As you're enjoying the income from your Q4 Amazon and eBay sales, you should be looking ahead to some simple 2019 spending and budgeting. Extra money is always easy to spend, but please do it wisely and with some forethought. To help you, I've aggregated some ideas. Take action!
Here we go:
1.) Invest in Your Efficiency - Take a look at your eBay/Amazon operations and see where you are spending too much time. As sellers, we have available to us countless tools, technologies and equipment to help make mundane business tasks more efficient.
- Consider purchasing shrink-wrapping equipment to help you package products more quickly and professionally.
- Expedite your packing and shipping with box re-sizers, bar code scanners and label printers.
- You may be able to streamline your inventory, contacts and databases by upgrading your laptop (I just did. Every few years I'll buy a sub-$500 laptop - my go-to brands are Acer and Toshiba. I avoid - due to some real horrific customer reviews lately - Dell and HP).
- Track what you spend with programs like favorite spreadsheet tracking tool, you may be able to decrease taxable income through business expense deductions.
- Save time with inventory listing tools like Inventory Lab (for any product(s)) or Scanlister (ideal for used books)
2.) Stock Up on Discounted Inventory - Just about every store and online site is running clearance sales through the Summer of 2019. I spend this time to buy Christmas-themed merchandise (toys, home decorations, ornaments, etc.) at 80% off or more, and stockpile them for this upcoming Christmas (2019) when I enjoy selling the for 3x to 10x my purchase price. Take advantage of the great deals, rebate offers and rock-bottom prices for your Amazon business. Take the time to see what seasonal/holiday merchandise you sold (e.g., over the last Easter, Valentine's Day, Summer, Mother's Day, etc.). That way you can identify the recurring trends and popular items will top resell markets in coming months. Prepare ahead by buying inventory well ahead of the crunch.
3.) Bulk Up on Business Supplies - Buying almost anything in bulk will save you money. Take advantage and stock up on:
- Packaging tape (my cheap favorite is here)
- Shipping boxes (my cheap favorite is here)
- Padded envelopes (my cheap favorite is here)
- Labels and printer cartridges. I get mine from Amazon. For labels, I only go with major 'brand names', like Avery or Dymo official products (the non-Brand names tend to get stuck and it ruins everything). For printer cartridges I don't go for 'brand name' because of their price - Instead I find the compatible ink cartridges from top-rated sellers (those with the most positive reviews).
Supplies can be much less expensive when you buy larger volumes. While you're at it, set up a tracking system of what you actually use in 2017 so you can make even better purchasing decisions one year from now.
4.) Bulk up on Services - Do you pay monthly for any software services, utilities, and/or subscriptions? I HIGHLY recommend you contact those providers (examples: cell phone, Internet, any/all insurances). Ask them for their 'best discount' if you upgrade to annual billing (or 'pay in full') now. Yes, I've done this. You can save a boatload in 2017 instead of paying monthly. And the added benefit is you reduce your taxable 2016 income by paying it before 2017. Still don't want to pay annually? Ask them (nicely) for a lower monthly rate to 'keep your business.' You'll be surprised how much you'll save!)
5.) Sell off your Inventory Laggards - I know you may be reluctant to reduce prices on your still-sitting-there Amazon or eBay inventory. There's some drawbacks to hanging on to it until 2017, though:
- Your accountant likely considers your leftover-into-2020 inventory an 'asset' and thus it's taxable (if you're unsure, ask your accountant), and
- You are going to incur storage costs (especially if your products are at Amazon for a few months).
So I generally liquidate (=lower my prices dramatically) what I can before the end of 2019. If I'm reluctant to liquidate and I'm 100% certain I can get at least $20 profit for a product in 2019, I'll have Amazon send the product back to me (via their removal service - it's inexpensive to do so) and store it at my home until the right time. Tip - if you use Amazon's removal service, be sure to select 'ship' not 'dispose.'
6.) Eliminate/Reduce Debt - One of the best things you can do with extra money any time of the year is to pay off debt. Not only will you be saving yourself interest that often accumulates every day, but you will be reducing your monthly financial commitments as well. Think of paying down debt as an easy way to give yourself a raise. If you have trouble managing your debt, consider investing in some money management programs or books to help you get your financial house in order (My favorite is this one.) If you can't afford to shake off all your debt soon, consider applying for (or using an existing) credit card with zero to 2.99% APR balance transfer checks. For instance, I have excellent credit but a small outstanding loan of $10,000. I'm paying 0% APR for 18 months via the consolidation checks my card (Chase) offered to me.
7.) Minimize Your Taxable Income via Savings Before the end of the year, you may want to consider taking some of your extra earnings and using them in ways to help reduce taxes. If you donate some money to non-profits, be sure to keep track of those donations as deductions next year. Consider the tax benefits of tucking some of your extra money away in a retirement savings account, which may have tax advantages. Business-related expenses such as supplies, new software and time-saving equipment may be deductible as well (check with your accountant if you're unsure). Again, check with your accountant or a qualified CPA/advisor.
8.) Invest in Your Online Selling Future- Always keep learning on what's on the cutting edge. I keep tabs with the continuous new training I receive from The Proven Amazon Course.
9.) Splurge A Little ... On Yourself or On Others - Money doesn't mean much unless it's spent in a joyful and rewarding way. If you have something you'd really like to buy or do, set some of your extra income aside for a little year-end bonus. Or, take the extra income and treat a loved one to something unexpected and special. You might also want to share some of your extra wealth by supporting a non-profit organization in some worthy cause to help others. I ensure my money goes to legit, hard-working, non-scammy charities by using the trusted and free CharityNavigator.org. Many organizations out there need financial help; find one that inspires you and support them. Contributions can help you reduce taxes as well.
2019 is a great time to generate extra income online, and it's a great time to invest in yourself and in the future of your business.
Good luck and keep me posted!