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If you are considering running an FBA business, you can start from scratch or buy an existing business. Choosing between the two can involve quite a bit of brainstorming. If you have the skills and intent to fight it out and grow a successful online brand of your own, you should give it a shot.
On the other hand, you could buy a growing FBA company, scale it to new heights with your skills and capital, and sell it for a decent profit. It all depends on your short and long term goals, how much capital you have and your personality as an londonbusinessblog.com.
Related: 3 Things to Consider Before Owning an Amazon FBA Business
When to Start an FBA Business?
You have startup funds:
If you have built up a decent amount of capital or have access to attractive financing, starting an FBA business is a great option. Although surveys of FBA sellers showed that, on average $3,836 is needed to get an FBA business off the ground, the actual cost of starting can actually be as high as five figures depending on the product or business model of your particular FBA business.
Starting a new FBA business comes with costs such as inventory, PPC advertising, social media marketing, legal needs, branding, packaging, and Amazon fees, among others.
You are in it for the long term:
An FBA business is just like any other business – it requires huge time and energy commitments and can quickly take over your life. If you’ve decided to jump into the e-commerce jungle and are willing to take on the challenges, this is the right choice for you.
However, time and money are not the only things you need to keep your business running. FBA expertise also plays a big role.
You want to build and sell a successful business:
Wanting to sell a successful FBA business can be one of the best reasons to start one. Starting your FBA journey with an eventual sale in mind will streamline your operations and provide you with strong SOPs to ensure a smooth transfer to the new owner.
This ensures that your business will be the best choice when you decide to sell it. And partners like ScaleBrand can help you speed up the time to get to that stage — help you optimize your operations, boost your brand strength, and help you build watertight financial records.
Related: 5 Ways to Grow Your Fulfillment by Amazon Business
When to Buy an FBA Firm?
You are not jealous of the crowds:
If you are one of those people who can intuitively smell a successful business and have the resources to grow it by leaps and bounds, you should definitely choose to buy an FBA company rather than start one from scratch .
While buying a well-run FBA business will save you the arduous journey of growing a brand, building a strong portfolio of reviews, and overcoming the initial growth phase, it still has its specific needs, such as positioning for a sale.
Your goal with an acquired FBA company should be to make it “exit-ready” to eventually sell it. “Basically, a company is ‘exit ready’ if it ticks all the boxes of the attributes acquirers want. There are dozens of boxes to tick to be as prepared as possible,” he said. Emmett Kilduff, CEO of The Fortia Group. You need to check and correct the features present in a sub-optimal state, such as outdated inventory, poor SEO, and low brand recall, to position the company for a profitable sale.
If you cannot identify the attributes to be repaired, full-service Amazon marketing agencies such as: Urtasker can help optimize every aspect of your newly acquired business.
You don’t have a lifetime to invest in the company:
Buying an FBA company, taking it to the next level, and then flipping it for a hefty profit over what you initially paid is a strategy that entices many entrepreneurs, which can take up to one to two years.
As you grow your newly acquired FBA business, you will likely face several challenges, including inventory management. Inventory can make your life easier by managing inventory forecasting and supply chain management out-of-the-box, so you can focus on the bigger picture.
Related: Want to Sell Your Amazon FBA Business? Here Are 5 Lessons From Someone Who Oversaw $100 Million In FBA Acquisitions
Which one is right for you?
When you juggle the “start or buy” decision, you need to take stock of your skills, risk appetite and your business goals.
If you have an ecommerce background and the expertise to grow and scale online businesses, buying an existing business is the right choice for you. On the other hand, if you can handle the challenges of the growth phase, overcome the first year of almost zero profit and enjoy working on a new project, you should start your own business.
Your risk appetite plays a big part in how you approach every decision in life. If you are risk averse, starting a business from scratch may be a better option given the relatively lower capital risk. If not, the higher risk-reward combination of buying a business will work better for you.
Finally, what you plan to do with your business can decide which route you take. You may enjoy investing several years in building and growing an FBA business and reap the significant benefits once you become more successful. Alternatively, you might be more inclined to start a new business as a short-term project and sell it for a profit after a year or two.
Choosing between starting or buying an FBA business should come from what you know and what you are willing to learn. You need to assess your expertise and your risk appetite when juggling these two decisions. There is not one correct answer.
Whatever you decide, growing an FBA business and keeping it successful takes a lot of effort, both in terms of time and money. Overcoming FBA challenges will be difficult at times, but the rewards at the end of the journey may make up for it.