as too much data can disguise relevant trends and distract you from your goal. If your primary goal is to boost engagement, revisit your brand audit goal later and add categories relevant to a different objective. Again, it’s all about establishing a scope that you can accomplish in a reasonable amount of time.

4. Analyze content

Next, analyze your content. The exact steps you take will depend on the goal of your content audit, but here are a few common actions:

• Identify high- and low-performing content. Sort a relevant performance metric column (like organic traffic volumes or keyword ranking) numerically, and look for trends among high- and low-performing pages, considering categories like topic, word count, page type, and format.

• Identify content gaps. Sort your content audit spreadsheet by topic and evaluate content distribution across areas. Does it align with your content strategy? Do you see any meaningful performance trends? Then, cross-reference your distribution with the latest relevant search volumes to see if your content distribution aligns with audience needs.

• Review on-page SEO. If you’re using advanced SEO software, use your keyword optimization score to validate on-page SEO performance. If you aren’t, check the page content for best practices like effective primary keyword use, appropriate title, header, meta tags, and an optimized URL slug, and add a column for your findings. To keep your spreadsheet manageable, use a numerical score or a simple yes/no binary to indicate on-page optimization.

• Check for technical SEO issues. Broken internal links, missing SSL certificates, slow page speeds, and duplicate content can also hurt your SEO performance. Review each page for technical SEO issues and create a column that notes the number of technical SEO issues on each page.

5. Create an action plan

Create an action column in your audit spreadsheet with four options: retain, remove, improve, and repurpose. Here’s what each one means and when to use it:

• Remove. If a page isn’t performing well, is outdated or inaccurate, or doesn’t align with your content strategy, you might decide that your site is better off without it.

• Improve. Sometimes underperforming content is high-quality and accurate, and inaccurate or outdated content can perform surprisingly well. In these cases, you might decide to retain the page and improve existing content or address relevant technical issues.

• Retain. If a page is meeting your goals and doesn’t have any obvious technical or SEO issues, great. Leave the page as-is.

• Repurpose. Sometimes, the problem with a page isn’t the content—it’s how or where it’s used. Consider two underperforming blog posts with similar focus keywords: Could combining or restructuring the posts improve SEO performance by boosting keyword rankings or better aligning with search intent? Use this category for content that fits your content strategy and provides value to readers but has performance issues not answerable by technical fixes.

Use your content audit spreadsheet as a to-do list and track your progress in it, but keep in mind that any content gaps you identified won’t show up on your list of existing pages. Add new subjects in the topic column and fill in planned page titles as you build out your content strategy.

6. Implement changes and evaluate results

Implement your planned changes, updating your spreadsheet to keep track of your progress. When you’re ready to measure your results, you’ll re-run your performance metrics and look for changes, but remember to give it time. It will typically take three to four months for the results of an SEO content audit to appear in your site performance metrics.

Let’s say you’ve got a $10,000 marketing budget. Should you go all-in on paid advertising, allocate a portion to influencer marketing, or invest in search engine optimization (SEO)? Some entrepreneurs get giddy in the face of decision-making, others get the jitters, and most experience both at some point. 

But the ability to make good choices in a work setting is essential for company success. Your decision-making skills impact the future of your business, from high-level marketing strategy down to the details that form your customer experience. 

Learn about the key components that go into this valuable workplace skill and how to get better at making thoughtful business decisions with confidence. 

What are decision-making skills?

Decision-making skills are the combination of skills you use to evaluate choices. They help you remove roadblocks affecting everything from company-wide initiatives to your day-to-day business operations. Whether you need to choose a marketing slogan or build a new team workflow, the ability to make the right choice efficiently and confidently is critical for success.

Good decision-making skills demonstrate your strength as a leader, give your team confidence, and guide your company toward a collective vision. Making efficient and quick choices is the pinnacle of good decision-making and an incredibly valuable skill.

Key components of decision-making skills

1. Creative thinking
2. Organization
3. Time management
4. Leadership
5. Problem-solving
6. Emotional intelligence
7. Critical thinking

Here are the essential skills you need in your toolbox to become a better decision maker:

Creative thinking

Creative decision makers develop original ideas that are uniquely suited to their business and the challenge at hand. Ask yourself which choices will make your brand stand out from competitors. For Douglas Watters, the founder of nonalcoholic beverage brand Spirited Away, that choice was to start local and prioritize the consumers in his community.

Douglas decided to keep the shopping experience personal by launching with a brick-and-mortar store—and that decision was the right one. “About 90% of our orders come from in-store shopping because people want to shop for beverages in person,” he says on the Shopify Masters podcast.

While the brand offers online orders to handle local deliveries and in-store pickups, Douglas followed his conviction to remain local. While this choice may be surprising among ecommerce brands that prioritize online sales from day one, this creative yet logical thinking allowed Spirited Away to curate an intimate retail experience that appealed to their target market.

Organization

When you’re organized, you’re more likely to be productive, calm, and clear-headed under the pressure that comes with making critical decisions. Being organized comes in many forms, from keeping detailed notes to having dedicated time in your schedule to think through company strategy without distractions.

When it comes to effective decision-making, staying organized means you have all the necessary information readily available—from financial statements and market trends data to customer data—to help you make the best choice. Timely decisions are easier when you have all your data tracked in one place. If you run a handbag company and are wondering whether to launch a bold color or neutral, having a database of customer purchase history will help you identify the best-selling shades.

Time management

Can you make a final decision without spending too much time deliberating? There’s a time to take the decision-making process slowly and a time to make it snappy. For example, if you need to decide on a social media advertising campaign that’s dependent on a trend, you risk missing the trend’s window of virality if you take too long to deliberate. 

When you need to make a timely decision, time management techniques—like giving yourself a deadline or clearing time in your day to focus solely on the decision at hand—can make you a faster decision maker.

Leadership

When you demonstrate decision-making skills, you’re demonstrating leadership skills. Decisive business leaders can inspire confidence in those around them and set an example for others on how to approach decisions. Good leaders also encourage team members to contribute to business decisions.

