In an ideal world, you’d be able to get your account back up and running quickly, but there’s no guarantee of that. This makes an Amazon seller account suspension one of the most stressful and frustrating challenges that you can face. On top of that, if you don’t handle cashflow strategically throughout a suspension there’s the ever-looming possibility that you could run out of money.
To avoid that, we’ve put together a cash flow survival guide, designed to explore healthy business practices that can provide a safety net in the event that your business faces an account suspension.
Have Extra Funds Reserved and Ready
Develop and Maintain a Contingency Plan
An emergency fund for your business is a savings account designed to be touched only in the case of, you guessed it, emergencies. Amazon seller account suspensions typically happen with little to no notice, taking your income and ability to operate normally with it. Emergency cash gives you a cushion to help you withstand this type of unexpected challenge and ultimately makes your business more likely to get back on its feet quickly.
This fund shouldn’t be a go-to solution for all budgeting issues as it’s likely one of the last reserves of cash that you’ll tap into. Its purpose is to help keep you above water during hard times. If your Amazon account is suspended for more than a few days, it will halt your cash flow. Your ability to run daily operations falters, creating a huge emergency to reckon with. While your account is suspended the emergency fund can be used to pay for operational expenses, pay employees, or even fund an experienced consultant like ecommerceChris to help you get back online.
You can build up cash for this fund over time by allocating a set percentage or amount to go into the account at each payout. A good rule of thumb is to have three to six months of operating expenses saved in your emergency fund. This may seem excessive, for a (hopefully short) Amazon seller account suspension, but it’s impossible to tell exactly how long it will take to bring your account back online.
Establish a ‘Sleep Well at Night’ Number for Your Cash Flow
Although healthy cash flow won’t save you from the perils of an Amazon account suspension, it will help mitigate the damage to your finances if one were to happen. One of the best practices to maintain a healthy cash flow for your Amazon business is to establish a “Sleep Well at Night” number, or a minimum amount of capital on hand at a given moment. Over time, this number will increase to create a buffer of capital that ensures you never have to worry about a “cash flow negative” month in the future.
While a ‘Sleep Well at Night” number won’t solve the significant cash flow crash that comes with an Amazon seller account suspension, it will help you buy some time before it hits and guarantee that you’re in a healthy position to recover.
The buffer that a “Sleep Well at Night” number creates is similar to an emergency fund, but it isn’t necessarily made up of money sitting readily in your business bank account. That working capital may include money from profits, external funding, a combination of both. Think of your “Sleep Well at Night” number as the first line of defense against cash flow problems whereas an emergency fund is typically reserved for unexpected, more complicated challenges.
If you’re facing an Amazon seller account suspension, having both a “Sleep Well at Night” number and an emergency fund ensures that your business will remain stable for an extended period. That gives you time to resolve the suspension and to get back to selling.
Diversify Your Ecommerce Marketplaces
At some point, we’ve all heard that it’s important to have multiple streams of income, but that’s especially true when it comes to ecommerce businesses. Selling on multiple ecommerce marketplaces can help improve your financial agility and prevent your cash flow from coming to a complete halt in the case of an account suspension. Even if you sell in greatly reduced numbers off Amazon, selling on other platforms means that you’ll still be able to make sales and keep cash flow moving while suspended. And if something were to happen to one storefront, another will be available to receive customers.
Other ecommerce marketplaces also have advantages that Amazon doesn’t. For example, since Shopify operates much more like a traditional small business, you can directly contact your customers, collect data about them, and personalize advertising.
Expanding your business onto other ecommerce platforms like Shopify or Walmart+ has never been easier or more important. Even if you’re not worried about facing a seller account suspension, with Amazon’s increasing prices, ever-evolving terms and conditions, and current FTC lawsuit, it’s worthwhile to have the foundation laid on alternative platforms.
Consider Utilizing Alternative Funding Solutions
If you’re already facing an Amazon seller account suspension, it might be time to start utilizing some alternative funding sources. We understand that taking on external funding can be daunting, but sometimes it can be necessary to get your business back on track. Ensure that you’re making the right choice about funding for your business during a financial crisis by considering all the available options.
Traditional Banking Loans
If you’ve been selling for an extended period and consistently getting high sales, you may qualify for a traditional business bank loan. Banking loans typically have one of the lowest comparable interest rates versus other funding sources for Amazon Sellers. This is a huge benefit to lower your total payback amount, which is especially important when you’re in a position where you don’t know how long you’ll need the money.
However, bank loans are also typically very slow to obtain for Amazon Sellers. When you’re facing a stoppage of cash flow, you’ll need money quickly. The fact that you’re facing an Amazon Seller account suspension is going to slow that process down. Additionally, if you’re a new seller or have ever struggled with sales, it’s likely that you simply won’t qualify for banking loans.
Ecommerce Funding Solutions
As the industry has grown, funding solutions specifically for ecommerce business owners have cropped up to help sellers manage common cash flow problems. Some of these are very simple and painless to obtain given that they are designed with speed and efficiency in mind. This type of funding is also normally based on sales history and success, rather than your credit score.
Although ecommerce funding solutions are quick and easy to obtain, they often come at a steep price. Many have high-interest rates and hidden fees that you should be wary of. Before committing to a funding provider, ensure that you’re getting the best deal possible for your business and not being taken advantage of while in a vulnerable situation. Due diligence matters!
Viably’s Funding for Ecommerce Sellers
Viably is an all-in-one business banking and funding solutions platform for ecommerce sellers, including Amazon. Based on your unique needs you’ll receive a tailored funding offer to help grow your business in whatever way you see fit– including recovering your Amazon Seller account from suspension. Rather than charging interest, Viably uses a flat-fee model so that sellers always know exactly how much they will be paying.
With a seamless and personalized experience, you’ll not only be able to get your business back on track but scale sustainably over time.
Since an Amazon Seller account suspension is an incredibly scary experience for any seller, be sure that you’re actively practicing healthy financial habits. That will mitigate damage to your cash flow while you work to get your account running again. Even if you’re not facing an account suspension on Amazon, practicing these three tips to the best of your ability will create positive cash flow that can be utilized to grow your business.
Oz Merchant is the VP of Customer Success at Viably. He has consulted and coached startup founders across 5 continents. As someone who grew up in ecommerce and launching retail businesses, Oz has a unique perspective on the current landscape of financial management for start-up founders, specifically ecommerce business owners. Too often traditional lenders do not understand the seasonality and growth opportunities of ecommerce business and Oz believes better management of cash flow will lead to stronger opportunities for businesses to have an exit. Oz has worked closely with hundreds of Amazon sellers and business owners over more than a decade to help them achieve financial success through outside capital and understanding their inflows and outflows consistently.