In this episode, host Josh interviews James Thomson, Managing Partner of Equity Value Advisors, about scaling e-commerce brands, especially on Amazon. James shares practical advice for brand owners aiming to grow from seven to eight figures, emphasizing the importance of delegating tasks, building a competent team, and creating a three-year business plan. He discusses making brands attractive to investors, leveraging capital for faster growth, and focusing on brand equity and customer experience. The episode concludes with actionable takeaways for building teams, enhancing brand value, and strategic planning for long-term success and potential exits.
Chapters:
Introduction and Guest Background (00:00:00)
Host introduces James Thomson, his background in e-commerce, Amazon, and advisory roles.
Actionable Steps for Scaling from 7 to 8 Figures (00:00:58)
James shares first steps: delegate tasks, free up time for strategic thinking, and focus on growth opportunities.
The Power of Delegation and Building a Team (00:01:13)
Discussion on outsourcing, hiring competent help, and multiplying business impact through effective delegation.
Strategic Thinking and Long-Term Planning (00:04:04)
Importance of spending time on big-picture questions: product expansion, new channels, and funding.
Making Your Business Attractive to Investors (00:04:53)
How to position your brand for investors, debunking myths about channel expansion, and identifying growth levers.
Developing a Three-Year Business Plan (00:05:46)
Necessity of a three-year plan, working backwards from growth goals, and evaluating new channels and products.
Preparing for Channel and Category Expansion (00:07:03)
Exploring requirements for retail and new categories, talking to experts, and assessing readiness for expansion.
Securing Capital and Mindset Shift for Growth (00:09:01)
Considering outside investment, selling equity, and the benefits of being part of a larger, faster-growing business.
Investor Excitement: Key Growth Levers (00:10:46)
What excites investors: clear three-year plans, actionable growth levers, and a roadmap for scaling post-acquisition.
Three Actionable Takeaways for Brand Owners (00:12:33)
Host summarizes: build and delegate to a team, focus on brand equity and customer experience, and create a multi-year growth plan.
The Importance of a Three-Year Plan (00:15:04)
James emphasizes three-year planning, aiming for aggressive growth, and preparing for a successful exit.
Conclusion and Contact Information (00:16:30)
James shares how to connect with him on LinkedIn; episode closes with thanks.
Links and Mentions:
Tools and Websites
Amazon Seller Central
LinkedIn
Key Concepts and Strategies
Delegating Tasks: 00:01:13
Three-Year Business Plan: 00:05:46
Brand Equity: 00:13:13
Actionable Takeaways
Build Your Team: 00:13:13
Focus on Brand Equity: 00:14:24
Create a 3-5 Year Business Plan: 00:15:04
Transcript:
Josh 00:00:00 Today I’m really excited to introduce you all to James Thomson. James is the managing partner of Equity Value Advisors, advising brand executives and investors that are seeking guidance on how to accelerate e-commerce revenues and to align e-commerce and physical retail distribution and pricing strategies. Formerly, James was the chief strategy officer at Big Box Experts, a managed services agency supporting brand executive teams selling online, as well as private equity investors evaluating brands sold on Amazon. He has also served as the business head of Amazon Services, the division of Amazon responsible for recruiting tens of thousands of sellers annually to the Amazon Marketplace. He also served as the first fulfillment by Amazon Account Manager and prior to Amazon. James was a management consultant and retail banker. So with that introduction, James, welcome to the podcast.
James 00:00:56 Thank you for having me today, Josh.
Josh 00:00:58 On that note, James, I mean, we talked a lot about different strategies that people can be implementing to move from seven figures to eight figures and beyond. What would be like your actionable advice for them to say, hey, this is what I would do first, second, third.
James 00:01:13 So the first thing I would do, we actually haven’t talked about yet. First thing I would do is I would start to delegate tasks to people and clear up your plates so you can spend more of your time thinking about how to go and source better products, how to do more research to find those product gaps in your catalog that you can start to fill. How to start thinking about new channels that you might expand into. When I think of the day to day activities of what it takes to run an Amazon business, there’s an awful lot of stuff that, quite frankly, we don’t really like doing. You got to check reports. You got to check seller central. You got to check your inventory. You probably got to talk to your, three people if you’ve got one that’s bringing products in from overseas. There’s a lot of activities that need to be looked at. And I didn’t even talk about, oh, you got to file 20 seller support tickets today. All that kind of stuff you need to be saying to yourself, even though I think I can do this better than anybody else in the world.
