Scaling to 8 Figures: Part I

Managing and growing an Amazon FBA Business to 8 Figures was an incredible experience and since our business was successfully acquired by an aggregator I took some time to summarize the key lessons we have learned along the way.

I am not going to talk about the latest tricks and hacks...

Those things are changing constantly and I want to address this matter from a different perspective - from a higher-level view that focuses on your business.

The truth is that the space is getting more professional and so should you. I would like to show you how to gain more leverage so you can stay ahead of the curve.

If you are like most Amazon Sellers, you managed to get your business off the ground on your own. You followed the formula and you are growing - adding new products and building your brand.

As your business grows, operations start to take more and more time and if you are still wearing all the hats in your business, you are likely getting lost in the daily grind and losing track of the big picture.

I have been there and if it sounds familiar, you may have to sacrifice your freedom soon just to keep your business alive.

Let me show you how we fixed that in our business…

The Problem

First of all, we need to clarify what is wrong and define the problem. Amazon FBA is a great business model that allows us to achieve amazing results as solo entrepreneurs. However, even this has a limit.

There are essentially two types of activities in our business:

1. Growing

2. Maintaining

This concept is pretty straightforward, but if you are not sure, simply ask yourself "Can I double my business by focusing on this area?"

Product Development? Yes! ➝ Growing

Supply? No! ➝ Maintaining

Customer Service? No! ➝ Maintaining

Marketplace Expansion? Yes! ➝ Growing

When we are launching our business, we focus mostly on Growing = Doing product research, talking to suppliers, and getting our listings ready...

Once we launch, there is some Maintaining required = monitoring stock, tweaking PPC, replying to customers...

That is easily manageable with one product and we want to grow our business so we focus on Growing again = launch more products, expand to new marketplaces, new sales channels, ...

Every single product, every variation increases the time required Maintaining. Sooner or later, we get to a point where all of our time is consumed by Maintaining and there is little to no time left for Growing = let's call it The Wall.

If we ignore Maintaining, our business will collapse.

If we ignore Growing, our business won't grow.

Naturally, we tend to protect what we already have, so when we get overwhelmed, the default is to ignore Growing and prioritize Maintaining. It is simply too hard to wear that many, many hats for a long time.

We hit our wall around 7-figures. At that point, I spent most of my time in supply, dealing with Amazon, estimating demand, tweaking PPC, and so on.

Every day, there was a fire I needed to put out. Shipment delayed. Listing Suppressed. You know what I mean, right?

Well, our Marketplace Expansion had to wait. Indefinitely.

The Goal

So what is the goal? What is the ideal situation?

How do we break The Wall and keep growing?

First of all, you need to be in a place where you don't have to worry that your business will collapse without your constant presence.

Only then you will have the mental capacity to see the things that actually move the needle. Ideas start to flow the most once you get rid of the stress and mile-long to-do lists.

The goal is to get out of the daily grind and get back your focus.

So you can spend most of your time Growing your business - operating in your zone of expertise without getting distracted by a constant stream of reactive work.

Ideally, you should never stop focusing on Growing.

And you cannot do that if you try to do everything in your business on your own. You cannot be the bottleneck of your business.

You need help... and a General VA that helps you with various admin tasks won't cut it.

So... How do we get there?

Warning

Do not fall for temporary solutions such as your personal productivity! It still leaves everything on your plate and nothing really changes - you merely move The Wall a little bit further.

The Solution

We know where we need to get to and what it looks like. Now the question is: How?

To answer that we need to define another type of activity ignored by most new entrepreneurs.

Both Growing and Maintaining are activities in the business.

However, we can also work ON our business. And we will call that type of work Designing.

Let's figure out what it actually means.

So on one side, we have our current situation:

• we are running our business mostly on our own, end to end

• if we stop, our business stops as well

• only we know how our business really works

And we want to get here:

• we are removed from Maintaining

• we are able to fully focus on Growth and strategic planning

• we can step away from the business

• we have enough mental capacity to think clearly

There is a seemingly large gap and I know it may sound intimidating - there is so much to do, so much to learn. Where do we begin?

We will now reverse-engineer the situation to fully understand the requirements and thought process behind it.

Let's work backward and break it down:

Desired situation ➝ ??? ➝ Current situation

In order to be removed from some areas of the business, we need someone else to be accountable for the outcomes. Therefore, we need to transfer the ownership to someone = we need to Delegate.

Desired situation ➝ Delegate ➝ ??? ➝ Current situation

In order to delegate, we need someone with relevant abilities on our team. Therefore, we need to find that person and bring them on board = we need to Hire

Desired situation ➝ Delegate ➝ Hire ➝ ??? ➝ Current situation

In order to hire, we need to know exactly what they are going to do and how they are going to do it. Therefore, we need to systemize our business = we need to Develop Processes

Desired situation ➝ Delegate ➝ Hire ➝ Develop ➝ Current situation

We need to have the right people, doing the right things, right.

