How to Buy an Amazon FBA Business [STEP-BY-STEP]

Hey, how's it going, YouTube? This is Iman Los Angeles, and if you guys follow this YouTube channel, you guys know that last week I posted a video of how I was able to purchase my very first Amazon FBA business in July of 2022. And in that video, I talked about why I am so bullish on Amazon FBA and how 2022 might be the biggest and best year to actually start purchasing these small mom-and-pop type of businesses. And I won't go ahead and bore you with the details. If you guys are interested as far as what brand I went ahead and and why I think this is a great opportunity, I'll go ahead and link it up here. But after that video, I received a lot of emails regarding the process of actually purchasing Amazon FBA business. What is type of financing? What do these terms mean? How can I analyze a business to see that it is a great business to go ahead and purchase? So instead of going ahead and replying back to all of those emails, I wanted to make a video and I'm going to dive deep into the websites I went ahead and used, the type of financing I used, what analytics I went ahead and looked after to see there's huge opportunity when it comes to buying Amazon FBA businesses. So in this video, that's exactly what I'm going to go over. So if you appreciate anything I say in this video, all I ask for in return is consider liking this video and consider subscribing to this YouTube channel because again, I'm still a small YouTuber and the only way I know how to grow is by asking you guys to either like subscribe to his YouTube channel. So first things first, what website can you actually purchase an Amazon FBA business? And by simply doing a Google search, you can see that there is a variety of different websites where this can actually be done. But to tell you the truth, the most popular websites is one, Flippa, and 2, Empire Flippers. And what I did, I went ahead and used Empire Flippers to go ahead and purchase this Amazon FBA business. The reason why I did this was because I felt like they specialized in Amazon FBA businesses. They dug deep into the analytics, they went ahead and talked to the actual sellers, breaking down profit and loss statements and how much everything actually costs to get produced, how much they spend on advertising, so on and so forth. And then after that, it's just as simple as signing up for Empire Flippers. I'll go ahead and have them linked down below, and I'll also include them in the comments section so it can be easier for you guys to get on the website. But after you sign up for an account, you're going to get a dedicated rep. And the thing with this rep is they're going to guide you through the entire process of what to expect from start to finish of buying an Amazon FBA business. But they're also going to ask for a sheet of your liquid assets. So any cash you have in reserve, maybe some stocks, crypto, CDs, bonds, whatever you have as far as liquid assets, they're going to go ahead and ask for that. And the reason for that is because Empire Flippers has a bunch of different types of businesses that range from different prices. I've seen anywhere from $80,000 and all the way up to tens of millions of dollars. So based on what you can go ahead and be pre-approved for is going to determine what type of listings you can actually unlock on Empire Flippers. But don't be too concerned about this because there are different types of financing options available. For me, I was able to close on just based on seller financing. So I actually asked the seller, instead of going ahead and paying you full price, can you go ahead and split split it up into different types of payments. And I'll go ahead and show you how I went ahead and did this. But you can also go on government websites such as sba.gov, and based on the criteria, how much this business is cash flowing, they can go ahead and give you a loan as well. And the best thing about this right now is that last year, it would be nearly impossible to do this because the SBA takes a very long time to actually analyze the business, make sure all the T's and I's are all dotted in. But right now, because a lot of these Amazon FBA aggregators are no longer purchasing businesses, now you can go ahead and take your time and actually have the SBA look over these accounts and actually get your offers approved with these Amazon FBA businesses. So once you went ahead and uploaded all those different types of financial statements, you're going to get a maximum unlock listing price. And based on that, you're able to go ahead and unlock listings up to that certain amount. And as we go ahead and look through Empire Flippers, you're gonna notice that they sell more than just Amazon FBA businesses. As you can go ahead and see here, this is a SaaS company, this is a service company, right? Another SaaS. And this is a display advertising and Amazon Associates and digital product. So they aren't only selling Amazon FBA businesses, they sell a variety of different ones, but they do specialize in just Amazon FBA businesses. And I know this based on experience of me talking to them, right? But after that, we can go ahead and just filter out a few things. And I'll go ahead and move myself out the way so you guys can go ahead and see the different