Case Study: How One Buyer Quickly Scaled an FBA Business After Acquisition

Raj Patel ditched his dreams of becoming a lawyer when he realized he could make far more as an Amazon FBA entrepreneur. After bootstrapping two businesses on his own, Raj recognized there was an easier way to boost cash flow: buy healthy Amazon FBA businesses and grow them like crazy. Mimic Raj’s process in your own entrepreneurial journey to skip over the heartache of launching eCommerce startups and get straight to the owner/CEO role.

Skipping the Startup Grind

Ever wished you could hop in a time machine? While some folks yearn to revisit Prohibition-era speakeasies or castles of the Renaissance, many entrepreneurs would choose to see the future. After all, with a time machine, you can fast forward to the best parts of your life when your business is thriving!

Business owners are dreamers. If you could fast-forward your business by two years to skip the hard work of bootstrapping, you’d probably do it, wouldn’t you? You could pretend all the issues with funding and crying over bad prototypes didn’t happen.

The thing is, serial entrepreneur Raj Patel made this happen in real life—without resorting to a souped-up DeLorean. Raj’s specialty is acquiring thriving eCommerce businesses and growing them even more. 

Thanks to his method, Raj has been able to skip the pesky business of bootstrapping and building altogether, enjoying tasty profits from the get-go with matured Amazon FBA businesses.

In fact, 80% of Raj’s revenue is from Amazon FBA. 

Although he sells directly through some of his websites, he’s all about Amazon, and for good reason. Isn’t it time for you to get a piece of the booming eCommerce market? Learn how Raj fast-forwards the process by acquiring existing businesses to earn more with fewer headaches.

Becoming an Entrepreneur with an Online Business 

How did this all start for Raj?

26-year-old Raj was a university student studying to become an attorney. He dabbled in Amazon eCommerce on the side out of curiosity. What shocked him was that he was able to quickly earn more money through Amazon FBA than he would as an attorney after he graduated.

Who would bother finishing a law degree when they’re already making more through a part-time side hustle? 

“Why bother growing a totally new business when there were perfectly good businesses out there for sale?”

Instead of tying himself to the courtroom, Raj realized he wanted to reap the perks of growing an Amazon business: independence, freedom, and the ability to travel the world.

Raj decided to bootstrap two businesses from scratch instead of becoming a lawyer. Five years later, Raj still has these two brands under his belt.

After growing these businesses and seeing healthy cash flows, Raj had an idea. Why bother growing a totally new business when there were perfectly good businesses out there for sale?

Raj took a gamble and purchased a third business. It went so well that he decided to acquire a larger one, The Beard King, for a total of four businesses in his portfolio.

Why to Buy an Online Business Instead Of Bootstrapping?

Raj has put his wild and crazy days of Amazon FBA startups behind him. Today, he’s all about acquisitions. Thanks to his accumulated capital from his first two businesses, he’s able to comfortably research and acquire businesses that fit his needs.

“If you’re tired of the ‘boostrap, build, sell’ model, there’s a healthy alternative.”

Some of the core benefits to buying an Amazon business instead of starting one include:

• Saving significant time by avoiding the bootstrapping phase.
• Avoid risking start-up capital on a new venture that might not work.
• Having a proven business that is already cash-flow positive.
• It will likely continue increasing in value.

Raj’s approach is different from what many Amazon business owners are doing. If you’re engaged in retail arbitrage and have an Amazon FBA product, you’re probably scaling and building it yourself. However, as with many things in entrepreneurship, the decision to go against the grain can be a fruitful one. For a more in-depth discussion about the pros and cons of starting an Amazon business versus buying one, check out this previous article. 

Most people don’t even think about acquiring a business instead of building it. 

Fortunately, the times are a’changing, with entrepreneurs trending towards buying instead of building.

It’s easier to get ahead when you’re buying a business that somebody has already grown. Sure, you could build something yourself. Or, you could dedicate yourself to other interesting activities in the meantime and buy a similar business once it’s up and running.

Raj prefers the latter approach. To him, it’s all about time. He likes to expand aggressively with his businesses. 

