What is a good way to build up a successful business from nothing and have fun doing it?
The import-export business may be your answer. Not only does it require little financial investment to start, but it offers the prestige of working with clients from all over the world.
In this article I’m showing about how to start an import/export business step-by-step in 2020. I think you are going to get some really good ideas. The possibilities are truly endless when it comes to building your business and be your own boss.
What is an Import/Export Business?
For nearly as long as there’s been people, there’s been trade. In the long history of humanity, when we aren’t at war, we’ve been interested in buying and selling various goods from each other. Imports and exports are how the potato came to Ireland, and in a more modern sense it’s how we’re able to buy food, drinks, furniture, clothes, and nearly everything else, from all around the world today.
There’s a very simple but important distinction that trips up high school students and functioning adults alike: The difference between imports and exports. Imports are any good or service brought in from one country to another, while exports are goods and services produced in the home country for sale to other markets. Thus, whether you’re importing or exporting a product (or both) depends on your orientation to the
The modern system of international trade is a complex web of import/export businesses that handle the sale, distribution, and delivery of goods from one nation to another.
There is more than one type of import/export business. You could focus just on importing or just on exporting. You could be a manufacturer’s representative, specializing in a certain industry, or you could be an import/export merchant or agent, which is more of a freelance broker.
HAVE A GREAT OPPORTUNITIES FOR NEWBIES
Importing is not just for those lone footloose adventurer types who survive by their wits and the skin of their teeth. It’s big business these days–to the tune of an annual $1.2 trillion in goods, according to the U.S. Department of Commerce.
Exporting is just as big. In one year alone, American companies exported $772 billion in merchandise to more than 150 foreign countries. Everything from beverages to commodes–and a staggering list of other products you might never imagine as global merchandise–are fair game for the savvy trader. And these products are bought, sold, represented and distributed somewhere in the world on a daily basis.
But the import/export field is not the sole purview of the conglomerate corporate trader, according to the U.S. Department of Commerce, the big guys make up only about 4 percent of all exporters. Which means that the other 96 percent of exporters–the lion’s share are small outfits like yours wil be–when you’re new, at least.
WHY ARE IMPORTS SUCH BIG BUSINESS IN THE WORLD?
There are lots of reasons, but the three main ones boil down to:
TYPES OF AN IMPORT/EXPORT BUSINESS
First off, let’s take a look at the players. While you’ve got your importers and your exporters, there are many variations on the main theme:
EXPORT MANAGEMENT COMPANY (EMC)
An EMC handles export operations for a domestic company that wants to sell its product overseas but doesn’t know how (and perhaps doesn’t want to know-how). The EMC does it all — hiring dealers, invoicing customers, distributors and representatives; handling advertising, marketing and promotions; overseeing marking and packaging; arranging shipping; and sometimes arranging financing or contracting out for a developing a credit card app.
In some cases, the EMC even takes title to the goods, in essence becoming its own distributor. EMCs usually specialize by product, foreign market or both, and–unless they’ve taken title–are paid by commission, salary or retainer plus commission.
EXPORT TRADING COMPANY (ETC)
While an EMC has merchandise to sell and is using its energies to seek out buyers, an ETC attacks the other side of the trading coin. It identifies what foreign buyers want to spend their money on and then hunts down domestic sources willing to export. An ETC sometimes takes title to the goods and sometimes works on a commission basis.
IMPORT /EXPORT MERCHANT :
This international entrepreneur is a sort of free agent. He has no specific client base, and he doesn’t specialize in any one industry or line of products. Instead, he purchases goods directly from a domestic or foreign manufacturer and then packs, ships and resells the goods on his own. This means, of course, that unlike the EMC, he assumes all the risks (as well as all the profits).
SWIMMING THE TRADE CHANNEL
Now that you’re familiar with the players, you’ll need to take a swim in the trade channel, the means by which the merchandise travels from manufacturer to end user.
A manufacturer who uses a middleman who resells to the consumer is paddling around in a three-level channel of distribution. The middleman can be a merchant who purchases the goods and then resells them, or he can be an agent who acts as a broker but doesn’t take title to the stuff.
Who your fellow swimmers are will depend on how you configure your trade channel, but they could include any of the following:
Manufacturer’s representative: A salesperson who specializes in a type of product or line of complementary products; for example, home electronics: televisions, radios, CD players and sound systems. He often provides additional product assistance, such as warehousing and technical service.
Distributor or wholesale distributor: A company that buys the product you’ve imported and sells it to a retailer or other agent for further distribution until it gets to the end user.