Try holding an open forum involving numerous people from different teams to contribute suggestions and ideas on where to take your next marketing campaign. This gives your team insight into your decision-making process, which can encourage professional growth and ownership of positive outcomes.

Problem-solving

Problem-solving, which identifies issues and possible solutions, is often a step along the journey toward making a decision. Identifying problem patterns means you can plan in ways that avoid repeating issues.

For example, shopping cart abandonment remains a common problem for online retailers. To solve this problem, you can start tracking your website’s cart abandonment rate, then generate a list of practical solutions, such as strengthening calls to action (CTAs) on your checkout page or emailing reminders about abandoned carts.

Emotional intelligence

Emotional intelligence helps you make workplace decisions with care and understanding, manage your emotions in a high-stakes work environment, and respond appropriately to coworkers and customers. It’s also a key component of being a rational decision-maker who doesn’t let emotion cloud their judgment. 

Displaying emotional intelligence can also enhance your brand reputation and build consumer trust if you’re known as an authentic, transparent company. In turn, this can build customer loyalty. 

Critical thinking

Critical thinking is the ability to evaluate and synthesize information to form a judgment or solve a problem; it’s the core of all decision-making abilities. As a business owner, you’re bound to come across countless tough decisions, especially when it comes to how you allocate funds. 

In a Shopify Masters podcast interview, Shanae Jones, founder of Flyest, discussed the importance of weighing the potential outcomes of every choice. “When you are spending money on your business, you have to consider what the returns are going to be,” she says. “Are you going to be able to live with the decision?” 

For every decision you need to make, evaluate how the outcome might impact company strategy and your bottom line. Run a cost-benefit analysis that considers labor, materials, and opportunity costs. Compare those to projected benefits, such as increased revenue and boosted brand awareness.

5 tips to improve your decision-making skills

Reflect on past decisions

Take the time to learn from past decisions by collecting feedback from one or more teammates and carving out time to reflect on your own. Assess why they were or weren’t the right move, and identify what you could have done differently. When you retrace your past actions, you can better prepare yourself for the future.

You can also evaluate the outcome of a decision using data. Look at revenue reports or conversion rate reports to determine if the latest product you added to your inventory was the right move, for example.

Give yourself a deadline

Decision paralysis is when you get stuck in the decision-making process due to fear of making the wrong choice, often in the face of an overwhelming number of ways forward. Giving yourself a strict timeline, including a deadline to make a call, can help you build the habit of making sound decisions quickly.

Use decision-making tools

Use a decision matrix to clearly evaluate your choices. This tool compares your options based on different criteria using a rating scale. Say you’re deciding between two manufacturers. To pick which one to work with, you rate each based on its cost, reliability, and location. The manufacturer with the highest total score wins.

You can also consider using the tried and tested method of a pros and cons list. This simple yet effective strategy allows you to visually compare the benefits and drawbacks of each option you’re deliberating.

Collaborate with your colleagues

Discussing a decision with others gives you access to different perspectives and all the factors at play in your decision, even those beyond your own expertise. The more you expose yourself to other problem-solving methods and points of view, the better you can assess decisions from a wider lens and consider all available options.

Try different problem-solving methods like brainstorming or team-building activities that encourage thinking outside the box. Mind mapping is a method that helps you and your team organize ideas by topics and subtopics. Write the main idea in the center of a piece of paper or a whiteboard, then add related ideas around it. As your session progresses, group related concepts together to help refine broad concepts into specific ideas.

Stretch your creative muscles

Creativity can improve how you make strategic decisions by generating multiple ideas and better alternatives, but it doesn’t come naturally to everyone. Try following the five stages of the creative process to fire up your imagination. This step-by-step approach encourages you to research, plan, and reflect to help you reach the aha moment of a fresh idea.

Once you have your new solution, put your idea into motion by soliciting feedback from colleagues and confirming that your creative decision is in line with your broader objectives.

So you had your eureka moment—congrats! But your great idea is just the first step to starting a business. You may also need funding to cover your startup costs and, eventually, fund your growth. 

Raising capital is an obstacle some businesses never clear. According to federal data, about 22% of new businesses fail within their first year, often because of a lack of cash. Fortunately, there are multiple ways to secure funding for your fledgling enterprise. Here’s a rundown of how to raise capital for your new business.

6 ways to raise capital

1. Self-funding
2. Angel investors
3. Venture capitalists
4. Bank loans
5. Crowdfunding
6. Friends and family

Here’s an overview of some of the most popular ways to raise capital:

1. Self-funding

Also known as bootstrapping, self-funding involves using personal savings and resources instead of external debt or equity investments to start your business. 

Advantages of self-funding: 

• Control. You retain complete control over your company without giving equity investors ownership or decision-making power.

• No debt. You don’t need to worry about making monthly loan payments and can avoid the interest costs that come with debt. 

• Strong signal to investors. You may attract future investors by showing your commitment and ability to expand your business with minimal funds. 

Disadvantages of self-funding:

• Limited resources. You may need to operate on a tight budget, which could slow growth and limit opportunities. 

• Personal financial risk. You assume all the financial risk, which can be a heavy burden if the business fails.

• Opportunity cost. You may need savings for other uses, such as family emergencies. Or you may realize the money could have been spent on another business idea for higher returns or less risk.

2. Angel investors

An angel investor is typically a wealthy individual who uses their own money to invest in your startup, usually in exchange for an ownership stake in the business. 

Advantages of angel investment:

• Mentorship and guidance. Angel investors may provide advice on scaling, hiring, fundraising, and market strategy.

• Networking opportunities. Angels can help you form strategic partnerships with people in their personal and professional network, such as potential customers and future investors.

Disadvantages of angel investment:

• Limited contributions. Angels typically invest $25,000 to $500,000, which may not be enough if your startup has significant capital requirements.

• Reduced control. Startups often give angel investors equity, which means losing some decision-making control over your company.

