Have you ever wondered how to start a Fulfillment by Amazon (FBA) business? If so you've come to the right place. The average Amazon Seller makes about $10,000 profit per year, but Amazon estimates that between 5-10% of the seller central accounts make over $100k profit each year and around 2% make over $1m profit a year! We talked to one of the luckiest Amazon sellers in the game, Casey Walters. Puppy lover at heart, Casey started Shed Defender because friends would complain about his dog shedding all over everything. As a result, he's been invited to Shark Tank, featured on Buzzfeed and Mashable, and made $1.2 million last year selling Onesies for dogs. We're going to walk you through Amazon business options, how much it costs to start an Amazon business, and the actual process of how to start an Amazon business. When you're done reading this, you won’t wonder, “Is an Amazon business worth it?” You'll know it is.

What Is an Amazon Business?

When wondering how to start an Amazon business, there are a variety of business models you can choose. Which business model you choose will depend on how much money you have to invest, what kind of skills you have, and how you want to operate your business. Some of the more common ways people run businesses on Amazon are: [su_note note_color="#dbeafc"]

• Amazon Seller with Self-Fulfillment: You store the products and fulfill the orders for your shop.
• Amazon FBA business: Amazon stores and fulfills the orders for your shop (Only one guaranteed to qualify for Prime listings.
• Dropshipping with a third-party supplier: A third party carries inventory and ships it when you have an order. This may be combined with print-on-demand.
• Let Amazon sell your artwork and receive a royalty for each piece sold.
• Amazon Associate links and blogging: You write blogs and refer people to Amazon to buy products mentioned in the blog.

[/su_note] Let's look at the benefits of starting an Amazon FBA business.

Why you should start your own brand as an Amazon FBA business

For those of you who want to start your own brand, an FBA business is the way to go. Amazon FBA is only available if you have a professional seller account on Amazon Seller Central. Of the Amazon business models, an FBA business offers some unique value propositions including:

• Amazon Brand Registry works to protect your intellectual property.
• Products are stored in Amazon fulfillment centers worldwide.
• Products in fulfillment centers automatically qualify for Prime delivery.
• The shipping process is handled for you, which is helpful as most sellers can't independently get the same shipping rates because a new business doesn't have the sales volume and proven demand that Amazon does.
• Inventory management solutions are provided from the largest eCommerce website.
• Returns are handled for you.
• New sellers receive discounts on sponsored product ads, shipping to the fulfillment center, and a monthly storage fee.
• FBA fees are charged based on a per-sale basis plus a storage fee.
• Send product samples of new products to encourage Amazon reviews.

Keep reading to learn how much it costs to start an Amazon business.

How much does it cost to start an Amazon business?

If you’re looking to start your own brand, you can expect to spend $100K-200K during the first year on inventory, software, and marketing. If you go with dropshipping or print-on-demand, the costs can be reduced to the cost of the software you use, but your profit margins may be narrower.

How to start an Amazon FBA business with little money

Fortunately,  you can start an Amazon business for free if you use Amazon Associate and a free blog site like Medium, but you'll want to master how to use relevant keywords. At UpFlip we use SurferSEO to help us rank our blogs well. Dropshipping is another answer to how to be an Amazon seller without a lot of startup funds. You'll just need enough money to cover the first few days of orders and software costs. Amazon Sellers can also start an Amazon FBA business with one low-cost product that sells like wildfire. For instance, you might buy 500 lightning cables for iPhones for $830 and ship them to an Amazon fulfillment center and sell them for $4 each. That makes it easy to sell on Amazon. Let’s look at what you’ll want to know about starting an Amazon business.

How to Start an Amazon Business

Starting an Amazon business has never been easier. There are so many ways Amazon sellers can sell on Amazon so you just have to find the business model that works for you. You don't even need a business license before starting an Amazon business if you plan to have less than 40 sales per month because they have an individual plan that starts at $.99/item sold. If you want to take the more business-minded route, I suggest reading Hub articles about starting a business because this blog is focused on teaching you how to sell on Amazon in 7 easy steps: [su_note note_color="#dbeafc"]

1. Decide what you are going to sell
2. Create account
3. Add products
4. Market products
5. Handle customer service
6. Manage the shipping costs
7. Get customer reviews

[/su_note] Keep reading to learn about product research when starting an Amazon business.

Step 1: Decide what you are going to sell

Before you can start selling on Amazon you have to decide what you are going to sell. There are several matters to be considered if you want to make money on Amazon including:

• What are you passionate about?
• What is the demand for the product?
• What are the price points of comparable products?
• What is your Cost of Goods Sold (COGS)?
• Are you going to be a reseller, print-on-demand merchant, or private label with inventory?

Let's look at how each of these impacts how to start an Amazon FBA business.

What are you passionate about?

Passion impacts what you sell because many of us find it tedious to spend all day doing something we don't care about. You'll be spending a good chunk of time creating a successful Amazon store, so it needs to be focused on products you believe in. In Casey's case it was: [su_quote]I really love my Saint Bernard, but people would complain that she used to shed everywhere we went so I created a product that would prevent her from shedding all over the place.[/su_quote] It makes it easier to push through the challenges when you really believe in something. Make sure you consider what you love as you start your Amazon FBA business. Keep reading for more considerations. Check out the rest of his interview below: [su_youtube url="https://www.youtube.com/embed/XTiks_VFTMo"]

What is the demand for the product?

Demand can be used in two ways to help you choose products, either by identifying gaps in the market or by identifying trending products. Each has a different strategy and both can be used to help an Amazon Store capture more of the market. Let's look at each.

Identifying gaps in the market

When you are looking for gaps in the Amazon market, you are looking for issues that aren't already solved or at least aren't solved well. Tools like Opportunity Finder help professional Amazon sellers identify product ideas that can increase their profitability. You can search the product database for high selling product ideas based on the Amazon seller product category and find create your own business

Identifying Trending Products

Review the Amazon Best Seller page to establish what types of products are selling best in the industry you are considering. The Amazon Best Seller Rank is based on the sales in the category compared to other products, and it is updated hourly. The ranking is weighted between recent sales and long-term sales so you can get an idea of what is trending, but some products are consistently best sellers. For instance, diapers are always going to be a best seller for babies, but the brand and style might change. If you review Amazon’s trending products, you’ll notice seasonal and holiday trends. For example, during November and December, women's winter seasonal wear is usually trending.  Next, you might want to prepare for the next trends which will be spring wear and Valentine’s Day. While you are looking at them, make sure you can see what the best price available is, which we'll discuss next.

What are the price points of comparable products?

You have to be competitive to be able to sell in a market where there are millions of products. If dog leashes are going for $6-$30 and you would have to sell your leash for $100, there has to be a legitimate reason why customers would want to pay the difference. For example, the only leash I saw that justified a substantially higher price is the bike leash so a person riding a bike can have their dog run with them. It was $70, which would be reasonable for a niche that is an avid bike rider that wants to get exercise with their dog. You’ll need to know the price of comparable products to help you establish whether the estimated cost of selling the product can be recouped in sales.

What is your Cost of Goods Sold (COGS)?

Your cost of selling the product on Amazon is the full price your FBA business spends to provide the product to the customer. The costs that Amazon includes in its Margin Per Sale are: [su_note note_color="#dbeafc"]

• COGS: The total costs of the materials, packaging, assembly, and shipping to the Amazon warehouse converted into a per-item price.
• Amazon referral fee: Typically 15% of the sales price OR $.30, whichever is higher. Find more detailed answers about Amazon referral fees on their site.
• Shipping to the customer OR the FBA fee:
• • If you are handling shipping yourself, add your cost of shipping minus the FBA Fees vary based on the item but start at around $3. For more detailed pricing, review the link with the referral fees above.