Representative: A savvy salesperson who pitches your product to wholesale or retail buyers, then passes the sale on to you; differs from a manufacturer’s representative in that he doesn’t necessarily specialize in a particular product or group of products.
Retailer: The tail end of the trade channel where the merchandise smacks into the consumer; as yet another variation on a theme, if the end user is not Joan Q. Public but an original equipment manufacturer (OEM), then you don’t need to worry about the retailer because the OEM becomes your end of the line. (Think HP Computer purchasing a software program to pass along to its personal computer buyer as part of the goodie package.)
STARTING AN IMPORT/EXPORT BUSINESS
What is a good way to build up a successful business from nothing and have fun doing it? The import/export business may be your answer. Not only does it require little financial investment to start, but it offers the prestige of working with clients from all over the world.
You don’t need previous experience in the field, but you should have a good head for organizing. Fulfilling a successful import-export business requires constant attention to little details.
Do you know some local manufacturers looking for ways to increase their market for the goods they make? Or are you planning a trip abroad and want to make some contacts for setting up a business?
If you have an ability to sell, and an air of diplomacy, the import-export business might be right for you. All you need is the desire and determination to make it work.
As you progress in the business, many factors become obvious and easy to handle. For example, you’ll need to find a person to handle shipments, called a freight forwarder. And you’ll need to create solid contacts and
strong relationships with reliable suppliers. But after a short time, you can be well on your way to making a sizeable income – with a very low overhead.
Do you like the idea of running your own business? How would you like a tax deductible trip to foreign places a couple of times a year? The advantages of an import/export business are great.
The biggest advantage is the money you’ll make. Once you get the business underway, the commission for setting up sales is very profitable. And after you establish and maintain a number of exclusive accounts, you’ll find the time you spend is highly rewarded with money.
Take a look into the import/export business. Consider the risks, and consider the advantages. Talk to people in the business. Is it for you?
Here are the 6 steps you need to take to start an import-export business:
1- STARTING BUSINESS
GET YOUR BASICS IN ORDER
Anyone starting a business in the 21st century needs to cover certain bases, like creating a website as well as social media channels like Facebook, Twitter, Instagram, Linkedin, YouTube and a host of others.
So here’s your first step: Get the basics in order. This means registering your business with the state in which your headquarters will be located, registering a domain name, getting any business licenses you need to legally operate, and so on.
You’ll need a business plan, too. Part of that business plan needs to cover how to handle the rules and regulations of the markets you want to work in.
You can’t exist in the import export type of business if you don’t invest in a well-built website. Your website will be the first impression that you make to potential new customers, and it is crucial to building it in a very attractive way. Luckily, nowadays, you can set up your website by using different platforms. Some of them are even free, or they offer you a free trial to enjoy until you afford to pay for a subscription.
You can even start by building a blog or incorporate a blog section into your website. Whatever you choose, remember that your website has to include contact information and valuable content about your import-export business. You can also add a section of testimonials so old customers can leave a review and guide new ones toward your business.
Many new potential clients will make their decision of collaborating with you or not based on your website. So you can easily win or lose clients through it! It should determine you to build a rich website and offer as much information as you find suitable. Any online export-import business should be based on a strong online campaign to support the offers and promote the entire set of products. Investing in some SEO might also help you reach new clients worldwide.
Perhaps most importantly, you need access to capital. Startup costs can vary greatly depending on the type of imports-exports business you start. Everyone knows it takes money to make money, so it’s helpful to have capital on hand when you’re getting started.
2- CHOOSE YOUR PRODUCT
PICK A PRODUCT TO IMPORT OR EXPORT
The next step in starting an import/export business is to find a product or industry you are passionate about and that you think could sell in international markets.
If you are planning to trade with ASEAN countries, you might have plenty of options to explore. And there are many new products that you can introduce to the ASEAN markets as well. You can import almost everything from rice to clothing and even electronics.
Once you identified the products that are in demand in a particular market, you will have to decide if you can trade that product or not, according to your possibilities. If all the research goes well, you will be able to move on to the next step and start developing your business.
Also, keep in mind that when you choose your product, you can consider your long-term activity as well. Will you be able to stick with a certain product for long? Or maybe you should test new ones to introduce into your target market?
These questions can make the difference between a successful business and an unsuccessful one. Plus, when you research for products, you might also discover many import export business ideas to develop your business. It is a good idea to consider the demographics of the country you plan to export goods to.
It will help you estimate the number of goods that you can export and how much profit you can make. Don’t be afraid to upgrade your business to new levels by importing or exporting new products now and then. Stay informed regarding the local demands on different countries and tries your best to supply them with high-quality products.