3. Venture capitalists

Venture capitalists (VCs) are professional investors or firms that invest in companies with high growth potential in exchange for equity or ownership.

Advantages of venture capital:

• Substantial funding. VCs can afford to invest the large amounts—hundreds of thousands to millions of dollars—that are often necessary for rapid growth.

• Expertise and mentorship. With their industry experience and connections, venture capitalists may provide strategic guidance. Firms often offer dedicated portfolio services to help with recruiting, marketing, and product development. 

• Networking opportunities. VCs may connect you to their personal and professional network, helping you build valuable industry contacts, customers, and partners. 

Disadvantages of venture capital:

• Loss of equity and control. Venture capital firms may demand a substantial share of equity and a board seat, limiting your control over the company.

• Pressure for returns. VCs expect high returns relatively quickly, which may put pressure on you to meet their expectations.

• Long vetting process. A venture capital firm will thoroughly vet your business before investing, often taking a few months to complete their due diligence.

4. Bank loans

Taking out a small business loan means borrowing money from a financial institution, like a bank, and repaying your debt with interest and fees. This may be a good option if you have a steady cash flow and have been in business for at least six to 12 months.

Advantages of bank loans:

• Predictable payments. Bank loans are usually repaid in fixed installments over a set period, such as five to 10 years or more. This predictability helps you budget.

• No equity dilution. No need to give up an ownership stake in your business or hand over decision-making powers to investors.

• Credit health. By consistently making on-time payments, you can build both business credit and potentially personal credit.

Disadvantages of bank loans:

• Collateral requirement. Some business loans, including US Small Business Administration (SBA) loans, require collateral—assets or property that you offer to a lender as security for your loan. If you fail to repay, the lender can seize the collateral to recover the amount.

• Strict eligibility criteria. Financial institutions often set strict requirements, including minimum time in business, credit score, and steady cash flow, which you prove through financial statements.

• Debt burden. You must make monthly payments until the debt is paid off, incurring interest costs along the way.

5. Crowdfunding

Crowdfunding is raising money from many donors, typically through an online platform like Kickstarter, GoFundMe, or Indiegogo. You offer various types of rewards to your backers in exchange for different levels of support. 

Advantages of crowdfunding:

• No repayment or credit check. If you run a donation, reward, or equity crowdfunding campaign, you don’t need to repay the funds or pay interest on the amount raised. You also don’t have to go through a credit check.

• Creates an engaged audience. Backers are interested in what you have to offer and may become customers once you launch your business.

• Quick path to funds. Crowdfunding platforms often limit campaigns to 60 days, providing a quick way to raise funds (if successful).

Disadvantages of crowdfunding:

• Limited contributions. Crowdfunding campaigns raise an average of $28,656, which may not be enough to cover your startup costs. You may have to combine this funding strategy with another source.

• Dilution of ownership (equity crowdfunding). When you raise money through equity crowdfunding, you’re selling shares of your company, meaning you’re giving up some ownership and potentially some control over business decisions. This dilution continues with each funding round.

6. Friends and family

Your personal connections, like friends and family members, may also be willing to contribute to your endeavor. This may be a good option if you have a strong support network willing to back your vision.

Advantages of raising from friends and family:

• Fast and straightforward. Unlike traditional investment channels, securing funds from friends and family is often quicker and involves fewer formalities.

• Flexible terms. Repayment conditions and interest rates tend to be more lenient than those of banks or venture capital investors.

• Emotional and moral support. Beyond financial backing, personal connections can offer encouragement and motivation during your startup’s early stages.

Disadvantages of raising from friends and family:

• Risk to relationships. Business setbacks can strain personal relationships, leading to tension or conflict.

• Limited capital. Friends and family may not have the financial means to provide substantial funding, limiting your growth potential.

• Lack of strategic expertise. Unlike professional investors, your friends and family may not offer the same valuable industry insights or networking opportunities as VCs or angel investors.

Funding stages

Businesses that raise money from venture capital investment typically do so in stages, starting with seed and pre-seed funding, followed by Series A, B, C, and additional rounds as needed. Here’s a breakdown of each stage of the capital-raising process:

• Pre-seed and seed. This is the money that helps get your business off the ground. Pre-seed funding could precede investment from venture capitalists (VCs), possibly coming from the founders’ personal savings or friends and family. Early stage startups usually use this capital to do market research, draft business plans, and work on product development and prototypes. 

• Series A. Series A is for proving that you have a business model with long-term potential. Once you’re open for business, investors can help you scale operations, expand your team, and refine the product or service.

• Series B. At this stage, you’re ready for significant growth initiatives, often involving larger VC firms. Businesses that reach Series B have an established market presence and are looking to prove that they can scale their ideas.

• Series C and beyond.Later-stage funding rounds can finance entering new markets, acquiring other companies, or preparing for an initial public offering (IPO). Institutional investors like private equity firms, investment banks, and hedge funds are typically involved. 

Tips for raising capital

Here are a few tips to keep in mind when raising capital:

Know your financial needs

Identify your startup costs and create a budget if you haven’t already. Knowing how you’ll spend the capital you raise can help you figure out how much you need and where to raise it. Then create a funding strategy for each stage that aligns with your evolving needs.

Diversify your funding sources

Depending on a single funding source is risky, potentially creating financial vulnerability and limiting flexibility. Plan to raise funds from several sources, such as combining government grants with business loans. 

Link to business milestones

If you plan to raise money from investors over time, your fundraising strategy should align each investment round with key business milestones. Investors expect a clear roadmap showing how their capital will drive value—whether through a product launch, user acquisition goals, or reaching profitability. 

Prepare for due diligence

Investors will go through your financial statements, business plan, and legal documents to evaluate your business before pledging funds. Gathering and reviewing these documents beforehand can help you pass this review.

