Improve Your FBA Businesses Organization & Record-Keeping
April 28, 2021 Jenna Craig
FBA business organization and good record-keeping is foundational to being a top seller and essential to reducing your stress load. This is our last installment of Stress Awareness Month content, and your sign to bring spring cleaning to your business.
Getting organized is not just about your sanity as a business owner and operator (though that’s a pretty good reason), it’s essential to building out a team as you scale as well as prepping your business for an exit.
Thrasio has bought businesses in every level of [dis]organization. We’ve even acquired a company whose financial records were entirely written longhand on scraps of paper—nothing scares us.
That being said, when it comes to running your business effectively, knowing where you stand so you’re prepared to both pounce on opportunities and tackle any challenges is a good place to start.
Running a well-oiled machine (or established file naming convention) will help you:
• Get your hands on whatever info you need within seconds of needing it
• Onboard a VA or business manager to help run your business
• Shop around for an acquisition
• Streamline operations so you can devote more time on other projects (or with your family)
• Scale with ease
How do I organize my FBA business?
There are a million different ways to organize your files, but usually, the best approach to optimum functionality is to reverse engineer your filings based on the information an acquirer would ask about or need to access during due diligence. It’s pretty simple—we’re going to need to look at and come to understand everything you use to run the business so we can assume responsibility without missing a beat.
If you have a VA, delegate this. If your business is still a solo operation, this could be a good starter project for your first hire. You could even hire a professional organizer to set you up with a naming convention and software (like Trello or Airtable) if you’re feeling bougie.
When you go through the due diligence process (with us or with any other acquirer), you’ll need to provide 12 months’ worth of financial records. Having a place to regularly save these digitally (whether on a hard drive or in an encrypted cloud) will make that part of the process so much easier.
Additionally, anytime you’re applying for a line of credit with a bank or funding from an industry outfit like Yardline Capital, you’ll already have this info on hand—even in just the early discussion period.
What to have
• Bank Statements
• Credit Card Statements
• Tax Returns (and any additional tax forms related to your business)
P.O.s & Invoices
You need a P.O. system. Having managed a couple of small businesses that didn’t have effective P.O. systems when I came on, this is essential to any retail operation’s success.
If you’re thinking about hiring a business manager or a VA and you don’t have a PO system in place—make this their first assignment as part of overhauling your filing system.
P.O.s will document the process and help keep a record of lead times etc for the following:
• Freight Forwarding
Every FBA business lives and dies by the reliability of its supply chain. This is one of the first things our M&A team asks sellers about when we start migrating a brand over. Having this info locked in will help you seize opportunities and avoid disasters.
Pro Tip: We’ve been asked about how we manage relationships with suppliers in light of shaky international relations on our weekly seller Q&A Private Label Live. The answer: have a backup. Throw a small order to a supplier in a country other than your main supplier and see how they do. Establishing these relationships before you need them can give you an incredible leg up when the going gets tough.
Have on hand:
• Agreements and contracts
• Terms of Service
Keeping all your legal documentation easily accessible to you prepares you for anything. Just as essential for operating your business as it is for selling it.
Here’s what you need:
• Business registration
• Disputes/litigation – this includes any Amazon disputes with other sellers (ask Amanda for examples)
• Certifications (e.g. for USDA certified organic products)
• Any contracts, agreements, and related paperwork for employees or contractors working in your business
• Intellectual Property – patents, trademarks, and copyrights
Not having the above items certainly isn’t going to keep Thrasio from working with you or entering LOI. However, it’s usually a requirement for working with a broker. And anyone will tell you having all your documentation in order before selling your business makes the transaction much easier.