First off, if you’re not in the FBA Sourcing Simplifiers group on Facebook, you’re really missing out. So, stop reading, click this link: FBA Sourcing Simplifiers and let me know when you’ve joined. Done? Good. Now that we have that out of the way, let’s get to it.
For most people who sell on Amazon, the goal seems to be to eventually quit the nine-to-five grind and go full time as an Amazon seller. Everyone from recent graduates to seasoned executives seem to want to make the switch once they start catching the Amazon bug, and why not? FBA offers a low entry opportunity with endless strategies and possibilities, and working for yourself offers control of your own destiny, freedom of your time, and no glass ceilings or income caps. You and you alone are ultimately responsible for your successes or failures. It’s really easy to see why selling full time is such an attractive offer, and I am here to share the lessons I learned by going all in, and then eventually returning to the traditional work force. Here’s what happened.
I was making a decent living working as a solutions consultant for a small SaaS (software as a solution) company while I was earning my MBA. When I got bored with the job I decided to see if I could replicate my online selling success from my first online venture in 2009. Back then I started with around $100 and pushed to over $100,000 in sales within the first year, and naturally I wanted to see if it was just luck or if I could do it again. A few months after starting my little experiment things were going pretty well on Amazon, and then I lost my job. Like everyone else, I could clearly see the massive potential in being an Amazon seller, and since I wanted the flexibility to finish my MBA I struck a deal with my wife. As long as I continued providing the same level of income, I could sell on Amazon full-time. Deal!
Keep in mind that I made the decision to go full-time while I was still in “experiment” mode. Things were going well, and I was growing quickly, but that growth was relative to where I started and not where my income needed to be. So in order to get the income my family required, I would need to grow and fast. The answer was to clear my investments and leverage some personal credit card debt. But since having more money is only useful if you have more items to spend it on, I started programming to find online arbitrage opportunities faster. Im sure by now you have picked up on the major mistakes I made, but if you read between the lines you will also find some less obvious errors that potentially had a much larger negative impact on my business. However, it can be summed into three major points.
Moving too Fast and Expecting too Much
As I mentioned, I moved into selling on Amazon full-time out of a need for income and to support my family. But I did so before my income from selling on Amazon matched or exceeded my nine-to-five income. This added a lot of pressure and stress to my business that would not have existed if I would have just took things more slowly. I had also made a promise to provide a minimum income level, so if I was short for a week my business suffered because I had to eat into my inventory to make ends meet.
The Lesson: Don’t set arbitrary dates or income goals for going full-time. The last time I visited my family half way across the country, my great-grandmother repeatedly told me,
Don’t try to make a million dollars at once, slowdown.
That was some really good advice that I ignored because things were starting to come together as we entered Q4, but I really should have took it to heart.
My Advice: Don’t say I am quitting this day, or I will make this much. Let it happen first, and once it does then you can say “I will quit in six months”. In fact, if you are making an equal (or more) income on Amazon as your day job and then wait six months to quit, you can easily save six months of income in case things do go south. Slow down, don’t try to make a million dollars at once. Just let it happen and then make the decision.
Minimize Risk, Don’t Put All Your Eggs in One Basket
A glaringly obvious mistake I made was clearing my investments and taking on debt to fund growth. That just put me in bad positions all around. Not only that, but I counted on Amazon alone as an income source. By mixing those two decisions I added an exponential amount of unnecessary risk. Having used my savings and taking on additional debt, something like an account suspension could have easily spiraled me into bankruptcy.
The Lesson: Don’t take on debt unless you don’t need it, diversify your income, and never touch your investments or retirement accounts. Things went really well during Q4, and it felt like everything came together, up until Q4 ended. Once sales slowed and debts needed to be repaid it was like a light switch was turned off and everything reversed course.
My Advice: Let your Amazon business grow with its own profits, and if debt is even an option it should only be considered if you don’t need it. Only take debt if you’re good where you’re at but have an opportunity to do more, and even then be sure to think twice.
