Non-podcast blog posts.
Back in August of 2016, I decided to get serious about building a profitable business reselling brand name products on Amazon and today we achieved a milestone that I’m extremely proud of; we made the 2019 Inc 5000 list of the most successful companies in America.
Simply making the list would have been a thrill, but to achieve a ranking of 254 with a 3 year growth rate of 1,693% was absolutely awesome and I am extremely proud of my wife (our COO) and our team of dedicated employees and virtual assistants.
Why Sell on Amazon?
In August of 2016, just after interviewing Dan Meadors on my podcast, I realized that reselling brand name products on Amazon was an extremely appealing business model.
Why did I like it so much?
Three words: steady cash flow
In my opinion, one of the greatest things about selling on Amazon is that you make sales 24×7 and in doing so, we get to generate a profit, every. single. day.
For example, here’s how our numbers looked from yesterday (Aug 13 2019).
With our current overhead, our total expenses for one day is approximately $800….which means that our net profit yesterday was $1055.95.
Not bad for a tiny company with only a handful of employees!
Better still is the fact the Amazon sends us our money every two weeks just like clockwork.
They are never late, and the money is electronically deposited into our bank account.
Compare that to my old business (a marketing agency and before that an IT service provider) – at any given point in time, our accounts receivable was over $100,000!
That means that on any given day, $100,000 of my money was still sitting in someone else’s bank account – and as a result, I would have to tap into my line of credit and pay my bank interest, just to get access to the working capital that my customers owed me.
With Amazon, collecting past due receivables simply is not a part of our business!
How Did We Grow So Fast?
There are a lot of people that attempt to sell products on Amazon, and sadly, many of them don’t ever achieve this level of success; though…for the record, there are plenty of larger companies whose revenue is substantially larger than ours.
In our case, the key to our rapid growth comes down to a few key things:
- I was obsessed with creating documented business processes (called Standard Operating Procedures, or SOPs) for absolutely every part of our business right from day one.
- From day one I was equally obsessed with delegating virtually every part of day-to-day operations to employees and virtual assistants – and thanks to all our SOPs, this was actually pretty easy for me to do.
- We put a significant amount of time an energy into differentiating our business from the competition.
- I got really good at explaining to brands why they needed to work with us and how we could help them to solve their problems on Amazon, and improve their performance overall.
Here’s a video of me explaining how I normally try to convince a brand to begin working with my company.
Opportunities for the Future
Amazon has radically reshaped the retail landscape and they are likely going to continue to do so for some time.
Just take a look at the following charts that show Amazon’s growth in both their prime members and their revenue and profits.
As you can see, their numbers are pretty amazing.
A wise man once told me that entrepreneurs are like surfers, and in order to be a really great surfer, you need to ride a really big wave.
Amazon is a HUGE wave! So big, in fact, that even an average “surfer” is going to look pretty damn good!
In order to be a really great surfer, you need to ride a really big wave.
Is It Easy to Make a Living Selling On Amazon?
In looking at our success, combined with the charts above, one could easily conclude that making a living (and getting rich) selling consumer products on Amazon is easy.
Nothing could be further from the truth.
It is simple (conceptually), but it is definitely not easy….and that is where having all of our systems in place has played such a critical role.
The reality is that it has never been more competitive to find profitable products to resell – and finding them requires that sellers crunch a lot of data.
Without our systems and the overseas workers that we have crunching data, achieving the success that we have would be substantially more difficult, if not impossible.
Systems have become so critical to our success that as a result of a talk that I gave at a conference a few years ago (explaining how we succeeded on Amazon), I now also own a software company that close to 1000 other Amazon sellers rely on to run their businesses as well.
Note: the software company allows anyone in any industry to rapidly create and share their Standard Operating Procedures. It is not just only for Amazon sellers.
How to Get Started
If you are interested in learning more about getting started on Amazon, or you are already selling on Amazon and would like access to some of the tools we sell, I encourage you to check out our resources page. On this page you will find links to our free training webinars, as well as the products that we sell to other Amazon sellers.
The following is a sponsored post written by Victoria Sullivan of Paybility
It goes without saying that taking on financing for your business, no matter the source, is a very serious commitment, and isn’t right for every seller. If your business is growing and has revenue growth potential that is greater than the cost of financing, then raising money might be right for you.