[/su_note] If the cost of selling the product does not provide a reasonable margin, typically 20-50% then you probably don't want to sell that product. Casey told us: [su_quote]My margin's typically run 40-70% because Amazon takes out 15% off the top for the FBA services... They are higher on my own site and Chewy, but 65% of my revenue is on Amazon.[/su_quote] Let's look at the final consideration when deciding what to sell: how you plan to get the products.

How will you source the products?

Sourcing products is accomplished in three main ways: [su_note note_color="#dbeafc"] 1. Resell other manufacturers products 2. Print on demand sellers 3. Private labels with inventory[/su_note] Each of these strategies has different benefits and risks associated with selling on Amazon. Keep reading to help you decide which works for you.

Resell other manufacturers products

When reselling products, you'll find a supplier, purchase them, and resell them for a higher price. Common places to buy products to sell include:

• Wholesalers: Wholesale Central has a list of wholesalers grouped by category. They may require minimum purchases but offer lower prices based on quantity. These may offer to dropship as well.
• Distributors: Like a wholesaler, but focused on selling a specific company's products
• Going out of business sales: sometimes you can find killer deals when a company is closing. Just make sure the prices are less than what you can sell them for.
• Clearance at big box stores: Sometimes clearance sales have pricing that is ridiculously low at stores like Walmart, Target, and Best Buy. I've found a $2,500 computer for $1,100 in the past.

These options will typically require more of an upfront cost, but the payoff is in lower shipping times, which customers love. People use Amazon because of Prime, which requires FBA  to qualify. You can do it through other methods, but this is the easiest way to meet the Prime requirements. Keep reading for information about print-on-demand sellers.

Print-on-demand sellers

Print-on-demand allows creative folks to sell their art with low upfront costs by only printing the product after it is ordered. This is also called dropshipping and is great from an inventory standpoint, but is slower than when you carry inventory. From order to customer's door can be up to 14 days, but it can also be less in inventory costs. Printful is the option I use for print-on-demand, but Amazon also offers Merch that does something similar and qualifies for shipping under Prime Membership. Merch does not charge sellers the cost of manufacturing, but Printful does. Merch pays the seller a royalty.

Private labels with inventory

If you are designing your own clothes or products, this is the strategy for you. You'll have to source your materials, find a manufacturer, and have your own storage facility (or use Amazon's). This type of Amazon seller is the most labor-intensive but is also the only one that can truly take advantage of gaps in the market. Casey told us about one of the upcoming products that he could not create without using this approach. He is working on releasing a leash that can wrap around the dog and connect to itself with a magnet, making it easy for his dog to move when it is alone. And then when the dog needs to be on a leash, Casey just grabs it and it's ready to go. Normally this category requires the most funds to get started. You'll have design costs which will vary based on complexity, then manufacturing and shipping costs, plus you may need to patent unique aspects of a design to protect the intellectual property. Casey told us: [su_quote]Mom sewed the prototype then I went to a seamstress who could sew maybe one per day. When we went from 5/ month to 100 in a night and then over 1,000 orders in 3 months, we had to find a manufacturer to mass-produce. The first loan was $30,000 from my mom and the first year was a total of $140,000 in manufacturing and fabric.[/su_quote] Keep reading to learn how to create an Amazon FBA account.

Step 2: Create an account

Before you can start selling on Amazon, you need to create a seller account. You may already have one if you have an eCommerce store that is already connected to Amazon or you shop on Amazon. Follow the directions to create an account and you will come to a page that looks like the one below. This page will request the name of the country your business is located in, the type of company, the name of the company, and to certify that the information is correct. Make sure your business is already registered with the proper government agencies before you input this information. It's important to note that in the US, there are five business types to choose from: [su_note note_color="#dbeafc"]

• State-owned business: Most likely won't apply to you unless you are opening an account for a government agency.
• Publicly listed business: Most likely won't apply for you. These are for companies that sell stock on an exchange.
• Privately owned business: This is for you if you are registered as an LLC, corporation, or operate under a sole proprietorship/ partnership with a DBA.
• Charity: If you are a nonprofit that raises money by selling goods, this is what you'll choose.
• None, I am an individual: Choose this if you do not have a company that you are operating under.

[/su_note] For the rest of this article, we are going to assume you are a privately owned business. If you are another form of business, the process may be slightly different but only for the next few steps. The next screen will request your business registration number, address, phone number, and contact information. Put this information in and confirm it with a one-time SMS password. They may send you a postcard you need to respond to as well. Then it will ask for information about the contact person including country of citizenship, country of birth, birthday (in DD/MM/YYYY format), proof of identity, residential address, phone number, whether they are a beneficial owner or legal rep, and whether you have included each of the beneficial owners. Beneficial owners are those that own 25% or more of the company. The next step will tell you that you need a bank account and credit card. Make sure to read the page as I'd expect it to be different depending on the type of company. Once you accept, it asks for your bank information. Once you have included that, the system will verify it. If your bank is not on their default list select "Others," input the information, and it will require a bank statement later. Then it will ask you for a credit card and inform you that you'll be charged $39.99/month if you have active listings, so don't create active listings until you are ready to pay it. On the next screen, you'll need to add the name of the store, any Universal Product Codes (UPCs), any diversity certifications, if you are the manufacturer or brand owner, and whether or not you have any trademarks for the products you plan to sell. The final sign-up step for an Amazon seller account is to provide proof of ID (both front and back) and any other documentation requested (a bank statement was requested from me). Amazon may request a video call. If so, the options are immediate (greyed out when I attempted) or scheduled. Schedule the call if requested and attend it. You'll need to go back to the verification page to attend the call and input the code on the postcard before you can access the account. I scheduled the call and received the postcard after 7-10 days. Once I input the code from the postcard in the link provided, it allows you to start working in the account. Are you still thinking about starting an Amazon business? Keep reading to learn how to add products to your Amazon Seller account.

Step 3: Add products

Now that you have an Amazon seller central account, it is time to add products to your Amazon Business. Regardless of whether you start selling private label products, dropshipping, or participating as an Amazon reseller, you'll need to add your products before you can start selling. You'll need to include the following information: [su_note note_color="#dbeafc"]

• Product Identifiers such as GTIN, UPC, ISBN, or EAN. Alternatively, you can request an exemption.
• An SKU, for your internal inventory tracking
• Visible product page elements

[/su_note] Keep reading to understand each of these requirements.

Product Identifier

When preparing to sell on Amazon, you'll need to be aware of the requirements of a product identifier. They accept the following types of product identifiers: [su_note note_color="#dbeafc"]

• Global Trader Identifiers: issued by GS1 for $30 per product with a one-time fee.
  • You need one of these for each size, color, style, and type of package they come in. This is expensive if you are running a clothing company. GS1 suggests these for companies needing 10 or fewer barcodes.
  • According to GS1, these cannot be used for medical devices, pharmaceutical products, variable measure products, or mixed cases, or to create coupons.
• Universal Product Codes (UPCs): issued by GS1 along with a company prefix, but have both initial fees and annual fees. These come with the bar codes you are used to seeing on products sold in stores.
  • Savings of up to 99.65% compared to buying individual GTINs
  • Available in batches of 10, 100, 1K, 10k, 100k
  • Eligible for Medical devices at $2,100/year
  • Can buy extra to plan for growth or buy new company prefixes as you need more
• International Standard Book Numbers (ISBNs): These are for books. Go to selfpublishingadvice.org for more information if publishing a book.
• European Article Numbers (EANs): Also available from GS1 and only required in Europe for physical items.
• Japanese Article Numbers (JANs): Also available from GS1 and only required in Japan using 45 or 49 for the first two numbers of the 13 number barcode.

