3 Tips From a Millionaire: The Best Way to Start a Profitable Business on Amazon

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One thing is certain: starting a business requires time and money, often much more than you initially think. The commitment for success and the daily grind is too overwhelming for many entrepreneurs — and that’s why most startups fail. The number of startups still operating after the first five years is only around 50 percent.

The good news or bad news, depending on how you perceive it, is that the reason almost half of all small businesses fail is due to lack of funding or profits. Most entrepreneurs are under-capitalized in the beginning, and most new business owners underestimate just how much money they’ll need to fund operations.

However, if you’re wondering if there is a way to launch and fund your startup quickly and without much risk, look at these eye-opening stats: thirty percent of online shoppers in the US have an Amazon Prime membership, and Amazon ships 35 items every second. This makes selling via Amazon a prime opportunity for entrepreneurs.

According to Andrea Anaya of Boom Seminars, there isn’t a better time for entrepreneurs to take advantage of this opportunity. Anaya is an Amazon-selling entrepreneur who became a millionaire by age 30 and then sold her business for $55 million. She now helps other entrepreneurs launch Amazon-based businesses by following her three funding strategies outlined below.

1. Self-Funding

Some entrepreneurs are comfortable with major risk-taking. If you’re one of them, and have a substantial nest egg built up from previous savings and/or generous buyouts, you should consider committing those funds to your new startup.

It’s not for everyone — some people prefer going into debt rather than risking their hard-earned savings. The upside, of course, is that once your business is up and running you don’t have any creditors or banks to worry about paying back — with interest. Without loans and debt weighing on your shoulders it allows your creativity to flow freely, resulting in a more innovative state of mind. You will also sleep better and night without the stress of having business debt.

2. Friends and Family

Although Shakespeare said in one of his plays “neither a lender nor borrower be,” that kind of thinking would have prevented some of the greatest business enterprises of the last two hundred years. Friends and family can provide funding for your startup, and are often happy to do so when your plan is fully explained to them.

However, you should always avoid informal loans and business arrangements. Treat a loan from a family member or a friend as you would a loan from the bank. Put everything in writing and have it witnessed and notarized. This assures your friend or family member that you are fully committed to paying them back, and they have the legal instruments at hand to make sure that you do. A formal agreement gives them the peace of mind that you are serious, and it gives you motivation to work hard — the last thing you want to do is disappoint a friend or family member.

3. Crowdfunding

The number of crowdfunding websites is massive, and it continues to grow. Indiegogo, Kickstarter, GoFundMe, Crowdrise and RocketHub — these are just a few of the crowdfunding sites that have helped entrepreneurs raise literally millions of dollars on the internet.

While it’s a relatively easy process, it will take time and planning to be effective and efficient for your particular project needs. Many entrepreneurs post a funding goal and expect to sit back and watch the money roll in, but that’s not the case at all. You need to promote it heavily, and having a very active and engaging social media presence will help this greatly. The takeaway is amazing, though — for the most part, this revenue stream is completely tax free.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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