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Business to Business Finance Explained
Many businesses are quickly realizing that business to business finance and online transactions involve much more than just a web site. 'Internet shop fronts' are not always successful and it is more about the relationships that you have with fellow business operators that will allow you to develop and grow your business.
Before embarking on any business to business venture, whether it be an e-commerce website, joint venturing with a business partner or borrowing from or lending money to a fellow business, it is important to have some knowledge about these opportunities in order to make an informed decision about the directions you might like to take your business.
The key area of business these days is business to business transactions. Research conducted by the Gartner Group suggests that, by 2004, B2B transactions will account for more than 7 percent of the forecasted $105 trillion total global transactions.
There are a number of different forms which a business to business venture can take. Some examples of business to business ventures and how you could apply them to your business include:
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Application Software Providers (ASPs) - rent out expensive application software to small businesses that might not otherwise be able to afford to buy such software - the return is usually in the form of a monthly subscription fee.
• Online exchanges and marketplaces - These providers provide a meeting place for vendors and buyers to make transactions over the Internet - the return is usually a monthly subscription fee to access the marketplace plus a small fee for each transaction made.
• Outsourcing for cost reduction - There are a number of online B2B services which outsource key business functions such as customer support, advertising and human resource management - the return is usually a flat fee per service.
• Venture Capitalists - provide a specific loan for business related ventures - the return is usually the repayment of the loan plus a portion of expected profits within a given period.
Different types of B2B e-commerce may be suitable for different types of organizations, so it is worthwhile taking the time to research what opportunities, if any, are available for your company.
