5 Tips to Help Increase Funding for your Amazon Business
Today I am going to share with you my insights on a topic I am very excited about because that is one of the most common questions that arise before every entrepreneur. And that is funding!
How to get funding for my Amazon business, my privatel label business, my physical product business, any business? And over the last couple of years that I have been selling my products on Amazon, i have tried different strategies, lots of different approaches as to the funding scenario, and now i have got some tips to share with you, as well as 2 of my favourite places to go to find finding for your Amazon business.
But before that, let’s go back a few steps, because before you start looking for funding, there are some things that you can do and, I think, should do to prepare for that! Even if you haven’t started your business yet, or if you are just starting, but you are not yet in a place when you are looking for funding, there are things you should be doing to make that process easier, help it to be successful for you once you are ready.
Tip #1: Do a good job with your financials!
Keep proper records, do your bookkeeping right from day one. Now, if you have already passed day one (many of you are thinking: Dan, I’m on day number 900 already!), well that’s OK, just start TODAY! And i can tell you from experience, it makes all the difference in the world, when it comes to doing things like getting funding for your business if you have good record keeping.
So, find a good accountant, a good CPA, a good book keeper. Especially when you are like me, and spreadsheets give you headache, you need someone in your corner doing the books for you each and every month, and it will make a world of difference, when it comes time to start applying for funding and financing.
Tip #2: Make sure you have your business set up as a separate entity!
So, if you are running your business like I did in the beginning, as a sole proprietor, and that means that Amazon has your social security number on file, instead of a EIN number, you have to stop that. You have to apply for EIN.
Selling as sole proprietor not only has tax and financial implications, but it also exposes you to a lot of unnecessary risks.
Tip #3: Don’t use automatic withdrawals – don’t use sponsored products ads that are deducted from your seller balance on Amazon!
Amazon gives you an ability now to have all of your ad dollars, taken right out of your account balance, as opposed to having it deducted from your bank account, or having charged to a credit card. And while that may seem convenient, it can impact your ability to get funding down the road. And that is because it reduces amount of your payouts from Amazon.
One of the things places like UpFund or Payability, or Kabbage use to determine whether you qualify for their funding is they actually login to your Amazon account through the API and they look at your payouts from Amazon themselves. And so if you are having a couple of thousand dollars deducted from your account balance every week, then that’s going to reduce the amount of those payouts and make it less appealing. They are not necessarily will take the time to look and figure out that those 5 thousand dollars for a period went for sponsored ads.
Tip #4: Make sure you maintain proper inventory levels!
This doesn’t necessarily mean that you should have tons of inventory, but you do want to have a decent amount of inventory. Because if somebody is lending on loaning you money, they want to see that with inventory on hand you will be able to pay back that amount of money. So make sure to maintain proper inventory levels and do not run out of stock.
Tip #5: Think about what you need the funds for and how you would spend them!
Often times, whether it’s an individual or private investor, or traditional bank, or something more progressive like upfund, they want to know how you are planning to spend the dollars that they may be advancing you.
So having a really clear idea and understanding of how you are going to use those dollars is a really good idea. As well it helps you to make sure that you are borrowing the right amount.
Now let’s move on to my favourite places to look for funding and ways to grow your Amazon business!
My number one place to go is Payability. What they are actually doing is they advance you your Amazon payments on a daily basis. Meaning that at a certain time you can request all the money that was generated on your Amazon account that day to be sent to you on that same day. Ultimately what this does is it helps you grow your Amazon business rapidly through having immediate access to cash you are generating. No more you have to wait 2 weeks for Amazon to deliver the money.
My second favourite place to request funding is UpFund. Essentially, what they do is help you fund your inventory. It is a crowdfunding platform for your Amazon products. They have very attractive options and affordable ways to grow your business. And the best thing about these guys is that you only start paying back your loan when your inventory arrives at Amazon and starts selling.