Please give me advice, I need start up capital
Okay so here it is. I am an 18 year old in college. I started a business about a month and a half ago and I am only selling one product, but it has taken off quick. Last week I began steadily making about $1000 in sales a day. My product plus packing and shipping costs about 55% of what I sell it for, minus 15% amazon fees, and I am left with around 30% profit margin. This is all great, however, I really need capital. I started with only $4000, and when I only get payed MAYBE half of my account balance every two weeks, I mean how am I ever going to grow. I’m not complaining because I understand the policy and why it is in place, but I need enough money to keep up with the demand every week. At the moment I put my account on vacation mode and I will be payed 5 days, but I have an $8000 balance and my current available balance is only a little over $2000. I have already gone through the account review process and been approved several weeks ago. My business is registered and legitimate. I have put sweat and tears into this business, but at this rate, I will have grey hair before I am getting enough money back to sustain my sales for the two weeks in between each payment. I looked into amazon loans, but was unsure whether to apply now because my cancellation percentage is unusually high due to my supplier being in Florida, and yunno hurricane Ian. I usually have perfect account health and can make a good amount of sales, my business has so much potential, but I am also 18 with no credit score. Also, any sort of loan from my family is out of the question. I have looked into different things such as payoneer or PayPal credit but they all give me an uneasy feeling, and again I only make 30% profit margin so any interest from a loan will just take away from that. What should I do? any advice would be greatly appreciated. How do I get a good amount of startup capital?
Thanks in advance,
Luke
[Moderator Edit(Quincy_Amazon): Personally Identifiable Information Removed]
Seller_y2Siy9f4A02oy
You started off with 4k. You are making 30% every 2w. In 6w from when you started, you will have 8k and in 10w, you will have 20k. Exponential growth is your friend.
Seller_y2Siy9f4A02oy
You started off with 4k. You are making 30% every 2w. In 6w from when you started, you will have 8k and in 10w, you will have 20k. Exponential growth is your friend.
Seller_Hi7wbO2Kbo6bl
With no out of pocket expense at all, you could add in a few hard returns and I would read it.
Seller_qIY1zDxKNWKmI
Be careful if you’re drop shipping, things can go bad in a hurry. Do not list anything that you don’t have on hand and ready to ship. If you are drop shipping, I hope you’re following the rules.
Drop Shipping Guidelines:
https://sellercentral.amazon.com/help/hub/reference/G201808410
Seller_G3tKlxqw9EUfb
Also, you may very well be telling the truth above (or not) but
STATS
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4 days visited
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6m read time
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6 topics viewed
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17 posts read
…does not bode well for your continued success. Amazon is a very unforgiving marketplace.
Seller_aV1Bh32hE0KND
First off I want to say congratulations on your success so far, it also sounds like you have selected a good product that customers want.
Having your money tied up for 2 weeks and also having a large chunk being held in reserve is a hurdle because as we know it takes money to make money. The reserve on my account was lifted after 3 months but that was a long time ago, there’s no set rule and it varies from seller to seller. Hopefully your reserve will be lifted sooner than later which means you will get the full disbursement every 2 weeks which will be a game changer as you continue to grow.
See Payments, Payments based on delivery date and What is an account level reserve for additional info.
Good job on putting your account on vacation mode Delivery delay due to natural disaster, you seem to be doing your homework. New sellers typically don’t take the time to go through Seller University and it’s a shame because they are really doing themselves a disservice, the more you know the better you are equipped to tackle the ins & outs of Amazon and set yourself up for success.
Before I started selling on Amazon I was selling on eBay, that was the start of my e-commerce business. Like you I had a great product that was in high demand and I was losing out on sales and money because I was running out of stock quicker than I could replenish it and needed a decent size loan so I could purchase larger qty’s.
I went through PayPal credit, it was easy for me to get the loan because PayPal Credit was tied-in with eBay and would automatically take a % from my eBay payment amount. I was able to pay them back fairly quickly in big chunks because I had more money coming in.
PayPal doesn’t work directly with Amazon so I’m not sure if that’s an option or not, but I did have a positive experience with them.
Amazon has their own program which I would imagine works similar to how PayPal works or used to work with eBay. I don’t have any firsthand knowledge about Amz or Payoneer but there are many sellers who have or do use them so hopefully they will chime in and share their experience.
Here are some links for you to review that may be helpful.
- Amazon Lending
- Amazon Lending: Payments FAQ
- Amazon Lending: Interest rate FAQ
- Amazon Lending: Third-party lender FAQ
My advice to you is if you decide to take out a loan, to pay it off as quickly as possible. It’s tempting to just keep paying the minimum amount - out of mind out of sight kind of thing whereas the money in hand is tangible and you may feel the need to want to hang on to it. Get yourself out of debt as soon as possible, drowning in debt is the worst, being debt free is awesome and = freedom.
Avoid accepting additional capital just because it is offered or taking out an additional loan before the first one is paid off, google “merchantmaverick Double Dipping loans” (paying interest on interest), for an interesting read.
Profit is not the legitimate purpose of business. The legitimate purpose of business is to provide a product or service that people need and do it so well that it’s profitable. James Rouse
You seem to be a smart individual that is driven and committed to putting in the work. I hope you continue to grow at a steady pace and establish a good solid successful business model that is sustainable and profitable …welcome to Amazon!!
Seller_Xpktjspu2oF5C
What is your agenda with this post?
If you are doing $1000 a day in sales why in the world would you even need outside capital.
Seller_T5Mv3ZCUSh7Zl
Small Business Administration (SBA) loan.
Seller_pBEwo8CxxHc63
Seller_pBEwo8CxxHc63
Seller_RJpvIZTdVNEC6
I was cheering for you OP from over here behind my keyboard, but if you are suffering from a lot of canceled orders because you are drop-shipping, then your days are short as an Amazon seller. You won’t need a loan because your account will be closed and you won’t be able to get the remaining $thousands that are in your Pending. Best of Luck.
