Now, don’t get the wrong idea, just because you hit $1 million in sales doesn’t mean you actually walk away with $1 million in your pocket. You’ll have overhead and other expenses, but your profit margins on a typical Amazon store is typically 30%.
As a result, you’ll earn $30 for every $100 in sales. Of course, this is provided you don’t blow up the process and lose your shirt. So, if your store takes off and is making sales left and right to the tune of $1.1 million every year, then you’re looking at about $333,000 per year in profit.
When you break it down even further, that’s $27k per month, or almost $940 per day. But exactly how do you get to $1 million? Well, you could keep up this pace for 3 years, but you could get burned out pretty quickly. Fortunately, Tom Wang has a better option.
“So what you want to do then, when you actually hit this milestone,” Tom says, “is you actually want to sell your business. Okay? Now, there are tons and tons of people coming into this space right now.
They’re purchasing Amazon FBA businesses. There’s a lot of good media coverage. There are big names, big investors coming in. And people think Amazon FBA is truly the future.”
In fact, people are falling over themselves looking for Amazon FBA business. For them, real estate investment is a great option, but FBA is much better.
“So once your business can kind of generate this [one-point-one million a month in revenue] for at least twelve months, what you can now do is approach one of these buyers and you can sell them this business,” Tom points out in his latest YouTube videos.
The biggest question at this point is how much do you sell the business for? Well, you have to ask yourself what someone would be willing to pay for your FBA business. What you want to do is take the last 12 month of profit, $333,000 in this case, and multiply it by a specific number.
In the Amazon FBA industry, you can expect to get about 3x the amount of your last 12 months of profit. So, this gives you your $1 million.
Now, it’s just a matter of doing the math. If all you do is sell just one product for a $20 net profit, then in order to make $940 per day, you would have to sell about 47 units every day.
That might be stretching it a bit for one product. But if you add 3-5 different products, then this would become much more feasible. In either case, do your homework and figure out what would be your best option.