Selling On-Line - Passive Income?

More than once I have bumped up against the notion that selling on-line on Amazon is way to make passive income. There is no way in the world that selling on Amazon is a way to passive income! Passive income is things like buying 100 shares of IBM and receiving a dividend check from them every quarter for the next 50 years. Passive implies lack of activity. Amazon is a business that you must actively work at. I downloaded a sample book on my Kindle once on making passive income. The first chapter was all about using Amazon as passive income, which is ridiculous. Even the jokers that steal everyone's listings and then use other sellers to drop ship the purchases, still must do some work. An Amazon business doesn't run itself while you lay on a beach somewhere drinking Pina Coladas.

Steer clear of any book that implies selling on line is an easy, fast way to make money. Or a passive way to make money even more so. The writers are appealing to the lazy folks who think everyone else got 'lucky' making money on Amazon! Way too many people in our world that want quick cheap fixes to their lives, but real change and a real business, only comes about by WORK.

As to books on selling on Amazon, sorry, I haven't looked for any in a long while. You want to go to Seller University at Amazon to learn the ins and outs of selling there. For actual books on selling on line, specifically on Amazon, look for recently written books on SEO, running a business, keyboards, etc.  all those areas that benefit a selling by having the knowledge to know what makes a good key word or why your listing gets no traction on search engines. I have also found over the years, if I am curious about a topic, I will go to the Kindle store and download samples of 10 recent books about selling on Amazon, selling on line, Pinterest, etc. Samples of books encompasses the first 10% of a book so a 300-page book would give you the first 30 pages including title page, etc. But you might get the whole 1^st and possibly part or all of the 2^nd chapter and by reading that info for 10 different books, you will have gleaned a lot of ideas that you can put into practice or investigate further. I used this technique to understand how to get followers on Pinterest and within two years I had 10,000 followers and in two more years over 22,000 followers. So, this crazy way of learning things does work, and it is FREE! If you find a really great book when reading the sample, you can always buy the book.

 

 

 

How can I tell when to go 'Full-Time' when selling on line?

On an on-line forum, the other day, I saw a question from a seller asking about when it would be feasible to go ‘full-time’ with his on-line business. That isn’t just a single number that can tell you that. Here are only some of the things you should consider.

Well one thing you must look at is not your sales figures, but your net profit figures. A person could sell $7500 worth of product a month, but because of high costs and expenses and a low profit margin they could be netting only $250/month. Not enough to quit your other jobs or businesses. Someone else could have $7500 in sales and because of high profit, low costs and expenses are netting $5000/month. That my friend is a livable income. If you don't think it is, try living on a SS check that is 1/4 of that and see how you feel.

Over the years as I have sought every idea possible for living and surviving on Disability pay, I've seen many folks bemoan the fact that although they earn $250,000/year they can't make ends meet. Well to begin with in their head they are thinking I make a 1/4 of a million dollars a year I should be able to afford ______ (fill in blank). the reality is with an income that high, they are forgetting the money they send to their Uncle Sam, the governor and mayor as well as to SS and Medicare, etc. They may only be taking home $180,000 or $70,000 less than they thought they were making. You must be clear in your head just exactly how much you are making when deciding if something has turned into a full-time job/business, and it takes lots of figuring to come to those numbers. Of course, you also must see an entire year's selling cycle to see the peaks and troughs of your income during the years. My best months selling months are January>April. My December sales are generally in the toilet as I don't sell items that are gift type things. I sell items that you can make gifts from so they should be bought out further ahead of Black Friday.

Lots of things to look at and figure out. How efficiently are you running your business? Are you spending money where you need to? For instance, I have bought items from people that have a hand scribbled address on the package, don't bother with a return address and no packing slip. Apparently, they don't want to invest $40 in a printer. Instead they send out packages that you have nothing in your hand to help remind you of the seller's name in case you want to buy more. Same with sellers that won't invest in a scale. Both items are business expenses and both will allow you to keep shipping expenses correct and help you promote your business. So, the person netting $500 a month might be able to change that number to a higher one depending on how he deals with expenses.

