Import Export businesses have been in existence since the beginning of the world. , Every country has a unique product as no country has all the natural resources they need to run their economy.
How to start an import and export business is an important trading skill to acquire in 2021. And this article explains how to get started in detail.
Countries carry out trade transactions by supplying or buying products from each other. For instance, Japan can sell electronics to another country in exchange for gold.
Import involves the process of buying or manufacturing products from or in a foreign country to sell locally, while export has to do with selling or supplying locally produced goods to other countries. There must be a balance between an import and export business for a nation to enjoy a stable economy.
Import Export business is not only carried out by the government, individuals also set up companies to import or export goods to and from other countries.
There are various business opportunities in this business venture and I’ll be explaining all you need to know about an import-export business in this article. A sneak peek at the table of contents below reveals the highlights.
What Is An Import Export Business?
An import-export business is one that specializes in trading goods between local and international companies. The import-export business is all about buying goods from foreign countries and bringing them in for domestic use.
Import Export business cuts across International trade boundaries with different business models.
Having import-export license grants you the privilege to sell your products abroad, act as a middle man between local producers and international buyers or between International producers and local buyers, you can also purchase International goods and sell locally.
Is Import Export Business Profitable?
Definitely, an import-export business is very profitable. Before starting up a company that is in the import-export business, you must have thoroughly researched different business models and learned the right strategies to employ.
You should possess the good business skill and the right techniques for this business, you’ll make a good return on investment.
Why Start an Import Export Business?
There are several reasons why you should consider starting an import-export business, the benefits are inexhaustible, asides from the huge profit you’ll be making, an import-export business boosts the economy of a country.
It widens your sales potentials because you’ll be transacting business with a lot of clients or customers both locally and internationally.
One of the ways of reducing cost associated with manufacturing goods from scratch is by importing it. Most times it is better to import goods in part than and complete production than starting from the first stage.
Another cool reason why you should consider an import export business is that it exposes you to different products, you acquire the skill of knowing which product is of high quality or low quality.
Import Export business gives you the opportunity to always bring something new to the international and local market, you’ll always buy or sell goods that are unique and needed by various countries.
It also has a wide variety of opportunities, there are a lot of job opportunities in this business venture.
What Are The Types of Import Export Business?
There are a lot of import-export business ideas to select from. The opportunities involved are diverse. Below are some of types of import-export business you can check out:
- Export-Import Sourcing Agent
- Direct Exporting
- Direct Importing
- Export-Import Agent
- Online Exporting
- Renting Out Warehouses for Import Export Businesses
- Export-Import Consultant
- Import Export Insurance Broker
- Import Export Market Researcher
Here’s a brief explanation of them.
#1. Export-Import Sourcing Agent
This is an agent that handles the sourcing of goods, suppliers, buyers, and customers for the business. It is a very easy job to do and it doesn’t require much from you. In fact, you get to acquire new skills, boost your experience, and get great connections along the line.
You’ll have to find an import-export business that’s in need of your services, sign a contract with them, source for buyers, goods, and suppliers for the company, and get your money.
You don’t necessarily need to leave home to do this job, there are various online sites where you can get listed as a sourcing agent to get started.
#2. Direct Exporting
Direct exporting is a type of import export business where you buy or produce goods locally and sell in foreign countries. It is one of the oldest businesses that has been in existence since the beginning of time.
Though it has a lot of risks, then no business venture goes without a certain level of risk. Countries like Japan and China produce goods that they sell overseas.
Before starting direct exporting you should carry out a thorough business analysis, find out the kind of goods your choice country really needs, the cost involved, and the profits you’ll make.
#3. Direct Importing
This is the opposite of direct exporting. This time around instead of producing goods and supplying to other countries, you directly buy from them.
Direct importing is a business venture where you buy goods from foreign producers or countries and sell locally or in your home country.
Just like direct exporting, you’ll also have to carry out market research, find out what type of commodity your country needs and import it. Buying a product that is not necessarily required by your country will only incur a loss for you.
#4. Import Export Agent
An Import Export agent is someone who technically handles the management and organization of the business. This includes shipments, providing a set of guidelines to follow, carrying out business negotiations and agreements between the parties involved.
It also involves handling financial documentation and a lot more. You should also be conversant with various languages as this will serve as an added advantage. Possess some business skills as well, at the end of each transaction, you’ll be paid a commission.
#5. Online Exporting
The internet has paved the way for a lot of businesses to be conducted online and the import-export business is not left out. Basically, you can have online stores on eBay, AliExpress, Amazon, and a host of others. You just need to create an account, upload the pictures of your goods and the descriptions.
