How much did you increase your income last year?
If you compared your tax return from the year before versus the most recent year, was it $100,000 more?
For most people, likely not. Most of us don’t increase our income $100,000 per year.
What if we could though? What if in the next 12 months you reliably increased your income by $100,000 after taxes? Here’s how:
Path 1: Make an Extra $135,000
If you make an extra $135,000, you’re left with about $100,000 after taxes.
You can hustle, work multiple jobs, get paid for performance, or take a new, much higher paying job if one is available.
However, this path isn’t the easiest and is far from the most reliable.
Path 2: Buy an Asset that Appreciates $125,000
If you buy an asset for X, it appreciates to X + $125,000, and you sell it after a year, you end up with about $100,000 after taxes.
Maybe you can buy and fix up a house. Or, you can buy a small business and improve it quickly.
The problem with this approach is the risk. To buy and sell an asset that appreciates $125,000 pre-tax in a year, you likely will have to invest at least $100,000 or more in the first place.
Then, what if it doesn’t work out? Your goal was to make $100,000 – instead, you might end up losing $100,000. Not good.
This brings us to the third path…
Path 3: Create a Business Worth $125,000 and Sell It
Before I explain this path, I must admit my bias. The idea for this post came to me as I’m preparing to host a webinar to share a process to build a six-figure business in 12 months or less. On this webinar, we’ll give lots of free content, then offer the opportunity to join the newest version of our business-building course, Amazing Selling Machine Revolution.
I’m biased toward (1) building an e-commerce business and (2) this particular path to create wealth. However, I’m not here to sell you our course. I am only explaining the process which you can do on your own.
If you build a business worth $125,000 in 12 months, then sell it, you end up with about $100,000 after taxes. I’ll talk primarily about one business model (the last in the list below), but here are a few businesses which might work:
- High-value service in which you aren’t the primary service provider (otherwise the business is unlikely to be sellable after one year)
- Blog / review site
- Consumer product brand
Any of the above businesses have the potential to be quickly built and then sold. The one I am most familiar with is the last one, a consumer product brand business, and is the main focus here.
Step 1: Pick a Product
The first step is to pick a product to sell. Selling a product already proven to sell makes growing sales far more predictable. To build a $125,000 business in 12 months, we must sell a product we know people will buy. This is not the time to invent something new (that can come later, if you wish).
Fortunately, finding out what people are buying is easy today. We just have to look at Amazon. Go to Amazon’s website and look at any product. If you scroll down, around the middle of the page there’s a section titled Product information. In that section, there’s a Best Sellers Rank. If you look at the first category listed, you’ll see this product’s rank in that top category.
I just pulled up a bamboo cutting board that’s ranked #545 in Kitchen & Dining. This means that product is the 545th best-selling product in that entire product. Anything below 10,000 is good. In this category, a product with a Best Sellers Rank of around 10,000 still sells about $200,000 per year.
How do I know this? Because my company is the majority owner of a software business called Zoof. With this tool, you can install a Chrome browser plugin and pull up the sales volume of any product on Amazon. Zoof is free to use for the first 14 days (= shameless plug).
First, look for a product with less than 10,000 Best Sellers Rank. Second, look for a product with less than 10,000 ratings as that’s a gauge of the level of competition for a product. Amazon replaced product reviews with product ratings not long ago. When it did, the number of ratings shot through the roof – by 10X.
Lastly, go to Alibaba and search for the product you want to sell. (Note: if it’s a health supplement or beauty product, search in Google for “[product] private label” – for example, “vitamin d private label”). See if you can find a supplier for the product. If you can, you can likely create your own brand of the product.
Once you find a supplier, go back to Amazon. Read the most recent reviews of five to ten of the products available on Amazon that match what you want to sell. What do people like? What do people don’t like? Make a list.
Then, when working with a supplier, aim to improve at least one aspect of the product. To stand out on Amazon, you need a reason for people to want to buy your new product. The best way to do this is to differentiate your product in at least one way.
Step 2: Create Your Own Brand
It’s so easy to create your own brand of a product that it’s not worth the horrible margins to sell someone else’s brand.
First, come up with a list of potential brand names. Second, check the availability of the .com domain name on GoDaddy.com (or another domain search tool). Lastly, check on the US Trademark Search website to see if the name is trademarked. Pick a name that (1) has the domain available and (2) is not trademarked.
Then, create a simple logo on fiverr.com (search for “logo design”). These cost as little as $5 to $10.
Step 3: Order Inventory
Next, order inventory with your supplier. I don’t recommend spending more than $5,000 to $20,000 on initial inventory, regardless of your financial circumstances. Any more than that for your first time is likely too risky.
A typical product following this model sells for around $20 to $30. This means your product cost is around $5 to $10 including shipping and packaging.
You should be able to order at least 500 units at first, though that’s not completely necessary.
Most suppliers will ask for 30% upfront and 70% when the product is ready to ship. For example, if the total inventory cost is $5,000, the supplier will want $1,500 upfront (30%) and $3,500 (70%) when the product is ready to ship.
Step 4: Grow Sales
Your first goal once you’ve chosen a product is to grow sales. If you can get consistent sales coming in every day and every week, you can increase your profits over time. At first, you just need to make the sales without losing a bunch of money.
Here are the best ways to grow sales for a new product on Amazon:
- Create a discount coupon on your Amazon product page for 10-30% off
- Use Amazon Advertising
- Create content about your product and post it on social media
- Recruit influencers, especially if you know any personally, and pay them to promote your product
Your Target to Build a $125,000 Business
A business like this that’s only been around for a year might get 2X annualized profits. This means if you want to build a business worth $125,000 before taxes, it needs to produce $5,200 per month in profit ($5,200 x 12 x 2 = roughly $125,000).
As long as you don’t waste money, you can achieve a net profit of 25% in this type of business. To produce a monthly profit of $5,200, you need $20,800 in sales per month at a net profit of 25%.
If you sell a $30 product, you need to sell 23 units per day to build a business worth $125,000.
That’s your target: 23 units sold per day. (Note: If you sell a more expensive product, say for $50, then you only need to sell 14 units per day. However, more expensive products usually mean more upfront inventory costs.)
How to Put $100,000 in Your Pocket After 12 Months
If you build a business with a good product, good reviews, happy customers, and about $5,200 in monthly profit, you own an asset worth about $125,000. To put $100,000 in your pocket after taxes, the next step is to sell your business.
You can use a website such as flippa.com or a business broker such as Website Closers or Quiet Light.
However, you might want to keep growing your business. If you build a business with $20,000 in monthly sales in a year and grow it by 10% per month, after 12 months you have a business with over $62,000 in monthly sales. At a 25% profit margin, your business then produces over $15,000 in monthly profit.
The story gets even better… The valuation multiple of your business goes up too. Rather, than only getting a 2X annualized profit multiple, you might get a 4X multiple. Your $15,000 per month profit business could be worth over $700,000 after just one more year.
It’s good to have options 🙂
Other than getting a new, higher paying job, I think this is the most reliable path to an extra $100,000 in the next 12 months for most of us. It’s also a lot of fun building a business from scratch and watching the brand you own come to life.