If he buys an Amazon FBA business, he wants to see a return on that investment within 2 years of purchase.

Of course, not every entrepreneur is ready to buy a business outright. Doing so requires having the capital as well as some experience (although, many buyers use SBA financing to get great deals). Raj put in his time when he grew his first two businesses, which gave him the capital to buy other Amazon businesses.

“If he buys an Amazon FBA business, he wants to see a return on that investment within 2 years of purchase.”

Now that he has moolah, Raj skips right over the long, painful hours required when you’re bootstrapping a business. “Now that I have the capital, I’m able to skip those two years of hard work,” he says. It’s like hopping into a time machine and driving several years into the future where your business is already earning a solid income.

If you’re tired of the “bootstrap, build, sell” model, there’s a healthy alternative. For Raj, that meant evolving from a builder to a buyer. You won’t be the same business owner in five years. Acquisitions might not be right for you now, but as you pick up knowledge and capital, the future can look very different.

How to Find the Right Amazon Business to Buy

Science is woefully behind on developing a time machine, but that doesn’t mean that you can’t skip forward to the future with your business. Raj recommends you use these four tips to identify businesses that are ripe for acquiring.

1. Look For Amazon FBA Businesses

It’s kinda obvious: Amazon is annihilating everyone else at eCommerce and has been doing it for some time.

There are few key reasons why purchasing an Amazon business is a great idea:

• Leverage Amazon’s massive customer base and Amazon prime program.
• Quick-growth opportunities.
• The Amazon platform is easy to use.
• By owning multiple Amazon businesses, entrepreneurs can diversify risk.

By acquiring an Amazon FBA business, you’ll be able to scale on an established platform with a healthy audience base.

Some entrepreneurs are hesitant to look at Amazon FBA, fearing that Amazon is a fad that will leave them high and dry with minimal returns. However, this is an outdated notion, as all current evidence suggests that the Amazon marketplace will only keep growing. 

Previously, it took business owners years to build a thriving eCommerce business. Thanks to Amazon, it’s possible to have a fully functioning business in less than 3 months if you put in the elbow grease. 

Raj recommends buying Amazon businesses because the platform is so easy to use. If you’re a fan of the “passive income and sipping on a margarita on the beach” lifestyle, Amazon is perfect for you. 

Raj likes Amazon because, once everything is set up, it’s mostly on autopilot, giving you time to do other things (like sip spirits on the beach, if that’s your thing). A modest Amazon FBA fee gives you access to powerful tools for managing and growing your store.

Now, will Amazon stay like this forever? It’s not likely. You’re an entrepreneur, though—change is your middle name. To be successful as a business owner, you have to be willing to adapt.

If you’re tentative about Amazon, Raj says don’t put all of your eggs into one basket. That’s why he likes to have multiple streams of revenue on the Amazon platform, going so far as to expand internationally (more on that in a bit).

2. Do Thorough Research

Raj doesn’t make an offer on every business that he comes across. He recommends that anyone interested in business acquisitions spend a lot of time on research to find the right fit. 

If you head over to the Quiet Light Brokerage Listings page, you can check out our listings and request information packets for those that you’re curious about. After filling out a blanket NDA, you’ll be able to examine any of our businesses that catch your eye. You don’t need to be a serious buyer at this stage. In fact, we recommend that all potential buyers familiarize themselves with our packets in order to understand what a desirable business looks like. It’s like speed dating, but for business acquisitions.

A few key rules to follow during the research phase include:

• Take your time finding the right business.
• Look at as many businesses as possible.
• Read memorandums cover to cover (don’t skim).

Before acquiring Beard King, Raj shopped around for 4-5 months. He subscribed to several brokerage emails and sifted through the listings aggressively every day. “I subscribed to every single email list out there,” Raj says, laughing. During that time, about 40 listings caught his eye.

Instead of skimming through the dry memorandums, Raj read them cover to cover. This helped him understand if a particular business was a good fit for his goals. Even if the business wasn’t a fit, Raj still learned about other businesses’ models, processes, and products.

