You might be asking yourself that questions after reading our previous blog post that answered the common question; How Much Money Do I Need To Start An Amazon Business?
Now you know that you need a Total of $2,000 to $10,000 to start a proper Amazon business using the ALGO strategy but how do you fund it?
Well, we've found that the best and easiest way to fund your Amazon business is with the intelligent use of credit cards.
Now, before we go any further, note that we do NOT suggest using credit cards to pay for things you can NOT afford. Credit cards are simply the easiest form of financing you can get to start and Amazon business (and they come with some unique benefits).
Assuming that $2,000 to $10,000 is something you can reasonably afford based on your current net worth and business plans, we would suggests using new credit cards for two reasons; 1. Free Stuff and 2. Leverage.
1. Free Stuff (ROI & Benefits)
Many credit cards offer sign up bonuses, cash back, and benefits.
Bonuses example: A new Chase Sapphire Preferred Card will give you a 60,000 bonus points after you spend $4,000 in your first 3 months of having the card. 60,000 points are worth about $750. So, if you spend $4,000 on inventory for your Amazon business and then get $750 back you make a 18% return before you even sell any inventory!
Cash back example: While many supplier will charge a fee for using a credit card, some will not. There are many credit cards that offer 2% cash back on everything you buy. That means an extra 2% profit. 2% every month can add up quickly, especially as your business grows.
Benefits example: Many cards with the best rewards also come with the best benefits. For example, cards like the American Express Platinum card include benefits like access to airport lounges, $200 airline credit, $200 in Uber credits, elite status at major hotel brands and much more.
2. Leverage
Leverage is a powerful tool that, when used correctly, can quickly grow your business. The simple concept of leverage is using other people's money to grow your business.
An example of leverage you might be familiar with is using a mortgage to buy a home rather than paying 100% cash. You can apply the same concept to growing your Amazon business.
For example; if you can use a 0% credit card to purchase inventory that you KNOW will make a 10% a month profit, you can make 10% profit with no money of your own.
Now, there are other ways to use leverage (or other people's money) to grow your Amazon business but, when starting out, credit cards are by far the easiest.
Regardless of what you think of our current President, we can all agree that he's made a lot of money. Here's a quote from Donald Trump in The Art of the Deal on p.54 "Leverage: don't make deals without it."
For more on leverage, check out this YouTube video: https://www.youtube.com/watch?v=l3jlFZ4XMUo
Again, we DO NOT recommend using credit cards for foolish things that you are not 99.9% confident will make you a greater return than your cost of capital. Using our system, you can have that confidence in your business decisions making credit cards a great way to fund you business initially.
Again, again, again -- Don't buy things you can't afford, always pay your credit cards off before having to pay interest on them, and only use credit for things that will make you more money in the long run!!
Want to learn exactly how to Start and Scale your Amazon business? Our team will be hosting a FREE online workshop within the next 7 days!