[/su_note] Now that you know about those, unless you have fewer than 10 items, go with the company prefix. If you have global sales, make sure to multiply the number you need by the number of countries or regions you need codes for. They are referred to as Global Location Numbers on the GS1 site.

Stock Keeping Unit (SKU)

You can create your own system if you want, but honestly, it might be best to just use the UPCs as your SKU numbers to keep track of your inventory. They already come with barcodes and everything you need to make inventory management easier. Why recreate it? Keep reading for information on creating a product page so you can become an Amazon seller.

Product Page

The Amazon product page is the key to capitalizing on Amazon’s business opportunities. It is where the user will find the majority of the information about the private label product. Here is an example from Shed Defender. It includes the title, pictures and videos, seller name, reviews, any promotions, price, sizes, and colors, followed by the product description. Let's look at each of these to see the impact they have as you sell on Amazon.

Title

The title should give the prospective customer an idea of exactly what the product is. The title on Amazon should include the brand name, the color, and the product name. You may also want to include differentiating factors between your product and other products. For example, you might include, “Seen on Shark Tank.” Shed Defender uses the following title: [su_note note_color="#dbeafc"] Shed Defender Original Dog Onesie - Seen On Shark Tank, Contains Shedding of Dog Hair for Home, Car, Travel, Anxiety Calming Shirt, Surgery Recovery Body Jumpsuit, E Collar Alternative [/su_note] I don't really love what they've done because I consider it keyword stuffing, but they include the company name, the product name, and some of the great selling points. They don't include the color because it is available in a variety of colors, which makes sense because they can include the color in other areas. I would probably have left it as"Shed Defender Original Dog Onesie - Seen On Shark Tank" because it is sweet and to the point. Keep reading to learn about the photos and videos that an Amazon seller should include.

Amazon product photography requirements

Photos of the product have specific requirements that Amazon sellers must be aware of if they wish to be able to sell their products. Some types of products have additional requirements, but the main requirements are: The first photo must: [su_note note_color="#dbeafc"]

• Have a pure white background (255,255,255 is the color code if you do your own editing)
• Show the whole product
• Fill 85% of the picture
• be named with the Product Identifier for books and some other products
• Have a long side that is between 1,000 and 10,000 pixels on the long side
• Be the following file types: JPEG (.jpg or .jpeg), TIFF (.tif), PNG(.png), or GIF (.gif) file formats

[/su_note] The other photos should follow the same technical requirements but do not have to be on a white background or use the product identifier as the title. They can include videos, infographics, and models except for babies. Make sure to review the information for specific product category photo requirements.

Seller Name

This is the business name or the title of the seller account you add when creating the Amazon seller account. It will be a hyperlink that will take you to a page similar to the one below. You don't really need to do anything with this step. I just want you to be aware of it.

Price

Be sure to come up with a price for each product listing during your research phase. You'll want to add it to the price box. With different sizes and colors, you can price each one differently based on the cost of doing business or you can price them all the same.  Shed Defender prices the sizes differently because dogs range from a couple of pounds to as big as an adult so they probably wouldn't sell many if they charged as much for a Chihuahua as they do for a Saint Bernard. But if you sell t-shirts, is it really worth offending someone by charging $3 more for a 2XL than you do for an XL? Probably not, so just find the highest cost of that t-shirt and make them all the same price unless there is a really good reason to charge different prices. I prefer that method cause it's not discriminatory to larger people.

Any promotions you are offering

Every successful business has sales from time to time. If a business is running any offers they will show under the price of the product listing. Once you start selling products, you'll probably want to do so as well. You can offer promotions on your product listing by following the directions on the deals page in Amazon Sellers Central.  Unfortunately, Amazon password blocks the link without a sellers account, but for those who have already created a sellers account, use the following link to learn how Amazon suggests increasing sales: https://sellercentral.amazon.com/help/hub/reference

Reviews

Under the Amazon seller, there are reviews. It’s a great place to look when learning how to start an Amazon business:

• They impact search results because search results take into account the likelihood to buy
• The likelihood to buy is based on reviews or prior experience
• The more good product reviews the better

We'll discuss how to get reviews in a future section but read the customer product reviews section carefully to understand the requirements and make sure your seller account follows the Amazon seller best practices to make sure you get higher product reviews.

Sizes and Colors

Sizes and colors are important because each size and color is actually a different page. It won't actually be noticeable that the page is changing, but it does slightly change the link in the address bar. The main photo can also be different based on the color desired. The following pages have slight variations that occur based on the sizes and colors that sellers should be aware of. Play with how this works on your product listings when you are setting up your store so you can comfortably work with your listings.  In the back end of the store, you'll be able to input the number of each size and color so that it won't offer products that are unavailable. Make sure to input this information into your product listings so that they stay up to date.

Product Details and Description

The product details and description are key aspects of selling products. Third-party sellers may be limited in what you can include in the product listing, but if you sell your own products on Amazon, you can get fairly creative as long as you are honest about what's in your product. You'll want to make sure to include: [su_note note_color="#dbeafc"]

• Commonly searched keywords
• Materials included in the product
• Brand name
• Unique selling points
• Sizing chart if available

[/su_note] Casey recommends using JungleScout for finding good search terms, and if you are uncomfortable with writing product descriptions, try an AI writer like rytr.me. On rare occasions, I'll use it when I have writer's block, but I prefer to write by hand to keep my mind sharp. You can review Amazon's Quick Start Guide for more information or review seller central for specific product listing requirements.

Step 4: Market your product and Amazon Business

No guide on how to start an Amazon business is complete without discussing the marketing of the business. There are a variety of ways to start marketing your Amazon FBA business both on and off Amazon. Choose what strategies to use based on whether you are selling your own brand or another company's product. We asked Casey about his normal marketing costs and he told us: [su_quote]I spend about $6,000 each month on sponsored ads through Amazon... In addition, I run Google Paid Search, and social media for awareness and remarketing.[/su_quote] In addition, he gave advice about launching new products: [su_quote]I use Vine for new product releases to start getting reviews...Plus I'll use Email, SMS, paid, and free social media strategies.[/su_quote] During the conversation, he talked about luck playing a major role in his success. He's been featured on Shark Tank and had the following to say about those: [su_quote]We'd been thinking about applying to Shark Tank, but Shark Tank actually invited us to apply. We did lots of prep and worked with a professional media consultant. We made a deal on the show, but then mutually backed out because we wanted more of a hands-on partner than they wanted to do. We got private equity about a year later though.[/su_quote] BuzzFeed and Mashable also reached out and he attributes it to: [su_quote]I've got products that people think are a joke so they reach out.[/su_quote] So basically his marketing strategy is: [su_note note_color="#dbeafc"]

1. Create funny products with meaningful uses
2. Drive awareness through social media, Vine, and companies that reach out wanting to feature his product
3. Run Google paid advertising and Amazon sponsored ads to sell products to people who are searching for pet products
4. Collect emails and phone numbers when people buy their products
5. Run remarketing campaigns when people abandon carts
6. Watch trends in the industry to create new products
7. Use customer email and social surveys to get input when creating new products.
8. Expand your product line and sell bundles to increase Lifetime Customer Value
9. Run remarketing campaign when launching a new product
10. Keep building on top of these

[/su_note] Between everything, his marketing budget is between $16k-$18k per month. He pays an agency to handle Amazon ads and another to handle the paid social media and Google ads. For most people that sounds like a ton of money, but it's only 12% of revenue on the high end. If you don't like handing the money over to others to manage, you can do it yourself. I'd recommend learning how to do it yourself by familiarizing yourself with many of the marketing tools available from the platforms you'll be marketing on. Here are some of the references for marketing from major platforms: [su_note note_color="#dbeafc"]

• Amazon Advertising Learning Console: Lessons and certifications on Amazon marketing tools.
• Skillshop with Google: Learn how to use Google Ad, Analytics, Google My Business, and more.
• Youtube: Learn how to make the most of YouTube Ads which are covered under Google Video Ads certifications.
• Meta Blueprint: Learn how to market on Facebook.

