Should I Go Into Debt for My FBA Amazon Business?

Patience isn't just a virtue, it's a business building necessity.

FBA Amazon is one of the simplest, low entry level businesses that you can enter, and make a fast return on your investment. There are sellers who begin their business with $50, and sellers who start out with $5000, and everything in between and then some.

So what should you do?

First, what do you have available? How much can you afford to invest without going into debt, dipping into your savings, or putting a major dent into your household budget? Start there.

Second, what can you do to raise seed money without going into debt? Hold a garage sale. Sell clutter on eBay. Save your change. Take on some temporary, part-time work.

Several years ago, my hubby and I attended a Dave Ramsey course at our local church. We cut up our credit cards, worked on snowballing our debt, and live on a cash basis.

There are those who will argue that personal debt is different from business debt, but in my opinion, if you're responsible for repaying the debt, then it's still your debt. Do you really want to go there?

The beauty of this business is that you can spend a small amount of investment money, then reinvest your payouts until you reach a point where you feel as if you can justify paying yourself. No debt needed.

Some people invest more than they really have, then panic when their items don't sell as quickly as they had projected. Some people invest too deep in one product, and put too much hope into getting their money out, then something goes wrong, and they freak out. Don't invest more than you're comfortable losing. You will most likely make your money back, but sometimes you make a buying mistake, so you have to plan for that. You might get a return -another hit to the pocketbook. If you invest too deeply, going into debt, and things go awry, then you're stuck.

There are sellers who use credit cards or take out small loans from sites like Kabbage. Oh, the temptation! Imagine being able to invest a few thousand in time for Q4! A disciplined person might feel certain that they will pay off their debts monthly. A business minded person might determine that short term loans for capital is simply apart of doing business. A desperate person might be willing to take a risk. But is it necessary?

Instead, what if you used your small, piddly amounts to carefully research and invest in fast turn replenishables? Could you turn $50 into $100 within a couple of weeks, or by the next payout? How about snowballing those payouts into more fast turn replens? Could you turn that $100 into $200 sooner rather than later? Patience is not just a virtue, it's the key to staying debt free while you build your little Amazon empire.

I've seen sellers in the following two scenarios:

Scenario 1 - I pulled the trigger and took out a Kabbage loan for Q4. I thought I'd be able to pay it all off, but I made some buying mistakes, and now I'm stuck with the debt. 

Scenario 2 - I put all of my eggs into one basket. I went deep on this product, and now someone has come in and undercut my price! I need to sell these items, or I won't be able to pay my electric bill this month. 

Yikes!

As tempting as $500 from Kabbage, or elsewhere might be, I recommend taking the turtle route. Slow and steady builds this business -debt free.

As great as one product might seem to be, you never know how things might change. I recommend taking the wide diversification route. Debt and depth are two "D's" on a report card leading to an "F" which equals Fatal mistake. You might be able to overcome your F, and pull it back up to an A (A for Awesome), but is the stress worth it?

If you don't have $500 or a $1000 that you can comfortably take out of your own budget, then in all honesty, you can't really afford the debt. Risk taking is one thing. Packing that first box is risky. Investing anything at all is risky. There isn't a need to take a financial risk when patience will pay off in the end.