James 00:02:08 The reality is, there’s only so many hours in the day you need to go hire a VA or outsource this to a trusted colleague who, you know, make. Of course you know it’s going to cost you money, but the money that you spend to have somebody do a lot of these repetitive tasks or tasks that you don’t really like doing, that frees you up to do much higher value added stuff to drive your overall business. If you’ve got more time to be doing new product research and thinking through, okay, where is there opportunity for me to potentially expand my product line? where do I need to start thinking about culling out some of the products in my products? Because quite frankly, not all this stuff has turned out to be gold. You’ve got to have time to think through those bigger questions. And the only way to do that is to start outsourcing some of the mundane that comes with running an Amazon business. as you get better at outsourcing that and accepting the fact that, yeah, you know, this other person who’s taking on these tasks may not be quite as amazing at doing it as I am, but quite frankly, I don’t need amazing, I need confidence.
James 00:03:10 And the more you can get competent help to help you with many of these tasks, the more time you free up to work on other types of activities. When my partner, business partner and I were running our Amazon agency, we did everything we put on every hat imaginable to run that business. And as we started to outsource certain tasks and get more comfortable with listen, we can outsource most of this stuff with high confidence to people, as long as we train them properly and we’re patient and we get them up and running. All of a sudden we now had a multiplier effect. We have a multiplier effect. That’s when the genius of being a business owner starts to really kick in. And yeah, you know, wouldn’t you love to have five other people who is as strong and intelligent and good looking as you are to be there with you? I don’t need that. I need 3 or 4 highly competent people in each of their specific areas to help me pursue different responsibilities so that I can go and tackle some of these bigger, long term questions.
James 00:04:04 That’s the stuff that really starts to matter, and that’s the stuff where I get excited because I realize I can spend time helping think through how to grow my business versus being in the weeds day to day, making sure that every seller support ticket gets addressed and every customer inquiry gets responded to quickly. That’s not where I should be spending my time as a business owner. Yeah, it’s good to touch bases and check in every so often on those things. But if you’re doing that all day, all night, trying to make, make, make ends meet with your business. I would rather have a little bit less margin, but have more time to think about the bigger issues. Like what products do I need? What channels do I need? Do I need to go and get some outside funding to help accelerate the growth? Those are the big, complicated questions that you as a business owner need to be thinking about. If you have any intention on going from being a seven figure to an eight figure seller.
Josh 00:04:53 Yeah. How should brands be making their brand or their business attractive to investors? You talked about, you know, investors want to be able to come in and know what levers they can pull to accelerate growth. Yeah. and I’ve also kind of heard, hey, you don’t want to get into retail yet because you want that potential acquirer to say, oh wow, look at this opportunity with retail. or you don’t want to go to all of the channels because you want other investors to be able to say, oh, you haven’t gone on to Walmart. Like, that’s easy. I can do that. And Etsy and Target so dismiss, you know, let’s maybe dismantle some of those myths but also talk about like what are investors truly looking for? What are the levers and what makes it an attractive business? I know that’s a loaded question, but given that there’s.
James 00:05:46 A lot of stuff that you can do here, and again, assuming you’ve delegated tasks and you have time to think through what I’m about to say, it’s really important, in my view, for every brand owner to have a three year business plan and that three year business plan says, where can I be in three years from now? What’s it going to take for me to get there? Now, I didn’t say you actually have what it takes to get there, but what would it take to get there? And I’m not talking about we’re going to the moon.