So, before jumping into thinking you can support yourself if needed on your on-line income, be sure you KNOW what that income is. Of course, you can also look at your own living expenses to see if you can chop things out if necessary so that you can live at lower costs as well and figure out how many months you can live off what is in your savings account. You don’t want to go full-time with $500 in the bank only to have a major selling slump with no income coming in for days if not weeks, or due to being dismissed from selling on the only site that you have and have poured all your energy into. Lots of things to consider before making the full-time plunge.

Cunningly Clever Entrepreneur

I always enjoy reading business books and especially finding that the author is on my wave length as I found in this book: Cunningly Clever Entrepreneur by Andrew Wood. I haven't gone to business school, I have only worked for businesses and have run my own business, Moonwishes Sewing and Crafts, I have learned by experience and also by the many books that I have read on starting and running your own business long before I ever had a business. My goal for years was to have a business that I could run from my own home. My goal with this blog is to help you learn how to avoid some selling on line errors and how to do the right thing so that your business will grow to where you want it to be.

On one of my early posts here, Begin How You Plan to End I talked about starting your business in the same way that you want it to be running when you sell it, die, or for whatever reason you no longer want to be in business. Having the end goal in mind keeps you focused so that you don't run into someone else's' goal and score the point for them. In Cunningly Clever Entrepreneur the author also states this same philosophy. To look ahead, make goals, measure those goals, market your product (and you will be surprised to learn what your product is!) and many other essential things that an entrepreneur needs to learn. I'm not quite half way through the book and I have already found some ideas that I could use. Instead of waiting until I had read the whole book, I instituted them today with my store Moonwishes Sewing and Crafts . I look forward to finding many more ideas that I can use as well.

Besides his actual points of advice, Wood also pushes the necessity of continuous learning. Reading or listening to audio tapes or watching videos all on different topics that will help you to achieve your goals for your business. I have never, in all the books on business that I have read, met up with any author that pushed the necessity of keep studying like he does, ..... and he is right. You should be able to find an entire steak dinner including desert  to 'chew' on while reading this book. If you can't find even one scrap, then you aren't looking hard enough or perhaps you don't have enough imagination and creativity to run a business. I love having my own business where I don't have to send all suggestions up to my boss where she takes it to her boss and then the idea I had that everyone else in the office loves gets tossed out for some idea that is completely different. My business, no committee. If I skin my nose it is my fault, but if I earn $$$$ from the idea I can take full credit as well. So many times when I suggest that people read and research before starting and jumping in with both feet into a business venture, they give the excuse of not having enough time or they don't read fast, or deep down they really just don't like to read. Those are all excuses for being lazy. Just because you want to sell on line doesn't mean that you shouldn't be prepared and continue learning so you will always get the best results. The internet is very fluid and you have to be able to respond to change in the middle of the day sometimes. Your knowledge base will help you do that efficiently.

Get this book and read it. You can borrow it for FREE using Kindle Unlimited if you are signed up for it, or you can buy it outright. Either way it is a must read! Please note that there are two authors at least with the name Andrew Wood, so be sure you have the right one! The links here will lead you to one of his books and just follow links at the book to his other offerings.

Working from home

While you may think before you start a home based business that it will be easy since you can work it around family activities, that isn't quite how it works. You will either find yourself buried in work or putting things off since the kids want to got out for lunch or to the park, etc. One of the main secrets of having a successful on line business, especially one conducted from home is organization.

Here is an interesting article that I received the other day and since the author says it better than I can, I will refer you to it instead of trying to paraphrase it. The name of the article is The Challenge of Working from Home 4 Steps to Focus . Just click on the article name to be taken to it. You might also want to sign up for their newsletter while there. Every website that has important information and you can see the potential for more, you should sign up for.

While I have always been an organized person, I have much more trouble keeping to a schedule of any kind these days as my health causes me to have many bad days out of the blue. But I try to focus on what is the most important thing for me to be doing. For me that is the on line stores I run, http://www.MoonwishesSewingandCrafts.com as well as http://www.amazon.com/shops/moonwishes . Then my crafting blog. After that comes my reading and review blog as well as this one. I don't purposely put off this blog, but as I don't earn anything from it and I do earn from my stores, that has to be where my concentration is. Eventually I want to be able to spend more time on my blogs and writing in general for pay since my health is only going downhill and eventually I won't be able to deal with packaging orders, etc. That will be a sad day.