types of filters. And this is basically what I do whenever I'm looking for an Amazon FBA business on Empire Flippers. I go ahead and go to status, and I always check off pending sold because I really don't care if a company is already sold. I'm looking for businesses that are actually for sale right now. And after that, I go down to this monetization section here, and I type in Amazon FBA. But as you can go ahead and see, there's affiliates, Amazon associates, and all these different types of businesses. Maybe instead of going ahead and doing Amazon FBA, I can just do regular e-commerce. And maybe there's an opportunity to put all these e-commerce stores into Amazon FBA and start growing the brand that way, right? Again, this is not a video to go ahead and purchase Shopify stores and create them into Amazon FBAs. So we're going to go ahead and stick strictly on Amazon FBA businesses for sale. And then after that, you can go ahead and see what type of niches that you're going ahead and looking for. I like to keep this blank because I don't really care about the industry itself. If the company is good and I know I can scale it, it doesn't matter what industry it's actually in, right? And this is where we can go ahead and put down the prices from to prices to, because as you can go ahead and see, I am not eligible to go ahead and unlock this $7 million listing or this $6.7 $6 million listing, right? So again, this is where we can go ahead and start putting a list price. So for me, I can go ahead and put in, I am not looking for any businesses over $650,000. So now, as you can go ahead and see, just based on those certain features right there, I still have 53 available listings to choose from, right? Another thing I like to go ahead and do, which you might not want to, is I don't want to go ahead and deal with a lot of different types of products. I want to take over a business that I know maybe only has 5 or 6 products where I know I can go ahead and extend the product line. So for SKU count, I go ahead and put 6 right over here. Again, this might be an opportunity because I'm putting this filter. I'm not getting a lot of businesses for sale, but this is just based on my criteria as far as how I can go ahead and scale a business. So based on all those current filters that I have right now, there is 15 available listings on Empire flippers. And let's actually go through what each of these columns mean, right? Because obviously we know what the price is for this business. It is $338,000. But based on this, this actual business is generating $8,000 of pure net profit every single month. And again, this is the revenue as well right now. And we know the monetization is Amazon FBA. So they're only selling on Amazon FBA. And now we go to the multiple, the monthly multiple. This means that the price that they're actually charging this business for is based on 42 times its monthly net profit, meaning it's going to take us 42 months to get our money back when we purchase this business. Obviously, the idea here is that we're buying actual businesses that have a lot of potential. So even though they're selling for 42 times monthly multiple, we might be able to get our money back sooner than that because we anticipate this monthly net profit not being $8,000 anymore, but maybe we can go ahead and scale it to $12,000, $14,000, or even double it to $16,000. And they also go ahead and offer you when the business was actually created because a lot of actual buyers are looking for established businesses. They don't want a business that was just started last year or during the pandemic because we all know that there was a huge boom when it came to e-commerce during the pandemic. And as you guys are going ahead and doing the research, you might go ahead and see that this one has a 42 times multiple, but this one has a 36 times multiple, and this one has a 44 times multiple. You have to understand that there are certain different things that are going on in the business that's going to dictate that type of multiple. Right over here, you can go ahead and see that this one has a 36 times multiple, and you might think, wow, this is a huge bargain. But as you can go ahead and see, they're actually down 34% in profit margin from last— over the last 12 months. And you can go ahead and see that revenue over the last 12 months is also down close to 20%. So this might be a declining type of business, and that is why they're going ahead and only charging a 36x multiple. So maybe during the pandemic, they had to pay double for freight. Maybe the raw material cost has gone through the roof, right? That's some things you can go ahead and start researching with Empire Flippers when they give you a profit and loss statement that we'll go into right now. But you can also see that this one is a little bit more overpriced, right? A 44 times multiple. And I use that overpriced cautiously because you can go ahead and see that this particular business over the last 12 months has seen a huge boom in profits. They have 712% higher profits this year than they did last year. And the revenues are also up by 381%. So what you do here, if you're interested in going ahead and purchasing this business, is you want to go ahead and learn more information, right? Before you unlock these