We all want to effectively grow our businesses but many of us never stop and consider what that should look like for what we want. Effective benchmarking allows you to quickly know if you’re on track or not with your business. If you’re falling behind, it’s much easier to realize what needs to be done to correct the issue. It’s something we do here at Vendrive each month!

 

Whether you want to double your business in the next thirty days or comfortably grow 10% each month this post will help you clarify your method for successfully doing so.

 

Benchmarking The Right Way

 

The famous Peter Drucker said, “What gets measured gets managed”. Nothing could be closer to the truth. Want to ensure you have the correct amount of Vitamin D in your body? Measure it once a week. How about growing your business 30% each month? Measure it.

 

The actual act of measuring something puts more focus on it, regardless of what it is you’re measuring.

 

Before you can begin measuring anything you first need to ask an appropriate question: what’s the single most important metric for my business?

 

Is it monthly sales, monthly growth rate or possibly how much you spend on inventory each month?

 

There are no right or wrong answers but you must choose just one to measure effectively.

 

When I started growing my business 30% each month I quickly realized that I didn’t care how much I did in sales because I couldn’t control that number. What I could control was how much money I spent on inventory each month. I knew that if I spent $25,000 each month on inventory I would do roughly 30-50%+ in sales based on my margin and because I only buy inventory that fits my buying criteria, I was safe to use this metric.

 

I then quickly realized that if I wanted to double my sales I would need to focus on spending $50,000 each month, instead of the current $25,000. In my opinion, that’s a much better way to approach the problem of growth as it forces you to ask very different questions.

It’s no longer how can I grow sales, but how can I add 10+ suppliers this month. What would I need to change in my process to allow me to do that? What would stop me from being able to reach this goal?

Once I’ve answered all of these questions, I get to work applying my answers. I solve any potential roadblocks and change what needs to be changed.  

 

My personal benchmark became increasing how much I was spending on inventory by 30% per month, essentially growing my sales by 30% by default as well.

 

Whatever percentage of growth you want is your choice, but make it personal and work backward from where you want to be in 6 months or a year from now.

 

Once you’ve chosen your metric, find the simplest way to measure it, either weekly or monthly.

 

Side Note: Are We In A Harvest or Winter Month?

 

There are only two seasons as an entrepreneur and business owner: a harvest season and a winter season.

 

A harvest season is one filled with progress, financial gains, and pure joy. On the other hand, a winter season is filled with anxiety, struggle, and stress. Typically when an entrepreneur fails it’s because they never survived their winter season. These seasons can last anywhere from a few weeks to a few years but it’s important to know which season you’re currently in because it’s cyclical.

 

Being in a winter season should never worry you as it simply means you’ll have to survive just long enough to reach your harvest season. Likewise, don’t relax too much while in a harvest season. Save for the upcoming winter.

 

Being ready for these two seasons ensure you never rest on your laurels and never quit because of struggle. You become quite Stoic.

 

Ask yourself right now which season you’re in. If you’re in a winter season that means you have a lot to look forward to. If you’re in a harvest season it means you need to prepare for what may be coming so you never feel the pain of a potential downturn.  

 

Closing Thoughts

 

Knowing where you want to go, understanding where you currently are and what is required to bridge the difference of the two is incredibly important. It will tell you whether you need to double down on your efforts to get back on track or keep steady if you’re already on track.

 

You decide the track.

 

“How we do anything is how we do everything.” That saying is something that has stuck in my mind for quite some time. I realized my business wasn’t running like the well-oiled machine I had imagined. I crafted a challenge for myself to redesign my business from the ground up. I quickly became a geek for process optimization and automation.

 

I had a vision of what my business would look like. I even wrote a two-page description of what my ideal day would look like. Although I had the vision laid out, I never considered the mechanics of it all at the beginning.

 

I started writing down every task I completed each week. If I repeated a task more than once, I put a checkmark next to it. After I had a decent sized list I asked an appropriate question: how can I do each of these better?

Having limited time to grow the business forced me into a box. This would become the catalyst that allowed me to grow the business month after month since I worked somewhere between 5-10 hours each week as a solo business owner.

 

Before we can get into the mechanics, we need a framework. I’ve found the O.A.O. Framework from Ari Meisel of Less Doing which stands for Optimize, Automate and Outsource. Essentially, the framework is a process you put every task through, starting with Optimize.

 

Before any process can be automated or outsourced, it needs to be optimized. Having a virtual assistant do an ineffective task isn’t progress. Once we’ve made the process uber-optimized (that’s totally a word), we can look at ways to automate it.