Bookkeeping and You

Much of my time in the past month or so has been taking up with sorting through piles of paper and doing taxes. Something I'm sure we all love to do. I got behind this year due to my poor health, but I decided that I'm not going in the direction any more. Losing and not tracking receipts can cost you money by making your income from being self-employed higher than it really was. Every year I try to find better ways of dealing with the paperwork involved with running 2 businesses that my husband has. It is tough. There is a lot to keep track of of the rules are ever changing.

When it comes to selling on line, or having your own business of any kind there are many things that you need to be aware of from the point of your own business being an idea in your head so that you can track expenses and then as you start selling, your income. While you may want an accountant or tax preparer to do your taxes, YOU need to be aware of the government rules  so that you save the proper paperwork to give to your tax person. They can't take a deduction for you is they don't have any paperwork showing that you paid for something.

Over the years on many forums I have seen many people that don't want to be bothered with tracking income and expenses because they don't think they are in a business, this is just a 'hobby' to them. However, what happens when that 'hobby' begins to take up 40 hours a week? It has gone past the point of a hobby and into the realm of being a job or your own business. Treating your hobby as a business from the beginning can help you keep more of your income because there are more deductions available to a business than to hobby income. The best thing to get is a current copy of IRS Publication 334 Read it. Don't understand it? Read it again. I have done my family's taxes for my entire adult life and I still have to read up on the rules and any changes. And yes, it is confusing but it doesn't mean you get a 'get out of jail free card' just because you don't understand the rules. The IRS doesn't care if you don't understand something, they expect you to follow the rules anyhow.

I'm not suggesting that you become an IRS expert, but that you understand the basics, such as what is considered an expense, what is income, and those sorts of things. Read through the Publication 334 paying special attention to chapters 6-8. Copy those pages out and go through them with a highlighter. Many rules are there for multi-million dollar companies and most of us who are making some money on line aren't probably going to get there, but we don't want to miss those deductions that we can take.

Now I'm taking my own advice and going back to my tax forms with 334 to be sure I did everything correctly.

Why Do You Want to Sell On-Line? Part 2



??  WHY Sell On-Line ??

Last week we discussed the main reason that many want to sell on line and it is money. However, there are many intangible reasons for selling on line. Perhaps you have always wanted your own business to fulfill a need within you, and that is a great reason. I know that was true with me. I read many books on starting a small business long before I was able to do anything about it. Many of us are tied down to jobs with paychecks since we need to keep a roof over our heads and food on the table, so you can’t generally just quit your job to start a business of your own. If you get laid off, sidelined due to disability, become a stay at home mom or dad once children come and you want to help bring in some more money, are all good, legitimate times to go ahead and plunge into starting your business. I actually fell into my on-line selling business, and several things I would have done much differently if I had known then what I know now. Or you can learn all you can and then dip your toes in the water and start selling and doing the business start up work on your evenings off and weekends. However you do it, starting an on-line business can proceed slowly and you can be accomplishing a dream.

Another reason that you may want a business is to prove that you aren’t that chump who will never amount to anything according to your family and/or friends. With thoughtful research, planning, diligence and execution you can surprise them all.

I have heard of many crafters that love crafting but after a while they don’t have the funds to buy what they need to continue crafting, so they start selling their handcrafts to support their crafting habit. This can apply to any collector as well; they sell their items with less value so they can afford the items with more value and thus have a much nicer and valuable collection. Perhaps you can no longer be as active in a hobby like you would like to be so you keep in touch via selling the supplies that other collector or crafters need. This has an added benefit of keeping you participating in something you love and many of the things you need for keeping up with your niche becomes tax deductible (please check with your accountant or IRS publications on this).

