Questions Only You Can Answer

Before you click the button on Amazon to become a seller, you should have a few questions answered for yourself, first. One of the biggest reasons online businesses fail, especially with the FBA model, is that people aren’t sure what they actually want to do. 

We’ve all seen the success stories, seen the online ads. But there are some nuts-and-bolts questions that no one seems to answer. These are things you need to consider. Like, what will you sell? Where will you actually store all the products you will sell? Where will you even get the products?

Having a clear plan will set you up for success. It won’t guarantee it, but it will make moments of frustration a lot easier to handle. Also, remember that plans can change. Deciding on a plan now doesn’t mean you won’t be flexible as your business grows.

First Priority: What Will You Sell?

There are a number of different types of FBA business models, almost as many different types as there are people. Some people use Amazon because they have a specific product they know will sell that no one else is marketing. If that’s the case for you, you can skip to the next section.

But if you don’t already have an edible pet soap that doubles as a water purifier, then you need to figure out what you will sell. This is your first priority. Will you sell anything that makes you a profit? Or do you want to specialize in car accessories?

If you don’t have an MBA it can be difficult to analyze the market. Even with a degree it can be next to impossible. But making this decision right away will help keep your mind clear. You’ll be able to maintain focus on your brand and your products even when distracting fads come. Because as quick as fads come, they are certain to go.

So, before going forward with your Amazon business, devote some time to thinking about your product. And it’s okay if you’re going for the profit-only approach. Lots of people make good money on Amazon selling anything and everything. But if that’s your model, be prepared for extra work.

Second Priority: Arbitrage, Private Label, or Maker

There are three basic Amazon models, and we’ll break them down in simple terms. Basically, arbitrage is reselling other people’s products; a private label is when you buy products from manufacturers directly, and they put your name and logo on it; and being a maker is when you produce the goods yourself.

After you’ve decided between Arbitrage, Private Label, or to Make your own products, we’ll get into how that works with Amazon, specifically.

Arbitrage

What’s that word? It’s the funky sounding word for buying low and selling high. Whether you specialize in a product or decide to sell anything that will make you a profit, arbitrage could be the path for you.

Essentially, you find something on sale at your local retailer, or on a holiday sale online. You buy several units of the product, store it, and when the market price of that product goes up, you sell it at a profit on Amazon. 

You can also take advantage of regional price differences. Amazon has an app for sellers where you can scan a product on your phone at your local retailer, and the app will tell you what that product is going for online.

Perhaps you found a great deal on snow shovels at your local Wal-Mart, because you live in an area where it snowed every year except for this one. Meanwhile, a dozen cities across the country are getting snow they never expected. You can earn a profit on Amazon by buying up all the shovels at your local Wal-Mart and selling them online to everyone else.

In online arbitrage, you find the deals from online retailers, and try to sell them at higher prices on Amazon. This works for a couple of reasons. One, Target isn’t going to sell to Amazon, and some people only do their online shopping on Amazon. That means you get to make a profit being the middle-man.

There are some Pros and Cons to arbitrage, so consider them before deciding if this is the route for you:

Private Label

Have you noticed that every grocery store has their own line of foods? From sugar to cereal, from syrup to chips, every grocery store has their own brands. Now you’ve probably already figured out that these grocery stores aren’t making all that food, so how does the model work?

It works with an old industry model called White Labels. A White Label is when a large manufacturer of a product doesn’t want to get into the retail game. Take yogurt. A dairy outfit in Wisconsin might be passionate about their cheese, butter, and yogurt, but they’ve decided to restructure their company. They will focus only on making the products.

That means they’re not going to pay for a logo design, for sales people, for marketing campaigns, or for supply chain logistics. They’ll make yogurt. Then Safeway or Kroger comes along and buys the yogurt at wholesale prices, puts their own label on it, and sells it as their own.

Costco and their Kirkland Signature brand have made a lot of money doing this, and so can you on Amazon. 

When using the Private Label option, it will take a little more planning than arbitrage. With arbitrage, you’re simply shopping for deals and selling things at higher prices. With Private Label, you’ll need to have a product or type of product in mind, first.

This model is perfect for someone who has a brand idea, but doesn’t want to invest in manufacturing equipment, warehousing, and employing workers. Let’s use our edible pet soap model. If you want to start building a brand of pet products, you can contact wholesale manufacturers of food and water bowls, leashes, toys, and even pet clothes. 