James 00:06:10 I’m talking about, okay, I have a $2 million a year business if I want to grow it to be a $10 million business. Okay, well, let’s let’s work backwards. We know what my conversion rates are. We know what my inventory levels are. We know what you know. We can estimate what kind of potential market demand there is for products like mine. Okay, so if I’ve got ten products in my category, do I need to have 50 products? If it’s 50 products. Is it all still in the same category or is it other types of products? Start to think through and you can just you can either go down up or top top bottom, you know, either way, just figure out what would need to be the case in order for me to be three, 4 or 5 times bigger. And some of it’s going to be simple math, but also some of it’s going to be if I needed to open up new channels, which channels probably make the most sense given what I can see on a superficial overview, just looking at some of those other channels.
James 00:07:03 Okay, if I want to sell into physical brick and mortar, maybe I should have a conversation with an agent that could help me sell into those channels. Not that you’re actually going to sell them to those channels, but to figure out what would it take for your products to be ready to have a conversation with a retail buyer to figure out if, in fact, your products would be, be welcome in those channels? Those are conversations you can have, and it doesn’t take that much work to do. That. And what you may quickly realize is, with the products I already am making, with the packaging I’m already using, there are some changes that I could start to make to some of those products that actually make my products more interesting and more ready for retail, or more ready for other types of online channels. And so just working through that exercise of saying, what are the minimum criteria I need to be in these different types of channels, or to expand into some of these other types of categories where there might be different regulatory issues or different manufacturing issues start to work through those things, even though you may not actually, you know, activate and move forward on any of them, but you can at least start to ask the questions.
James 00:08:11 Talk to fellow colleagues who may have already explored those channels. Talk to experts who know those particular categories or those other types of channels, and ask the questions and start to figure out what would it take for you to be 3 to 5 times bigger in the next three years? As you start to think that through, you may realize that a lot of those issues that hold you back are going to be going to going to be, you know, financial, financial access to to more working capital. Well, again, you may not have the working capital, and it may require an investor to come in to provide that working capital, either acquiring your business or providing you with some investment capital. But as you go through and you start to figure out if I want to build a really big cake, what ingredients do I need? Okay, I’m going to need this. Much of this and this much of this. Now I know what it’s going to take for me to get to, you know, having a really big cake.
James 00:09:01 Turns out some of the things that you may need. You may find ways to get in the meantime long before you actually sell your business. You may decide, I got to go to my rich uncle and say, can I borrow half $1 million and give you 20% of my company? Because with that half $1 million, I can do all these exciting things with new product testing, you know, getting larger minimum order quantities and hence lower costs, I can expand into some new categories. All that stuff is well worth exploring as part of developing this three year plan. The other thing I do want to say is an aside, because I’m fully guilty of having made this mistake myself. Private label brand owners often like to build up their brand with the idea that at some point they will sell it to somebody and they will get 100% of the money for selling this business. Look, I built a $10 million brand, and somebody paid me a crazy amount of money. I would much rather be the owner of part of a much bigger pie than the full owner of a pie that I built by myself.
James 00:10:00 But quite frankly, I never got to be as big as it could have been. And so the idea of taking capital from somebody else, selling off a piece of your business to get more working, capital that shouldn’t be looked at as an evil. In fact, with the right kind of partner, with the right kind of terms, it’s something that you should definitely be looking at seriously and saying, could I accelerate my business considerably if I had half $1 million more working capital, $1 million more working capital, and you don’t have to take it on as debt? Maybe you do, maybe you don’t. But you could also take it on as equity. And those are conversations that are well worth having. And those are long term conversations that, again, you can only have if you’ve got time to start thinking about the strategic nature of where your business could be in three years and what key ingredients you’re going to need to get yourself there.
Josh 00:10:46 Yeah. What are the specific levers that you see investors getting excited about being able to pull right now?
James 00:10:54 right now, right now, brands that are looking to sell their business at some point in the next 12 to 18 months.
James 00:11:04 You got to have your house in order. And having your house in order is not just, oh, I’ve got SOPs and my county’s in good shape and blah, blah, blah, blah, blah. It’s also, do I have a three year plan that I’ve laid out that says logically, my catalog could go in this direction? I could add these types of channels. You’ve got to start thinking through what it’s going to take. Which levers you think are most meaningful to your business given where they are today, given the manufacturing relationships you have, and so on, start laying out what those things are so that you can hand the next buyer what you believe. A meaningful starting point for a three year building plan would be to take your brand to the next level. It doesn’t mean that the buyer is actually going to take all those ideas, but it’s a starting point. And if you’ve looked at this seriously and actually started to apply some, details around what it’s going to take to make each of these different activities happen, what you’re doing is you’re helping the buyer to be able to say, okay, once I acquire your business, I may have to kick more working capital into the business, but I can see that, yes, it makes sense for me to diversify into these products.
