Frequently Asked Questions

1.Is 70k liquidity okay or is more expected at any time later? 

70k+ liquidity is good for the initial purchase orders. More can be injected for faster scaling.

2.As I understand, we are also using supplier net terms and credit lines they make available, so this is what allows us to access higher inventory, but we need the credit to make the initial orders to get this started, right?

Correct. The 70k is required for the initial inventory.

3. How do we distribute net income monthly during the entirety of the business partnership?
Bank transfers through ACH/Wire.

4. Looks like operating income stays within the business for the first 6-12 months and is not paid to either party?

Correct. This is a mutual agreement before we begin the partnership. This can change if the store scales sooner than expected.

5. Operating Expenses and or additional invoices can I expect monthly?

Besides the profit split, operating expenses will be roughly 1k/month. This is paid for with the upfront until the business is generating profit. Licenses, subscriptions, Amazon marketplace fees, inventory management fees, web hosting, shipping fees.

6. Do I have to file taxes for the business?

We will help and recommend a great CPA, but yes you would be responsible for filing and paying your taxes for the profits generated by the business.

7. How does COGS scale as sales scales?

COGS will be roughly 60-70% of sales to get a gross margin around 30-40%. This may get lower as we scale to 100k+/month.

8. What are typical gross margin, COGS of sales %, EBITDA, and multiples from past sales? Multiples have been 3-5x in the past.

Previous partner: gavkwok.com/wholesaleclient

9. When is the time to sell, how/where are you finding the buyer and who does the deal - broker or marketplace? Just want to confirm that this part is done by you and your team, not by me, right?

After 18-24 months of cash flow, we will be doing this entire process, but you're welcome to help if you have a potential buyer.

10. Time involvement expected of me per week for store and order management? 

10-15mins/week in the initial onboarding phase as we ask for documents/verification. After that, there is no time investment required. My team and I handle everything.

11. What do we do if inventory is not sold?

It's Wholesale FBA so the products are guaranteed to sell since there is a preexisting market for each product we buy. In the worst case scenario, the products may take an extra month to sell.

12. Is it correct to say that worker and software expenses, insurance are already covered by the upfront cost paid for setup, or does it come out of business gross profit income under operating expenses, or is this an additional cost required of me?

Correct. This is paid for by the upfront cost until the business is generating sufficient cash flow/profit. Once this happens, we'll deduct it from the business revenue/profit.