Plan the exit strategy

Plan for the long term and ask yourself, what’s the exit strategy? The answer will influence how you fundraise. For example, if you want to run the business forever, seeking VC investment may not be the best option. You might plan for an initial public offering (IPO) and sell shares on the stock market or set a goal of being acquired by a larger company. All of these decisions can influence funding choices and investor selection. 

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months based on sales.

Think of your finances like a busy train station—your personal and business funds are two different lines running on separate tracks. Mixing them in one account is like sending every train to the same platform: confusing, inefficient, and risky.

A checking account is one of the key tools for managing your finances. But it’s important to keep your personal and business finances separate. You need a distinct account to take in your organization’s revenue and pay for business expenses. Having separate hubs for your personal and business funds may even be legally required for some business types.

Understanding the differences between business checking and personal checking accounts can help you better size up your options and know what to look for. 

What is business checking?

A business checking account is where you can handle daily business transactions. For instance, you can deposit funds, process customer payments, handle payroll, or pay suppliers. You’ll typically get a debit card to use with the account, and you may also get access to a business line of credit if you’re eligible. The same goes for a business loan.

These accounts often come with banking tools tailored to the needs of business owners. Depending on the account, you may have access to bookkeeping integrations, cash flow monitoring, employee debit card access, and invoicing features. As a downside, basic business accounts may limit the number of transactions you make each month—although you can sometimes upgrade them for a fee to get over this hurdle. They also come with maintenance, cash deposit, and wire transfer fees, as well as other costs to keep the account open.

What is personal checking?

A personal checking account is where you can manage your day-to-day personal expenses and income. You might use this type of checking account to receive your direct deposit paychecks, pay household bills, deposit funds, withdraw cash, and send money to friends.

You typically get a debit card linked to the account and checks to make payments as needed. These accounts may come with simple budgeting features, but they’re usually not as robust as the tools that come with business checking accounts. 

Some banks have rules against using a personal checking account for business purposes—and may close your account if you break those rules. 

Business checking vs. personal checking: What’s the difference?

Business and personal checking are two types of accounts that help you manage transactions. They both offer deposit insurance and charge fees, but they’re geared toward different audiences and come with different features. Let’s explore the commonalities and differences.

Deposit insurance

Personal and business checking accounts both come with deposit protection, which reimburses you for the funds in your account if your bank or credit union fails. The Federal Deposit Insurance Corp. (FDIC) provides this type of insurance for federally insured banks, while the National Credit Union Administration (NCUA) provides coverage at federally insured credit unions. 

Business and personal accounts both have the same standard insurance limit of $250,000. Each depositor receives at least this amount in coverage at each insured institution for each account type. Business accounts are insured separately from the individual accounts of the business owners, with the exception of a sole proprietorship.

Access

Both personal and business bank accounts provide several ways to transfer, withdraw, or otherwise use your money. Personal and business checking both usually let you withdraw cash at ATMs, set up wire transfers, and send money using peer-to-peer payment services. Both types of accounts may also provide access to the Automated Clearing House (ACH), where you can send and receive payments and transfer money between bank accounts. The bank or credit union will also provide a debit card and checks. To manage your money, you can usually log in to a mobile banking app or your online banking account. 

All bank accounts come with high-level security features, such as multifactor authentication and fraud detection. But because business checking accounts handle higher transaction volumes and may carry higher liability risk, security is often more robust. For example, the accounts may come with dual control requirements (where two employees must approve certain transactions), more sophisticated fraud detection, IP address restrictions, token-gated login, and more. 

User roles

Both business and personal checking accounts allow you to grant access to authorized users, but with a business account, you can be more nuanced with permissions. Business checking accounts often allow you to assign different permissions and features to employees. For example, a manager may be able to pay bills up to a certain limit using a debit card or setting up digital transfers. 

Jointly held personal checking accounts usually don’t offer this type of controlled access. Each user has equal permissions to the account.

Business tools

Many business checking accounts provide access to a robust suite of business tools, which can help you run your business more efficiently. 

For example, Found Bank’s business checking account helps you estimate your tax payments, categorize your transactions, and look for deductible expenses to reduce your tax bill. It also integrates with your accounting software. Bank of America’s business checking accounts also offer this feature and help you check your business credit score for free. These business specific features can help make tax reporting and finance tracking easier. 

Personal checking accounts, on the other hand, typically offer fewer, less-advanced features. For example, Bank of America’s budgeting tool helps you track your income and expenses on the mobile app, while SoFi’s checking account allows you to earmark funds for different purposes.

Transaction limits

Business checking accounts typically have large deposit limits but may limit the number of free transactions you can make, such as 100 or 200 per month. You might pay a fee, such as 50¢, for each transaction beyond your agreed number. 

Personal checking accounts often come with lower deposit limits but don’t restrict the number of transactions you can make. 

Fees

You can often find free personal checking accounts that come with no monthly service fees, opening deposits, or minimum balance requirements. If you do open a checking account with maintenance fees, you can often avoid the fee by meeting criteria, such as exceeding a minimum deposit amount.

Business checking accounts often set minimum opening deposit or minimum monthly balance requirements in order to waive or lower their monthly fees. They may generally charge higher fees than personal accounts for monthly maintenance and services like cash deposits. 

Financial institutions may offer savings accounts you can link to for overdraft protection, which can help you avoid some fees. This feature may be available with both business and personal checking.

Earning interest

Some business and personal checking accounts pay interest on your balance in the form of an annual percentage yield (APY). Depending on the account’s compounding schedule, interest may be calculated daily, monthly, or quarterly. 

The bank or credit union may require you to meet certain requirements, such as receiving direct deposits each month or maintaining a certain balance, to earn the best APY. 

Interest-bearing accounts are more likely to charge monthly maintenance fees, so you’ll need to do the math to determine whether the account benefits outweigh those fees.

Accepting credit card payments

Many business checking accounts offer merchant services, which let you accept customer payments via credit card, debit card, or mobile app. Personal checking accounts lack these features, though you can transfer money to friends and others using a person-to-person payment app. 