As long and as boring as memos can be, Raj insists that reading them was never a waste of time. Even if you don’t decide to buy the business, the process of looking at these listings can be pretty insightful.

During the five months he was shopping, Raj made approximately 4 offers on a few companies. On one, he even made it to the Letter of Intent (LOI) phase, but he missed the deadline by a day and another buyer swooped in. 

It all worked for the best, though. After months of hard work, Raj found Beard King and knew it was the perfect fit. He spent a lot of time looking, but ensuring that the Amazon business was the right fit meant Raj could hit the ground running immediately after his new acquisition.

3. Build Relationships With Brokers

Most of us are tired of Zoom meetings, but they’re important nonetheless when it comes to landing the right deal. We live in an email-driven world in which it’s super easy to shoot off written messages. However, if you want to land a good deal on an Amazon business acquisition, you need to put in some face time with brokers.

“If you want to land a good deal on an Amazon business acquisition, you need to put in some face time with brokers.”

A few core advantages of communicating via phone or Zoom include:

• It’s easier to build trust.
• Offers seem more genuine over the phone.
• You can often get a better deal after getting to know the broker and seller.

Raj recommends that you talk to brokers any chance you get. This is especially true if you send an offer that’s lower than what the Amazon FBA seller is asking for. “I would always try to talk to the broker because, when you send a lowball offer by email, it doesn’t seem genuine,” he says. 

By chatting face to face, you can explain why you gave the offer you did and justify your opinion why you’re shooting a little lower.

Now, the broker might laugh in your face and reject your offer. That’s okay. The goal is to start a conversation and see what you can work out with them. 

More often than not, being likable and starting a conversation will get you a better deal. When a broker trusts you, you can share your reasoning for offering a certain dollar value, opening the door for negotiations.

If you build a good relationship with the broker and the seller, that’s ideal. You can get a much better price this way, too. That’s because business owners are selling a part of their soul when they sell their business. They’ve been working on this thing for years. Amazon FBA sellers don’t want to sell their business to someone who is only driven by profit.

Part of Raj’s success is due to his genuine intentions to grow the businesses he acquires. Because of that, his sellers sometimes accept lower offers because they know he is passionate about the business, not just the dollar signs.

4. Focus On Proprietary IP

One of the most unique things about the Beard King transaction is that the company owned several utility patents and copyrights. This is unusual to see in the eCommerce space, which made Beard King stand out. 

Benefits of having patents and trademarks include:

• Defensibility against competition.
• Amazon’s patent protection program makes it easier to eliminate counterfeit products that seek to compete with your listings.

Now, patents and trademarks can make the process a little stickier, but they have significant benefits for you as a buyer.

“If you want to buy a unique Amazon business that has a lot of competition, patents help you knock out copycats.”

Raj bought Beard King knowing that it already had intellectual property protection sewn into its fabric. “IP makes it easier to take away competitors,” Raj says. Thanks to these patents, Raj could turn around and use the Amazon patent protection program to kick off spammy counterfeiters who try to steal the buy box on the product listing, driving up Beard King’s sales and profit margin.

Brush up on your patent and trademark knowledge. If you want to buy a unique Amazon business that has a lot of competition, patents help you knock out copycats. Enforcing intellectual property takes competitors out of the field and puts more dollars into your pocket.

Scaling an FBA Business After Acquisition

Even though Raj is the new Beard King, he professes that he can’t grow a beard. But let’s not hold that against him, shall we?

After running Beard King for a good quarter of a year, he recognizes what it takes to scale the business. Follow his 4-step process to press “fast-forward” on your newly acquired FBA business’s growth curve.

1. Embrace The Learning Curve

Even if you’ve already done the “bootstrap, build, sell” cycle before, acquisitions are a different ballgame. Heck, every business is different. Therefore, it’s important to embrace the learning curve of business acquisitions.

Two of Raj’s favorite educational resources are:

• Amazon Seller University
• Small masterminds with successful sellers

For a lot of entrepreneurs, that means absorbing as much knowledge as you can. Raj is all about learning, but he says you don’t need a $2,000 course to do it. He’s never paid a cent for a course because he says you don’t need them.