You can always introduce a new product on the market by testing its potential with samples before exporting or importing a big cargo. Being able to identify new import export opportunities will change the course of your business for the better which is why it is important to follow your instinct as well!
3- SOURCE YOUR SUPPLIER
Once you have a product you’d like to trade internationally, you need to find a local manufacturer or other producer that makes your product and can lead to a strong partnership. A good relationship with a supplier is crucial to longrunning success in an imports/exports business.
Generally, you can find suppliers through companies like Alibaba, Global Sources, and Thomas Register. You will need to convince the supplier of the benefits of entering the U.S. market (or another market you wish to sell to), and figure out the logistics of taking their product from their local warehouse or production facility to another one, potentially on the other side of the globe.
Also you can demand a professional helps from the companies which they offer global sourcing management. It helps you, find reliable and reasonable supplier and ease to your work. You can check my company FUTURESIA Global Trade services about global sourcing.
You might also be your own supplier in some cases.
4- PRICE YOUR PRODUCT
You know what product you want to work with and you’ve identified your target market. Next up, figuring out how much to charge.
Typically, the business model on an imports-exports business includes two key understandings:
1- The volume of units sold
2- The commission made on that volume.
Be sure to price your product such that your markup on the product (what ends up being your commission) doesn’t exceed what a customer is willing to pay. But you don’t want to make it too low such that you aren’t ever going to make a profit.
In the imports/exports industry, importers and exporters typically take 10% to 15% markup above what the manufacturer charges you when you buy the raw product.
The more you sell, the more you make! Keep your product pricing separate from logistics because, at some point, you combine the two to determine a landed price per unit. A good transportation company can assist here. Don’t let this part intimidate you!
5- FIND YOUR CUSTOMERS
Next up on how to start an imports/exports business? Finding customers to sell to.
Provided you have done a good job with search engine optimization on your blog or website, customers will find you. But don’t rely on it. You should also go hunting for customers! Check with local contacts, such as trade organizations, Chambers of Commerce, embassies and trade consulates.
They generally have a good sense of who’s doing what in the international marketplace. They can offer contact lists specific to your industry and also suggest trade shows that are taking place locally and internationally that might help you connect with customers in a faster and more efficient manner.
Excellent service on the exporting end is the U.S. Commercial Service (CS) Gold Key Matching Service. The U.S. CS can help you find potential overseas agents, customers, distributors, sales representatives, and business partners.
At the same time, work your social media and networking platforms (your blog, Facebook, Instagram, LinkedIn, and Twitter) by posting information about your product or service and asking specific questions about your audience’s needs. This gets the conversation going and keeps it going while making sure it’s related to your business. The point is to keep your business on the minds of potential customers worldwide.
6- GET THE LOGISTIC DOWN
Your next step is to focus on logistics — transporting the product to where you will be selling it. By now, you have located a customer who loves your product, solidified the terms of the sale with them and established a means for getting paid. Now you must move your product.
Hire a global freight forwarder who serves as an all-around transport agent for moving cargo, typically from a factory door to another warehouse. Their service saves you a lot of time, effort and anxiety for a very reasonable fee.
Based on information you provide, they take care of all shipping arrangements, which includes but is not limited to handling documentation, arranging insurance, if requested, and determining necessary licenses, permits, quotas, tariffs and restrictions (country regulations), which can be one of the most complicated aspects of importing or exporting for a newbie international trader.
You can find freight forwarders online under “transportation,” or check listings in trade magazines or other international handbooks. Pick two or three that seem like a good fit for your product or shipping destination.
Four well-known companies that are eager to work with brokers, consultants and small businesses are UPS, Fed Express, DHL, and TNT. Either can also assist with getting paid, a critical part of the international sales process.
PROVIDE A GREAT GLOBAL CUSTOMER SERVICE
The relationship between you and your overseas customer shouldn’t end when a sale is made. If anything, it requires more of your attention.
Think of your after-sales follow-up on your import/export business as part of your product or service offering. The first step is to say, wholeheartedly — whether in person, via Skype, by email or telephone — “Thank you for your business!” For more on this, learn how to provide great global customer service.
Congratulations! You have officially learned the fundamentals of how to establish an import-export business. Now start booming and make the world your business!
Also, if you would like to learn more about international trade, here is a link to our international trade for beginners guide. You can also watch videos on my YouTube channel.
Now I would like to hear your thoughts:
What’s your first takeaway lesson from this article?
Or maybe you have a question about the topic.
Either way, leave a comment below right now.