 

I’ve heard countless times that given the choice between automation and people, you should always go with automation. It really makes sense once you understand that automation works 24/7, costs much less, and you can factor out the whole human error variable.

 

After automation coincidentally comes Outsource. Not every task can or should be automated, in which case we’ll bring on a new team member.

 

Altogether this is a pretty simple framework, so let’s delve into the mechanics of a wholesale business.

The Tools and Mechanics

 

There aren’t many major systems or processes in running or even growing an Amazon business. I suspect this is a major explanation of why this model is so popular.

 

Major Systems of a Wholesale Amazon Business:

• Sourcing
• Prepping and Shipping
• Placing Orders (both initial and restock)
• Finance
• Supplier Relation Management

 

Not exactly a lengthy list. Even better, of the 5 major systems, some are already done for you if you use a prep center.

Here’s a list of some specific tasks or processes inside of those major systems:

• Sourcing
  • Research products using either the competitor research or reverse sourcing methods
  • Analyse specific ASINs that match your buying criteria using a tool like Keepa or Jungle Scout
  • Research suppliers for products you’ve found and add all information to Vendrive 😉
  • Call each supplier to get the account
  • Fill out applications and submit to suppliers
  • Scan price lists for new suppliers
  • Calculate, create and send initial order with new suppliers
    

• Prepping and Shipping
  • Calculate restock order volumes using Restock Pro
  • Create purchase orders and email suppliers
  • Email your prep center so they know a shipment is inbound
  • Manage cash flow for growth using Payability
  • Create labels and Shipment inside Seller Central, email labels to your prep center and complete the Shipment once they’ve fully processed the inventory

 

That isn’t every single task you’ll complete in your work, but now you have a list you can work from.

 

A Task To Optimize: Placing Restock Orders

 

To make this very actionable, let’s pick a task we want to apply the O.A.O. Framework to. The first task I noticed was taking me away from growth was restock orders. At the time, I basically waited until it was too late to replenish inventory in time which meant lost sales. This single process was taking up the majority of my time each week so I started looking for solutions. That simple solution was Restock Pro. Instead of building a system myself, someone had already done this for me. After setting up my account I was able to reduce the amount of time spent dealing with restocking inventory  below 30 minutes per week.

 

Here’s what that optimized system looks like:

• Log into Restock Pro on Thursday mornings
• Look at suggested restock levels and verify
• Put together Purchase Orders (typically a pdf form sent via email)
• Create one large shipment and create labels
• Email prep center with the following – 1. a simple form containing total SKUs, total units and shipping links for tracking and, 2. Labels for each unit so they won’t be waiting for me when the inventory arrives
• I’ll receive an email from my prep center once the inventory is ready to be shipped containing all the information I need, so I’ll complete the Shipment in Seller Central and email shipping labels.

 

That’s pretty much the whole system. It may seem overwhelming to some, but it’s optimized and takes less than 30 minutes each week to restock thousands of units of inventory.

 

A Task To Automate: Automating Your Cash Flow For Growth

 

I first read Profit First two years ago and it’s changed my perception of money inside of a business completely. Like my most recommended book, I Will Teach You To Be Rich by Ramit Sethi, the author teaches finance from a system view.

 

In Profit First the author suggests you break up your business finances in the following way:

 

By taking your “Profit First” you’re able to make better decisions when it comes to things like expenses. Once you have your percentages figured out you can start using automatic drafts and transfers each month without lifting a finger.

 

Let’s say you get a payout from Amazon on the 1st and 15th;, you would have automatic transfers on the 3rd and 18th to transfer your profit into a profit account, your expenses into an expense account (or pay them off) your owner’s pay into an owner’s pay account, ect..

 

The idea here is that your business will succeed financially because it’s set up to do so. The system doesn’t need you or allow you to mess things up. You work the system!

 

A Task To Outsource: Sourcing New Wholesale Inventory

 

I love doing Live Sourcing sessions with our Facebook group members, but we can all attest to the fact that it isn’t the most enjoyable thing to do day in and day out. This is where I really started using the Competitor Research sourcing method and created a system that easily allowed me to plug in a virtual assistant to do the legwork.

 

Here’s what that system looks like:

• I find competitors I want to source from (could outsource this as well)
• Add their link to a Google Spreadsheet
• Virtual assistant opens link and begins sourcing they way I would but in a very narrow scope to keep them super effective
• Adds ASIN and product details to Vendrive when they find a product that meets my buying criteria

 

This system alone saves me 20+ hours each week allowing me to only spend time in inventory that has been pre-vetted. Instead of looking at 1,000s of products, I’m only looking at 100 that are highly targeted each week. Out of that I may land another 2-5 SKUs that I start to carry.

