Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.
To run a successful Amazon business, you need to make smart inventory decisions — what products to sell, how to maximize your margins, and how to sell product quickly without going out of stock. But it doesn’t stop there. After all, you can’t move on these decisions if you don’t have capital.
Gaining capital is easier said than done, especially given Amazon’s two week payment delay. Luckily, there are several ways to invest in inventory so you never have to worry about an running out of stock again. Here are five common ways to finance your Amazon inventory.
1. Personal Savings
It’s common for people to dip into their personal savings to launch their businesses, buy inventory, and scale. Doing so can be tempting, especially because the money is available immediately and requires no interest payments or fees.
But, there are risks. First, you could run out of funds. Second, it’s your personal savings — funds you’ve been setting aside in case of emergencies at home, not with your business. So, be careful about investing in your business at the expense of your personal life.
2. Credit Cards
Using credit cards is another common way to finance inventory. It can be tempting to do so with the cash back rewards. But, there are spending limits and high interest payments if you don’t pay your balance in full on time.
If you do consider using credit cards, look into a business credit card rather than your personal card. After all, using your personal credit to finance your business will put your personal credit score in jeopardy. What’s more, using a business credit card can help you build business credit, which can open the door for you to get other types of business financing in the future.
If you run a private label business with a fun and unique product, you may find success using a crowdfunding site like Kickstarter or Indiegogo. You’ll just need some marketing chops to get your fundraising page in front of potential donors and increase the chances of it going viral. Otherwise, you may not get any money at all — most crowdfunding sites won’t dispense any amount you’ve raised unless you reach a predetermined fundraising minimum.
Another way to crowdfund is to ask friends and family to invest in your business, though be careful about mixing business with pleasure.
4. Business Loans
There are several types of business loans to consider, from traditional bank loans and lines of credit to online business loans and Amazon Lending Loans. Here’s a breakdown of each so you can determine which one is right for you:
- Traditional Bank Loans & Lines of Credit offer large dollar amounts, low-interest payments, and long payment terms, but the application processes are very long and approval rates are low.
- Online Business Loans offer simple applications, fast turnarounds on decisions and funding, and high approval rates, but interest rates are high and payment terms are short — often requiring a daily or weekly auto-debit.
- Amazon Lending Loans are offered on an invite-only basis. If you qualify, you’ll see an offer with non-negotiable loan terms in Seller Central.
Payability is a modern-day invoice factoring company that provides high growth Amazon sellers with next-day access to their Amazon earnings.
Payability advances 80% of your Amazon income one business day after making a sale — all for a 2% flat fee. Over time, more funds will be advanced for a lower fee thanks to the Payability Loyalty Program. With this daily cash flow infusion, you can buy more inventory as you need it, maintain the Buy Box, and continue growing your business.
All in all, Payability helps Amazon sellers optimize their inventory strategies not to mention buy more and sell faster.
Growing a successful Amazon business takes a lot of work and capital. Choosing the right financing option for your business is just the first step. Be sure to properly manage your inventory and utilize forecasting software to maintain a healthy level of stock. You’ll be a top Amazon seller in no time!
Have you used one of the finance methods above? Do you have any other methods that have worked for you? Share your experiences in the comments below.