Were you one of the fortunate ones with a tax refund this year? Or if not, do you have some extra cash you’re thinking of putting back into your FBA business?
For any business to scale and grow, you’re going to need to reinvest back into it – hopefully, you’re at the point where you can also set aside some of your profits to put back into the business.
The choices you then have to make are around what you should be spending money on. What types of investments will work out for boosting your business? We’ve got a few ideas for how that tax return check can help you take your business to the next level:
#1. Expand Your Portfolio
Expanding your current product offerings is a great way to grow, as long as you make your product decisions very strategically. Of course, you need to invest money in inventory to expand, so if you’ve done your product research this might be a good investment of your money.
Here are some thoughts about what you might invest your cash into:
- Test orders of new products.
- Developing a private label brand, including items such as branding, website, logo, packaging and any special modifications to products.
- Large orders of closeout products for flipping (provided you’ve done the research to realize that the product will sell for a profit!).
- Put some cash aside so that you’re able to cash in on seasonal trends later in the year. For example, you might want to sell a “hot” seasonal item that is set to be popular for Christmas. It’s frustrating if you spot a good opportunity but don’t have the funds to invest!
However you choose to manage your portfolio, the emphasis should always be on strategy and good research. It’s always a risk when you’re investing in products to sell, but it should be more of a calculated risk rather than a “let’s see how this goes.”
#2. Make New Connections
It’s no secret that often it’s the people who cultivate wide networks and good relationships with other people who experience high rates of success in business. Sometimes, it’s who you know that gives you a distinct advantage over competitors.
For example, if you get out and meet suppliers, you might be able to build the relationship and get to a point where they will offer you exclusive deals that others don’t have access to. It might be that you’ve proven yourself to the supplier by buying a lot of product from them already or expanding your portfolio by going through them. Otherwise, actually meeting people in person can make a huge difference. It’s much easier to build a relationship in person rather than via email!
That being said, a possible way to reinvest some cash into your business is to use some for business travel. You might specifically choose to travel to meet certain suppliers or perhaps attend one of the many annual events where suppliers and other valuable connections can be found. (Canton Fair or eTail, anyone?).
You might also choose to attend a conference where you not only make new connections, but potentially learn valuable skills or gain new ideas for better running your business. (For example, check out Seller’s Summit or Collision Conference).
The key is to make sure you look at any of these trips or events as business investments. How are you going to ensure that you get a return on your money? Go in with a plan to make the most of your meeting, conference or event and make sure you’ve prepared well in advance. You should be going in with some goals for what you’d like to achieve out of it, so you are able to assess fairly if it was worth the expenditure.
#3. Invest in New Tools
When you’ve only been in the FBA business for a short time, you’re often still bootstrapping as much as possible and trying to do everything for yourself. Any added monthly costs, such as software and tools which can help you with your business might not be within budget in those early stages.
However, you’ll find that careful investment in the right tools can help you make a real difference when it comes to growing your business. It may be an added monthly cost, but the idea is that it should save you money in the long-run, or at least save you some time so that you can focus on more growth activities for the business.
Some of the smartest FBA sellers are being aided by using a good combination of tools to automate processes, help with decision-making and free up their time. You might consider paid tools for:
- Automatic repricing of your products, to keep you competitive for the buy box. (Repricer Express, for example).
- Inventory management and analytics. (Forecastly)
- Simplified product research (Jungle Scout).
If you’re doing any kind of expansion of your product range, we suggest that investing in some automated tools is the way to go. You’re going to find that you have too much going on to be monitoring and researching everything yourself, so a good tool will free up some time for you and help give some peace of mind.
#4. Invest in Marketing
You’ve got to grow your profile if you want to expand your brand. There are a number of marketing activities which you can take care of for free, but to really get a boost, you’re going to need to invest some cash.
Here are a few ideas for the sorts of things you can invest marketing dollars into:
- Building your own website for your private label.
- Tools for landing pages and list-building, such as LeadPages.
- Paid advertising on Amazon.
- Paid social media advertising.
- Google Adwords advertising.
- Create a contest to boost your profile.
- Pay for some website and/or social media content (especially if you have little time yourself!).
- Run a promotion on Amazon.
- Invest in a quality CRM tool which allows you to segment and track customer activity. For example, Ontraport, Infusionsoft, Salesforce or Hubspot.
#5. Hire some Help
If you’ve reached a point where some things start to slip or you can’t get as much done as you’d like because you’re too busy, provided you can sustain the cost from your Amazon income, it might be time to hire some help.
While using FBA takes care of most of the logistics issues you will experience with a growing eCommerce business, you can still reach a point where further growth requires extra help.
Avalara wrote a piece discussing who your first hire should be, with a few interesting points. For example, if you’re not so good with analysis and crunching the numbers yourself, would it make sense to hire a Business Analyst? Do you need a logistics person to take care of your frequent orders of new stock which need preparing and sending to Amazon? What about marketing or customer service? If you’re pushed for time, there is probably a role here you could fill.
You’ve got to invest in your business in order to grow, right? So if you’re one of the fortunate ones with a tax refund or even just some extra cash at this time of year, perhaps consider investing it back into your FBA business.
Expand your product range, grow your brand, get the right tools or hire some help to get things rolling. Here’s to your success!