[/su_note] In addition, many marketing tools that you pay for such as JungleScout and Helium10 offer training to learn how to make the most out of your Amazon business. Assuming you are selling great products and using the best practices, you should start getting sales Keep reading to learn how to manage the shipping costs when you start an Amazon business.

Step 5: Provide Customer Service

If you're using FBA all the sales and customer service is handled by Amazon. If you are using self-fulfillment, you'll need to handle shipping, refunds, customer complaints, and inquiries. You can hire someone to help you with this, but you'll want to try to be the fastest and the best customer service in your product category. The easiest way to beat other sellers is to have the fastest shipping times, easiest customer experience, and best products. That means using Amazon FBA. Casey told us: [su_quote]Reviews make or break a seller’s rank. Make sure to get your product on Amazon Fulfillment.[/su_quote] While the margin may be lower than selling on your own online business, new sellers will find it much easier than managing their own sales. An online business that doesn't use FBA would have to store their products in their house, retail stores, or warehouse. You'll spend more time and money dealing with the operations than with growing the business.

Step 6: Manage the shipping costs and inventory

One of the biggest challenges an Amazon small business will face is the shipping costs. Depending on your products, shipping costs can be expensive. Keep reading to learn how to become an amazon seller and get reviews for your new business.

Step 7: Get Product Reviews

When wondering how to start an eCommerce business on Amazon, one of the biggest challenges any small business owner faces is how to get customer orders and get quality reviews.  Fortunately, Amazon offers some ways for sellers to get reviews for their own products. The most common are: [su_note note_color="#dbeafc"]

• Vine: For a $200 fee, brand owners can enroll a product in the Vine program and provide product samples to people who are highly likely to give quality reviews. I suggest you start with their Vine FAQs to understand more.
• Send a request for the customer to review the product from Amazon within the first 30 days or use an automated tool to activate this feature in JungleScout.
• Request buyers of your product in other places to go on Amazon and review it.
• Include a reminder to review the product on Amazon in the packaging, but don't incentivize reviews.

[/su_note]

Closing

We've provided everything new sellers need to create and manage an Amazon store. Remember the Amazon key for business is to have great pictures, great copy, and get great reviews. If you apply those lessons, you'll be among the people who know that an Amazon business is worth it. What are the benefits of an Amazon business that will impact which type you start?

Ever wondered how some small businesses are making millions even though the small business owner appears to be on a never-ending vacation?

They are making a living participating in some of the best small business ideas from home. Home-based business ideas can be extraordinarily successful. We’ve interviewed small business owners who’ve made millions in all types of businesses.

By the end of this article, you’ll have dozens of ideas for businesses you can run from your own home and be ready to take your first steps toward launching your successful home-based business.

[su_note note_color="#dbeafc"]

We’re going to share some of the most successful work-from-home ideas and answer some commonly asked questions, including the following. (Click any of the links to jump to the section that interests you most.)

• Work-From-Home Business Benefits
• Work-From-Home Business Drawbacks
• What Makes Successful Home-Based Businesses?
  • Training Required
  • Initial Investment
  • Managing Inventory
  • Web-Based Potential
  • Staffing
• 27 Profitable Home Business Ideas
• How to Start a Home Business
• Choose Your Own Business Idea [/su_note]

Work-From-Home Business Benefits

According to Indeed, home businesses are beneficial because they:

• Streamline communication: When you work from home, you will have documentation of all business communication at your fingertips all the time.
• Increase productivity: You won’t waste time driving to work every day.
• Expand your talent pool: Provides access to a global workforce if you hire employees who can work remotely.
• Save time: Driving to work, getting dressed, preparing a lunch then taking a lunch break all take time that can be reduced or eliminated with at-home businesses.
• Removes job barriers: Some people don’t have cars. Those without cars have more opportunities with work-from-home businesses.
• Provides more comfort: People buy what makes them comfortable, while businesses buy what gets the job done. A business from home combines the two.
• Increases freedom: Running your business from home means you can set your work hours or even work while on vacation. Local businesses without employees are an exception to this point.
• Increase job satisfaction: All the things I listed above increase job satisfaction.
• Reduce turnover rate: Small business owners with remote employees will have lower turnover because the employees have more freedom.
• Reduce overhead costs: Combine lower turnover with less space requirements and the ability to deduct part of your home expenses as business expenses to reduce overhead costs.
• Improve brand reputation: A more satisfied workforce will make customers happier and improve your brand.
• Provide global insights: Employees from all over the world can share their experiences.
• Enhance sustainability goals: Working from home reduces almost all carbon dioxide emissions compared to the average commute to a place of business.
• Increase business hours: If you have employees, they’ll likely be in different time zones, meaning you can support your customers more hours of the day.

Meanwhile, there are some disadvantages of working at home that we’ll discuss next.

Work-From-Home Business Drawbacks

While we all love the freedom to work when and where we want, home business owners may face:

• Reduced learning opportunities: Interacting with people often means learning new things. When you run a business from home, your interactions with others decrease.
• Missed social interactions: Many people make friends with their employees and coworkers, but you might never meet them if you run a home business.
• Lost innovation opportunities: The dynamics when people with different expertise get in the same room can lead to huge jumps in innovation, and that’s unlikely to happen when you start a home business.
• At-home distractions: People at home are hopefully fun to be around, so they’ll probably distract you.

What Makes Successful Home-Based Businesses?

Home business ideas need to have certain characteristics to be successful. The main things you need to consider are:

• Training required
• Initial investment
• Managing inventory
• Web-based potential
• Staffing

Training Required

Starting a home-based business idea that you don’t have any experience in can be difficult. The more training you need, the more it will cost and the longer it will take to start a business from home.

Initial Investment

When you start your own business from home, you want it to be inexpensive to start. Low startup costs make it easier to become profitable. Ideally, you should be able to start a new home business idea by purchasing a website and building your company from there.

Managing Inventory

You don’t want a small business idea that requires a lot of space for inventory. If you’re going to sell products, consider a dropshipping business and have a fulfillment center manage the inventory. Alternatively, use print-on-demand.

Web-Based Potential

A home business idea will normally be an online business that relies heavily on digital marketing skills. As long as you have a computer, you should be able to start your home business idea for under $1,000.

Staffing

A home-based business idea that needs people to work collaboratively will often be problematic because of how disconnected employees may be from each other.

Local service businesses are commonly the exception because all employees have to be in the same location. Neel Parekh found a way to run a $1.5M remote cleaning business. Find out how.

[su_youtube url="https://www.youtube.com/watch?v=kVyLriqFVdc"]

Get ready to learn about the best at-home business ideas.

