Looking for a part-time business to fill in some of your financial gaps or give you more financial freedom?
In the last couple of weeks I've had discussions with a friend and two new acquaintances about whether book arbitrage is the answer to their income needs. Here I'm sharing my thoughts on where the BIBS (Business of Internet Book Selling) fits best as part of an overall plan to increase income and gain financial freedom.
In tomorrows post, I'll finish with where Book Trades can fit into the big picture of transitioning your BIBS from a part time business to a full time one which supports your income needs.
Building a Book Business
What are your income needs?
If you have absolutely no money and no job then building a book arbitrage business the way we have is not an option for you.
If you're looking for a paycheck to bring in groceries for next week and pay rent this month, BIBS isn't likely to do that for you. Those are important short-term goals that can't be met by a book arbitrage business, in my opinion. BIBS was our long-term goal, because our short-term income solutions were slowly getting us more and more behind.
What needs to be in place to build a BIBS if you have nothing?
- You need to get/keep a job (or two) that will cover your living expenses.
- You need a way to invest $50 or more a month in books that have great ranking for sales in Amazon.
- You need to be able to re-invest in your business all the sales that your BIBS is making (don't live on it,) until the sales are enough for you to live off of them and keep re-investing in the business. It took us a year and a half to do that.
Building the BIBS when you have available cash.
In this case, if you learn to do the book business well, you can take money you have set aside and grow it. We know several people who are using the book business to grow their retirement income. If you're this person, and you find the book business fits you well, you can grow your BIBS quickly and that's exciting!
But honestly, this post isn't focused on that situation, though I have written some about it and will continue to. On my mind right now are people who are really financially struggling and why it could be worth it to scrimp or get an extra job (temporarily) in order to support a growing BIBS.
Why the BIBS is a good long-term income solution for our family.
And why it might be worth it for you too.
Let me paint you an honest picture of our finances in the last 20 years or so.
In the past 20 years, three times my husband took a pay-cut in a job change because it made sense for other reasons. We looked at our budget, felt strongly that if we were frugal we could do it and it would be worth it. No regrets about that, but we thought we were doing better than we were. If something broke down, we didn't have money to pay cash sometimes, although more than once we saved up to pay cash for used vehicles and we were really trying to be very responsible.
- We didn't have any investment property at all as we lived in a parsonage for around 3 years and a home on a camp property for about 5 years before that. The living arrangements were considered as part of our compensation. Looking back, it would have been great for us to have planned to add even just a thousand a month to have as a down payment for a home in the future (the book business would have been great for that, what did we know then?)
- Our living arrangements had to change due to health issues and our living expenses went up as we added rent to our budget. On top of that we had medical expenses that we struggled to cover. Without Jim's mom and her help, we wouldn't have been able to do what we did for our daughter's health.
- We decided together that I would start working to help with our finances. But we both thought I should work from home. That started my journey as a content writer for websites and podcasts. Jim also started working part time doing that as well as his full time job. Even when it seemed like we were working a lot of hours, we couldn't get ahead of the bills and we could save up a down-payment for a house (we were still paying rent.)
- Honestly, we needed a business that would help us grow our income exponentially and none of the work we were doing for others was doing that for us. I see now that the key was that we needed to own our own business. But many of the other businesses opportunities call for more money than we could dream of affording.
An affordable part time business.
If you have enough money, and you're good at it, you can buy and flip houses. If you have lots of money, you can buy a franchise or buy and existing business that is thriving.
We didn't have that kind of money, but we began to see (and my friend had been telling me for a long time,) that the best way for us to grow our income was to start our own business.
We started by purchasing the system that introduced us to the concept of book trades and book arbitrage (buying and selling books.) We invested our hard earned money in that system and yes, it was scary. We decided to give it about three months to prove itself and it did.
After we saw the results from the first textbook season, we decided that, for us, it was all or nothing. Even when we've scrimped we've kept up with our credit cards and debt so we have good credit. We decided to risk purchasing on one of our credit cards for the next textbook season. We believed that if we saw the same results from the last season, we would be able to pay off the card in three months and use any profit to re-invest in our business.
That's what we did.
I'm not recommending it, but it's what we could do and what we felt we needed to do. For various reason, we really need to move out of the house we are in. Our goal was to build the business quickly and be able to save a down-payment while we kept re-investing in our business. We were able to do that. We haven't bought any books on credit since then. We've saved a down-payment, we're buying a home/business.
The book business still isn't where it needs to be for us to be able to afford all that we want to do for our kids and family. We hope to reach some very important goals by next year and that's what we're building toward.
Building this business wasn't cheap, but it was doable for us.
Let me just compare this to getting into the real estate market (which I might like to try some day.)
- Affordability? Um around $3,000 to give it a "try". I'm pretty sure you can't get into real estate for around $3,000. Any argument on that?
- Opportunity for failure? Yikes! Honestly, I do want to try flipping a home some day, but all the things I could get wrong? And all that investment in ONE HOME? When we made mistakes in our book business (and we did,) it amounted mostly to the double digits and occasionally into three. We were able to learn from all of them without crashing our business. Plenty of room to fail without really FAILING! :0
- Financing? No problem, we had good credit and could borrow a "big" amount, using a credit card, to push our business to the next level after three months. Asking a bank to let us do a real estate "flip" investment on their dime probably wouldn't have happened a year ago (and probably not now!)