listings, because Empire Flippers is only going to give you a certain amount of listings that you can go ahead and unlock at a certain amount of time. If you run out of those unlocked listings, it's okay. Just reach out to your rep and they'll go ahead and give you more. But Empire Flippers is going to give you a bunch of different types of data here. You can go ahead and see that they have only 5 SKUs on this actual profile, which is great. It hits our criteria, right? The supplier contacts and relationships, they have a Facebook page, and inventory is not normally included in the list price. Further details can be provided, uh, to verified buyers, right? So again, this is a very great area here because you can actually negotiate inventory prices, right? So again, most of the time you have to pay for inventory that the current seller has in stock right now. But again, there's always a negotiation there as well. So after that, you can go ahead and see the listing prices right over here, the multiples, and you can go also see if this is brand registered or not. So by this saying no, this brand we know is not brand registered. That means they might not have actual photos on their listing page. They might not have a video on their listing page. They can't run sponsored brands types of ads. So already based on this saying no, There's already huge opportunities right there. And as we go ahead and go back to it, they're going to give you a bunch of listing details that you can go ahead and read over here. So again, they give you a bunch of different types of an overview of this business. And as you can go ahead and see over the last type of 24 months, you can see that there is a huge growth phase and it's not letting up. Right now in e-commerce, a lot of sellers are experiencing a decline in sales, but not with this business. So as you can go ahead and see, this is a business that you might be interested in going ahead and pursuing. So after all you're going to go ahead and do here is unlock this listing. You go ahead and check that box there, and now we're able to get even more data about this actual listing. So I'm going to take you through exactly what I look for in a business, right? The first thing I want to go ahead and look at is all the numbers make sense now. The profit margin is very healthy. First, I want to look at what type of products this actual business is selling. So the good thing here is that Empire Flippers is giving us the actual products that they're going ahead and selling. And as you can go ahead and see here, they're actually selling products that might not be brandable. What I like to go ahead and look for in a business is a customer goes ahead and purchases my product, and if they want to go ahead and purchase more of my product, they're going to go search up my brand name. And based on what they're selling here, that might not be what I'm looking for, right? They're going ahead and selling things that a customer might buy once and not remember the actual brand name. So let's go ahead and just look through Jungle Scout to see what type of profits these guys are actually making, right? So let's go ahead and log in here. And as that's going ahead and loading up in the background, we can go ahead and see that this business has right around 4 different brands that they're going ahead and selling. As you can go ahead and see, one of them is generic. Based on the price point, they're actually not making that much money on each of their products. What I like about this is that the number one selling SKU is not making all of the money. What I don't like about this is that they're not really going ahead and selling much every single day. So again, one of it is that it's not brandable. So that's not something I'm looking for. I'm actually looking for a business where I can go ahead and build an audience around my actual brand. I don't think or have the confidence that I can go ahead and do that with this actual listing. But let's say I was interested in actually purchasing this business. The price point makes sense. The products are something that I'm going ahead and looking for and is brandable. Then I can go ahead and start going into the documentations and the P&L statement for this actual business. So Empire Flippers already gives us that information right over here. All we have to go ahead and do is view P&L. I'm not going to do this in this case because not everybody watching is eligible to purchase this actual business. And this is confidential information for the actual business owner, right? So I'll go ahead and take you through the business that I went ahead and purchased because based on it being my business now, I'm okay sharing it with all of you. So let's now really analyze the profit and loss statements with the purchase that I went ahead and made on Empire Flippers. So as you can go ahead and see, I went ahead and bought this business for $190,000, but I only put $100,000 up front. And the rest is seller financing. And the cool thing about this is I was able to agree on terms that over the next year, as I'm growing this business, as Amazon is paying me, I can take a portion of that income and start paying off the rest of the $90,000 to the seller of this business. So again, seller financing is something to go ahead and