310 When can I go Full time with my Amazon business?

This very important question came up recently with one of my mentoring clients, which is a very common question among Amazon sellers. For more information on mentoring, you can find that at amazingfba.com/mentoring.

Goals on personal income
“I'd like some very rough goals in the way of income and what I should be shooting for to actually be able to take 20-25k for myself to live on and go full time with this.“

Mentoring client

This person is roughly $13,000 a month of income.

The $64,000 question!
Goals
Long term goal - have as full time income

Take it seriously. Assess the business model and determine if it’s right for you. And if it is, do everything you can, such as seeking mentoring, to make the most of it. Give it at least a year.

Can suffer 1-2 years working on part time. This seems realistic. You don’t even necessarily have to quit your full time job. There is a member of the 10K Collective that still has a day job. He’s looking to leave it, but he’s not in a rush.
Starting points:
Comparisons
Comparison points need to be sensible.

Don’t set unrealistic expectations for your business, even if it was possible for someone else to do so.

Get a spreadsheet, and you can make a plan for what you want to make as working capital in your first year.

It may even be up to $80,000.
This is rare, but two members of the 10K Collective were able to do this, so it is possible.

For more realistic expectations, generally p,eople do￡50-100k per month before going full time.

For example, Ashley Pearce mastermind member that was on the podcast before, in episodes 252 and 253
He was full time about 2-3 days per week. He had an arrangement with his boss that allowed him to work this schedule before going full time with his Amazon business.

Stability
Number of SKUs, and longevity of profit in those SKUs

It may be that you get a product that is in fashion for a time and make a lot of profit, and then other sellers catch on, and the profit starts to go from it.
That’s when having a strong brand and staying dominant is really critical.

Therefore, if you only have 1 or 2 products, you are not very diversified, and it’s not a very safe bet.  

Length of time business running

If you can manage to keep your business afloat for 3 years, you can likely do 1 or 2 years more.

Others’ opinions
You have to think about explaining this to your spouse, or kids, or whoever may be involved in your life. So it’s important to have a solid business case.
NUMBERS
It’s not just about the numbers, it’s about how you feel. And you don’t want the pressure on yourself or your Amazon business. There’s no guarantee how it’s going to play out.
Working Capital
Working capital is the amount of money you can put in, and there has to be a relationship between that amount, and the goal amount you set for yourself.

You can’t build a serious business by putting tiny amounts of money in.

Joe Jaques of 10K Collective, previously on episodes 265 and 266, said that if you want to be doing $250,000 per month, you probably need around $70,000 in the bank.
Calculation
Often, people think of their business finances as they do their personal finances, but they are really different.

With an inventory based business, if you make ￡10,000 per month, you’ve got overhead along with a gross margin.

Margins tend to get better as your business grows because you can order more in bulk, but the overheads increase as well.

You will kill your business if you have a profit margin of less than 10% is the rule of thumb.

If you want to grow your business, you probably shouldn’t take any money out of the working capital.
Basis 20% net profit therefore 10% personal income

Market
Businesses need to be big enough, not only to serve your needs as a business owner but to survive in a marketplace with other people who have more money to spend.