Once you’ve contacted them, you pitch them your ideas, and negotiate a rate. Then you will work with them on labeling and designing specific products for you to sell on Amazon. 

If this is the way forward for you, here are a few Pros and Cons to think about:

Making Your Own Products

With this option you definitely have more preparation work than the previous two. And there’s more risk, because it requires more setup cost. But this option also gives you the most control, the highest profit margins, and the least competition on Amazon.

It also means you need to know exactly what you’re going to sell. It is the rare and very lucky person who can start a business and then stumble into the right product.

This article isn’t as much about starting a business from scratch, or developing a supply chain for raw materials, finding manufacturing space, hiring employees, managing shipping, or dealing with the legal protections you would need to consider. We mention that because those are all things that a maker of goods needs to think about.

The good news is, this article is all about what to do to get your products sold on Amazon. So if you’re comfortable making your pet soap in your garage, and you have all those kinks worked out, read on.

Selling your own products on Amazon makes you truly your own boss. Selling on Amazon means you have a place to advertise, sell, warehouse, and ship your products. Amazon becomes your logistics department, and all you need to worry about is making great products and branding yourself.

We’ll go over some of the basic Pros and Cons, and then we’ll move on to how you can use Amazon to maximize your business.

Third Priority: Where Will You Store Your Product?

This question gets us to the heart of the Amazon business question, and it’s a question that a lot of people don’t put enough thought into. It’s also the last question you need to answer before we get to the step-by-step instructions for setting up your FBA business.

It might seem like a simple issue, but some people never consider it. No matter what your model is (arbitrage, private label, or maker), where will you actually put all that product you’re trying to sell, and how do you pay for shipping it to the buyer?

This question can torpedo even a really sharp Amazon business owner. It usually happens like this: someone finds those snow shovels on sale at Wal-Mart for only $10; they know it can go online in a blizzard for $20; but then they see it’ll cost them $12 to ship the shovels individually. That means they’ve now lost $2 on every shovel.

The Amazon seller app has a breakdown of estimates for every product you might want to buy. Estimates of how much it’ll cost you to ship every item, either from your house to the buyer, or from you to Amazon warehouses. 

But these are estimates. And those prices can change. At the end of the day, we’re only talking about a few shovels. Let’s be honest: you’re not starting a business on Amazon to sell a couple of things. If you want to make real money, you’ll need to repeat this process hundreds of times.

Which brings us to our second torpedo: once you’ve moved on to selling two dozen shovels a week, three dozen boot scrapers, seventeen bottles of windshield wiper fluid, and sixty bags of ice-melt, where are you going to put all of that?

If you already happen to have a clean garage, you’re still talking about shipping all that product to yourself, then turning around and shipping it to the buyer through Amazon. Or you’re renting warehouse space and doing the same thing with the added cost of rent.

Lucky for you, there’s another option. Amazon Inventory Services is built into the Amazon seller app and dashboard. You can have all the products you buy in arbitrage or White Label shipped to and stored at Amazon facilities. For a price, of course.

But you’re also paying for convenience and peace of mind. You don’t have to worry about a thousand packages showing up at your house every month, or finding warehouse space. In the end, only you can make this call. And it’s important to think about, if not decide on, before moving forward. 

If you’re making your own products, Amazon Inventory Services still might be a great option for you. You can simply make what products you want, based on your system and raw materials, and then ship what you have to Amazon when your batches are complete.

For makers, this can be the best of both worlds. If you make those pet soaps, you can set up your garage for the lavender scented, blueberry flavored dog soap, make all the product you can, ship out the whole batch, and then convert your space over to the thistle-and-honey cat scrubs.

Here are the Pros and Cons of using the Amazon Inventory Services. After considering them, we can move on to the step-by-step instructions for setting up your business.

Let’s Get it Started: Step-by-Step

The good news is that the first three steps are the hardest, and if you’ve read through this whole article, you’ve already taken them. You’ve thought long and hard, you’ve looked at the market, and you’ve decided which route you’ll take. Those are steps 1-3. 

After that, steps 4 and 5 are on Amazon itself. Finally, steps 6-10 will depend on what sort of business you’re running. So be sure to look through the steps to make sure you’re following your model, Arbitrage, Private Label, or Maker.

Steps 1-3

Steps 4 and 5

Steps 6-10 for Arbitrage

Steps 6-10 for a Private Label

Steps 6-10 for Making Your Own Products

Have You Started Yet?