How to open a business checking account

It takes just a few minutes to open a business checking account. Preparing in advance can help make the process easy. 

1. Consider your needs. For example, are you looking for a bank or credit union that has branches and ATMs nearby? Very small businesses might need a simple account for their business related expenses, while larger businesses with more employees may need extra features and higher deposit limits. 

2. Gather documentation. Banks typically ask for copies of your business’s formation documents, ownership agreements, and business license. You’ll also need an employer identification number (EIN), or a Social Security number (SSN) if you’re a sole proprietor. Check your bank’s specific requirements in advance because it may request additional documentation.

3. Review your options. Research business checking accounts at several banks, credit unions, and online institutions. Compare details like available business tools, fees, introductory offers, interest rates on deposits, minimum account balance, and opening deposit requirements. 

4. Submit your application. Once you choose a financial institution and the best checking account for your situation, fill out the application, and submit copies of your documents. Most banks and credit unions let you do this online, but you may be able to complete the step in person. 

5. Open the account. If your application is approved, you’ll sign your account documents and make the minimum opening deposit, if there is one. You can also typically set up account access online and in a mobile app.

Whether you need to fund a project or cover business expenses, there are plenty of financing options out there. Many small business owners turn to business loans and business lines of credit, the two most popular funding options in the Federal Reserve’s Small Business Credit Survey. 

But what’s the difference between a business line of credit and a loan? A line of credit allows you to borrow up to your credit limit anytime during the draw period—which is why business owners often use it for covering periodic or emergency expenses. A business loan gives you the money upfront and comes with predictable payments, which you might opt for if you need a large amount for a specific purpose, such as investing in the business’s growth. 

These financing options have other key differences as well as similarities. Here’s a breakdown to help you figure out which is right for you. 

What is a business line of credit?

A business line of credit (LOC) is a flexible funding option that provides business owners with working capital on demand. It works like a credit card (i.e., you borrow funds up to your credit limit and pay interest only on the funds you withdraw). You can then choose whether to pay off some or all of the balance and borrow again as needed. 

Lines of credit often come with a lower borrowing limit compared to what you can get with a business loan, and you may need to pay an annual fee and other costs. These loans usually come with variable interest rates that can rise or fall over the repayment term. That’s why this funding option is typically used by businesses that want ongoing access to financing to even out their cash flow gaps or to tap for emergency expenses. 

What is a business loan?

A business loan is more straightforward than a line of credit. You receive the entire loan amount as a lump sum upfront, then repay the balance through installment payments—usually over a few years. Interest rates tend to be fixed and won’t change as you pay off the balance. Unlike a line of credit, you’ll need to apply for more funding if you want to borrow more. Companies that need financing for a specific project, investment, or acquisition might opt for a business loan.

Business line of credit vs. loan: What’s the difference?

Both financing options can provide funds to cover business expenses, but they vary in a few key ways. Let’s dive into the similarities and differences between a business line of credit and a loan.

Amount borrowed

Lines of credit come with a trade-off: a lower borrowing limit (compared with term loans) in exchange for the ability to access your funds repeatedly over the draw period. Borrowing limits often come out to around $250,000 with a draw period of about three to five years. 

Business term loans often provide up to $500,000, but some lenders extend much larger loans. For example, some loans backed by the Small Business Administration (SBA loans) reach $5 million. 

Fees and interest 

Borrowers pay interest, the main cost of borrowing money, on both financing options. Interest is usually expressed as an annual percentage rate, or APR, and acts as compensation for a lender taking on the risk to provide a loan. A higher interest rate results in higher borrowing costs and vice versa. 

Lines of credit often come with variable interest rates, while term loans are typically fixed. In a 2024 Federal Reserve study, APRs were slightly lower on lines of credit compared to term loans. An additional benefit: You’ll only pay interest on the funds you draw with a line of credit.

Both loans and lines of credit may also charge fees, such as origination fees, prepayment penalties, and late fees. But lines of credit may come with additional charges, such as annual, inactivity, or per-draw fees. 

Repayment terms

With a business loan, you’ll pay off the debt in set installments over the loan term with a fixed interest rate. Each payment usually includes a portion of the loan principal plus interest. This financing option usually comes with longer repayment terms compared to a line of credit.

A credit line is more nuanced. You can typically draw funds from the account repeatedly during a draw period, which can last up to several years, if it’s a revolving credit line. There are minimum monthly payments (which include interest) during this time frame, though you can choose to pay the minimum, pay the entire balance, or do something in between. 

You won’t be able to withdraw funds once this period ends. Depending on the terms of your contract, the lender may either require a balloon payment or convert any remaining balance to a loan that’s payable over a brief set period. 

Collateral

Business loans and lines of credit can either be secured, meaning they’re backed by business assets, or unsecured. With a secured loan or LOC, the lender can take the collateral and sell it to recoup its losses if you default on payments. 

Whether the financing is secured or unsecured depends on a few factors, such as the borrowing purpose and the business owner’s creditworthiness. For instance, equipment financing and commercial real estate loans are often provided as secured loans. Some borrowers with poor credit must provide collateral to reduce the lender’s risk.

If you take out unsecured forms of debt, the lender bases your eligibility on your credit history instead of requiring collateral. 

Personal guarantee

A personal guarantee is a statement that you (as the business owner) will step in and repay the debt if the business defaults on its loan terms. These are very common for business financing, whether you take out a business line of credit or a loan. But they differ from collateral, which is a specific asset a lender can take after a business defaults. Collateral doesn’t specifically require the owner to be personally liable.

Eligibility criteria

Before you can borrow money, whether it’s a loan or a line of credit, lenders check your ability to repay the funds. They’ll usually review your credit history, check your monthly revenue, and set a minimum “time in business” requirement. Lenders will also request your recent financial statements and may require that you have a business checking account and a strong credit score. 

The qualification requirements vary with each type of lender and the specific institution. Traditional banks often set stricter criteria compared to online banks, credit unions, and CDFIs. Between loans and lines of credit, the latter often have easier qualification requirements.