There are lots of reason that you may want to sell on-line including small cumulative reasons such as; no need for an alarm clock, ability to work at home in your pajamas if you choose, no driving through blizzards for an hour or two to get to a work site or even the need to clean snow off the car for days at a time, no boss above you squelching your ideas since this is your business and not anyone else’s. There is also the freedom to set your own working time to coincide to when you are at your best for working. For many, myself included, these are some of the best reason to work from home and selling on-line is one way to achieve your goals of this sort of job freedom.

One big reason to sell on-line is that you may have ‘wanderlust’ or ‘itchy feet’ with no job keeping you happy for long. I used to be a nurse and had 7 different nursing jobs in 14 years because after a while I just couldn’t stand working at those facilities. Yet with what I do to sell on-line now, I’ve been doing it for over 12 years and still love doing it even though my health doesn’t allow me to work ‘full-time’. That is what I call a successful business. Doing what you love and making money while doing it!

Tip of the Day. What is your main reason for wanting to be a stay at home business person running an on-line business? What are some of the smaller reasons that you want to do this?  What are your goals and thoughts on why you want to start selling on-line? What do you hope to accomplish financially and emotionally from selling on-line?  Write these things down for when the going gets tough, and it will, so you can read them again and remember why you are doing this. Also as you go through your beginning thought process you may discover that selling on-line is the LAST thing you want to do. Better to find out sooner that later.

Years before I ever had my own business, I read many books by Paul and Sarah Edwards that gave me knowledge for when I did start my own business. I realize that some of their advice may be a bit dated, especially when it comes to hardware, internet and venues to sell on, however, the thought process behind starting your own business was always spot on. You might want to read some of their books either bought via Amazon or borrowed from your public library. Paul and Sarah Edwards

Why Do you want to sell on-line? - Part One

 

??  WHY Sell On-Line ??

 

One of your first steps prior to selling on-line is to ask yourself, “WHY do I want to do this?” While you may have heard that selling on-line is easy, not much work and that you can make a lot of money doing it, that isn’t necessarily so. Selling on-line requires patience, perseverance, time and effort. If you aren’t prepared to spend the time and effort to do this, then you might want to look into finding a different way to make money. This is not said with any kind of condemnation. If you need to earn extra cash, and who doesn’t these days, at least find a way to do it that you will enjoy.

 

As you start asking yourself the question of Why do I want to Sell On-line, some of the things that you need to think about is how much money do you need to make or want to make. The need to make a certain amount is how much isn’t being covered currently by your paycheck job. The want to make is because you want to save to go on a great vacation, eat out more often, buy more clothes, and things like. In other words the things you could live without if you don’t make the money. The money you need to make is a whole different story if every month the gap between your paycheck and the utility bills gets ever wider; you are using credit cards to buy your groceries, etc. I believe strongly in living a frugal life, but I also understand shortfalls in income versus expenses.  So write down that figure that you want to make as a bare minimum on a monthly basis and you have your first goal set. Then figure out how much more it would take to give you a more comfortable life style on a routine basis. That is your goal to push towards once you are consistently making the minimum goal. Having that minimum goal keeps you focused during the month and gives you a kick in the backside if you aren’t anywhere near that goal and it is the 25th of the month. Then you ask yourself where you went wrong, too much TV, not enough promoting, lousy inventory, poorly written descriptions and titles and poor photography?

 

Along with how much money you want to make, decide if you really want to have a small business or just a hobby to make a little money. Be honest with yourself. If you don’t think you can be a success and just figure that you will try to make some money out of a hobby, you won’t be making much. You won’t get the full tax benefits and write offs that the IRS allows. But if you say you want a business and treat it like a hobby then you are a hobby seller. To be frank, this blog is being written to benefit those that actually want to start an on-line business.

 

If the thought of having your own business, scares you silly, that is okay. I felt the same way. You may need to find a mentor that will encourage you to take the chance. More about mentors later in another post, but a good idea now is to be looking for one that won’t tell you all your ideas are marvelous even if they aren’t nor do you want one that will put down everything you say.