Now that you’ve seen the steps, it’s time to get going. The planning is the hard part, but clicking that first button is the scary part. There are a lot of things to keep track of, and that’s why it’s so important to write down the plan and stick to it. When things get rough, you’ll want to have something concrete to focus on, and a list of steps is great for staying on target.

As you get going, there will be more things that pop up. There are even niches of Amazon selling that we didn’t have time to cover. But these are the basics, and if you believe in yourself, and you’re not afraid to put in the work, there’s a market for you and your business.

Tips

Keep these in mind as you go forward. They can slip through the cracks, or make all the difference to your success.

FAQs

Steps One Through Three

Making the decision to start a nonprofit is really the first step—so if you’re reading this because you’re already decided, congratulations! You’re one step closer, already. Whether you’re still on the fence, or you’re already posting on social media about your idea, be sure to run through these first three steps. Writing them down and keeping them visible will keep you on track and make sure you’re dedicating your time effectively.

1. Identify the need

There’s an old adage in business that if you don’t believe in your product, no one else will, either. That’s especially true of nonprofit work. There are thousands of groups already hard at work in the world, feeding people, building homes, helping educate, and serving communities.

Before you spend your hard earned money and hard fought-for time building a nonprofit, you need to make sure you have identified a real need in your community or the world. And you need to do your research to make sure that someone isn’t already doing the work you have in mind. 

It may sound harsh or coldly pragmatic, but no matter how passionate we are about our ideas, if there’s no solid need for fixing a problem you may find it difficult to get your project going.

So do your research and find out everything you can about your issue. If your nonprofit is feeding homeless parrots, find out everything you can about parrots, homeless pets, the cost of pet food, and even community health concerns regarding avian populations. The more you know about your subject going in the better your chances of success.

2. Identify the People

This step is three fold. First, in your research you hopefully found out what people will be directly impacted by your nonprofit. That could be read another way: what people are directly suffering because your nonprofit doesn’t exist yet.

That’s the first group of People you need to identify: who you will be helping.

The next group of people you need to identify are the People who will be helping you. And you need to make sure it’s not just a list of your friends and relatives. As much time and energy as they may offer, they might not be the people that can benefit your nonprofit the most.

So look for volunteer workers in a related field, or experts in your subject. Back to homeless parrots, find passionate employees at pet stores, or look into social media groups for people interested in related fields.

The third group of People you need to look for are the ones already doing related work in your area. These people might not be able to help you, directly, with time or money, but they can be invaluable allies and sources of knowledge. 

Again, the three groups of People you need to identify are: who you will be helping, who will be helping you, and who is already in the field.

3. Identify your Action

This is one of the most crucial steps in the whole process. We all know what needs society has, and we can usually come up with long lists of People in step 2. But in step three, you now need to identify the specific action you’re going to take to fill the need, and address the people in need.

This step needs to be as specific as possible. Some people use the S.M.A.R.T. guideline for setting an action step: Specific, Measurable, Attainable, Relevant, Time-Sensitive.

Your Action can’t simply be to feed the parrots. How will you feed them? What will you feed them, and when? When we identify our Actions, we follow the SMART formula to come up with something we can communicate to others for donations, for their time helping us, or for getting the word out about our ideas.

Here’s an example: “I will feed homeless parrots once a day, with grain donated by local pet stores. I will feed the parrots 100 yards from the public fountain they gather at, freeing up the area for human enjoyment, and training the parrots to move around more. My first planned feeding is in 60 days.”

This Action has specific parameters, so that you can get local people on board and help negotiate issues later down the road. It’s measurable so you can tell donors whether you’re meeting goals. It’s attainable so volunteers and you can all feel like you’ve done well. It’s relevant to your needs and the needs of the community, and it’s time-sensitive so that you have deadlines to motivate yourself and others.

Identifying an Action is what propels your nonprofit from an idea to an actual Organization, ready to file paperwork, get donations, and start doing good.

Steps Four Through Six

Now that you’ve Identified a Need, the People with the Need and the People who will help you, and you know what Action your nonprofit will take, it’s time to file paperwork to make sure everything is legal and above board.

You can never be too safe with this paperwork. For some people it makes sense to bring in a friend or other advisor who has experience filing paperwork with the state, or even hiring a third-party. In either case, before you take any money from donors or put your name on anything, file your paperwork.