Some business loans can be used only for specific purposes, such as equipment or real estate. Lines of credit are often more flexible and can be used for any business purpose. But as with any financing option, it depends on the terms of your contract, and lenders usually want you to state the purpose of the loan or LOC when applying for funding. 

How to get a business line of credit or a loan

You can get a business line of credit or loan at many different financial institutions. Here’s a breakdown of how you can get the ball rolling with each option.

Credit unions

Credit unions are not-for-profit institutions that tend to offer lower interest rates than their bank counterparts. However, you’ll need to join the credit union before applying for a loan or line of credit. Additionally, credit unions may offer fewer business financing options compared to banks and online lenders. This type of lender is often a good fit for small businesses and startups, as credit unions may be more willing to work with them than traditional banks. 

Banks

Large national banks tend to offer low interest rates, but they also set strict eligibility criteria. Approval usually requires a credit score of around 670 or higher, at least two years in business, and annual revenue of around $200,000 or more. If you’re having trouble qualifying with these traditional lenders, try a community bank. In the Fed’s survey, businesses were fully approved more often at small banks than at large banks.

Online lenders

Online lenders are financial institutions that operate entirely online. They often process applications more quickly and set looser eligibility criteria. In the Fed’s survey, small business owners with bad credit were more likely to be approved for financing at online lenders than at other sources. The trade-off is that you’ll typically pay a higher interest rate and more fees to offset the lender’s risk. 

CDFIs

Community Development Financial Institutions, or CDFIs, are nonprofit lenders that serve low-income communities and individuals who can’t qualify for a traditional loan, typically due to a lack of credit history and/or collateral. These institutions often provide lower interest rates and longer repayment terms on business financing.

However, businesses usually need to meet strict eligibility criteria, which may explain why only 6% of respondents in the Fed’s survey borrowed from one of these lenders. You can search for CDFIs to see if one matches your needs.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two six-month periods. The actual duration may be less than 18 months, based on sales.

In today’s competitive corporate landscape, strong customer loyalty can mean the difference between a surviving business and a thriving one. What’s one way to bring customers in and have them come back for more? An enticing rewards program.

Small business rewards programs can be a cost-effective way to build trust with customers and encourage repeat business. Read on for a breakdown of how small business rewards programs work, and a step-by-step guide to designing your own.

What is a small business rewards program?

A small business reward program is a type of loyalty program that incentivizes specific customer actions with redeemable discounts, cash back, or free products. For example, a business might reward customers for making purchases, referring new customers, or publishing content about the brand. After taking enough of these actions and accumulating a certain number of points, the customer can redeem the corresponding reward. The primary goal of a rewards program is to increase purchases and/or engagement with the brand.

Types of small business rewards programs

Small business rewards programs are flexible—you can reward customers for anything you want them to do, using anything they value enough to do it. Here are four popular options to get you started:

Punch card programs

Punch cards are a classic way to encourage repeat business. They typically look like business cards and display several icons, like 10 tiny coffee cups or 25 hot dogs. Customers earn a punch or a stamp for each purchase, and when the card is full, their next purchase is free.

Consider punch cards if your business model relies on repeat purchases of relatively inexpensive products or services. Bakeries, ice cream parlors, and oil change shops are good candidates, while mattress stores are not. Punch cards are particularly popular with brick-and-mortar shops, but you can also use an ecommerce app to add one to your online store. 

Referral programs

Referral programs reward existing customers for recommending your business to others. When a potential customer makes a purchase, the referring party earns a reward, like store credit, a free item, a discount, or a specific number of loyalty points. 

Referral programs help small business owners quickly build a customer base. They also improve relationships with current customers and keep your company top of mind, encouraging repeat business. Consider thanking referring customers through email or social media shoutouts, or even in person if you run a services business, to maximize program benefits. Personal acknowledgments make customers feel appreciated and encourage future referrals. 

Points programs

Points programs are a versatile and flexible choice for small businesses. You decide how customers earn points, what they’re worth, and how they’re redeemed. You can also adjust incentive structures as your needs change, shifting focus without introducing customers to an entirely new program.

Here are example activities you might reward:

• Referring a customer

• Making a purchase

• Purchasing a specific product or product type

• Subscribing to a service

• Tagging your company on social media channels

• Reviewing your company on a review site

• Signing up for email marketing newsletters

• Completing surveys

• Providing testimonials or product photos

• Signing up for a free trial

Design your redemption system to meet your needs. You might allow customers to trade in points for store credit, exclusive discounts, or free items, or provide VIP rewards like free samples, instant access to sales, or special deals to customers who reach a certain number of points. If you choose a non-redemption strategy, customers continue to accrue points to access more personalized experiences and increasingly exclusive perks.

Points programs allow business owners to adjust terms as business needs and available resources change. If you received an over-shipment of a certain product type, you can add it to your rewards shop or distribute it as a VIP gift. If a product recall issue generates a batch of negative online reviews, you can add review points to your incentive structure or increase the point value assigned to that action to counteract your negative reviews.

Subscription programs

Subscription ecommerce businesses use rewards programs to encourage sign-ups and boost brand loyalty. They may also discourage customers from cancellation: It’s one thing to stop paying for something, but another to give up free perks.

Claudia Snoh, the founder and CEO of the subscription coffee concentrate company Kloo, shared the details of her company’s program on an episode of the Shopify Masters podcast. Kloo automatically enrolls all subscription customers in its program, The Cupper Club. The club offers members the following benefits:

• Free shipping

• Seasonal gifts every few months, including free samples of new product launches

• First invitations to exclusive Kloo events like coffee cuppings

• Access to member-only products and merchandise

• Guaranteed best pricing on all Kloo products

• Early access to new product drops

• Priority concierge support

“The program is designed to reward our most loyal customers and create a community of coffee enthusiasts who appreciate the sommelier experience we provide,” Claudia says, noting the program’s effectiveness as a relationship-building tool. “The Cupper Club has created strong brand affinity and loyalty. When we send out seasonal gifts and exclusive offers, we regularly receive personal thank you emails from members,” she says, adding, “These moments of connection have transformed many customers from casual buyers into genuine brand advocates.” 