27 Profitable Home Business Ideas

Job #1. Business Consultant

• Average Annual Revenue: $364K
• Average Profit Margins: 6.4%
• Startup Costs: $1K-$3.5M
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: 2.2%
• Best for: Executives and business leaders, entrepreneurs with management or business expertise, people with strong analytic, problem-solving, and communication skills

According to Business Insider's 2022 report, being a business consultant ranks as the fourth most lucrative side gig. With the potential to rake in as much as $98 per hour, it stands out as one of the top-paying self-employed occupations.

A consultant's main responsibility is to assist business owners in optimizing their operations. This necessitates a solid grasp of effective business management. Many successful consultants transition into freelancing roles after amassing experience in the corporate sector or as accomplished business proprietors.

In this field, hands-on experience carries more weight than formal education. If you possess a wealth of business knowledge, a bachelor's degree (or even a high school diploma) is not a prerequisite for flourishing as an independent consultant.

Idea #2. Social Media Management

• Average Annual Revenue: $82K
• Average Profit Margins: 6.9%
• Startup Costs: $100+
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.3%
• Best for: Entrepreneurs skilled in social media, marketing strategies, data analysis, and similar areas

Social media managers will perform tasks like creating and scheduling posts, interacting with customers, and other tasks that help you interact with customers more effectively.

Idea #3. Nanny or Childcare Services

• Average Annual Revenue: $143K+
• Average Profit Margins: 0.9%
• Startup Costs: $0-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 51.7%
• Best for: Teachers, tutors, babysitters, parents, caregivers, compassionate and patient entrepreneurs with strong organization and multitasking skills

Childcare services are experiencing a surge in popularity, particularly in rural regions, where nearly 60% of families lack necessary access. Even in urban settings, parents can have trouble finding dependable childcare options. This escalating demand is anticipated to fuel a Compound Annual Growth Rate (CAGR) of 12.8% for the overall childcare market until 2027.

Since its inception in 2011, Twinkle Toes Nanny Agency has expanded to encompass over 20 locations, boasting a combined annual revenue of $11.2 million. Learn about the journey of its founder, who transitioned from a role as a surgeon's assistant to achieving multi-million-dollar annual earnings.

Idea #4. Cleaning Business

• Average Annual Revenue: $74K+
• Average Profit Margins: 6.7%
• Startup Costs: $500-$30K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.2%
• Best for: Self-motivated, independent, and detail-oriented entrepreneurs

If you've set aside around $1,000 for investment, consider diving into the cleaning industry. In terms of both success rate and the ease of initiation with no prior experience, it surpasses many other self-employment concepts.

What's even better is that you can kickstart this venture solo, but you'll have the option to expand once the money starts rolling in. Picture shedding your everyday duties and running a business with the confidence of a leader. This isn't just another run-of-the-mill 9-to-5 grind.

A former guest of ours, Chris Mondragon, generated $18,220 in his second month after launching a cleaning business. He's now boasting an annual revenue of well over $1.5 million. If you're interested in learning how he achieved this, take a look at this resource.

View our interview with Chris below:

[su_youtube url="https://www.youtube.com/watch?v=YcYIYdqegGA"]

Idea #5. Software Developer

• Average Annual Revenue: $400K-$1M+
• Average Profit Margins: 14.5%
• Startup Costs: $100-$50K, depending on size and scope
• Time To Revenue: 3 months to 2 years
• Annual Market Growth Rate: 3.1%
• Best for: Coders and developers adept in programming languages, independent and self-motivated entrepreneurs with strong communication and project management skills

In 2021, the average income for a software developer exceeded $120,000. With the demand for these skills on a steady rise, there are numerous job prospects available for developers seeking conventional employment.

That said, as a developer, you can work from home for yourself by selling your programs and services directly to users and clients. Pursuing this path can lead to additional streams of passive income.

Workello initially operated as an agency connecting business leaders with freelance writing talent. However, their true potential was unlocked when they transitioned into a SaaS (Software as a Service) company. Discover the story behind their software business in this podcast episode.

Idea #6. Vending Machine Business

• Average Annual Revenue: $182K+
• Average Profit Margins: 4.3%
• Startup Cost: $2K-$10K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 0.5%
• Best for: Those who like to tinker with machines and understand mechanics and those who enjoy driving

After placing your vending machines, you'll only need a few hours per week for maintenance. Right now, our friend Adam Hill is successfully running his vending machine business, which generates six figures, while dedicating just two days a week to it.

He's achieved such remarkable success that we pestered him until he agreed to craft an insightful masterclass exclusively for our UpFlip audience. It lays out precisely how he accomplished this feat.

Check out our interview with Adam below:

[su_youtube url="https://www.youtube.com/watch?v=-s_Y-O1nosw"]

Idea #7. Virtual Assistant

• Average Annual Revenue: $35K-$50K
• Average Profit Margins: 10.5%
• Startup Costs: $100-$200
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.9%
• Best for: People with strong organization and communication skills, those who want to work from home and set their own hours

Your tasks as a virtual assistant may encompass activities such as responding to emails, coordinating meetings and travel plans, overseeing and posting on social media accounts, and similar responsibilities.

Initiate a virtual assistant venture online by creating a profile on a freelance platform like Upwork or 24/7 Virtual Assistant. While having fundamental computer proficiency and a dependable internet connection is essential, the most crucial attributes for virtual assistants are soft skills like dependability, effective communication, and adept multitasking. A formal education, including a bachelor's degree, is not a prerequisite for this role.

Idea #8. eCommerce Reseller Business

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Costs: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: People with sales and marketing skills, collectors who can spot valuable items, those seeking flexibility and the potential for passive income

Opening an online store costs less than starting a brick-and-mortar retail store. It also gives you more scheduling flexibility than many home business ideas since it doesn’t involve working with clients.

The inventory you sell will be the main cost of starting an eCommerce business as a reseller. If you have an eye for spotting hidden gems at flea markets, thrift stores, and garage sales, you can make a consistently high profit with this kind of business.

Mike Wilson started Golden State Picker with $1,000 worth of inventory and has grown that into a $30,000-a-month business. Hear how he started in this podcast interview:

Idea #9. Freelance Writer

• Average Annual Revenue: $46K
• Average Profit Margins: 14.6%
• Startup Costs: $100-$200
• Time To Revenue: 1 month to 3 years
• Annual Market Growth Rate: -1.5%
• Best for: Writers, editors, and language experts, people with SEO, marketing, and advertising knowledge, creative entrepreneurs

Are you a strong writer? Create a home business writing about the things that interest you.

Independent writers have the flexibility to engage in diverse writing projects. This spectrum includes fiction and imaginative work under your own name or as a ghostwriter. A notably lucrative avenue in freelance writing is technical writing, which boasted an average income of $75,700 in 2023.

Additionally, there's substantial demand for online content such as blog articles and promotional copy.

Idea #10. Digital Marketing

• Average Annual Revenue: $817K
• Average Profit Margins: 6.9%
• Startup Costs: $100-$10K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 1.3%
• Best for: Marketing and advertising pros, entrepreneurs with social media and data analysis skills, content creators

Maintaining an effective presence on social media has become imperative for many businesses today. However, not all entrepreneurs are well-versed in social media marketing. Consequently, the digital marketing industry has seen an average annual growth rate of 28.2% over the past five years.

This abundance of opportunities is what makes digital marketing stand out as one of the top home-based business concepts for those seeking flexible hours. Digital marketing extends to niches like SEO-centric web design, proficiency in Google Ads, and aiding clients in launching successful blogs.

