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How to Start an Import/Export Business in 6 Steps
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For nearly as long as there’s been people, there’s been trade. 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.
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 transaction.
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. If you're interested in starting a business in this industry, know that 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.
Starting an import/export business
If you’re interested in starting an import/export business, there are a ton of considerations you need to make — just as you would for any business. For an import/export business, specifically, it’s helpful to have a background in business, international relations, or global finance. This should give you an understanding of the myriad hoops one must jump through to sell or buy a product from an overseas supplier.
“The compliances make it so complex that even if you did know how to do it, you’re still going to have to keep in mind a lot of random considerations,” says Selena Cuffe, co-founder of Heritage Link Brands, a company that imports, exports, and produces wine, and other high-end products like tea and honey.
Cuffe worked for years in brand management for Procter & Gamble, among other trade-related positions, before starting her company in 2005. She was inspired after going to South Africa, where she attended the first Soweto Wine Festival.
Heritage Link Brands now operates within the wine industry in different ways: It imports wine from South Africa into the U.S. wine market, and it exports grapes from its own South African vineyard to the U.S. as well as the Philippines and Hong Kong. It also exports wine to airlines for use on international flights.
Keep reading for the steps you need to take to start an import/export business, as well as tips from Cuffe.
1. Get your business 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, 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. For example, to bring alcohol and tobacco products into the U.S., you need an Alcohol and Tobacco Trade and Tax Bureau permit, which is free but can take months to acquire. Similar research needs to be done when doing business with other countries, taking into account everything from various legal back label requirements in each nation to insurance.
Perhaps most importantly, you need access to capital. Startup costs can vary greatly depending on the type of imports/exports business you start.
“The first thing I recommend for anyone is to have your capital upfront,” says Cuffe. “That’s so you can protect your business from not only a legal standpoint but also the equity of the brand that you create and to make sure you invest in the quality of whatever you launch. Test a market, or test a city, then a state, then a region. Then I think that there are greater chances for success and sustainability long term.”
The ratio that Cuffe cited for success in the wine industry — "In order to make $1 million, you need to invest $7 million” — demonstrates the kind of capital needed to start a business comfortably (if one can ever be “comfortable” as an entrepreneur) and be prepared for whatever occurs, from issues with sourcing to changes in trade regulations.
2. 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.
For Cuffe, that product turned out to be wine. She felt a connection to the product not just from a quality and taste standpoint but from a social justice standpoint as well.
“When I first entered the industry in 2005, there was just one Black winemaker and five Black-owned brands," she says. "Today there are 17 Black winemakers and 31 Black-owned brands.”
Though the South African wine industry still deals with injustices like poor working conditions and unequal access to capital, Cuffe says things have improved since the previous decade thanks to the increased sales and notoriety of South African wines worldwide.
“The biggest thing that we’ve enabled is the financing of Black businesses. When we first got started, in order for even these brands to create their own wine, they had to source it from existing white wineries, because they didn’t own any land,” Cuffe says.
Once you find your product, you also need to identify the right market for it. After all, you need someone to sell it to. This is where your trend-spotting skills come into play. The best products for an import/export business are products that are just starting to become popular, or show some promise to being so in the future.
You can conduct research with resources like GlobalEDGE’s Market Potential Index or by checking with local government officials and websites, such as the Department of Commerce International Trade Administration’s Data and Analysis. You can also find reports on the state of the imports/exports industry with the Census Bureau Foreign Trade .
From there, it’s best to start “slow and steady.”
“Test your ideas,” says Cuffe. “Don’t assume that what you think will sell because you love it will catch fire in the market. What catches fire in the market is more than just the way it tastes — it’s who you know, and the packaging and serendipity of timing, and all of the indirect soft stuff that makes the difference.”
3. Source your suppliers
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 long-running 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.
You might also be your own supplier — in some cases, as Cuffe occasionally is for herself.
“We own an interest in a vineyard in South Africa called Silkbush ," she says. "My orientation when I do business to them is, 80% of the grapes that we pick we send off to domestic wineries who use our grapes to produce their own proprietary high-end wine. The remaining 20% is used to create our proprietary label Silkbush, which we export to foreign markets.”
