International trade is one hot industry and has taken over the world. The trade existed even during the times of prehistoric man when shells and salt were traded. Technology has become more advanced, and we have multiple new things. However, it becomes likely that we might need certain things. International trade can be more rewarding in such cases and helpful for countries that do not have access to proper resources. Starting an import-export business sounds exciting and could be beneficial in terms of profit and personal satisfaction. However, it is a big industry and may not be easy to operate. Here we have a comprehensive guide on how to start an import-export business and critical aspects you must keep in mind.
Identify Product or Industry
The first and most crucial step when starting an import-export business is to identify the right product or industry. Consider the product’s problem, solution, and demand to understand the need for that particular product in the global market. You should even study the market conditions or conduct a SWOT analysis to better understand the same. Always validate the findings of the market research before you implement the idea.
Types of Import and Export Businesses
You should be aware that there can be variations in the way each functions. Here are the common types of import and export businesses you must know about.
- The export management company (EMC): If any company wants to sell its product overseas but does not have the respective knowledge, an EMC will do all the tasks. EMCs charge a salary or retainer fee in exchange for looking after the operations of the company on a global platform.
- Export Trading Company (ETC): An ETC primarily works the other way and considers what buyers seek. The experts will search and share what they are willing to export from domestic sources based on the research findings.
- Import/ Export Merchant: This may be an independent entrepreneur who deals with no specific clientele or works in any specific industry. The merchant would purchase goods directly from the market and sell them in the respected places.
Before starting an import-export business, you should clearly understand the path or type of import or export business you want to choose.
Set up a Company and Get the Requisite Licenses
Another important thing while starting an import-export business is to focus on the company specifications. You need to set up the company and get all the paperwork done on time. Make sure you get all the required licenses to obtain legal permission to work and eliminate all the barriers. Ideally, you would even have to submit a minimal amount of fee along with the paperwork. Check the process online or take assistance from a legal professional to determine the ideal process you should follow before starting an import-export business. Check the requirements according to the country and state you live in and stay in compliance with the legalities.
Source Your Suppliers
Once you have figured out the type of business and product, you must look for the relevant suppliers in the industry. See the key competitors who deal with such products and aim to make strong partnerships with them. Consider all the aspects before onboarding the supplier and explain to them the benefits of starting an import-export business or entering a particular market.
Calculate Costs and Price the Product
You should know that the import-export business will comprise multiple things at different levels. Calculate the total landed costs of all the items or services necessary for the process. Here are some of the expenses that may be involved in your exporting and importing business:
- Custom duty and taxes
- Custom broker fees
- Insurance fees
- Local transportation costs
- Shipping costs
- Inspection fees
- Storage charges
- Currency conversion fees
- Payment processing fees
You must add other costs related to operations in the base country. After calculating the costs, the next step is to price the products. There are three main strategies that key players use while pricing the products.
- Cost-based pricing is calculated per the number of totals landed costs.
- Market-oriented pricing – Yiu may consider the performance of your product compared to the competitors and price it accordingly.
- Dynamic pricing – Keep evaluating the prices according to the market fluctuations and changes in the target audience’s preferences.
Brand-Building and Awareness
The next part is the crucial stage. You have already established the company, and the main objective is to create awareness that your business exists. You may use different communication strategies and business tactics to create awareness and market your business. Starting an import-export business can be challenging, and it may look difficult to find a buyer. Conduct pre-research to understand the potential buyers and use a similar approach to market your products to them.
Transport and Manage Logistics
Once everything is in place, you should step up to manage the logistics. The role of a professional in the import-export business does not end with sending or transferring the product to another location. The owner will also have to look after the documentation and logistics of the company. Consider factors such as documentation, insurance, restrictions, permits, and tariffs in mind while finalizing the logistics. One can even consider hiring a global freight forwarder to ensure they move goods from the factory to the buyer.
You must ideally follow these steps when starting an import-export business. This industry has a different way of functioning, and it will be ideal if you focus on researching and understanding the market. Take one step at a time and pay attention to all these steps throughout the process.
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