Explore our interview with Eric, the owner of Single Grain, who acquired a social media marketing agency for just $2 and has grown it to make millions every year:

[su_youtube url="https://www.youtube.com/watch?v=fO1F21040pQ"]

Idea #11. Makeup Artist

• Average Annual Revenue: $47K+
• Average Profit Margins: 7.1%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 0.9%
• Best for: Creative and artistic entrepreneurs knowledgeable about fashion, style, and trends, people who are detail-oriented with strong communication and collaboration skills

If your friends often seek your expertise for makeup or Halloween costume advice, you might want to explore a freelance career as a makeup artist.

On average, makeup artists earn around $66,000 annually, though this figure can vary widely. Beginners in the field may start with as little as $30,000 a year, while seasoned makeup artists can command $120,000 or even more.

While a bachelor's degree isn't a prerequisite for launching a home-based makeup artistry business, specific types of makeup application may require a cosmetology or esthetician license. To establish your own venture, you might also need to be a Certified Makeup Artist. State regulations for this profession may vary, so it's important to familiarize yourself with the specific requirements in your area.

Idea #12. Painter

• Average Annual Revenue: $76K+
• Average Profit Margins: 7.2%
• Startup Costs: $1K-$100K
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: -2%
• Best for: Home improvement pros, construction workers and contractors, people who enjoy physical work and have a sharp eye for detail

Launching a house painting business is a great business idea, particularly for those interested in a scalable niche. Joshua Douglas initiated his venture, A Painter’s Touch, with an initial investment of just $6,000. It has since flourished, with five crews generating over $25,000 in monthly revenue.

While Joshua's initial objective was to achieve a better work-life balance, he ended up surpassing his previous income levels. Discover more about his journey in this enlightening podcast interview:

Idea #13. Graphic Designer

• Average Annual Revenue: $123K+
• Average Profit Margins: 13.5%
• Startup Costs: $500-$5K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 2%
• Best for: Visual artists, designers, creative and artistic entrepreneurs

According to a recent Upwork report, graphic design emerged as the most sought-after creative skill in 2023. Graphic designers play a pivotal role in crafting business identities, a crucial factor in attracting clientele and bolstering sales. Given this significance, it's hardly surprising that this service is in high demand in today's market.

The average hourly wage for a graphic designer stands at $24. However, an experienced freelance graphic designer can command rates of $100 or more per hour for their expertise.

Idea #14. Lawn Care and Landscaping Business

• Average Annual Revenue: $272K+
• Average Profit Margins: 8.7%
• Startup Costs: $2K-$10K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 8.1%
• Best for: People who love green spaces and working outside, gardeners and plant experts, detail-oriented entrepreneurs who excel at customer service

Engaging in landscaping and lawn care services presents an excellent home business idea for individuals who have a passion for the outdoors. The United States has witnessed a consistent annual increase of 3.2% in the number of landscaping businesses over the past five years, and the demand for such services continues to surge.

Landscaping not only ranks among the top home business ideas but also offers the potential for significant scalability and profitability. Mike Andes, for example, propelled Augusta Lawn Care to over $1 million in revenue by the age of 24 and further expanded it into a franchise. Learn more about his service-based business journey in this YouTube interview.

[su_youtube url="https://www.youtube.com/watch?v=RLeOYgF54tE"]

Idea #15. Event Planner

• Average Annual Revenue: $94K+ (wedding planner-specific)
• Average Profit Margins: 12.2%
• Startup Costs: $500-$5K
• Time To Revenue: 3+ months
• Annual Market Growth Rate: 1%
• Best for: Organized and social entrepreneurs who are strong networkers and planners, creative problem-solvers

Projections indicate that the event-planning market is poised to exceed $1.5 trillion in value by 2028, marking an impressive growth rate of 11.2%.

Event planning encompasses a range of niches. While wedding planning and corporate events consistently yield high profits, there's potential for substantial revenue in organizing various types of events. This spans from social occasions like parties and reunions to professional gatherings such as product launches and conferences.

Establishing connections with local businesses, including event venues, caterers, and entertainment providers, is paramount for success as a self-employed event planner.

This aspect positions it as one of the most promising home business ideas, especially for individuals with backgrounds in hospitality, food service, and related industries. Drawing upon this expertise allows for rapid business growth.

Idea #16. Photography Business

• Average Annual Revenue: $50K
• Average Profit Margins: 7.3%
• Startup Costs: $1K-$10K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 0.3%
• Best for: Visual artists, photographers and videographers, creative entrepreneurs with strong customer service skills

Photography offers numerous avenues for income generation. You can capture events, create family or school portraits, or collaborate with businesses to provide images for their product listings and advertisements.

Idea #17. Proofreader Business

• Average Annual Revenue: $25K+
• Average Profit Margins: 9%
• Startup Costs: $100-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.9%
• Best for: Grammar and writing experts, people with a sharp eye for detail

Another excellent home-based business concept in the realm of content creation is proofreading. Proofreaders provide written materials with a professional finish, meticulously identifying and rectifying errors in books, blog posts, marketing materials, and other types of written content.

Though proofreading generally commands lower compensation compared to writing, a seasoned proofreader can earn up to $25 per hour. Additionally, you have the opportunity to augment your income by offering additional services like fact-checking or content editing through your business.

Idea #18. Online Tutoring Business

• Average Annual Revenue: $389.5K+ (when an agency has multiple employees)
• Average Profit Margins: 13.10%
• Startup Costs: $100-$1K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 8.5%
• Best for: Educators, people who are compassionate, empathetic, and can explain complex concepts in straightforward terms

If you possess expertise in subjects such as math, English, or history, consider tutoring as one of the top home-based business ideas. It’s also one of the best online business ideas.

The emergence of online tutoring platforms like Skooli and TutorMe has simplified the process of connecting with students and instructing them directly from your home. Beyond your subject knowledge, all you require to begin is a dependable internet connection.

Your earnings as a tutor hinge on your level of experience and areas of proficiency. The standard rate averages around $24 per hour, and you have the potential to command higher fees if you're able to provide college-level tutoring or specialized services like standardized test preparation.

Idea #19. Real Estate Agent

• Average Annual Revenue: $298K+
• Average Profit Margins: 44.6%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: -0.3%
• Best for: Skilled negotiators, friendly people with strong sales and communication skills

Becoming a real estate agent is a great home business idea. Agents typically have the ability to dictate their own schedules and select the clients they want to work with, making a career in real estate one of the most suitable options for those considering home-based business ideas.

Real estate agents have the option to represent the buyer or the seller in property transactions. Some agents may alternate between these roles, while others may specialize in one.

Regardless of your focus, obtaining a license is a prerequisite for becoming a real estate agent. The specific licensing criteria vary from state to state, but the process is typically straightforward and swift. Additionally, a high school diploma or GED is the minimum educational requirement to qualify.

Idea #20. Voiceover Business

• Average Annual Revenue: $50K-$110K
• Average Profit Margins: 19.8%
• Startup Cost: $3K-$5K
• Time To Revenue: 1-6 months
• Annual Market Growth Rate: 0.7%
• Best for: Strong readers and performers

If you've ever been complimented on your radio-ready voice, consider a voiceover business as a fantastic home-based business venture.

Voiceover artists are compensated for narrating scripts, audiobooks, or various written materials. Notably, you don't require acting prowess or formal training for this role—what's essential is the capacity to articulate and accurately deliver a written text aloud.

Platforms like Backstage and voices.com provide accessible avenues for honing your skills and establishing a clientele. This enables you to kickstart your journey in the field of voiceover artistry.