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: the volume of units sold, and 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.
5. Find your customers
Next up on how to start an imports/exports business? Finding customers to sell to.
Deciding on a market is not the same as finding your customers. You can’t just send your products to the Port of New York and start selling your wares on the docks to whoever walks by. You usually need to find distributors and clients who will take on your product and sell to others.
If you have a quality website that includes digital marketing campaigns, your customers may end up finding you. But to get started, Cuffe suggests doing things the old-fashioned way — by cold-calling. Check with any local contacts you have in the area, contact the area's Chamber of Commerce, trade consulates, embassies, and so on. These entities might be able to give you a local contact list that could be a vital help in starting a imports/exports business.
“I cold-called the local Cambridge, Massachusetts, Whole Foods store, and they gave me a chance. And now we do display programs and regional programs with Whole Foods,” says Cuffe. “A lot of what I did in the beginning and even today involves cold calls.”
6. Get the logistics down
Perhaps the most complex aspect of importing and exporting is the logistics of taking a product created somewhere and selling it somewhere else. How does the product make the trip from the vineyard of South Africa to the wine glasses of drinkers in California, for example?
“When you are operating within a supply chain where your customer is different than your client, which is different than your consumer, it requires an extraordinary amount of coordination,” says Cuffe. “I use a freight forwarder that on my behalf reaches out to shipping lines, like Maersk.”
Hiring a global freight forwarder is generally a good idea for all imports/exports businesses, as they'll serve as a transport agent for moving cargo — saving you a lot of time and worry about getting your products from the factory to a warehouse. Essentially, you'll give them information about your business and your intentions for the product, and they'll arrange the shipping agreements, insurance, and oftentimes the licenses, permits, tariffs, and quotas of working within another country. This can remove a lot of the headache associated with starting an imports/exports business in an international trade market.
Frequently asked questions
Is an import/export business profitable.
Many import/export businesses are very profitable. To improve your company's chances of profitability, it's important to conduct the required research on your industry and have a well-documented business plan. Understanding all of the costs associated with an imports/exports business and determining your profit margins when pricing your products is also essential.
How do import/export companies make money?
As an import/export company, you'll make a profit by selling products at a higher rate than you paid for them from the vendor or source.
What is an export license?
An export license is a government-issued document authorizing your company to complete certain export transactions. An export license is issued by the appropriate agency once the export transaction has been reviewed.
What documents do I need to import goods?
The types of documents you'll need to import goods will vary depending on the country you're importing the product into. In the United States, import licenses and permits may be required, but a Customs and Border Protection entry form is always required.
The bottom line
The world of importing and exporting is a dazzling, complex system that balances both emotional and economic needs. If we want something that is grown or produced in another part of the world, how can we get our hands on it? How can we give others the opportunity to enjoy it, while still creating a sustainable lifestyle for those producing it and for those who transport it from point A to B?
If you’re interested in answering these questions, don’t let the enormity of the task overwhelm you. With the proper research, planning, and documentation, you can launch a successful imports/exports business of your own.
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How to Start an Import/Export Business
From importing exotic fashions to exporting light fixtures, the international trade business will take you all over the world and into all product niches.
Jun 28, 2001
Editor's note: This article was excerpted from our Import/Export Business start-up guide , available from the Entrepreneur Bookstore .
International trade is one of the hot industries of the new millennium. But it's not new. Think Marco Polo. Think the great caravans of the biblical age with their cargoes of silks and spices. Think even further back to prehistoric man trading shells and salt with distant tribes. Trade exists because one group or country has a supply of some commodity or merchandise that is in demand by another. And as the world becomes more and more technologically advanced, as we shift in subtle and not so subtle ways toward one-world modes of thought, international trade becomes more and more rewarding, both in terms of profit and personal satisfaction.
- Target Market
- Startup Costs
- Income and Billing
More articles on Import/Export businesses »
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.
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Champagne and Caviar
Why are imports such big business in the United States and around the world? There are lots of reasons, but the three main ones boil down to:
- Availability: There are some things you just can't grow or make in your home country. Bananas in Alaska, for example, mahogany lumber in Maine, or Ball Park franks in France.