The Cupper Club has also helped Kloo build its subscriber base. “The program has become an effective conversion tool, helping us transition one-time purchasers into long-term subscribers who experience the full value of our brand,” says Claudia. 

How to create a small business rewards program

1. Set goals
2. Identify actions
3. Build an incentive structure
4. Launch your program and monitor performance
5. Adjust strategy and plan for the future

Small business rewards programs are infinitely customizable, so where do you start? Kloo took inspiration from competitor programs. “As we developed the concept, we studied successful loyalty programs from other brands, drawing particular inspiration from Flamingo Estate’s Estate Membership,” she says. This strategy supports the brainstorming process and provides helpful inspiration—so long as you don’t copy your competitor’s approach exactly, Claudia says.

Here’s a five-step framework to help you design and run a small business rewards program that works and feels unique to you:

1. Set goals

Loyalty program goals are typically a subset of a business’s overall marketing and sales goals, so review yours to identify your areas of greatest need. Common rewards program goals include boosting revenue, improving brand reputation, and attracting new customers.

Kloo designed The Cupper Club’s program to build relationships with its subscription customers. “We began our rewards program journey by focusing on a core question: How could we meaningfully show appreciation to the loyal customers who supported us during our soft launch phase?” 

This customer-first thinking guided their entire approach because it came from a genuine desire to show appreciation to early customers who believed in Kloo before the brand was fully established.

2. Identify actions

Next, identify customer actions that support your goals. Dig into sales data, target audience demographics, and market research to get specific. If your goal is to boost profits, you might ask yourself the following questions:

• Do you need to increase sales volumes across the board, or are you only struggling to move your higher-margin products or services? 

• How’s your market penetration? How does it compare to your competitors’?

• Do you earn repeat visits from existing customers? How much do they spend, and are those figures consistent with industry benchmarks? 

• What actions or behaviors indicate a high-value customer for your business? Do you earn more from customers coming from specific sources?

• What are your biggest sales and marketing expenses? Could a rewards program be a cost-effective alternative to pricey campaigns?

Use these questions to figure out what you want your customers to do. A company with strong retention rates might reward referrals, for example, and a company with a content shortage might reward customers for participating in user-generated content (UGC) campaigns.

Kloo focused on habituating customers to use its product based on data showing that customers in its market form long-term brand attachments. “We recognized that coffee is a product with high lifetime value potential,” says Claudia. “Once customers connect with a coffee they love, they tend to remain loyal over time.”

3. Build an incentive structure

Create an incentive structure that encourages the actions you choose, aligning the value of the reward with the value of the action for your business. Ratings and reviews tend to earn small discounts or free samples, for example, but successful referrals can earn customers hundreds of dollars from some business types. 

Consider offering rewards that serve your business goals. If you’re struggling to generate interest in a new product line, offer a product-specific discount to VIPs or allow customers to redeem points for a free trial of the product type. 

Kloo focuses on perks its members actually want. “We created The Cupper Club to reward subscribers and create additional incentives for customers to engage with our brand long term,” says Claudia. “The structure was designed to offer meaningful benefits that coffee enthusiasts would genuinely value, like seasonal gifts, first look access to new products, and exclusive events.”

4. Launch your program and monitor performance

Launch your program and promote it to customers. Encourage signups or automatically enroll customers, depending on your goals. Elective signup lets you educate new members on program terms and allows you to position your program as exclusive. Automatic enrollment maximizes participation and creates an opportunity to surprise customers with benefits they’ve already earned.

Once you’re up and running, monitor performance by tracking targeted metrics with your analytics software. Look for outcomes beyond your targeted metrics, too. Although The Cupper Club was designed to reward current subscribers, it ended up attracting new customers to the brand.

“Potential customers frequently reach out specifically to learn more about our rewards program, and these inquiries have directly contributed to increased subscription sign-ups,” Claudia says. “The program has become an effective conversion tool, helping us transition one-time purchasers into long-term subscribers who experience the full value of our brand.”

5. Adjust strategy and plan for the future

Use your metrics to evaluate performance and identify any issues. If you’re not seeing results, ask yourself the following questions:

• Are our customers aware of our program?

• Have we selected the appropriate actions for our business and marketing goals?

• Are we offering rewards that people want?

• Are reward values sufficient for the effort the action requires?

• Are customers attempting to use our program? If so, what barriers to entry do they face?

Survey or interview your customers for more accurate insights, and adjust your strategy based on what you learn. 

Once you’ve ironed out the kinks, give yourself permission to think bigger. “Looking ahead, our vision is to evolve The Cupper Club into a more sophisticated points-based rewards system similar to airline miles programs,” Claudia says. “We’re excited about the potential to gamify the experience, creating even more engagement opportunities while giving our most loyal customers increasing value as they continue their journey with us.”

Claudia also cautions business owners against scaling their programs too quickly. “Just because fast growth is celebrated and appears sexy doesn’t mean it’s the right approach for your specific situation,” she says. “Sometimes, the patient, deliberate path leads to more sustainable success and greater fulfillment.”

To get a startup off the ground, entrepreneurs need boundless energy, a sense of mission, a great idea—and money.

The term “startup capital” may evoke images of the TV program Shark Tank or venture capitalists in sleek Silicon Valley office campuses. In reality, entrepreneurs and startup founders have many different paths to secure funding for startup costs. Here’s what startup capital is, how it works, and what to consider before using it.

What is startup capital?

Startup capital refers to the financial backing a startup business needs to operate and grow in its early stages. It includes both the initial investment of seed capital and any additional rounds or series of fundraising. You can use startup capital for operating expenses like developing products, hiring staff, buying equipment, or just paying the bills.