Idea #21. Property Manager

• Average Annual Revenue: $372K+
• Average Profit Margins: 10.1%
• Startup Costs: $100K-$3.5M
• Time To Revenue: 6-18 months
• Annual Market Growth Rate: 1.3%
• Best for: Home maintenance and repair experts, organized and system-focused entrepreneurs who are great communicators

Another home-based business idea is to venture into independent property management. Property managers are frequently contracted independently by individuals who own rental properties or commercial real estate.

Property managers handle the day-to-day responsibilities associated with a property, including rent collection, organizing or overseeing repairs, and addressing tenant inquiries and concerns.

One particularly lucrative niche involves overseeing Airbnb properties on behalf of their owners. For instance, Nicasa, an Airbnb business, not only manages properties for others but also handles its own real estate investments, generating an impressive annual revenue of $3 million.

To gain insight into their successful strategies, watch this video:

[su_youtube url="https://www.youtube.com/watch?v=6m-MosXlpOE&t=5s"]

Idea #22. Accounting and Bookkeeping

• Average Annual Revenue: $244K per employee
• Average Profit Margins: 18%
• Startup Cost: $500-$2.5K
• Time To Revenue: 3-12 months (plus accounting degree)
• Annual Market Growth Rate: 1%
• Best for: Certified accountants, entrepreneurs with strong math and financial skills

Accounting is an amazingly profitable home business idea, but you will need a degree. Breaking into the virtual bookkeeping space can be a challenge even with these credentials since you’ll be competing against large, well-known corporations that provide these services.

Even so, for someone who has accounting experience, this is a great small business idea that pays well.

Idea #23. Life Coach

• Average Annual Revenue: $63K+
• Average Profit Margins: 10.5%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 1.5%
• Best for: Excellent motivators, empathetic active listeners, people with strong time management, organization, and problem-solving skills

As a life coach, your role is to empower clients to reach their full potential. This encompasses aiding them in resolving challenges spanning various aspects of their lives, including personal relationships, physical and mental well-being, and broader life objectives.

Becoming a life coach doesn't necessitate specific licensing or formal education requirements. However, similar to other home-based business ventures, acquiring some training can instill confidence in your clients, particularly when you're just starting out.

For comprehensive information on the best life coaching programs, check out this Forbes review of top-notch life coaching certifications. Additionally, holding a bachelor's degree in fields like psychology, social work, or another social science can equip you with the skills needed to enhance your clients' lives.

Idea #24. eBay Reselling

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Cost: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: Thrifters and collectors

An eBay store is fast and inexpensive to open. Once it’s set up, all you’ll need to start an online store is the inventory you’ll sell.

When Mike Wilson opened Golden State Picker, he started by selling items he already had. Then, he used those profits to get more inventory from thrift stores, storage unit auctions, and online marketplaces.

He explains how he grew that into a $30,000-a-month business in the podcast below.

Idea #25. Career Coach

• Average Annual Revenue: $64K+
• Average Profit Margins: 2.8%
• Startup Costs: $500-$5K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 0.8%
• Best for: Recruiting and human resources professionals, strong networkers with industry and job market expertise, effective writers, communicators, and motivators

Career coaches play a critical role in guiding individuals toward their dream jobs. Their responsibilities encompass tasks such as refining resumes and cover letters, conducting interview preparation and practice sessions, and assisting clients in developing the skills necessary for career progression.

Typically, a career coach charges between $100 to $150 per session. With a full roster of clients, this equated to an average annual income of $63,300 in 2023. Offering specialized services, such as executive coaching or aiding individuals through career transitions, can lead to even higher earnings.

Idea #26. Affiliate Marketing

• Average Annual Revenue: $60K-$160K
• Average Profit Margins: 8%
• Startup Cost: $500-$2K
• Time To Revenue: 1-3 months
• Annual Market Growth Rate: 10.5%
• Best for: Bloggers, YouTubers, those with a large social media presence

Affiliate marketers advocate for products and services offered by other businesses and earn commissions for every sale generated by their promotional efforts.

This not only serves as an excellent supplementary income for blogs or YouTube channels but can also stand as a highly profitable independent venture. It's worth noting that you don't necessarily need to be a prominent social media influencer to thrive in affiliate marketing.

Matt Diggity, for instance, began as an SEO specialist and went on to build a seven-figure affiliate marketing enterprise. You can delve into Matt's journey and gain valuable insights in this podcast.

Idea #27. Print-on-Demand Business

• Average Annual Revenue: $60K-$120K
• Average Profit Margins: 5-15%
• Startup Costs: $100-$1K
• Time To Revenue: 30-90 days
• Annual Market Growth Rate: -9.3% (based on eBay annual reports)
• Best for: People with sales and marketing skills, collectors who can spot valuable items, those seeking flexibility and the potential for passive income

A print-on-demand (POD) business is responsible for designing products and marketing to their target market. When customers buy a product, the POD business owner pays for the cost of production and shipping, then the manufacturer will print the design and ship it directly to the customer.

This profitable business model can be used with t-shirts, mugs, and in conjunction with an existing eCommerce business or subscription box business.

How to Start a Home Business

When you have decided what business to start at home, you’ll need to understand the process to start your business. Steps to follow include:

• Decide on a home business idea
• Write a home-based business plan
• Name your home-based business
• Get an LLC for your at-home business
• Get business licenses for your home business
• Get a home business bank account
• Set up your home office
• Market your home-based business
• Serve your customers

You can learn more in our blog about how to start a small business at home.

Choose Your Own Business Idea

We’ve provided a list of online business ideas, work-from-home business ideas, and service business ideas to help you choose small business ideas you can do from home.

The rest is up to you. Once you’ve chosen your idea, you’re on your way to joining the ranks of successful home-based businesses. Which business idea do you want to start?

A business should know for any given period whether the company’s ability to pay its bills is in question. The easiest way to do this is by having a real-time update of your profit and loss statement. This financial statement will help you easily identify your gross revenue, net revenue, and profit margins to see your financial standing. [su_note note_color="#dbeafc"] We’ll help you understand P & L accounting. Click on any of the links to jump ahead:

1. P&L Meaning
2. P&L Example
3. Profit and Loss Statement Template
4. The Differences Between Financial Statements
5. What is Net Income?
6. What are Operating Expenses?
7. How to Compare P and L Statements

[/su_note] Get ready to find out what a P&L statement shows.

What is a Profit and Loss Statement (P&L Statement)?

People might also ask: What Is a P&L Statement?, What is a P&L, What does P&L stand for? What is P&L in business, or What is P and L? A profit and loss statement is a document that companies file quarterly and annually to explain revenue and expenses. You might also hear these documents called by names like:

• P&L statement
• Income statement
• Statement of financial results or income
• Statement of profit and loss
• Earnings statement
• Statement of operations
• Expense statement
• Operating statement
• P&L report

These records are used by the government, lenders, and financial analysts to analyze how a company can improve its profit through cost reductions, increased investment, and increased revenue. A Profit and loss statement uses either an accrual or cash basis. The P&L helps the team measure the company’s financial health.

Are P&L Statements Required?

Yes. When you file your taxes, the IRS will require a profit & loss statement, as well as a cash flow statement and a balance sheet for your business during a specified period of time. (I would love to provide you with more information on the laws regarding tax requirements, but I am not licensed to offer legal or financial advice. You should go to the IRS to gather information about handling your taxes or consult a licensed accountant or other tax professional.)