James 00:12:08 Or yes, it makes sense for me to add these additional channels. And I can see that I’m going to need to do these specific things to make that happen. Keep in mind, most companies that will buy your company your brand, they’re not as sophisticated at running your brand as you are. So you need to give them a little bit of a map around what it’s going to take for them, not only to run your business as it is today, but also where it makes sense for them to take the brand going forward.
Josh 00:12:33 I love to leave the audience with three actionable takeaways from each episode. Here are the three takeaways that I noted. James. Let me know if I’m missing something. So number one, I would say the first step, if you have just kind of stumbled into a seven figure business and you don’t really have a team, more than maybe a few Vas or things like that, you need to start building out your team and delegating responsibility goes back to exactly what James just talked about is developing those SOPs, and then start getting really good at hiring and identifying good talent and start bringing people in.
Josh 00:13:13 You’ve got to learn through experience how to lead. And that’s something that I had to go through as a leader myself. I made a lot of mistakes when hiring certain people, and from that, I’ve been able to better refine our hiring process the way that we train and we onboard team members to where we can put somebody in. And like you mentioned, you know, like with your kids, you’re you have them doing the dishes. Right. And it might not be done correctly the first time, but you have a process to teach them and, you know that you can get them to the level of cleanliness that you need them to be at down the road. So that would be action item number one. Action item number two is you need to think about that brand equity starting today. we talked about this. There’s so many different levers you can pull when it comes to brand equity. we most recently just talked about, you know, what is your repeat purchase rate? Like, what are you doing to tell your story, to bring customers back, to have them fall in love with your brand? What are you doing with that? Unbox the product unboxing experience.
Josh 00:14:24 James, I think that was a big mindset shift for myself of maybe it is worth the extra cost to add a box on to your package so that you’re able to tell that brand story more fully, and that allows you to market additional products or help them get introduced to your YouTube channel. That’s not just. Hey, subscribe to our YouTube channel. It’s hey, here are these videos to help you gain more benefit from this product. Right? and so last but not least, I would say is if you don’t already have this in place, make sure you’ve created a 3 to 5 year business plan for your business.
James 00:15:04 Three years is enough.
Josh 00:15:06 Three years is enough.
James 00:15:07 Five years is so far into the future. If you think through what you’re gonna need to do in three years. By the way, a three year plan. If you’re experiencing 10 or 20% growth, you haven’t thought about it properly. I think the way Amazon thinks, which is what we’re going after, you know, 20 to 25% growth every quarter, what would it take in order to get there? I didn’t say you’re going to get there, but what would it take to get there if you can, if you can accomplish even half of that in the next three years, you’re going to have an amazing business on your hands.
Josh 00:15:36 That’s a really, really good takeaway there. So three year plan. How are you growing your business 25% every quarter might be outlandish, but put all those ideas on the wall and start chipping away at them. and then, like I said, when it comes time for preparing to exit, that’s what gets a potential investor interested in buying your business is that they see, Holy smokes, you’ve already laid out a lot of opportunity. I see that work you’ve been doing to prepare to, you know, take advantage of those opportunities. Let’s reinvest the capital or the expertise that we have that we can bring to the table and help go to the moon. James, this has been fantastic. Thanks so much for sharing your wisdom and insight with all of us today. If people want to follow you, learn more about what you’re doing. Is there a place that you would like to direct people to get in touch with you?
James 00:16:30 I’m on LinkedIn. James Thompson Om Sonne. You can find me there and certainly happy to chat with you there.
James 00:16:37 Thanks, Josh, for having me today. I very much appreciate the opportunity.
Josh 00:16:40 It’s been a pleasure. Thanks again. James.
