Legalities of Partnership
As an investor you ought to consistently put into a plant. Try not to put resources into seeds and don't put resources into trees. Putting resources into seed is consistently hazardous in light of the fact that when you are attempting to assemble a FBA business there are many factors in the center. You may succeed contingent upon such a large number of factors and you may fail as well.
This video https://youtu.be/Qolw7tnlFKo is a guide for people who want to get into Amazon business as an investor. Not just as an entrepreneur trying to build an FBA business but rather purely as an investor with capital only.
First of all we need to understand, in FBA we have 3 stages.
Every FBA entrepreneur is busy trying to grow a seed into a small plant (Immature list with few reviews + few organic daily orders) and later mature it and grow it into a big tree (A mature list with 100+ reviews and plenty of organic daily orders).
As an investor you should always invest into a plant. Don’t invest in seeds and don’t invest in trees. Investing in seed is always risky because when you are trying to build an FBA business there are hundreds of variables in the middle. You may succeed depending on too many variables and you may fail too. Don’t invest in trees because trees are expensive. You have to pay 30x multiple to buy a mature Amazon established list. Whereas, plants (immature listings) are your best bet that you can make as an investor because you can buy them for 10x multiple.
As an investor I prefer buying equity /Partnership instead of buying the whole plant. This way you let your partner work hard and continue growing this business to the next level and grow this plant into a tree and sell the tree later.
For example I can invest $50,000 into buying 50% stake of 10 plants (buying and selling immature listings) making $1k per month profit each. If I own 50% stake of 10 such listings then my share is $5k a month with ROI within 1 year and in 2 years these small plants become big trees worth $500k for my share. What business in the world can give you this kind of return?
Investing in plants is always less risky and always comes with a higher chance of growth. Even if I make it a 2 year goal, it’s not a bad strategy. I would rather pay higher to get 50% stake of 10 such listings instead of investing in an unstable property market.
Instead of buying 100% ownership of 10 lists, I would rather invest in 10 entrepreneurs and give them this cash and let them become CEO and grow the business to the next level and work hard for it.
Hence why, we won’t take the risk to invest on something as big as the size of a tree but on something mediocre like a plant. The tree investment gives less return whereas the plant investment generates profit.
Sunny Ali, CEO Extreme Commerce.
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