Accounting P&L Statement Example

Company Name	2023	2022	Year over Year Change
Sales or revenue	$4,206,900.00	$1,234,567.00	240.76%
Operating costs:
Cost of goods sold	$2,000,000.00	$700,000.00	185.71%
Selling, general, and administrative           (SG&A)	$350,000.00	$120,000.00	191.67%
Research and development (R&D)	$175,000.00	$60,000.00	191.67%
Interest on financial products	$4,200.00	$4,200.00
Other operating (income) expenses	$5,000.00	$2,400.00	108.33%
Total operating costs	$2,534,200.00	$886,600.00	185.83%
Operating profit	$1,672,700.00	$347,967.00	380.71%
Interest expense excluding financial products	$484.00	$465.00	4.09%
Other income (expense)	$239.00	-$35.00
Earning before income tax	$1,672,455.00	$347,467.00	381.33%
Income taxes	$351,215.55	$72,968.07	381.33%
Net profit	$1,321,239.45	$274,498.93	381.33%

Here are some other line items you might see on corporate income statements:

• Equity in profit (loss) of unconsolidated affiliated companies
• Profit of consolidated and affiliated companies
• Less: Profit (loss) attributable to noncontrolling interests
• Profit (attributable to common shareholders)
• Profit per common share
• Profit per common share — diluted
• Weighted-average common shares outstanding (millions)
  • Basic
  • Diluted
• Cash dividends declared per common share

Profit and Loss Statement Template

We’ve created a template for you to use to create a profit and loss statement. Download it below.

How do Companies Measure Financial Performance?

There are three main financial statements that organizations use to measure performance: [su_note note_color="#dbeafc"]

• P&L Statement: The profit and loss statement is simply revenue and other earnings minus expenses during a specific period of time to get a net profit or loss.
• Balance Sheet: The balance sheet provides a snapshot of the assets and liabilities on a specific date, normally the end of the quarter or fiscal year. Comparing the assets (especially liquid assets) to the liabilities helps investors project whether the company can meet its financial obligations.
• Cash Flow Statement: The third document shows cash flow from operating income and expenses, investment decisions, and financing decisions. If cash flow is positive, your company is typically in good financial health, but if it is negative, you may have issues.

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Profit and Loss Statement vs Balance Sheet

Profit and loss statements show a company’s total revenue, total  business expenses, and profits over a quarter or fiscal years. Meanwhile, balance sheets show the balance of liabilities and assets for the last date of the reporting period. Investors can compare the balance sheet to prior years to measure changes in the assets and liabilities. Comparing changes in revenue, business expenses, and total profits with assets and liabilities can give you a good idea where a company is going.

Income Statement vs Profit and Loss (P&L) Statement

The terms income statement and profit and loss statement refer to the same document. A net income statement or P&L statement will normally include the items in the example profit and loss statement below.

Profit & Loss Statement vs Cash Flow Statement

A profit and loss statement often has non-cash expenses like depreciation that are allowed in accrual accounting, while a cash flow statement only focuses on actual cash received or sent during the same period. This can change the financial outlook of a company because sometimes a huge depreciation can make a profitable business look like a loss.

Example Cash Flow Statement
Net Earnings	$1,321,239.45
Additions To Cash:
Depreciation	$26,424.79
Decrease in Accts Receivable	$9,909.30
Increase In Accts Payable	$9,909.30
Increase in Taxes Payable	$1,321.24
Subtract from Cash:
Increase in Inventory	-$19,818.59
Net Cash From Operations	$1,348,985.48
Cash From Investing:
Equipment	-$330,309.86
Dividends	$26,424.79
Cash from Financing	-$303,885.07
Notes Payable	$6,606.20
Cash Flow From Period	$1,051,706.60
Previous Period Cash on Hand	$283,256.00
Total Cash on Hand	$1,334,962.60

What is Net Income?

Net income is simply revenue minus expenses, interest, and taxes. It is the most common number that people look at after a company’s revenue because it shows how effective you are at turning sales revenue into take-home profits. Net Income might also be referred to as a net profit or net loss depending on the financial results during a certain period. Net income is also used in paychecks. 

What are Operating Expenses?

Operating expenses on a profit and loss statement are the costs associated with running a company. You can calculate the operating expenses by adding up the following:

• Cost of Goods Sold/Costs Associated With Sales
• Marketing
• Sales, General, and Admin (SG&A) Expenses
• Rent and Utilities
• Technology Costs 
• Research and Development

Business owners need to manage expenses to reach their target profit margin. How you manage the operating profit margin determines how analysts and lenders will evaluate your business operations’ effectiveness.

How to Compare Profit and Loss (P&L) Statements

Hey, guess what! I am actually allowed to provide advice on how to compare a profit and loss statement to another P&L statement. I’ll refer to NYU Stern’s table of public companies’ margins throughout this section. If you’re comparing a financial statement to another document, you’ll want to compare the following:

Company’s Revenues

Each profit and loss statement will have the gross revenue at the top. If you’re comparing year over year of the same company, you want to see revenue growing. When comparing financial statements from two companies, you’ll want to know which revenue is higher and which is growing more as a percentage.

Cost of Goods Sold (COGS)

A P&L statement will show how much each company spends to create their products or services. Whichever spends less as a percentage of revenue is doing a better job at controlling their financial position, but they may be losing opportunities if the business owner is focusing on financial strength over people.

Gross Profit

The gross profit is simply the revenue minus cost of goods sold. The higher the gross profit as both a dollar amount and percentage, the better the revenue statement reflects on the business.  Gross margins can range anywhere from about 10% to 100% (banks have virtually 100% because their costs are not directly related to selling a product or service), but most successful business owners aim for a 50% or higher gross margin.

Sales, General, and Admin (SG&A)

Small businesses have operational costs that aren’t tied directly to the companies’ total income. For instance, an accountant charges you based on the complexity of your books, not how much you sell during a fiscal year. Any company spending over about 16% in SG&A may want to look at where expenses are incurred to reduce the percentage.

Operating Profit

This is the expense directly related to operating the company. This line on a P&L statement will give you a good idea of whether your small business could cover the monthly payments on a loan. If your operating margins are less than 10-15%, you should look at your total expenses and see where you can improve your company’s profitability.

Interest Expense

If this item is on a P&L statement, it means the company is borrowing money. That’s perfectly normal, but if the interest expenses are more than the operating profit, then at some point the business will either fall behind on the loans or other expenses.

Net Income

This is the part of the profit and loss statement that shows the gains or losses from the company. If you divide this number by the revenue, you get the net profit margin. Depending on your industry, this percentage could range from -20% to +30%, with an average of around 8.9%.

Accrual Method Accounts vs Cash Basis

One other important aspect to understand about P&L accounts is the cash and accrual basis of accounting. A P&L account that uses cash basis accounting will only account for spending when they buy or sell products, services, or company’s assets.  P&L in accounting also allows companies to use the time of invoice as the basis for when the cost or revenue is earned. When this occurs, you’ll have accounts receivable and accounts payable that will impact your company’s assets. As you’ve seen from public company failures in the banking industry, a business may be forced to close if they reach a specific point where their assets and cash flow don’t cover their liabilities. That’s why it’s critical you have somebody to advise your P&L management that knows what they are doing. 

Now It’s Time to Hold Yourself Accountable

We’ve discussed examples of P&L statements, how to perform a horizontal analysis of P&L in accounting, and other useful information to better understand P&L responsibilities. Now it’s up to you to use the knowledge to help measure and increase your profit margins. While PNL finance measures from revenue to net income, many business owners find it easier to manage a business using the formula: Revenue - Profits = Expenses This lets you look at how much money you want to make and what you have to do to achieve it. What financial metrics and reports do you find most useful for running your business?