- Cachet: A lot of things, like caviar and champagne, pack more cachet, more of an "image," if they're imported rather than home-grown. Think Scandinavian furniture, German beer, French perfume, Egyptian cotton. Even when you can make it at home, it all seems classier when it comes from distant shores.
- Price: Some products are cheaper when brought in from out of the country. Korean toys, Taiwanese electronics and Mexican clothing, to rattle off a few, can often be manufactured or assembled in foreign factories for far less money than if they were made on the domestic front.
Aside from cachet items, countries typically export goods and services that they can produce inexpensively and import those that are produced more efficiently somewhere else. What makes one product less expensive for a nation to manufacture than another? Two factors: resources and technology. A country with extensive oil resources and the technology of a refinery, for example, will export oil but may need to import clothing.
Types of Import/Export Businesses
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 Dell Computer purchasing a software program to pass along to its personal computer buyer as part of the goodie package.)
The Right Stuff
Not everybody is cut out to be an international trader. This is not, for example, a career for the sales-phobic. If you're one of those people who would rather work on a chain gang than sell Girl Scout cookies, or if you blanch at the thought of making a sales pitch, then you don't want to be in import/export. This is also not a career for the organizationally challenged. If you're one of those let-the-devil-handle-the-details types whose idea of follow-up is waiting to see what happens next, you should think twice about international trading.
If, on the other hand, you're an enthusiastic salesperson, a dynamo at tracking things like invoices and shipping receipts, and your idea of heaven is seeing where new ideas and new products will take you, and if, to top it off, you love the excitement of dealing with people from different cultures, then this is the career for you.
It also helps if you already have a background in import/export. Most of the traders we talked with were well-versed in the industry before launching their own businesses. Peter P., who founded a Russian trading company, segued directly from his college major in international business to an operations position with an international frozen-meat trading company in Atlanta, which landed him in the right place at the right time.
"I speak both Russian and Ukrainian fluently," Peter says. "I'm of Ukrainian descent. I took Russian as a minor in college, initially as an easy grade. Little did I know when I graduated back in '89 that Russia would open up to the West shortly thereafter."
The Trade Hit Parade
According to the U.S. Census Bureau, the top 10 countries with which America trades (in order of largest import and export dollars to smallest) are:
- United Kingdom
- Republic of Korea (South Korea)
You needn't, of course, confine yourself to trade deals with importers and exporters in these countries--there are scads of other intriguing possibilities available, including the member countries of the Caribbean Basin and Andean pacts and the new kids on the Eastern Bloc, the former Soviet Union countries. But as a newbie on the international scene, you should familiarize yourself with our biggest trading partners and see what they have to offer. Then take your best shot, with them or with another country.
Every business needs consumers for its products and services to, as the Vulcans so eloquently put it, live long and prosper. Now that you know what running an import/export business entails, you need to plan, or target, your market, and determine who your potential clients will be, which geographic areas you'll draw from, and what specific products or services you'll offer to draw them in.
This is a very important phase in the mega-trader building project. The proper market research can help boost your trading company into a true profit center, and the more research you do, the better prepared you are before you officially open your doors, the less floundering you're likely to do.
Who Are Your Customers?
Any manufacturer, supplier, crafter, artisan, importer, exporter or retailer is fair game. You can go after companies that deal in heavy construction equipment or delicate jewelry, gourmet goodies or pet food, telecommunications or toys. The only essential requirement is that they want to sell their merchandise or buy someone else's.
More articles on import/export businesses »
This doesn't mean, however, that your best technique is standing at manufacturers' gates, tripping them as they walk to their cars after work each evening. Targeting by definition means homing in on a specific group.
If you have previous experience in a particular field, for example, you should seriously consider targeting that market first. You'll feel comfortable with the jargon and procedures so your sales pitch--and your initial sales--will go smoother and easier. As an added bonus, you may already have contacts in the field who can either become your first clients or steer you to colleagues in that area.
