Prepare and Automate Masterclass (ep #19)
In this upload, you’re going to learn how to build up your Amazon business and sell for 7 figures. I had Nathan Ginsburg on my podcast years ago; he recently was able to sell his business for nearly a million dollars. You can find him on SellerPlex. He is now an Amazon expert and consultant. His business helps Amazon FBA businesses maximize profit and exit/sell for 7+ figures.
In this Video:
- The 4 Stages to FBA Exit Success
- The 3 Ps you NEED to scale/Exit
- How you can sell for a Higher Multiple
- TAKE ACTION
Nate sold his FBA business in 2017. Following which, Since then he’s invested in 4 different businesses and has hosted the Ecommerce Exits Podcast. It was thanks to the 3 Ps that Nate was successfully able to sell his company for 7 figures. After which he knew he wanted to share his story and help others while looking for new opportunities.
He realized that a lot of the core concepts that Nate learned from his first business applied to other businesses. That’s what got him involved in investing and podcasting. All with the same goal of helping businesses, building them as assets they can exit from. That brings us to SellerPlex – They Invest in, Acquire, Accelerate Million Dollar eCommerce Brands Aiming for 7-8 figure exits
Now, let’s dive right in!
The Ecom Exit Playbook
The 4 Stages to FBA Exit Success
What Nate has found, in every business he’s been a part of, is that there are 4 stages of any business, whether it’s eCommerce, service, agency, or consulting. Those 4 stages are:
- Traction – your first sales.
- GRIND – Solve the 3Ps
- Scale – Growth without you
- Exit – Your Exit Formula
Stage 1: Traction – Your first sales.
“Almost every failed startup has a product. What failed startups don’t have are enough customers”
This as Amazon sellers are something you don’t have to worry about as much. That’s probably one of the best things about Amazon FBA, you know where the customers are and you know how to get them.
The first stage is your foundation. You’ve got to have a product and some sales. That will get you to the second stage.
Stage 2: GRIND – Solve the 3Ps
“I’d rather work 100 hours a week for myself, than 40 hours a week for someone else”
This is a common startup mindset mentality. However, this is a mindset Nate doesn’t believe in. He’s not trying to work 100 hours a week for himself or anyone else. You want to get out of the ‘grind’ phase because balance is important for your professional and personal life. The three things you NEED to both scale and exit are:
- Process
- People
- Profit
Process
You can’t scale or sell a business that’s dependent on you to run. If you are necessary for fulfilling the service or delivery of your product, how could you transition that to someone else to buy or run that for you?
At the same time, if you want to scale your business; if it’s all dependent on you, your time and effort are limited. So you got to have a process in place.
Now the term process refers to systems, Organizations, SOPs, and Documentation. These terms can be a little daunting, you hear SOPs and Systems and Temples and you think “complicated”. But it’s quite the opposite, something as simple as a log in sheet is a system, and can make a huge difference in your business.
A Log system is something to keep in track of all of your log-ins, so you have them all in one place and something you can share with your team. It’s a simple system you can add to your business to make it more scalable and help you run it better.
SOP or Standard Operating Procedures can be daunting. But the concept doesn’t have to be that complicated. You can start with just a simple document with bullet points on how to do things. You can then evolve it as the business progresses. But it is important to have them and start them.
Action Item: Make some SOPs.
Some of the ones we talk about and Nate teaches are Master Product list, Customer Service SOP, PO Reorder Process, Weekly Reorder Report.
These are all things that will help you organize and streamline your business so that you can scale as well as the exit at a 7 figure level.
People
“Business owners #1 challenge is finding and retaining the right talent“
- Think about the organization design
At a high level, you want to think of your business as a machine. This is a general organizational structure that can be applied to most businesses. Of course, this is quite generic but it definitely can be adapted to most businesses.
For example, if we specifically FBA businesses, this is how Nate organizes his business. You can use this or adapt it to fitting your company.
A couple of things you need to note about this is that when you’re starting you’re probably going to be one person, and that’s fine, One person can fill more than one seat. As you grow it’s about plugging people in different areas so you can unplug from them and concentrate on other areas.
One thing to keep in mind is that you can have one person plugin for 2 seats but you cannot have 2 people in one seat.
“If multiple people are in charge no ones in charge” – Riley Bennet
- Build your Hiring Funnel – Finding the right people
This is something Nate has developed this hiring funnel. Just like you build a marketing funnel to get leads, you build a hiring funnel to get qualified applicants. The idea is to have this structure set so it’s automated, where you can process applicants at the top, and if they complete each level of your funnel then you will have qualified applicants for business.
The goal is to be efficient and effective. You don’t want to spend too much of your time sifting through applicants.
Action item – Create your organizational chart and fill it.
This about your business, how do you want it to be organized, at a high level. Think into the different buckets that go into operating your business and structure accordingly.
Profit
“Profit for a company is like oxygen for a person.”
Gains are necessary for a business to live and prosper. Nate recommends these two books for the topic:
- Rich Dad, Poor Dad – Robert T Kiyosaki.