Focus, Don’t Do Too Much
Another thing I subtly mentioned was that I started developing programs to find deals. Programs that scanned big box stores like Walmart, Target, and Kohl’s, and then returned the best opportunities. Because even if it only took a few hours per day to find profits, I wanted to reduce that time and ensure I was getting the best ROI I could. Not only that, my programs had potential to add another income stream. So I focused on building them, and I focused on it a lot. I remember the one day that after I got home from a night out with my wife, I felt like I needed to “make up lost time”. So at 3 p.m. Saturday afternoon when I got home, I started coding and didn’t stop until 12 hours later. Add grad school, a family, and the National Guard to the programming work load, and needless to say my focus on Amazon slipped. A lot.
The Lesson: I was taking on way too much, and with the added budget stress mentioned above I always felt like I needed to accomplish more. Again, that started to spiral out of control as my focus got split between more and more objectives just to try and make some traction. But the more I split my focus, the less traction I made.
My Advice: Focus on one thing at a time, and do it well before adding something else. I still take on far more than I probably should, but I have positioned myself in a way to handle the work load better, and have greatly improved my time management skills. Now I have blocks of time where I focus on one thing, and ignore everything else until that time block is over.
Where I’m At, and Where I’m Going
By now it should be blatantly obvious that my attempts at selling full-time on Amazon failed. I’m alright with that because failure is part of learning. Given that I hold a Masters of Business and have a lot of experience with both selling online and entrepreneurship in general, I should have known better than to make some of the mistakes I did, and I probably did know better. For whatever reason though, in that moment I chose wrong.
Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.
What matters now is what happens in the future, and I have set three primary goals for the next five years.
- Pay off all debt
- Invest $500,000
- Be earning $300,000 per year
First off, in the grand scheme of things five years is still a relatively short amount of time. However, since I usually set goals in weeks and occasionally months, it is much longer than my norm. They are also SMART (Specific, Measureable, Attainable, Realistic, and Timely) goals. It may also seem crazy to expect to go from rushing to find a job to earning $300,000 per year, but that is a goal that is not out of reach, but will be a challenge to accomplish, just like goals should be. Expecting to earn $100k/yr. with an MBA is not unreasonable, selling $500k/yr. at 20% profit margin is very achievable, and creating killer programs to round things out makes the goals very possible. By diversifying income streams and setting obtainable income goals, with smart budgeting and modest living the other goals also fall into line. But there is one catch to all of this, and that is that I work my ass off and will be doing so for the next five years.
The reason I set these goals is also not random, or because it sounds cool. In fact, these goals are the results of very deliberate planning and thought. Consider how much less income you would need if you did not have any debt. No credit cards, car payments, student loans, or mortgages. If you are anything like myself and most other Americans, removing debt from your life would greatly cut down your cost of living and in turn make things like selling on Amazon full-time a much more viable idea. On the same note, without debt living on $50k/yr. is very possible (at least in my area, your situation may be different); so investing $500,000 and expecting a 10% annual return offers financial freedom. Finally, achieving an income of $300,000 per year is not just within reach, but scaling to this goal over the next five years provides just enough income to make the other two goals a reality.
Wrap It Up
If you are like so many others and want to sell on Amazon full-time, be sure you set goals. But not just arbitrary, abstract goals; goals that are challenging yet possible. But these goals also need to have parameters and not too far out of reach. Expecting to go from selling for fun to selling for full-time income overnight was a really bad idea that has done me more harm than good. If I would have planned for even scaling the whole time it would have been a much different story. Also, don’t sacrifice your financial stability and risk everything just to achieve your goals, or you might find yourself far worse than where you started. But when you do know what your goal is, focus. Achieve that goal, then set another. Eventually we will all sell on Amazon full-time, but hopefully this post will help you avoid the mistakes I have already made.