Dan S. targeted the field of technology--specifically, software solutions for commercial use and computer cables--simply because he's worked in that area for more than 10 years. He knows the field and feels comfortable in it.
Wahib W., too, began in a field he knew well, runway and navigational lights, then went on to other international construction projects, importing railroad and telephone pole materials and construction services, as well as other heavy-equipment materials.
What's My Niche?
OK. You've narrowed the list of products you'll target. Now you'll want to find your niche, the unique angle that will set your business apart from--and above--the competition. This is where you can really let your creativity shine through.
You may decide to start as an export management company (EMC, remember?), seeking out buyers for domestic manufacturing firms, or as an export trading company (ETC), finding domestic sources willing to export. Or you might want to stick with the original Trader Sam formula, importing and exporting on your own as an import/export merchant.
In Florida, Lloyd D. has positioned his company as both an EMC and ETC, depending on his clients' needs. "[As an EMC, we] work directly for a manufacturer, or his exclusive distributor/manager for international sales, as a marketing and screening provider," Lloyd explains, "and will search for and locate overseas buyers-for-resale and/or qualified distributors/sales representatives. [Our] objective is to function as an extension of [our] principal's in-house export sales efforts."
Under its ETC hat, Lloyd says, "[my company] performs in a fashion similar to that previously described, except for a diminished principal relationship, and business is typically conducted on a case-by-case or ad-hoc basis. It is more a sourcing function for the buyer and the seller."
In Germany, Michael R. describes his company's role this way: "[We are] a worldwide consultancy to SMEs (small and medium-sized enterprises) that wish to increase their sales and profits by using the available world markets more successfully."
Here's a rapid-fire overview of your market research tasks. You'll want to do some in-depth investigation into each of these areas:
- The product or service you'll sell
- The end user you'll aim for (mass-market consumer, heavy industry, light industry, medical or hospital use, government, business or professional)
- The country or countries you'll export to or import from
- The trade channel you'll use (direct sales, representative, distributor or commission representative)
One of the catch-22s of being in business for yourself is that you need money to make money--in other words, you need startup funds. These costs range from less than $5,000 to more than $25,000 for the import/export business. You can start out homebased, which means you won't need to worry about leasing office space. You don't need to purchase a lot of inventory, and you probably won't need employees.
Your basic necessities will be a computer, printer, fax machine and modem. If you already have these items, then you're off and running. Several of the traders we talked with started from ground zero. "We started from nothing," says Wahib W., but once they got a large project, that was all it took."
Peter P.'s company started from a similar financial position. "We had very little money in the bank," he says. What they did have was a carefully built relationship with suppliers, and this valuable asset the company was able to get up and running.
One of the many nifty things about an import/export business is that its startup costs are comparatively low. You have the advantage of homebased-ability, which cuts office lease expenses down to nothing. Unless you're starting as a distributor, you can get away with purchasing no inventory, which means no outlay of funds for pretty doodads to grace display spaces (you have no display spaces!). Your major financial outlay will go toward office equipment and market research expenses--and if you're like many moderns, you already have the most expensive piece of office equipment: a computer system.
But let's take it from the top. The following is a breakdown of everything--from heavy investment pieces to flyweight items--you'll need to get up and running:
- Computer system with modem and printer
- Fax machine
- Internet/e-mail service
- Market research and/or trade leads
- Voice mail or answering machine
- Stationery and office supplies
- Travel expenses for conducting market research on foreign turf
You can add all kinds of goodies of varying degrees of necessity to this list. For example, a copier is a plus. It's also nice to have bona fide office furniture: a tweedy upholstered chair with lumbar support that swivels and rolls, gleaming file cabinets that really lock, real oak bookshelves.
But let's consider that you're starting from scratch. You can always set up your computer on your kitchen table or on a card table in a corner of the bedroom. You can stash files in cardboard boxes. It's not glamorous, but it'll suffice until you get your business steaming ahead.
Income & Billing
What can you expect to make as an international trader? The amount's entirely up to you, depending only on how serious you are and how willing you are to expand. Annual gross revenues for the industry range from $30,000 to $200,000 and beyond, with an average of about $75,000. Some traders work from home, supplementing 9-to-5 incomes with their trading expertise. Others have launched thriving full-time businesses that demand constant care and feeding. Wahib W.'s export company has a staff of five that oversees multimillion-dollar contracts.
