One might have a plan to set up import export business. But do you have a clear idea of what it is? This is a crucial business that provides high earning opportunity if done wisely. Hence, a proper knowledge of the business is important for entrepreneurs.
The trading industry had been in vogue since days unknown. Right from the time when people started their overseas journeys, trading and exchange of goods was there in human civilization. The ancient days witnessed exchange of commodities in the name of trade, now we witness money exchange in return for goods.
Clear Understanding of Import Export Business
Import and exports are nothing but two sides of the trading coin that is appreciated by every country. When you buy goods from a foreign country it’s an import business. Export happens when your country is the producers and you ship off these goods to the other countries for money. Export business is always more beneficial for a country’s economy.
Depending on the orientation of transaction you choose, the business can be named import export.
The trendy international business market involves lot of services under the column of import or export. Some well established chain of works is distribution, sales, goods handling and ultimately the delivery of items. Strangely now you can’t just focus on any particular type of business.
There are difference verticals one can act as when in the import export business. One can be a representative of the manufacturer, be a vendor, a freelancer who acts as a broker, an agent or simply a merchant. Simply there are so many verticals to start with.
Starting an Import Export Business
Are you starting a new business? Willing to get into import or export business line? You might need to consider quite a number of points before you actually start a business. Of course, having a clear conception in both the field is essential to take the first call. Plus you might want to do some market research before you begin.
It’s not really a very difficult job to start any of these businesses. Just little consideration, step by step guidance and you are in the trade market. But, as an entrepreneur in this field, be prepared to face lot of challenges that you need to overcome in order to blossom.
You will initially come across a lot of theories about how to start an import export business. But more than theory, you need practical in the market scenario to progress.
Ethan Zuckerman said, “Creativity is an import export business”. Clearly you need to be creative and unique in the market to grow as an entrepreneur in this field.
Step by Step guidance on how to start Import Export business
When you want to set your business right, you need a practical guidance in import and export line. The steps can be described as below –
1. Fix the basics of business first
The first step to any business in modern world is no doubt to check on the basics. Do you have a website of your own? Do you have online presence in the social media? Are you doing enough digital marketing promotions? Have you connected with suppliers?
If you haven’t yet started doing these, you need to gear up and initiate the online presence first. Nothing works smoothly in today’s competitive world without online presence. Remember, your suppliers, customers, competitors, all are present online and they will know you only if you reach out to them online.
You need a strategic planning to initiate your business. Since its import export you have in mind, check for the regulations, legal barriers that are likely to come. You should have solution for them.
2. Decide import or export
When you plan for import export, you need to first decide which one you wish to pursue. To get a valid license you will have to state that. Depending on which country you come from, import or export affect your business.
It’s beneficial for developing countrymen to opt for export business as the first world countries prefer the materials from outside.
But if you have import in mind, finding customers is important. You should have presence in a market that can afford imported goods. If you don’t belong to such circle then plan in advance to promote yourself in such market.
Do a thorough research on both the cases to know about your customers, your suppliers and obviously the product you have in mind. Check where they have demand and how much profit you can make. Deciding import or export is something big and will call for several thoughts.
3. Learning about the home country’s sectors for export import
Every country, whether developing or first world, have their specific sectors for both import and exports. Check what is the core sector of your country’s export or import. Sticking to a similar sector can keep your business at benefit.
Following your country’s footstep into export or import can be beneficial. If your country is doing a certain type of business and earning good profit then that particular genre will let you earn good as well.
This research can be done easily with the help of your country’s trade bureau. Check the statistics before your decide. A proper market study can help here.
4. Select the product to export import
If you have decided on the type of trade you have in mind, you must have decided on the product list. The key to finalize the product is by doing the below –
- Study the target clients
- Follow the market demands (Find High demand products)
- Check the prices the products sell at and the cost for each product
- Check if the cost suits your budget
- Look for items that yield maximum profit in export and import
- Look for available suppliers
You need to comfortable with the product you choose. Just because the item is in demand you can go about doing the business. You need to have niche items that you are aware about. This will give you an upper hand while negotiation with suppliers or purchasers.