- The ROad less STUPID – Keith J. Cunningham
Keith is Robert’s teacher. “Keith Cunningham, his Rich dad or Rich dad, poor dad.” He is an incredibly successful entrepreneur who has written many entrepreneurial books.
One of the main things he talks about in his book is this idea of ‘Thinking Time’ and that as a CEO its part of our best opportunity, is to sit down and think about the business and review things in the business that are going to give you the best chance of success.
He talks about one of the most important thinking times being reviewing your monthly P/L. To help be on top of your numbers. This is a need to have not a nice to have. Every business needs to be on top of your numbers for several reasons, a few of them being: tax obligations and planning an exit.
- P/L Statement
You’ve got your revenue at the top, minus your cost of goods. That’s going to give you your GP, and minus your expenses is going to give you your net income. This is the number that we want to get as high as we can. That’s the number your business is valued at, if, and when you exit.
- Balance sheet
A balance sheet is also really important. They show your assets (Put money in your pocket) – Liabilities (take money out of your pocket) = Owner’s equity.
This is important as well if you want to sell your business because the P/L can show that the business is making high profits but the balance sheet is gonna show if the business has debt and level of equity.
- Cash Flow Chart
Last but not least, the Cash Flow Chart. As you guys know with e-commerce it’s super capital intensive. It takes a lot of money to run these businesses. You’ve got to buy new inventory, launch new products, etc. Cash flow projection like this gives you an insight on money in money out so you can plan accordingly.
Cash Flow management is super important with FBA businesses, and this is another tool that you can use to stay on top of things.
Action item – make sure you have a monthly P/L statement and then Ruthless reviews it.
- Attack biggest expenses first Negotiate down on fixed
- Can you cut, restructure or renegotiate?
- Do I need it? Is it ROI driven?
- SKU Analysis
All expenses that you can cut on your P/L are directly going to flow through and increase your profit. That is going to be more money into your pocket as well as increase the value of your company.
Stage 3: Scale – Growth without you
Once you solve the 3Ps, you’re in a good spot, you’ve got options and now you’re able to scale; you’ve got an Automated, Predictable, Cash Machine.
Stage 4: To Exit or Not To Exit
This brings us to an important question; You’ve solved the 3Ps, you are profitable, Your team is running the business, Do you want to exit or not?
You’ve put a lot into the business, you’ve built this thing and it’s taken on profit.
It’s up to you. There’s a lot of different reasons that people have that they would want to sell. But tbh that not always the best outcome, it could be, but if you want to hold the business and keep it for the cash flow that’s a good option as well
“50% of eCommerce Income Comes at an Exit”
This is something Nate knows from his FBA business. They were growing, they were profitable, but so much money was invested back into the business. Nate paid himself a modest salary, but most of his income from his FBA business came when he decided to sell it.
Your Exit Formula – what makes up your exit.
First, you’ve got your profit or SDE (Seller’s Discretionary Earnings). That is how much profit is the business making? You’re going to multiple that by a multiple.
The multiple is going to be affected by a couple of different factors:
- Is it easily transferable to the new owners?
- How diversified is it?
- Size of the company
- What assets does it have?
- What type of buyer?
So now you’ve got your profit times your multiple and that is going to be your exit Valuation. You can use any of these three choices to sell your business:
- Broker – you can exit with a broker
- M&A Advisory
- Self Sale
Now let’s look at two different scenarios here:
As you can see the eCommerce business is doubled, the business is 3 times bigger. You are selling for 6 or 7 times more of what you were when it was just the FBA business.
The more diversified your income stream is, the more stable it is, which makes it that much more attractive for buyers – Riley Bennet
The FBA is only one tool, but the goal is to build an eCommerce brand.
These numbers are fairly realistic, and what direction you want to go in is entirely up to you. But these are two options that you could work towards.
Connect with Nate
Instagram – @nateginsburg
Facebook – Nate Ginsburg
Email – [email protected]
Company Website – SellerPlex
Personal Website – Nate Ginsburg
NEWBIES START HERE
Want to create cashflow on Amazon but have no idea what to sell or where to start?
1) SUBSCRIBE to this channel for weekly tips, tricks & strategies.
2) DOWNLOAD my FREE “Amazon FBA Secrets” E-book (100+ pages) – http://livinthatlife.com/fba-ebook
3) BEGIN your product research! Use the Worksheet in my E-book along with JungleScout: http://livinthatlife.com/junglescout
4) APPLY to join the next 90-Day FBA Challenge/Accelerator if you want to go FAST & get coached by me: http://livinthatlife.com/90dayfba
5) FOLLOW on Instagram Podcast platforms: • Instagram: https://www.instagram.com/fba_lifestyle
• Apple Podcasts: https://podcasts.apple.com/us/podcast…
• Spotify: https://open.spotify.com/show/2JZCx75…
Need advice? Shoot me a message on Facebook – https://m.me/livinthatlifetv