Want to Build a full time business using BIBS but don't want to use debt to do it?
I think you're wise.
To exponentially increase your income, build your own book business. You can do it slowly, you don't have to fast-track it like we did.
Do it while you're in college. Do it just a couple of hours a day as a stay-at-home mom. Do it in the evening after you get off work. Try it for a year and see what happens. Start with a small goal, like investing $100 a month. Re-invest that money; don't live off of it. Don't use it to buy chocolate or dog food. Acquire your movie and Ramen money from some other means. Don't touch it! Re-invest it all!
Be obsessive and compulsive about it and enjoy it.
How does this look using the experience Jim and I have had doing the BIBS?
Let's take a general, working example. Let's start with 10 books, bought at an average of $10 each. (That's $100 for you math experts!)
- Month 1: Invest: $100 in high ranking, profitable books and sell 30% the first month earning around $45 in profit.
- Month 2: I invest $100+ $45 back into the business and sell 20% of the books earning around $75 (notice, I still have 70% of the books from the first month and 80% of the books from the second month in stock)
- Month 3: I invest $100+$75 (that I made on sales last month) back into the business. I sell around 20% of the books in your inventory so I have a profit of $105 (at this point, if I sold all of the books in my inventory at the price at my projected prices I would have around $400 in sales.)
- Month 4: I invest another $100+$105 (last months sales.) Whoohoo, textbook season. I bought bunches of textbooks and now they are really selling. I sell about 60% of my current inventory which includes all of the books from the past four months (Books I'd bought which hadn't sold yet because they were textbooks and sell best during textbook season.) This month I make $405 in profits (after my Amazon fees and shipping supply costs.) I've invested $100 a month, $400 total and I've made that back and on top of that I have built of inventory in my FBA bookstore.
- Month 5: I invest the $100 this month as well as the $405 I made during the first month of the textbook season for a total of $505 I'm able to invest in my business this month. This month I sell about 50% of my inventory so my sales this month are around $1,000, making my profit $518 for the month (after fees.)
- Month 6: I invest my $100 and re-invest the $518 and my sales are around 20% this year because sales have dropped after the textbook season, but it's a great time to buy cheap books, so my money goes further. I make $288 in profits. I'm a little bummed, but I'm hanging in there because I've got great inventory for the next textbook season. These 77 books are potentially worth around $770 in profit to me ($10 each after my $10 investment to buy them and my estimated $10 cost for fees.)
- Month 7: I invest $100 as well as the $288 I made last month. Low sales again, only selling 20% of my inventory. My profit is $345. However, I have around $920 invested in my inventory right now, which is worth around $920 to me in potential profit.
- Month 8: I invest $100 and the about $345 I made last month (which was a bit slow). But I'm so excited that I've made over $2,000 in sales THIS month ($1,020 in profit after my Amazon fees.) That is because it's textbook season again. I still have 68 books potentially worth $around $2,000 in my inventory and I expect to sell a bunch next month as well.
- Month 9: I invest $100 as well as the $1,020 from last month's sales. I know have around $2,000 worth in inventory and expect to have another good month. I sell about %30 percent of my inventory and make about $1620 in sales this month and $810 of that is profit to re-invest.
- Month 10: I invest $100+$810 from last month's profit. I'm bummed because I have to have some of my slow moving books sent back to me and I payed extra fees for long term storage. I also sold about 20% this month (for $1,302 in sales this month. My profit was $651.
- Month 11: I invest $100 this month as well as the $651, my profits from last month. I only sold 20 percent of my inventory this month and made around $1,470 in sales, with around $735 in profit. Looking forward to next month and another textbook season.
- Month 12: I invest $100 this month as well as the $734 in profit during this textbook season. I still have around $199 books in my inventory. My profit this month is $1,275
By next month I'll have $8,460 worth of books in my inventory for the first time. That's 282 books at $30 each. If I sell 50 percent of those books (141 books) during the textbook season (my sales would be $4,230,) I'll easily have $2,000 to invest in books for the next month.
I can finally see that my book business is taking off.
I can now see myself consistently re-investing from $1,000-$3,000 every month over the next year.
The keys are:
- Buying books that won't sit a long time on the shelves in an Amazon warehouse.
- Keeping track of my books and money.
- Reinvesting the profits from my sales instead of living off of them.
Does this seem far-fetched?
It jives with our experience, because we did the book business the right way, obsessively and compulsively.
The main difference is this: We borrowed the $10,000 to get us going after the 3 month trial phase. That first year, we ended up with $100,000 in sales. For our family's needs, that wasn't enough, so we kept re-investing for 6 more months. We're pinching pennies now, but in another year, I believe we'll be thriving off of our BIBS.
If you don't want to borrow money, I believe it is possible for you to have $100,000 in sales in two to three years time (we did it in one, after borrowing that first $10,000.)
Can you build a business like this in two or three years without any debt? I believe you can and more. Three year?!? That's a long time, but where will you be two years from now if you don't do something?
The thing is, you can do this from home if you have access to the internet. It's something you can do to build for retirement, or to build it up to become your family business (like we're doing.) For our family, we still need to build it up a bit before we can live off of our BIBS (Business of Internet Book Selling) and also continue to put money back into it to grow it. But we're close and we're doing it. How about you?
Interested in learning more about growing a BIBS?
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