How I Have a Virtually Unlimited Reselling Budget
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One of the biggest hurdles to overcome in regards to reselling is capital. In my opinion, though, capital is one thing resellers should never need to worry about, thanks to credit cards!
Many new sellers start with a set budget that they then use to buy products. Once that budget is depleted, they stop buying until their other products sell, which then fills their budget back up and the cycle continues.
In my opinion, this hinders their sales (and profit) significantly.
Now, don't get me wrong, I totally understand the business aspect of having a set budget to use and then only using that money to grow your business. It's a smart (and safe) business move to do that, however, if you utilize credit cards effectively, you can really grow your business exponentially.
So, whether you agree with my sentiments or not, read on to see how exactly how I use credits cards to grow my business.
How I Have a [Virtually] Unlimited Reselling Budget
Obviously, the answer to this is credit cards, but not just one or two; 30+ between my wife and I.
By utilizing so many different cards, I'm able to make buying decisions based on the resale-ability rather than my own budget. By that I mean, I'm willing to spend $50, $500, or even $5,000 on a product if the deal is right without worrying about if I have enough money to make the purchase.
With that said, I have a set of guidelines I follow on all my buys to help ensure I make well informed purchases that will actually sell within a couple months.
My process is simple: I buy my product(s) with whatever card earns me the most points. If the product(s) cost is over my credit limit, I either split the payment between cards or use a card that has a higher credit limit. And if my credit limit is depleted, I'll simply move to my next card. Then once the bill comes do, I pay it off in full to avoid paying any interest.
By utilizing my credit cards in this way, I basically get to take out multiple short term loans interest free. It's pretty slick!
Why This Works For Me
This business model works well for me, because I'm not one to buy sight unseen lots or gaylords of products. I buy products based on historical data, stats, and knowledge of the industry, which helps me ensure my products will actually sell so I can pay off the cards and make a profit.
Risks of Using This Method
I know this model isn't perfect and it likely won't work for everyone, so I want to lay out the risks of using it, before you think about implementing it into your business.
- Organization
Using one credit card for your business can be complicated and confusing, but adding in 10+ can get very difficult to manage. If you're not an organized person, you could easily forget to pay the cards off or spend over your credit limit. - Account Closures
By cycling through your credit limits, you run the risk of your bank(s) shutting down your account(s). If you manufacture spend, then this likely won't be an issue for you. - Liability
I'm not a lawyer or CPA, but my understanding is that if you use both your business and personal credit cards for your business, you open yourself up to liability issues if you're ever sued (even if you're an LLC). I may be completely wrong about this, but from what I've read, that's the case. - Missing a Payment
If you forget to pay a card off and the credit limit it maxed out, you'll be paying a lot of interest! - Not Being Able to Pay the Card Off
If you don't sell your products quickly enough, you run the risk of not having enough money to pay off your cards in time to avoid the interest. I only suggest using this method if you have a good chunk of money in savings/checking and/or you have a great turn around time on your products to ensure you don't run into this issue. - Your Credit Score Could Be Affected
If you max out all your credit lines or even just a few of them, you run the risk of your credit score being affected negatively. By doing a lot of CC spending, your utilization increases which is a big credit score factor.
How I Keep Track of All My Cards
Over the years, I've adjusted how I keep track of my credit cards, bank accounts, and the like too many times to count. Currently I utilize YNAB and Billguard (now Prosper Daily), but in the past I've used Wallaby, spreadsheets, and other tools, so there really isn't a wrong way to track your information, but I'll just show you what I use currently.
What I Track and Why
- Due Dates
I track due dates, because I try to make sure I pay my cards off in full 10-15 days prior to my statement closing. That way, I have a better chance of my utilization NOT being reported. - Transactions
I run so many transactions through my cards, that I like to give them a quick glance every day to ensure there is no fraudulent charges. - Utilization
I try to keep my utilization under 20%. Normally, I'd say stay under 5-10%, but when reselling with credit cards, that can be a real challenge.
My Process
As a precursor to my process, I check Prosper Daily every day and I check YNAB once a week.
1. Every morning, I check Prosper Daily for new transactions from the previous day and I check for statement balances due within the next 10-15 days.
2. If there are any questionable transactions, I research them to see what's going on. If I have any statement balances due in 10-15 days, I'll login to my credit card accounts and pay them.
3. Then once a week, I auto import all my credit card transactions into YNAB to make sure there are no fraudulent transactions (again), to make sure my CC bills cleared, and to do my own budget.
By doing that, I can quickly verify that all my transactions are legit and all my bills get paid. As a fallback, I also set up auto pay for all of my cards. I don't like to utilize auto pay by itself, simply because then my utilization gets reported which I prefer to avoid as often as possible.
A Look At Prosper Daily
Setting up Prosper Daily takes some time if you have a lot of card. After the first 10, the app starts struggling to add more. Once they're all added, though, it runs smoothly.
With Prosper you can check the following for free:
- Your credit score
- Every transaction on your credit cards
- Analytics on your spending
- Information about your utilization
- Information about statement due dates and balances
- Your total balance across your cards and your checking accounts
This is the statement balance area. You can easily see what you owe and when.
Here you can see a quick overview of your cards and which ones have high utilization. You can also check which ones you are paying interest on, however, some cards (as you can see in the picture) they don't update that information. If you are paying interest on the card or have a high utilization, you will see a red X here.
Here you can see all your accounts and current balances at a quick glance.
And if you want to see your detailed transactions, you simply select which card you want to look at and it brings up all your transactions. The green bar means that I looked at and approved the transaction.
Conclusion
Regardless of whether you resell products, manufacture spend, or just have a few credit cards to earn some rewards for your normal spending, it's important to keep track of your transactions. In my opinion Prosper Daily makes that extremely simple and helps me manage 30+ cards quickly and easily.
If you're a reseller, I'd love to hear your thoughts about my "unlimited" budget! Do you have a set budget and if so, why?
