As Q4 approaches, Amazon sellers are gearing up for the holiday shopping season. Taking proactive steps now can help you retain more earnings during this busy time. Alongside inventory buying, it’s essential to focus on streamlining your business operations. Start by analyzing your monthly operating expenses to get a clear understanding of them. Additionally, consider setting up a dedicated savings account, the “Future Plans Account,” to support your Q4 goals. These two steps will contribute to a smoother and more successful holiday season for your business.
Know Your Monthly Operating Expenses
As a Profit First user, you’re already dividing your Amazon payout into various accounts for different purposes like Inventory, Profit, Owner Pay, Taxes, and Operating Expenses. However, there’s one adjustment you should make. Align the amount going to the Operating Expense account with your average monthly expenses. Calculate this by reviewing your YTD Profit and Loss statement, finding the average monthly expenses (e.g., $20,000), and maintain this amount in your Operating Expense checking account.
Although you’ll allocate more funds to the Operating Expense account when sales increase, remember that operating expenses typically remain constant month to month (e.g., software subscriptions, rent, payroll). Avoid spending the excess by depositing only the average monthly allocation into the Operating Expense account.
Future Plans Savings Account
If you’re not using Profit First, follow this strategy: Determine your bank balance during typical months and maintain that amount in your account when your Amazon payouts arrive. Move the remaining funds to your Future Plans Savings Account.
This strategy helps counteract Parkinson’s Law, which states that our consumption adjusts based on resource availability. By keeping the Operating Expense account at its typical level, you avoid the temptation to spend the excess funds. Setting up the bank account may require a trip to the bank, so it’s best to do it in advance. Having it ready allows for a simple transfer during Q4, saving you time during the busy selling season.
Prepare Your Business for Success
Your reward comes after Q4, once the dust settles. Take a clear-headed look at the account and decide how to invest in your business in the future. Use the funds to transition from retail arbitrage to wholesale, launch a new product, pay down debt, set aside for taxes, or take a distribution for a family vacation. Having the money set aside allows you to make a deliberate choice instead of getting caught up in holiday spending. Share how you use your Future Plans Savings Account—I’m eager to hear!