4. Register with your State

This step is very important, not only legally, but financially, as well. Without proper registration you could get into trouble for doing your work, and you could get into even more trouble for accepting or asking for donations.

Before you file any actual paperwork, you’ll need to find a name for your nonprofit. Remember, this is the name that your organization will be known by legally and perhaps what your website will be (step 7). So do a little research and make sure there isn’t already an organization or company with your desired name. Also, keep it simple. Sometimes the more elaborate a name the more difficult it is to communicate what it means.

The rest of the process in every state is a little bit different, so we’ve got two general modes you can follow for getting registered with your state. The first is to simply do an internet search for filing as a nonprofit in your specific state. And here’s the key: only click on links whose internet address ends in “.gov”. The link you will want is usually the Secretary of State for the state where your nonprofit will be physically located.

Using this mode means doing a lot of your own legwork, and finding out all the requirements for your state. But it also means not paying as much money; you’ll only have to pay the fees required by your local jurisdictions.

The second mode is to use an online filing service. These third-party services will charge you a flat rate to set up your nonprofit and file the necessary paperwork with your state. This route is more expensive, but is a definite option for anyone who wants to focus more on doing the nonprofit work, and less on filing paperwork.

5. Bylaws and Articles of Incorporation

This step is sometimes required as part of step four. Bylaws and Articles of Incorporation are legally required at some point for any business wishing to have certain legal protections. This paperwork officially sets up your nonprofit as a different legal entity than yourself or anyone who works with or for you.

You can find lots of free templates online for both of these things, or you can also use the third party services. In fact, many of the third-party companies that will file your state registration will also make up your bylaws, articles of incorporation, and even file for your EIN (next step).

6. EIN and Bank Account

An EIN is the Employer Identification Number, and it’s sort of like a Social Security Number for your nonprofit. All companies, for-profit or otherwise, are required to have an EIN so that the federal government can track what money goes in and out of them.

For instance, in order to set up a checking account for your nonprofit, the bank will require you have an EIN for the organization. And you will absolutely want a separate bank account for your nonprofit than for yourself or other businesses.

The reasons for having a separate bank account are numerous, and all of them are important. First, you want to always be able to show people, in black and white, that your money is separate from your nonprofit’s money. All donations will go through the nonprofit account, so no one will ever have cause to suspect anything. Second, all money coming out of your nonprofit is coming through the same account, whether it’s paying for parrot food or paying for volunteer’s donuts and coffee.

An EIN will also help you in case you want to file for 501(c)(3) status later on, or if you ever want to do work outside of your original state. In short, you can start feeding the parrots without an EIN or bank account, but you’ll want to make sure you get them done much sooner than later.

Steps 7 and 8

Now that you’ve got your plans in place, and your paperwork filed, it’s time to start doing some work. You’ll want to look into the different compliances you need to meet and follow, make a website or create some other online presence, and you’ll want to get boots on the ground, feeding those parrots.

7. Compliances and Online Presence

Depending on the type of work you’ll be doing, you might find yourself filing more paperwork and getting brick-and-mortar licensing, or you may focus only on your internet presence.

Really these decisions will be informed by what you Identified in steps one through three. If you’ve identified a need for an actual building downtown where people can bring homeless and injured parrots they find, then you’ll need to look into city and state ordinances for business and occupancy taxes, animal handling permits, and food and health safety paperwork.

But if you’ve identified only a specific need for meeting once a day in an area crowded by parrots, then perhaps a simple blogspot, website, or even social media group will be enough for you and your group to get started. 

Whatever the case, you’ll want to make sure that you’re always compliant with state, local, and federal laws concerning your organization model. And this is where the third group of People you identified will really come in handy. People who are already in homeless animal outreach or experts in parrot-ology will be much more help than any other resource you could find.

8. Do Work

The planning, the paperwork, and the thinking are all done, now. Here’s where you get to put your best intentions into good work. And only you can do it. This really is a step in how to start your nonprofit organization because it’s what separates dreams from realities.

Write down your Actions, and keep them S.M.A.R.T. Then, as long as you're doing the work, your organization will be a reality.

Started but Never Finished

This guide has only been meant as a list to get you started. But work will always need to be done. We hope someday you’ll completely solve the homeless parrot problem, but there will always be a need for good people doing good things. So our real hope isn’t just that you find a way to start your current nonprofit organization, but that you find ways to keep starting new ones.

FAQs