"There are tons and tons of opportunities for [export] trade," says Wahib W. "U.S. manufacturers are at least 10 years behind the clock in exporting." So the potential for growth is entirely up to you--as long as you're willing to put in the time.
As an international trader, you're an intermediary in the buying and selling, or importing and exporting, transaction. Therefore, you have to determine not just the price of the product, but the price of your services as well. These two figures are separate yet interactive. Because you're a swimmer in the trade channel, the price of your services has to be added on to the product price, and that can affect its competitiveness in the marketplace.
Since the fee for your services will impact the success of the product, you may ultimately decide to change your pricing structure. You don't want to undercharge your client so that you can't cover your expenses and make a profit, but you don't want to overcharge and reduce the competitiveness of your company and the merchandise you represent.
Import/export management companies use two basic methods to price their services: commission and retainer. Normally, you choose one method or the other based on how salable you feel the product is. If you think it's an easy sell, you'll want to work on the commission method. If you feel it's going to be an upstream swim, difficult to sell and require a lot of market research, you'll ask for a retainer.
A third method is to purchase the product outright and sell it abroad. This is a common scenario when you're dealing with manufacturers who would rather use you as a distributor than as a representative. You'll still market the product under the manufacturer's name, but your income will come from the profit generated by sales rather than by commission.
Import/export management companies usually operate on a commission basis of about 10 percent. These fees are based on the product cost from the manufacturer.
Let's say you're working with English lawn chairs, which cost you $110 each. Here's what you do: First, take the price the manufacturer is charging for the product: $110. Now multiply $110 by 10 percent, which gives you a commission of $11 per chair.
So your product price at this point is $121 per chair ($110 + $11). To come up with the final price, you'll need to add other costs to this figure: any special marking or packaging, shipping, insurance and any representative or distributor commissions that you'll pay to others in the trade channel, which we'll go over a little later. Once you've arrived at a final price, you'll check it against your competitors' prices (you did do your market research, right?). If your product's price is comparatively low, you can bump up your commission percentage.
For now, however, you can see that for every chair you or your trade channelers sell, you'll get $11. If you sell a thousand chairs, that's $11,000 for you!
Biting the Retainer
If the manufacturer can't discount her price sufficiently or if you feel that the product will be a tough sell, you'll want to ask for a flat retainer (the monetary kind, not the dental appliance kind). You'll pass all the costs of market research along to the manufacturer. By taking a retainer, you guarantee yourself a set income rather than one tied by commission to a "problem" product.
To determine what your retainer should be, you'll need to consider three variables associated with the performance of your services:
- Labor and materials or supplies: This usually includes your salary or estimated salary on an hourly basis plus the wages and benefits you pay any employees involved in the performance of the job. To determine labor costs, estimate the amount of time it will take to finish a job and multiply it by the hourly rate of your salary and that of any employees you might use. You can compute materials as a percentage of labor, but until you have past records to use as a guide, you should use 2 to 6 percent.
- Overhead: This variable comprises all the nonlabor, indirect expenses required to operate your business. To determine your overhead rate, add up all your expenses for one year, except for labor and materials. Divide this figure by your total cost of labor and materials to determine your overhead rate. Or use a rate of 35 percent to 42 percent of your labor and materials.
- Profit: And the end result is: After all labor, materials and overhead expenses are deducted, profit can be determined by applying a percentage profit factor to the combined costs of labor and materials and overhead.
What you will be doing during your peak hours and beyond will depend upon how you've structured your services. Some traders act only as sales representatives, finding buyers and taking commissions, but steer clear of the shipping, documentation and financing aspects of the deal. Others are happier offering a full line of services, buying directly from the manufacturer and taking on all the responsibilities of transactions from shipping to marketing. These traders often specialize in either import or export and stick to the merchandise industry they know best.
No matter how exotic you want to get, your most basic tasks will be obtaining merchandise, selling it, transporting it and getting paid for it.