 

Because of this system, I’m able to consistently focus on what I’m good at, which is closing new accounts.

 

I want you to grab a piece of paper or open a new document and title it Tasks To Be OAO’d. Every task you do moving forward needs to be written on this list. Each week I want you to pick just 3 tasks and apply the OAO Framework and start Optimizing, Automating or Outsourcing tasks in your business that you shouldn’t be doing, which is typically 90%+.

 

Ps. If you want to go the more advanced route of OAO, take a look at Workflow for iOS which allows you to automate processes on your iPhone, Zapier for connecting and automated online tools or even Automator for Mac users if you’re super nerdy!

I recently posted a poll in our private Facebook group asking our members their most common questions regarding selling on Amazon. I thought there would be a much larger variance in questions, but we ended with a common set of questions that are actually quite easy to solve.

 

How Do I Find High Quality Products Consistently?

 

Probably the shortest of my answers: Read the in-depth blog post I wrote from the beginning. Nothing’s changed as the post is still effective for 90%+ of our members. For those who find it ineffective, it’s because they aren’t truly using it.

 

How Much Do I Need To Start and Where Can I Get More Capital?

 

Most of us getting started have limited capital to start buying profitable inventory with, but rather than asking the question of how much one needs to get started, it’s more appropriate to ask how much you currently have.

 

I personally started with just $2,500 in the bank but many have started with more or less than I and succeeded.

 

The most obvious answer for growth is using what you have available. Although I’m not a financial advisor, many sellers I know utilize business credit cards for immediate growth once they’ve figured out how to profitably source wholesale suppliers. From there you can start using services like Kabbage or even SBA loans that cater to small businesses.

 

How Do I Handle Shipping My Inventory?

 

The easiest solution is using a prep center and having all of your orders shipped directly to them. As you grow you can decide whether or not leasing your own warehouse and building a team is right for you.

 

Some suppliers may even offer to ship directly to Amazon, but this is the exception rather than the rule when it comes to suppliers.

 

It’s an odd thing to admit but I’ve never seen any of my wholesale inventory. When I made the change to wholesale from Retail and Online Arbitrage (RA/OA), I made the decision that processing orders weren’t the best use of my time so I never did. I immediately contacted a prep center in New York and every single order I’ve placed has gone through them for a small fee.

 

When you place your next order, consider having it shipped directly to a prep center and never touch your inventory again.

 

Read one of our recent blog posts to know what an automated and streamlined Amazon business looks like.

 

How Do I Handle Cash Flow and What About Payability?

 

Cash flow can get really tricky but the simplest thing to keep in mind is whether you’re in a growth phase or a profit phase of your business.

 

While in a growth phase, you’ll be shifting as much of your profits into new inventory as quickly as possible.

 

However, if you’re in a growth phase, it means you’re content with your sales volume and want to start taking some profits for yourself.

 

Depending on which phase you’re in, your setup may be different.

 

My biggest suggestion is for you to purchase a copy of Profit First and immediately put the framework into action within your business. Profit First takes a lot of the guesswork out of handling money inside of your business so that you’re consistently profitable and hitting your specific goals.  

 

My advice on Payability? Just do it. It took me a while to pull the trigger, but James pulled me aside and really broke it down for me.  After that, I realized it was a simple solution for growth and immediately saw the benefits within my business.

 

For those that haven’t heard of Payability yet, it’s a company that gives you access to a large percentage of your payments before Amazon sends them. Instead of two-week payments you can have daily payouts, allowing you to re-spend your capital on inventory as fast as it comes back to you.

 

How Do I Avoid Pricing Wars and Races To The Bottom?

 

If you’re consistently dealing with these two issues, it’s because of the type of products you’re carrying. If a product fits my buying criteria, it shouldn’t have these issues. The reason for that is because I’m looking for products that have low or no volatility when it comes to pricing. In other words, the pricing stays the same 90%+ of the time.

 

Here’s a product we recently sourced that shows near perfect stability. The Blue line is the pricing and you can see there’s been little movement for the last 3+ months. This shows that the product has either matured pricing-wise or has Minimum Advertised Pricing (MAP) enforced. Either way, I’m excited!  I love products that have MAP heavily enforced, giving me clear protection from a race to the bottom.

For products that don’t follow these rules, a repricer is key to increasing the percentage of time you’re inside the buy box. Remember, profits are inside the buy box!

 

As you start and grow your Amazon business, many more questions will arise.  Be sure to reach out and seek answers to your questions. As your knowledge grows, so will your profits!