Unfortunately, money doesn’t grow on trees, and getting working capital to invest in your business doesn’t come cheap, so you’ll have to ask yourself a few key questions:
- Am I stocking out or missing out on sales? If so, can I purchase additional inventory at a reasonable price?
- If I purchase more inventory, will it sell within a reasonable timeframe?
- Can I invest in operations that will help grow revenue (tools, people, fulfillment, etc)?
- How much revenue can I count on from a new product launch?
- Can I negotiate a discounted price from my supplier if I pay early or in cash?
Now that we’ve answered some serious questions, let’s check out 7 ways to raise working capital for your Amazon business:
1. Personal Savings
Although many businesses are strict about not commingling business and private funds, personal savings are the fastest and cheapest route to access working capital. Essentially, you are personally lending to your Amazon business, which pays you you back over time.
The major downside here, however, is that you only have a limited supply of capital and ultimately run the risk of depleting all of your savings.
2. Crowdfunding, Friends & Family
Although you can always ask others to invest in you Amazon business directly, crowdfunding sites like Kickstarter or Indiegogo can also be effective options. You’ll avoid paying interest, by “paying” through equity or rewards to your investors.
Unfortunately, there’s no guarantee you’ll get the working capital you need, since most crowdfunding sites have a minimum fundraising requirement.
In addition to the inherent risks of involving personal relationships with business, having others involved in your business also comes with a greater responsibility to deliver results.
3. Credit Cards
Opening new credit cards are not only appealing because of the “buy now, pay later” use-case, but also due to reward programs that actually put money back in your pocket through us of the card.
It is important to note the major downsides and risk of credit spending: you have to have good personal credit to qualify, your credit card will have a limit to how much spending power you can access, and you’re limited to investing in only what you are allowed to purchase with credit.
You have to be very strict in paying the credit card bills in full and on time, or you can quickly end up in a very expensive debt cycle, harming your personal credit.
4. Traditional Bank Loans & Lines of Credit
For well-established Amazon sellers (3-5 years in business, consistent sales, and physical operations) looking for an inventory loan, you could consider looking for financing from a bank, whether it’s a term loan (one lump-sum of cash) or a line of credit (a revolving pool of funds to access as you need).
Banks can potentially offer the lowest interest rates in the market, but the approval process is challenging. Endless paperwork, a manual review process (often including an on-site visit or two), and low approval rates for small businesses are all major hurdles in securing this type of funding.
5. Alternative Financing
The alternative or online financing industry promotes lenders that promise higher approval rates than banks, an easy online application, and faster funding. Buyers should beware that the loan offers often come with high interest rates and/or fees, short repayment terms, and daily or weekly auto-payments that start right away.
6. Amazon Lending / eCommerce Specific Financing
Several eCommerce platforms (Amazon, Shopify, PayPal, and Square, to name a few) offer loans or merchant cash advance products to their sellers. However, there are a few drawbacks.
Typically, these platforms have an “all or nothing” offer model: you can’t request a loan and the amount offered is non-negotiable. But, as inflexible the borrowing process can be, these platforms understand eCommerce businesses, the repayment terms are simple, and some platforms offer competitive rates to banks.
7. Advance Your Marketplace Sales
For most eCommerce sellers, sales on Amazon (and other marketplaces) can make up the majority of their overall revenue, which means they’re constantly facing payment delays and cash flow gaps.
There are a few financing solution services out there, like Payability, that purchase your receivables (sales not yet paid out), and advances that capital to you ahead of schedule. Payability offers next-day payouts with their Instant Access product, and a lump sum of working capital with Instant Advance.
Payability makes it easy for eCommerce sellers: no credit checks, fast approvals, seamless service, no debt, and no repayment schedule. But, like all financing, there is a fee for Payability’s service, and you have to give them restricted access to your seller account.
Hopefully you have an idea of how to approach financing for your Amazon business, enabling you to find the working capital solution that best fits your goals.
And if you’re interested in learning more about how Payability can help your business grow, visit www.payability.com.
Who is Trent Dyrsmid?
Trent Dyrsmid is a serial entrepreneur, husband, and father. Thanks to his obsession with Standard Operating Procedures and his love of delegation, his 3 private companies generate millions a year in revenue. Prior to launching these 3 companies, Profit Magazine named Trent’s first company as one of Canada’s PROFIT 100 fastest growing companies for two years in a row before he sold it for 7 figures in 2008. In 2007, Business in Vancouver magazine named Trent a Top 40 Under 40 Entrepreneur.