Entrepreneurs can explore many different ways to fund their startup companies. Many consider business loans from banks or borrowing against a business line of credit, which gives you the flexibility to borrow only when you need funds. Some turn to community support via crowdfunding or friends and family. Others tap into personal sources, such as savings and retirement accounts or borrow against their homes.

Startup capital vs. seed capital

“Startup capital” and “seed capital” are often used interchangeably, but they have important differences. Seed capital is the very first startup funding a company receives to begin operations. Seed funding is often used for the initial costs of business operations like market research, product prototype development, and early marketing efforts. Startup capital, on the other hand, broadly encompasses all financial resources a growing business needs, including seed stage backing and later rounds of fundraising.

Both start-up and seed capital can come from various sources, such as angel investors, venture capitalists, investment banks, major corporations, private equity firms, or your own funds.

10 types of startup capital

1. Bank/credit union loan
2. SBA-backed loan
3. Business credit card
4. Crowdfunding
5. Grants
6. Personal savings
7. Friends and family
8. Venture capitalists and angel investors
9. Home equity loan
10. Retirement savings

A business owner can consider multiple ways to fund a new business, and you may use several simultaneously or at different stages of your business ventures. Each funding option has advantages and disadvantages, with some being more accessible to brand-new businesses than others:

1. Bank/credit union loan

Many financial institutions, such as banks, credit unions, and online lenders, offer small business loans to help start or expand your business. These funds may be a lump sum or a revolving line of credit you can use for any business expense. However, securing traditional loans can be challenging if you’ve been in business for less than a year. You will likely need to provide a personal guarantee, meaning you are personally responsible if your business can’t make loan payments.

2. SBA-backed loan

SBA loans are also issued by traditional banks, credit unions, and online lenders—but with a US Small Business Administration guarantee, which may help new businesses qualify more easily. These loans range from $50,000 microloans to as much as $5 million for larger projects. They often come with benefits like low down payments, competitive interest rates, and sometimes minimal collateral requirements—or are assets the lender can take if you don’t repay the loan. But the approval process is often lengthy and complex, and like traditional bank loans, you will need to provide a personal guarantee.

3. Business credit card

A business credit card can be a simple way to fund startup costs, especially if you have excellent personal credit. They work similarly to personal credit cards and typically provide features to help you track purchases, manage employee cards, and download financial data. But just like that personal credit card, it’s easy to run up high-interest debt if you’re not careful. You’ll need to generate revenue sufficient to pay the monthly bill.

4. Crowdfunding

Crowdfunding involves raising capital from many individual donors via websites like Kickstarter and Indiegogo. You might offer donors a reward (like a product) or provide a stake in the company through equity crowdfunding. This approach not only raises funds but also helps validate your business concept and build an early customer base.

5. Grants

Local, state, and federal governments may offer various small business grants that don’t require repayment. Many aim to fund businesses founded by underrepresented groups like minorities or women, those located in economically depressed areas, or specific industries, like agriculture. Check state and local government sites, local business advocacy groups, and the federal grants database at grants.gov. Note that competition for these grants is often intense, particularly for new companies with unproven business models.

6. Personal savings

Using only your personal savings is called bootstrapping, from the adage “pulling yourself up by your bootstraps.” If you have enough savings, using your own money may let you avoid taking on interest-bearing business debt. However, financial planners generally recommend you maintain at least three to six months of living expenses in an emergency fund before investing personal savings in a business venture.

7. Friends and family

If friends and relatives have the means, they might consider lending you money for your business. If you go this route, clearly define expectations on both sides and create a formal agreement that outlines terms and conditions. While this funding source can be more accessible and flexible than traditional options, mixing personal relationships with financial arrangements requires careful navigation.

8. Venture capitalists and angel investors

Angel investors are wealthy individuals who provide seed money using their own funds, while venture capitalists invest in early stage businesses on behalf of venture capital firms. Generally, these professional investors are providing startup capital in exchange for an equity stake in high-growth companies. You may attract investors and receive equity financing with a unique idea and solid business plan; however, only a very small percentage of startups receive venture capital funding, with estimates ranging from 0.05% to 1%.

9. Home equity loan

If your company can’t qualify for a standard business loan, you might consider a home equity loan or home equity line of credit (HELOC). How much funding you receive depends on your home value. Lenders usually let you borrow as much as 80% to 90% of your home’s market value—minus your outstanding mortgage balance. While these loans often have lower interest rates than a standard business loan, they put your home at risk—if you can’t make your payments, the lender can foreclose on your property.

10. Retirement savings

If other funding sources aren’t possible, another alternative is dipping into your retirement savings. Withdrawing from an individual retirement account (IRA) incurs income taxes that can range from 10% to 37%—plus a 10% penalty if you’re younger than 59 and a half years old. Some 401(k) plans let you borrow up to 50% of your account value for any purpose (maximum $50,000 within 12 months), with repayment plus interest required within five years. Carefully evaluate the impact of withdrawals as part of your comprehensive retirement planning.

Advantages and disadvantages of startup capital

No matter the source of your funding, raising startup capital has advantages and disadvantages:

Advantages

• Access to critical financial resources. Startup capital is what gets your business up and running, letting you invest in operational necessities like product development, research, market research, and staff.

• Ability to scale faster. When you have multiple, flexible funding sources, you can pounce on opportunities to expand your business.

• Reduced personal risk. If you secure funding externally, you may avoid putting personal assets—like your savings, your retirement accounts, or your home—at risk in the event of business setbacks.

Disadvantages

• Less control. Accepting money from equity crowdfunders and investors typically means providing them with shares in your company. Many investors want a say in decision-making and strategic direction, which can limit your freedom as a founder.

• Debt. If you raise funds using credit cards and loans, you typically will have to repay that money with interest—which can add significant financial pressure and limit your ability to reinvest any earnings into the business.

• Pressure to perform. When you raise money from external investors, you’re beholden to others. Investors typically expect a return on their investment, which can add pressure and stress, and if you miss a growth milestone, you may have trouble raising more capital in a future funding round.