consider when trying to purchase these Amazon FBA businesses. First and foremost, you want to go ahead and look at their profit and loss statement to see what opportunities you go— you can go ahead and do with these types of businesses, right? So Empire Flipper is going to go ahead and give you this Google Doc statement where you can go ahead and see the COVID sheet, the summary, the combined FBA earnings USA, and what the product landing cost is, right? So obviously a summary is going to go ahead and tell you exactly how much they made on Amazon FBA. If they're going ahead and selling in different types of countries, they'll go ahead and have it here. But you're also going to see any types of expenses or software systems that they might have, right? And then the total net income month over month. So as you can go ahead and see, this business, when they first started off in 2020, they were actually negative every single month. It wasn't until 2021 where they actually started making money. And you have to understand that is very normal with businesses, right? When we first start off, we have to invest a lot more money into advertising, going ahead and doing photo photography, any copywriting to actually start growing and making a profit. So now we have to start looking at opportunities. And a huge opportunity that I saw for this business right over here was the actual shipping cost. So I started noticing what type of items do they actually sell, right? So as you can go ahead and see, they sell these types of chest packs. So I'll go ahead and open one up right over here. They sell these chest bags that's more so for the gym, right? So you can go ahead and have these running chest packs where you can go ahead and put your phone or other different types of tools in there while you're working out. Maybe you don't have pockets. Maybe you might be a barber that, you know, wants little things on your actual chest. So obviously this comes in handy, right? So I started noticing that for this particular product, they paid $3.70 to make it, but their shipping cost was $3. And based on the weight of this product, I thought to myself, how does it cost that much to ship? Because it doesn't seem like it's expensive, especially when we look under here and we see that this actual product is only 8 ounces, right? So it bewildered me as to why this actual business paid so much in shipping. And that's the great thing about Empire Flippers is because you have to try, you have to go ahead and write down all the different types of costs you have in your business, right? And then I started noticing on this section here is that they started air shipping a lot of their actual inventory. So every single time they went ahead and produced these products, they will air ship it. So it got me to thinking, how much would I be saving if I go ahead and start doing sea shipping instead of air shipping? And to tell you the truth, I saved more than 80% of the cost by doing this, right? So if I went ahead and had a healthy profit margin by air shipping these products, I know that I'll have a very great profit margin when I start switching over to sea shipping, right? So you have to look at these different types of opportunities there. And the great thing, especially right now, is that we're always looking at a business based on revenue and profit margin based on the last 12 months. And we all know that everything has been crazy the last 12 months where raw material is up, freight was through the roof. And now that freight is coming down, now that raw material is coming down, we're already going to have a better profit margin than we did in 2021. So those are some things to consider as far as opportunities out there. And after analyzing the entire profit and loss statement, you can actually schedule a phone call with the seller themselves, where you can actually take a deep dive into their business. What are some other inefficiencies they have? Are they doing advertising the right way? How is their, their actual copywriting when it comes to their listing page? And what other things were they considering as far as growing out the business? So I think that 2022 is a huge opportunity, especially with these Amazon FBA aggregators are not purchasing as many businesses as they once were in 2021. And for those of you that are skeptical and saying, hey, We're comparing to 2021 and those were killer numbers. You have to understand that in 2022, things are slowing down. Some businesses will have a slowdown in sales as well. And you can take that as your advantage when it comes to negotiating these types of terms you have with the seller. So again, if you appreciate anything that I went over in this video, all I ask for in return is a like on this video and consider subscribing because I want to go ahead and bring the seller where I purchased their business and talk about the other side of selling an Amazon FBA business, what they had to go ahead and go through, what are different things that they would have done differently before they sold their business. So again, subscribe to his YouTube channel to get that. And if you guys are interested, again, I'll have Empire Flippers linked as the first comment, and I'll actually have it in the description as well. But until next time, guys, peace.