 

Are you desperate for money so see selling on-line as a quick and easy way to round up money? Sorry, but for the most part that isn’t going to work very well for most people unless they are about to lose their home that is filled with expensive stuff that you might be able to raise needed funds by selling off all your excess stuff. Otherwise, the people that I see that jump into selling on-line through sheer desperation have multiple problems getting a store started. The money won’t come in like you want and think it should. Depending on the selling venue, some sellers don’t get their first sale for a month or more.

 

Until my next post, write down why you want to sell on-line and figure out your sales goals of the minimum you want to make monthly once your venue is up and running well. Also, how much do you really want to make to give yourself a more comfortable life.

 

Tip of the Day: Talk to as many people as possible that sell on line to find out what they sell; how their sales doing, why they are selling on line, what lead them into it and ask them if they sell in a niche and why. Keep your ears open and you can learn so much. Of the people that you talk to, think are any of them good mentor material?


 

Begin How You Plan to End

Begin How You Plan to End. What does this mean? It is simple. If you want a great ongoing success as an online seller you need to start out with that thought already in your head. It means you do the research ahead of time so that you are knowledgeable about what on line selling is all about, what a particular venue may require of you, having a firm knowledge of where you will source your inventory from, and be willing to charge the prices that make you a profit. By the way, profit (in my opinion) is not clearing $0.25 when all is said and done.

Over the years, those of us that have taken some newbies under our wings to help them have tried to get some of them to understand that the prices they are charging isn't going to make them any money at all other than the quarter I mentioned. I've even found sellers that were losing money when all was said and done! That isn't the point of selling on line! The point is to make money! We have frequently been told that they aren't doing this (selling) to make money. It is just a hobby. I can understand crafters that love to craft selling their finished articles to make enough money to finance another project or two. But I have a hard time understanding most of the 'hobby' sellers, selling what they do just as a hobby. I sell sewing patterns on line and have for years, I have run into other pattern sellers that list patterns for a tenth or less of what I sell mine for. Yet again with the excuse that it is only a hobby. I have proved through my sales that people will pay more for a pattern, so why not price them accordingly and make much heftier hobby money instead of pretty much nothing? If you want to sell on line as a hobby and you don't care at all about profit, please be considerate of those that sell on line to keep a roof over their head or food on the table, and don't sell at give away prices.

All this comes back to begin how you plan to end. If you can see yourself, or even if you don't have the self-confidence to see yourself that way yet but are hoping to do well, as a successful seller, think about what you need to do to get there. You need to learn how to take excellent photos of what you have for sell or else learn how to get someone to do it for you. You have to learn how to write good titles and listings, paying attention to spelling and grammar so that your listing looks professional. You have to learn how to write up your Terms of Service (TOS) so that you are fair to both your buyer and yourself, you have to be able to write up an About Us page so that potential buyers will trust you and see the link between who you are and what you are selling. You need to learn to spellcheck, proof read, and throw out the texting dictionary since believe it or not, not everyone has a cell phone and don't understand all those cutesy abbreviation. You want to write everything clearly so that they understand what you are selling even if they can't see the picture, and take your pictures clearly and well enough so that they don't really need to read the listing although you hope they will!

Set up a book keeping plan taking advantage of your computer. When I was first selling on line another seller admitted to keeping track of all her sales in a paper notebook! Use the resources available to you. Think up ways to promote your goods to your world wide market, not just the folks in your town. Think of what truly interests you or what you know a lot about when deciding what to sell, as that makes it much easier than trying to learn and understand a product that you don't understand what it is for and you have to write a convincing listing so that someone will buy it. Don't look at this as an opportunity to get rid of the yard sale leftovers that haven't sold at your last three sales. Unless you have researched the articles and know they should be worth something, don't bother trying to sell trash. Trash belongs in the trash.

We will be talking about all these issues over time, in the meantime put your thinking caps on and think of it this way. If you got hired as a lower level manager with a chance to climb the ranks to eventually be CEO of the company, would you come to work the first day on the job in dirty, holey blue jeans and a ratty T-shirt. If your answer is yes, this blog isn't for you. If your answer is a resounding no, then keep following. I will be posting as time allows since I am busy with my own successful business. 

Thought for the Day: Don't forget that the moment you start your business you have just become a CEO!