The Export Path
OK, exporter--you've found a buyer for your merchandise. You're a player. You're ready to roll. So now what do you do? Follow the export path:
- Generate the pro forma invoice--give the importer a quote on your merchandise; negotiate if necessary.
- Receive the letter of credit from your bank.
- Fulfill terms of the letter of credit: Have the merchandise manufactured if necessary; make shipping and insurance arrangements; pack the merchandise; and have the merchandise transported.
- Collect shipping documents.
- Present shipping documents to your bank.
The Import Path
OK, importer. You've found the merchandise you want to buy and then resell. You're a player. You're ready to roll. So now what do you do? Follow the import path:
- Receive the pro forma invoice, the exporter's quote on the merchandise; negotiate if necessary.
- Open a letter of credit at your bank.
- Verify that the merchandise has been shipped.
- Receive documents from the exporter.
- See merchandise through customs.
- Collect your merchandise.
A Day in the Life
What does a trader's day really look like? What does he do in between preparing pro forma invoices, requests for letters of credit and shipping documents? Here's a behind-the-scenes peek, courtesy of Michael R., the international trade consultant in Germany:
- First hour: Read statistics printed overnight by the computer to see if each representative/agent has fulfilled his plans, and initiate changes if necessary.
- Work on the internet for one to two hours to see what inquiries have come in, then answer them personally or forward them to past or present clients who may be interested.
- Have short meeting with colleagues to see if assistance is needed, then support them or trouble-shoot.
- Look at the day's newspapers to see whether there's any movement within my industry where I should act fast.
- Take a coffee break.
- Look at the mail and handle or forward items.
- After lunch, take time to reflect on what has and what should have happened.
- Discuss problems and/or chances for the future with prospects and/or business partners.
- Look again at e-mail and the Web for news and new opportunities.
- At the end of the day, there should be about an hour to discuss again with colleagues how the day went and/or problems that came up.
- One or two evenings a week, attend business events or meetings with partners for discussion.
On the Road
A trader isn't always at home behind his desk. What does he do when he's out on the road? Here's another behind-the-scenes peek, courtesy of Jan H., a Belgian tire trader:
Note that Jan's day, in typical European fashion, evolves through a 24-hour clock, or what we think of as military time.
Day in Belgium: 07.00 - 09.00 Office work, e-mail, fax offers, mail, etc. 09.00 - 12.00 Drive to airport, meet customer from Finland; back to warehouse, customer chooses products 12.00 - 13.00 Lunch with customer, general discussions 13.00 - 18.00 Visit with a customer from Nigeria; long discussion, haggling over prices, payment terms, etc.; supervise loading of containers bound for the United States; phone calls, fax, e-mail; arrival of a customer from France, discussions 18.00 Quick trip home to change and shower 19.00 - ?? Pick up French customer at hotel, have cocktails and dinner, more negotiations
Day on the road in Germany: 05.00 Leave home for 400 km drive 08.00 Arrive at first supplier; discussions and purchase of goods 10.00 Leave for next supplier 11.00 Next supplier; discussions without any result 12.00 Visit customer; make a sale 13.30 Visit another supplier; more discussions 15.00 Leave for another 300-odd km drive 18.00 Arrive at hotel; check e-mail on laptop, phone calls 19.30 Sauna and swim at hotel pool 20.30 Dinner with supplier, then to bed!
As an international trader, your mission is sales--in two different but overlapping arenas: a) selling yourself and your company to clients as an import/export manager for their products, and b) selling the products themselves to representatives and distributors. Success in one of these arenas will contribute to your success in another. Once you've established a favorable sales record with one client's goods, you'll have a track record with which to entice other clients. And, of course, each success will contribute to your own self-confidence, which will, in turn, lend that air of confidence to your negotiations with new prospects.
Hunting for Exports
A surprisingly small percentage of domestic producers export their wares. So your marketing goal is to convince the huge remainder that they can increase profits by exporting--with your guidance--to specific target countries. You can accomplish this with direct mail and cold calls. If you're starting with imports, don't ignore this section--you'll work in basically the same manner.