5. Supplier selection
When you have decided on the product for trade, you will have to look out for suitable supplier for local manufacturing. A strong partnership between you and your manufacturer or supplier can lead to potential business development. This is a matter of long term relationship. So build one carefully.
You can take the first step by search online in LinkedIn and other professional forum. Check-out their reviews on product quality.
Once you have decided on the supplier, move in a slow pace with the trade. Fix meetings, try and convince the suppliers to provide you with quality goods at the best rate. Bulk business is in general entertained in trade market.
Depending on where your supplier is from, check the logistical support you get there, the warehouse costs, the labor cost etc. If it’s a new business, you being a supplier are not a common trend, but it’s definitely a possibility.
6. Get business license
When your trade plans are done properly, it’s time to apply for proper trade permit and license. You need to do legal business procure your license in a hassle free manner. Some common steps to follow here are-
- Register your company under private or public limited
- Open business bank accounts
- Apply for the license with trading board
- Prepare visiting cards to process
- Start promotion for your website now once you have incorporated your license number in the website.
To get a license done you will need state the type of business you have in mind – import or export, the product you plan to trade with, the business turnover your expect etc.
6. Product pricing
If you have identified the target customers and market, done study on their demands and the product valuation, deciding on the product pricing shouldn’t be very difficult.
You need to understand the volume of goods you expect to sell and the commission you expect from the same. You should choose most profitable goods because the ultimate aim is to earn good profit without exhausting the market.
You need to hit a good bargain with your suppliers, such that they make little profit out of the deal and you get an opportunity as well. You need to keep in mind you can’t charge more than the market price for a product. You need to keep a mark up such that the customers don’t lose their will to pay.
As a standard margin, importers or exporters make about 10% – 15% profit with each unit sale.
7. Get the customers
When you planned the business, you might have already decided the market you wish to target. In import or export business, the target market doesn’t define your clients. First you need distributors to handle your products at the port of entry. Then you need to locate customers, who in turn will sell your items to the B2C market.
The best way to reach out to the potential customers is to go online-
- Use large online platform for goods trading to locate potential buyers.
- Professional social media platforms like LinkedIn and Facebook advertisements might help.
- Look out for freelancers in this field.
- Make your website SEO friendly and initiate digital marketing.
The offline search can be little more tedious –
- Look for local contacts, country’s Commerce Chambers, Trade Consulates, Trading Bureaus, and Embassies. They might help connect with a potential buyer.
- Identify buyers with demands for products as yours and fix meetings
- Offer great price to seal the deal.
Ensure your buyer is willing to pay as per your expectation. If you open to negotiation, make a deal such that it doesn’t lay too much effect on the profit.
8. Make the logistics right
Logistical support is something that plays a vital role in import export market. You need good logistical support when it comes to transporting an item from the grounds of manufacture to the grounds for selling.
Logistical support will in general include-
- Experienced drivers
- Manual labor for transferring goods
- Paper work support
- Legal support
To have a hassle free movement you need have an excellent coordination between your supplier, broker, if any and the buyers.
In the international trade market, it is suggested that you hire services of the global freight handlers. Sea-freights are definitely more cost effective than air-freight. These agents take the entire load of your transportation and cargo movement and save time considerably.
When you handover the logistical responsibility to the freight forwarders they take care of all activities from handling paperwork, legal issues to port handling and insurances. Hence, choose carefully and choose well.
Custom brokers are also helpful for international trade business.
10. Execute with complete contract:
When all the process of supplier, product, and freight handlers are decided, what are you wait for? It’s time to sign all your contracts and take the legal proceedings forward. Take a step forward to start with the business.
In case you chose to export internationally, you sign contracts with buyers and initiate business and when you get the payments in advance. The suppliers come into scenario after you get the payment. Buy the product; prepare documentation and handover the shipment to freight forwarders to process the cargo. Once all products are handed, you can expect complete document and the full payment.
In case you have opted for being an agent in the international trade, you need sign agreement for the commission with your buyer or supplier. You need to work on a fee you agree prior in the contract.
Import/Export business bottom line
Getting involved with the import and export business market can help you earn enough money. The process might be little complex but once you are in the game; it’s all step by step process. Select your product, customers and suppliers wisely. Ensure you have proper license and paper work. When all these are in order, all you need to do is monitor the business for smooth operation.