I started my FBA journey in August 2017. From then until now it’s been a roller coaster of ups and downs.
One thing that I always knew for sure is that I went into this knowing that I wanted to sell one day.
I sold my dropshipping business only a few months prior to starting the FBA business, so I knew that it was possible.
Although the sale of my first business was small, it made me understand that anything that generates consistent profits can be bundled up and sold.
I think most people still don’t really grasp this concept. When I told people I was selling, they always asked “who is going to buy that?”
And now looking back, I see that if you are not involved in this industry and don’t understand how it works, it might seem a bit crazy. However, if you are in this industry then it makes perfect sense.
Any revenue generating asset has value and I would argue that because these businesses are so highly automated, they are even more attractive compared to some traditional brick and mortar businesses.
With that being said, I’ve spent the last 20 months doing everything the “right way” and packaging this business up so that I can make sure it sells at the highest possible valuation.
If you’re just starting out or even years down in your journey, then you might find these things useful.
Get Your Trademark ASAP
Okay, don’t apply for a trademark day one, but this is something you need to consider very early on.
As soon as your business starts to gain traction, you need to apply for a trademark.
If you’ve spent any amount of time selling on Amazon you know it’s a jungle out there. Other sellers can jump on your listing, hijack your sales, or completely destroy your listing by changing titles, images, or descriptions.
I’ve seen sellers have their entire business fall to pieces in a matter of days because they did not have the proper protection.
Unfortunately, it seems Amazon doesn’t give two sh*ts about their sellers so these things aren’t going away anytime soon.
But all is not lost…
If you have a registered trademark you can get a little more protection by enrolling in Brand Registry. This ensures that you are the only one that can make changes to your listing. It also makes it easier to report other sellers for infringement or other shady things that they do.
Furthermore, you can also apply to get into Amazon’s Transparency program. This is a relatively new program where you are able to create special barcodes to place on each unit of your product, which ensures that no other sellers can list on your listing or hijack your sales.
Once you’ve got this on all your products, you’re pretty much golden. Sellers can no longer f*ck with your hard work and you can focus on the things that matter.
It’s important to note that getting a trademark takes time and is not cheap. This is why I recommend doing it as soon as you’ve started generating profits and have some traction with your product.
A little cool hack is that you can actually use a trademark registered in a different country for Amazon USA. This is helpful because registering a trademark in the US takes 9-12 months, while the same trademark in the UK only takes 3-6 months.
For my UK trademarks, I used Trademark Eagle and for the US you can use LegalZoom or hire a trademark lawyer.
If it wasn’t obvious, having a trademark is definitely going to increase your company value and the attractiveness to potential buyers, so get on it now!
Track Everything From Day One
If you’re running a business you need to know your numbers.
One of the biggest pitfalls I see sellers make is not knowing their numbers in depth. They can’t tell you what their profit margins are or if they’re even making money.
How do you expect this situation to pan out if you then try to sell?
I’ve give you a hint: It’s not going to work.
To make it as easy as possible on yourself, you need to be tracking all of your data from day one.
This includes everything that goes into and out of the business: sales, inventory purchases, advertising, promotions, taxes, fees, licenses, softwares, and more.
The easiest way to do this, and one I recommend, is Fetcher. I’ve been using this plug-and-play accounting software for my Amazon business from day one, which gives me a clear picture of the performance of the business on a day to day basis every day. At $19/month, it’s also the cheapest option for this type of accounting software, yet still gives you all of the functionality you need.
Of course, you still need to be meticulous about entering costs associated with each product, external softwares, fees, and others. But, everything on the Amazon side is handled for you.
Having this data organized and readily available for a broker will make your life SO MUCH EASIER when you decide to actually sell. Instead of scraping invoices and Amazon sales screenshots together, you can simply export an Excel datasheet directly from Fetcher and send it over.
Plus, being organized will show the new buyer that you are not messing around with your business and have been running a tight ship. Good for everyone involved.
Consistency Is Key
The final point I’ll cover is consistency.
If you’re serious about selling your business you need to show consistent or growing sales.
Think about it…
If you were going to buy a revenue generating asset, are you going to go through with the purchase if those sales are declining?
This is a key part of ensuring you sell successfully.
But what if I’m up one month and down one month?
Then you need to launch more products. You need to add enough products where you have diversified to a point where the slow days from some products are counter balanced by the other products’ good days—much like a balanced stock portfolio.
If you do this correctly and launch enough products, you’ll more than likely see consistent growth as opposed to stagnation. The point is, buyers want to see that there is some diversity of risk and that not all eggs are in one product basket.
Find A Broker
If you’ve built your business up, have consistent or growing sales for at least a year, and have tracked everything diligently then it’s time to find a broker.
A broker is anyone who can help you sell your business by connecting you with a buyer. For this service they will typically charge a commission. In my experience so far, those amounts have ranged from 10-15%. However, I believe you could negotiate that down if your business is much larger than the typical deal sizes (i.e. 8 figures and up).
There are many notable brokers for selling Amazon FBA businesses, but to name a few that I interviewed with:
- Empire Flippers
- FE International
- The FBA Broker
- Website Closers
A quick Google search on any of these will give you more info on what they’re all about.
I was looking for a few things in my search. I wanted a broker who had solid communication, a track record of selling similar businesses, reasonable broker fee, and an attractive valuation.
After weeks of interviewing I ended up going with Website Closers. This isn’t a sales pitch for their company but I ultimately went forward with them due to the lower broker fee. It’s hard to stomach giving away potentially tens of thousands of dollars in fees so, among other benefits, I chose them since they had the lowest rate compared to others.
Patience, Patience, Patience
It’s been a few weeks since we’ve been live and we’ve gotten several leads but no bites yet. I knew that this process could take months so I’m keeping my expectations low for now.
It’s important to run the business with the expectation that it won’t sell at all. This way you end up not neglecting your business too soon and end up shooting yourself in the foot.
What am I going to do with the money?
Well, I’ve been working hard on building up this new brand for the last 5 months so most of my time and money is going into that.
You can check out what I’ve been working on here: Oak & Rove.
If my Amazon business sells, it will be my second successful exit and from this you could say that I’m addicted. I don’t think there is any better way to amass significant wealth in a short period of time than building an asset and flipping it.
If you’re in the beginning of your FBA journey just keep these things in mind going forward and know that if you execute properly you can absolutely sell your whole business for a considerable chunk of money.
Hopefully, next post I’ll have my second sale under my belt 🙂