“I’m a simple guy. I just listen to what Amazon puts out there,” Raj says. As an Amazon buyer, all you need to know is what Amazon tells you to do. His personal favorite resource is Amazon Seller University, where Amazon shares everything you need to know—for free. Of course, there’s also good, old-fashioned YouTube.

Some people think you can buy a course and become a business genius but it just doesn’t work like that. The best way to learn is through trial and error. It’s okay if you don’t have a clear path to follow because life doesn’t come with an instruction manual.

“The most effective way to connect with other business owners is to have a small network of people you can chat with at any time.”

Another way to avoid mistakes is by connecting with other Amazon entrepreneurs. Raj says you can skip right over those 1,000-person Facebook mastermind groups. 

The most effective way to connect with other business owners is to have a small network of people you can chat with at any time. Raj partners up with a handful of fellow Amazon FBA power-sellers to chat about the platform and spitball new ideas.

2. Make Sure Your Branding Is On Point

Raj purchased Beard King, in part, because its branding was right on. 

In fact, branding is a big part of what makes Beard King what it is. When you buy a business, you need to make sure that its branding is really clear. Ideally, you should buy a business that’s already branded to the nth degree, but if it’s not, make that a priority!

Beard King went viral because of its branding, which skyrocketed sales in time for Raj to acquire the business. Get yourself a well-branded Amazon FBA business and you can take over the world.

3. Overhaul The Logistics

As great as Beard King was when Raj bought it, it had a weakness: logistics.

“There was a lot of money left on the table in terms of the cost of goods,” Raj says. The founder had been manufacturing locally in Florida and shipping in materials from China. That made everything crazy expensive to produce, increasing the business’ costs.

The first thing Raj realized was that the cost of goods was leaving money on the table. By chatting with a few suppliers, Raj dramatically reduced the cost of goods and increased the bottom line dramatically. He knocked 80% off of the cost of goods on Beard King, which Raj had never seen before. This was without modifying the actual product at all, mind you.

After optimizing the cost of goods, Raj is now considering making adjustments to the products themselves, as well as adjusting the shipping options.

When you buy an Amazon business, you have to look for quick wins like these. Logistics are easy(ish) wins that drive a ton of value to the business quickly after you acquire it. These improvements require a little bit of money and tweaking, but the results make them super worth the time.

4. Expand Internationally

Raj’s final note to fellow Amazon entrepreneurs is to be open to expansion. “I’ve hit the ground running in terms of launching in different countries,” Raj says. Amazon has thriving markets in several countries.

“If you expand to different Amazon markets, you’re going to have multiple streams of income,” Raj says. Raj believes in being aggressive with his international expansion. That’s why he’s planning to take Beard King to Amazon marketplaces like Canada, Australia, the UK, Germany, and more.

Now, these markets are smaller and contribute maybe a 10% boost in sales. However, Raj believes that you shouldn’t leave any money on the table when you acquire a business, and expanding to new markets is another easy way to fast-forward your business’s growth with little effort.

5. Maximizing Your Time

For Raj, business ownership is all about maximizing your time. Today, he spends 15 hours a week on Beard King. If he were bootstrapping the business, he’d likely be working 12-hour days, agonizing over marketing, fulfillment, and a lot more.

Building a business is a valuable experience for any entrepreneur, but it isn’t your only option. Once you get your sea legs, it’s time to think about acquisitions.

“If he were bootstrapping the business, he’d likely be working 12-hour days, agonizing over marketing, fulfillment, and a lot more.

Remember, don’t just acquire any old company.

Find the right Amazon business by taking your time, building relationships with brokers, and seeking out proprietary IP. Once you acquire your Amazon FBA business, lean into the learning curve, focus on branding, and get quick wins with logistics and international expansion.

“Remember, don’t just acquire any old company.”

Science hasn’t given us a time machine yet, but with Raj’s process, you’ll be able to grow earnings like you have one. Use this process to fast-forward your business so you can press “play” on the more enjoyable aspects of your life.