This is a great business practice for products like fashion products. You should possess good digital marketing skills. Most people transact this kind of import-export business with countries like China.
Dropshipping is a type of business model where you don’t create a physical outlet for the products or goods you sell. You buy from a third party and immediately ship it off to your customer without coming in physical contact with the product.
This import export business model is an online business transaction where you get to handle the marketing and branding of the goods.
You advertise the goods, place orders on behalf of your customers, purchase and make payments for it to the seller, after which the product is directly shipped to the customer without you having any physical contact with it.
#7. Renting Out Warehouses for Import Export Businesses
Import Export businesses need warehouses where the products purchased will be stored. Having a warehouse close to the seaport, airport, or any great place where products will be off-loaded is a cool way of earning money.
Warehouses serve as a storage facility and where products are distributed to clients. It is also a convenient location close to the ports for the exportation of goods
If you have the money to acquire or build a warehouse close to any seaport, airport, or railway station, then you should take advantage of this lucrative business.
#8. Export-Import Consultant
Having solid experience in the import-export business grants you the opportunity to build a consulting career. A lot of people are going into the business.
Generally, they need a good adviser or consultant to give them the right guidance on how to start up and manage their business.
Sharing your knowledge and experience in exchange for money with other startups is a great way of making money from an import-export business.
#9. Import Export Insurance Broker
Having a broad knowledge about all the risks involved in this business is also a great import-export business. There are some risks involved in this business like freight, delivery, and damages.
You can help these businesses ensure their products by either being a middle man between them and insurance companies through establishing terms of agreements between both parties or you can set up your own insurance firm.
#10. Import Export Market Researcher
Another type of import-export business is in the marketing research area. If you possess the right marketing skills both digital and offline, you can become a market researcher for these companies.
As a market researcher, you can assist in product branding and Also, market researchers aid in developing the best marketing techniques to build the company up.
A lot of import-export businesses don’t have the required skills or time to market their products and build the right customer base so you can seize this opportunity by selling your services to them in exchange for a commission.
Find the right customers for your clients, make sales pitch to them, get them to love, and sign contracts with your clients and bag your commission.
How Much Does it Cost to Start An Import Export Business?
The cost involved in starting, operating, and managing an import-export business varies on the type of products you want to supply or purchase. There’s no actual amount for starting this business.
It is best to carry out market research on the products you intend to trade. Basically, your research must cover detail of the kind of products you want to deal in, your customer base, mode of transporting the goods, and other expenses involved.
Generally, it cost $5000_$25,000 to start up an import and export business. This may skyrocket if you do not have access to a standard warehouse, employees and you can as well start with a few goods.
How to Fund Your Import Export Business?
There are different ways to secure money for your import-export business, the following are some ways to fund your business:
#1. Collecting loans from banks
Banks are one of the financial institutions that offer loans to businesses and companies but the process involved in getting the loan is tedious because these financial institutions have strict regulatory guidelines.
Before getting the loan from them, they’ll investigate the financial potentials of your import-export business and also find out if you can repay the money back.
After a thorough investigation of your business, the bank may give you the money or you might not get it. And if you should secure the loan, you’ll have to pay interest on it within a timeframe that will be given to you by the bank.
It’s is not advisable for new import-export businesses that are just starting up to borrow money from banks especially when you’ve not figured out the future financial potentials of your business. The consequences of not repaying back the loan when due can be very disastrous for your business.
#2. Secure loans by using your inventory as a collateral
You can as well secure loans from banks by using them as collateral, you’ll need to check the value of your inventory to get loans from banks.
There are different inventory financing methods such as blanket inventory lien, field warehousing, or floor planning, you can use any of these methods according to the amount of loan your business needs.
There are several factors to consider before applying for a loan, a clean credit record is one of them as well as the list of all your products and their values, you should also draw up a detailed financial plan on how you’ll be spending the money and the way you’ll repay the loan.
If your products have a very high value and the prospect of a positive market return is high then you can get a loan from the bank but if you’re not sure about any of these then it is advisable you look for other options of raising the funds.
#3. Strike a deal with your suppliers or manufacturers
Starting up an import export business will bring you in contact with a lot of suppliers or manufacturers.
You’ll have to find the best manufacturers out there offering the best products at high quality and affordable prices. If you don’t have any funds to purchase the goods, for instance, you can make a deal with the manufacturers.
Some manufacturers or suppliers offer you discounts for purchasing plenty of products. Others will give the goods to you without making any payments first, instead, you’ll come to an agreement on a repayment plan after making sales.
