How Much Up-Front Money Does it Take to Earn Passive Income Selling Books on Amazon?

Uncategorized Jan 12, 2016

how much - question in letterpress type

Have you ever thought about starting your own used book-selling business? One in which you paid people to do all of the sourcing and shipping? Wouldn’t it be nice to capitalize on the excellent profit margins that are found selling used books without having to do all of the work yourself? There’s opportunity to earn some nice passive income selling books online with the right system in place. But, before we get too excited it is important to count the costs. The faster you want to grow this type of business the more money you will need to invest upfront.

The question, “How upside-down do you get in this business before you start to earn a profit?” was asked to me by my good friend Jeremy James, and it is a very important one to consider. I’ll give you my answer to this question, but just remember that your results could vary. If you build your book selling business slowly and steadily, you could pay back your initial investment in inventory, supplies and equipment, and then slowly roll all of the profits earned, selling books, back into acquiring additional inventory (click HERE for a general list of what you’ll need to start this sort of business). I believe that this can be done without very much additional funding out of your pocket. This is a less risky way to grow this type of book-business than route that we took (which was to outsource the entire operation as quick as possible). But, If you’d like to scale things up a little faster you could invest more money upfront, and then reach your desired passive income stream sooner.

In 2014 we decided to grow our business faster than it would have grown on its own. What I mean by this is that we didn’t want to wait until the sales caught up before going out and sourcing for more books. I was confident that our initial investment would pay off, once our inventory hit a comfortable level. So, for the first 6 months of being in operation we were investing more into the business than we were getting out.

This means that we ended the year with a net loss of $2912.84. But, don’t let that discourage you! Yeah, we were down $3k, but we had an additional 4200 books in our inventory and were poised very well for the rush of sales that we were anticipating in January. We pay for our books (plus finder’s fees) the week that they’re sourced, but sometimes these books aren’t even shipped for a few weeks and then they need at least some time to sell on Amazon once they hit the fulfillment center. All this to say, If you are planning on putting in a large up front investment be aware that you’ll need to be very patient especially the first few months.

Now, as we are wrapping up Q1 of 2015 we are no longer in the “red”, even though we are continuing to grow our business and put a good chunk of our earnings back into new inventory and equipment.

So, to answer Jeremy’s question, it’s up to you how “upside down” you’d like to be. If you want to pin your ears back, like us, and you have the extra capital to invest in this new business endeavor now, great! If you’d like to slow things down a bit and build at a pace that you’re more comfortable with, go for it! However you want to structure your business is up to you. There is an incredible, scale-able opportunity in selling used books, and I wholeheartedly think that you should get in on it, whatever pace you decide!

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