This is Designing and you need to incorporate that into your schedule. Only this will enable you to transition from an Operator to an actual Business Owner.

Keep in mind that you should be the engineer building the machine, not the person operating it.

The strategy is to systematically remove yourself from the business. Start with areas that Maintain the business so you can gain more leverage by focusing on areas that Grow it = Simple.

And we already know how to do that

1. Develop Process = tame the chaos

2. Hire = find talent

3. Delegate = transfer ownership

Those are Evergreen skills you can use to build any business, not just Amazon.

Let's do a quick exercise to fully understand the power of this:

Calculate the value of delegation

You may object that you cannot build a team because you cannot afford to pay them. Now, let's do the math and figure out whether that is truly the case or not:

I recommend using your numbers to see it for yourself.

Let's say that my hypothetical business looks like this:

• I make $6,000 profit per month on average

• I work 140 hours per month on average

(my average monthly profit) / (my average monthly work hours) = (my hourly rate)
$6,000 / 140 hours = $43 per hour
= My average hourly rate is $43 per hour

I also know that out of those 140 hours:

• I spend 30 hours working in Supply on average

• (you should track your time to know where it goes = if you don't do that, you really should)

I look at the market and see that:

• I can hire a viable Supply Manager for $12/h

I will consider hiring one with the following conservative assumption:

• they will be a little slower at the job than us at first and it will take them twice as long to get the same job done

30 h * 2 = 60 hours
= It will take them 60 hours per month to do the same work

60 h * $12 = $720 per month
= I will pay them around $720 per month to get the job done

I can conclude that:

• I will save 30 hours per month

30h * $43 = $1,290
= which I value at $1,290 based on my hourly rate

• Looking at the rates, I also know that I am essentially losing money for every hour I spend working in Supply

(my hourly rate) - ((their hourly rate)*(adjusting for slower work))
$43 - ($12 * 2) = $19
= I am losing $19 for every hour I spend working in Supply

• My hourly rate will go up as well

(my average profit) - (Supply Manager salary)
$6,000 - $720 = $5,280

(my average work hours) - (delegated work hours)
140 h - 30 h = 110 h

$5,280 / 110 h = $48 per hour
= my new hourly rate is $48 per hour

I now work less and make more.

The main questions are:

• where else are you losing money?

• what are you going to do with those extra 30 hours every month?

Obviously, this is a simplified example, in reality, there are some extra costs in form of the time we need to dedicate to developing the process and finding the Supply Manager. However, the key takeaways are still illustrated well.

We need to understand the value of our time and act accordingly.

Common Obstacles

Here is a list of the most common mistakes and obstacles you will have to deal with. And yes, we made all of these mistakes in our business as well.

Delegating without systems
Probably the most common mistake. If you do not have systems in place, you do not know what you want them to do. And if you don't know that, you cannot really transfer the ownership. Well, and if you don't transfer the ownership, you have to tell them what to do and how to do it every single time.

= the goal is to remove yourself from the process so you don't have to think about it and you cannot do that without systems.

Building a team of low-level generalists
This goes hand in hand with the previous point. If you don't know exactly what you want them to do, you cannot know the requirements for that role. So you end up hiring a General VA as the cheapest option.

= Hiring cheap labor is a good way to minimize costs, but it is not a good way to maximize profits.

Trying to make it perfect
You do not have to make it perfect to get the benefits. Resist the urge. It may seem that you have to have it all figured out to make it work, but that is not the case.

= Done is better than perfect because perfect is never done.

Doing it all alone
You do not have to figure it all out on your own. Network with other sellers, form masterminds, and share your experience with others.

= Find advanced entrepreneurs who are willing to share

Final Word

Even if you don't feel ready to build a team, you can still benefit from proper systems = it will allow you to do more with less and minimize errors. And most importantly, once you decide that you are ready to take the leap, your business will be ready as well.

I would also like to stress the fact that you do not need a large team. We managed to scale from 6 to 8 figures in 4 years with a small team = 3 people working full time + 2 people working part-time.

I recommend you to get into the right mindset and ask yourself "How can I make this happen without me?". The truth is that pretty much everything in your business can be broken down into steps and delegated.

Your job is to identify bottlenecks and remove them - that is it.

I know it may sound intimidating, but trust me - you can do this. Dedicate a few hours per week to slowly build your business. Even just a few hours of Designing per week will make a difference - it adds up quickly.

Choose one process to begin with - low value, high effort. Document the steps as you do them.

That will enable you to find the right person for that role.

The sooner you start, the better.

It will open new doors and make your business much more enjoyable for everyone involved.

Pinpoint the gaps in your Amazon FBA business - Take our FREE 5-minute Business Checkup to understand what is holding you back and what you need to prioritize right now.