The manufacturers will expect you to pay in installments on specific dates. Well, this is quite risky if you’re not able to pay on due dates. You can also get sued by the manufacturers for failure to pay back.
This comes with some level of trust, mutual understanding, and excellent communication between the parties involved. This is a good method for new import-export businesses that are just starting up.
Once you make a deal with the manufacturers or suppliers and you’re able to fulfill it, then the manufacturers or suppliers will be more open to helping you more in the future.
#4. Securing commercial finance from private companies
Private credit companies offer loans to businesses, this process is faster than going to the banks directly, as with every other legal means of securing loans, you’ll be required to sign a contract with the company. You can also seek the assistance of legal experts before signing the contract.
Carrying out an evaluation on the financial prospects of your business, in the long run, is also advisable because it will help you determine if you’ll be able to repay back the loan. If you’re very sure your business will be able to pay back the loan then you can go ahead to secure a loan.
#5. Access to government financing programs
Many developed countries offer funds to support import export business, but it is hard to access this kind of fund especially if you’re still a new company. There are a lot of people in this business that apply for such loans and the government prefers to work with established companies than start-ups.
You’ll need a detailed description of the products you deal in, your financial prospects for the future, opportunities available to you in this business, and what you’ll be needing the fund for.
Government is always interested in business prospects that will have a positive impact on the country especially in opening more doors of opportunities and improving the nation’s economy.
If you’re a newcomer in this business then there’s no need for you to apply for government financing programs because you’ll not be considered.
However, if you’ve been in the business for a while you can give it a try, it might not be successful at your first attempt but don’t give up, no matter how slim the chances are, it is not impossible.
Step By Step Guide On How To Start a Successful Import Export Business in 2022.
If you’re about to begin your first business venture in the import export line, you should follow the following steps:
#1. Planning and organizing the basics of your business.
Before starting up an import export business, it is very important to carry out a proper market analysis.
Basically, find out the products that will sell best in your country or internationally, have a target customer base.
After carrying out your business research and finding a niche, you’ll have to proceed with registering your business, registering a domain name, getting your business license, and getting your required tax identification number.
Draft a business plan on how you’ll be running and managing your business, the operations cost, insurance, and other expenses. You’ll need to note all this down for smooth management.
#2. Select a product to import or export
After preparing the basic outline of your business, you’ll have to find a product you’re not only interested in but a product that is highly needed in your country or by foreign countries.
Before importing or exporting your products you should make sure there’s a large market willing to accept that product to avoid incurring losses.
You don’t want to buy a product that is not needed by anyone. It is better to research people’s wants and how you can satisfy them appropriately.
#3. Find your suppliers
After discovering the products you’d love to deal in, it is important you source for suppliers or manufacturers to handle the production of the goods.
Establish a good rapport with your suppliers or manufacturers, build trust and a strong relationship. Strike a deal with them and sign an agreement contract.
#4. Set a price for your products
Once you’ve commenced production, the next thing to consider is a price tag for your products. There are basically two key understandings, driving a business model of an import export business and they are the volume of the units sold and the commission made on that volume.
Be sure to set a reasonable price for your products, it shouldn’t be more than what your clients or customers can afford and it should as well not be below your commission. Your price should cover the total cost of the products plus the commission or profit you’ll make from sales.
#5. Build your customer base
Finding a market for your business is not the same as finding the right customers to sell your products to. You can’t supply your products to everyone, you should have a target customer. You’ll need to find retailers, distributors, and customers to supply your products.
You can also run an online advertisement for your products, digital marketing campaigns, and promotions. Branding is also an important part of getting the right customers.
You cannot operate an import export business without considering the mode of transporting your products from one point to another either locally or internationally. Logistics covers everything from shipping, customs fees, freight charges, and other expenses.
You’ll also need a warehouse for the storage of the products from where you’ll be distributing them to other places. You can decide to import or export your products through the seaport, airport, or railway station. Whichever one you decide you’ll still need to make arrangements for transportation and warehousing.
Import Export Business is a very lucrative business with a lot of benefits especially when you have properly drafted your business plan. Do not import products that will not cater to people’s needs. Draft your business plan, carry out a market analysis, find and build your customer base and watch your business grow.
When trying to find funds for your import export business, borrow loans you can repay, properly evaluate your products, and find out the rate of returns. Seek the help of financial and legal experts before making any decisions.
It is not always advisable for start-ups to borrow money, they’re other easier ways of funding your business. It is better to manage your business than borrow a loan you cannot repay.
There are step-by-step guides on how you should start up your import export business in this article, read through, and go make some nice commissions in your business.