In this article we're going to be talking about assets and why they are important as an Amazon seller. Many Amazon sellers have spent years and years ignoring the fact that they are not building assets. What happens is they spend day after day, month after month, year after year sourcing products, only to find that in the end, when they can no longer source, their entire business comes crashing down. In this article I want to show you how to grow and create assets that allow for long term financial stability.
1. Understanding what an asset is.
The first thing that we need to do in order to start growing assets is understanding what an asset is in the first place. Without going into a lot of complexities, assets are things that make money without you. An asset can be a fully functional business with employees and processes that runs while you are sleeping, it can be a supplier that is sending in product to Amazon without you having to pack and ship them yourself, it can even be a piece of software that you've created that help Amazon sellers do specific tasks that make them money. No matter what it is, the asset is generating revenue without you having to be directly involved. Of course there is maintenance and you do have to have some kind of involvement and some point in time, but overall your asset is generating revenue without you.
2. Bolt on, instead of bouncing.
One key thing that you have to have in your mind when you're creating an asset is the phrase, "Bolt on, instead of bouncing." A lot of us entrepreneurs want to bounce from idea to idea, business opportunity to business opportunity, and because we're constantly bouncing around we can never sit down and focus on one thing long enough to where it's actually generating revenue. As Amazon sellers, we are already making money with what we're doing. The last thing that we want to do is focus our intention on something else that's not really going to bring in more revenue. That being said, if we're going to create and grow more assets for our business, we want to make sure that these assets are going to be worth the time they take to focus on.
When you're creating new assets in this way, the thing that you have to keep in mind is that you want these assets to easily bolt onto your business. If you're doing retail arbitrage right now, or online arbitrage, it's not that much of a difference moving to wholesale, and getting a wholesale supplier account for your business. The time that you're taking to find that new supplier, and to contact them, setup the account and listen their products is generally the same amount of time that you would be spending sourcing. The result would be much greater over the long term because you have a supplier who can give you products that are replenish-able and profitable. Remember to bolt on instead of bounce.
3. If your business isn't scalable, it's a job.
Another thing that you need to consider when creating an asset, or at least knowing whether your business is currently an asset or not is that if your business isn't scalable, it's not a job. Is your business able to run without you? If you left for two or three months would your business come crashing down? If so, that means that your business, at least at this point in time is not an asset and is probably not scalable. What I mean by scalability is that you have either software, or people and processes that are in place that run automatically. You can grow your business by either adding more people, adding more software, or adding more processes. If you're a one man show that's selling on Amazon, than more than likely unless you have wholesale accounts, or private label products, or you're drop shipping, you are not a part of a scalable business.
Remember that an asset can also be your business itself, and so you want to make your business as scalable as possible because as you do, you're going to start having a lot more consistency in revenue, and you're going to be able to ultimately sell your business if you wanted to.
4. Focus on systems.
Another thing that you need to keep in mind if you're going to be building out an asset is that you need to focus on systems. Systems allow you to do two things when creating assets. One, they allow you to identify things that could potentially be assets, and they allow you to create and develop your business into an asset itself.
In the first example, let's say you are trying to find products to sell on Amazon for your business. You could go to a local retail store and find products there, but if you were focused on systems, more than likely you would want to find wholesale suppliers, or at least suppliers where you can find replenish-able products that you can then build a system around so that you no longer have to be a part of the sourcing process. How are these two things different? Well, if I'm focusing on a retail store, I either have to do the sourcing myself or I have to hire people to go out for eight hours a day and find product for me. I'm not always sure whether they're going to find product or not.
However, with a wholesale account, or a private label product, I can hire one person who manages multiple accounts, and all they would have to do is send emails, or talk on the phone to their accounts in order to replenish products that are almost about to be sold out. The first allows for a lot of ambiguity, the second allows for consistency. Plus if I'm looking at making my business into a system, it would be much easier for me to create a business with low overhead, and good processes if I had wholesale supplier accounts, rather than having teams go out to garage sales, or local supermarkets trying to find products to sell. It's much easier to forecast financials, and it's easier to write standard operating procedures for staff since those who are going out and physically sourcing run into a multitude of problems, while people who you hire to handle supplier accounts have a small amount of problems that can generally be done by email or phone.
5. Can your business be sold?
The last thing to consider when creating an asset is can your business be sold? Now remember once again that your business itself can be an asset, but if you are the only one sourcing, or you have a very high cost overhead team that goes out and sources for you, it can be very unattractive to anybody who would want to buy your business. However, if you have a small team with low overhead who are managing several replenish-able accounts, and have proven processes that can run without you, it makes it very attractive and appealing to potential investors and buyers who would want to purchase your business at a three to four times annual mark up.
One of the things that you'd need to keep in mind as you're developing your asset mindset is can my business be sold right now? If not, what do I need to do to get it to a point where it can be sold? This question alone will help you to start learning what minor things need to be changed in your business in order to turn it into a money generating asset that works without you.