Before you initiate contact with any manufacturer, you'll need to do some basic market research:
- What products are hot sellers in the domestic marketplace? Focus your attention on products that you know well or use yourself, or that are bestsellers in their market niches.
- Are these products hot sellers in your target countries?
- If not, are there situations or markets that would put these products in great demand if the products were available?
- Who manufactures these products?
- What is the selling price of each product--and of competing products or brands--domestically and in your target countries?
Now you're ready to begin your direct-mail campaign. Choose one manufacturer of one of the products you've researched. Then call the company and ask for the name of the person to whom you'll want to write. If the company is small, you'll probably want the president or owner. If it's a larger concern, you might want to direct your letter to the vice president in charge of sales, the sales manager or the president or owner.
Armed with a name and title, write your letter, taking care to address the following points.
- Introduce yourself and your company.
- Briefly outline the potential of the overseas market.
- Outline the product's potential within that market.
- If possible, explain why and how your company, out of all others, will be able to position the product best. For example, if you have experience with like products, be sure to say so.
- If you already have contacts with foreign distributors, explain that you have foreign representatives for overseas sales.
- Ask for a personal meeting to further discuss the possibilities.
Once your first letter is in the mail, sit down and write another to a potential client in another product line. And then another, until you've exhausted your first set of preliminary market research products.
Now wait a week or 10 days. If you haven't heard from your first target manufacturer, give him a call. Ask to set up a meeting in his office to discuss your plan. Then call the next manufacturer and the next. If you're not familiar with sales, you may find this portion of the program a white-knuckler. Don't be nervous! You're offering these people a terrific opportunity. Not everyone is going to bite (not everyone can recognize a great deal when it jumps up and grabs them), but not everyone is going to turn you down, either. A no thank you now and then is part of the game.
(Cold)-Calling All Clients
Cold-calling, so-called because you call a potential client "cold" without any warming up by prior contact, is an alternative to the direct-mail approach. The good news is that, if you're calling locally, it's usually cheaper than direct mail. The bad news is that it requires much more perseverance to be effective. The other good news, however, is that, done properly, a cold call can be much more effective than direct mail.
Before you make your first call, be sure you know what you want to say and how you want to say it. Some experts recommend writing out a sort of "script" that you can follow during the course of your call. This is a good starting-off exercise to help plan your spiel, but be aware of the fact that following a script has its drawbacks. The main one is that the person you're calling doesn't know he's supposed to be following the script, too, and when he gets off track, so do you.
Desperately Seeking Imports
How do you go about finding goods to bring stateside? You have several options:
- Travel abroad on an import search mission.
- Wait for foreign manufacturers to contact you.
- Attend trade shows.
- Contact foreign embassies' trade development offices.
- Contact the U.S. Department of Commerce's International Trade Association.
- Track down leads on the Internet and in trade publications.
You've located foreign manufacturers or suppliers whose products have U.S. sales potential. Now you have to sell them on the idea of entering the U.S. marketplace and convince them that you're the person to usher them in. How do you do this? Basically, the same way you'll pitch domestic manufacturers, with a direct-mail campaign. Only in this case, you'll do better to think of it as a direct fax letter. Although many traders rely on international mail, unless you're sending to regions or countries with highly developed infrastructures, such as Canada or Western Europe, you'll be much more assured of your missive reaching its destination if you send it by fax.
In your letter, outline the various opportunities available in the United States for the product and highlight that you'll handle all import logistics with little cost to the manufacturer. It's very similar to the export letter, with two exceptions:
- You should address the letter recipient. For example, use Monsieur (abbreviated M.) instead of "Mr." if the recipient is French. Even though your letter is in English, this little touch shows that you do know something about the French language and that you've taken the care and courtesy to address the recipient in his own tongue.
- Check to make sure you've eliminated any slang that may be confusing to non-natives.
Follow up in a few days with another fax. Think of the follow-up as a firm but gentle nudge, an opportunity to strengthen your position and demonstrate real interest in importing the merchandise. Remember that part of your task is to convince the potential client that your company is the best one for the job, so you have to supply a reason for this. If you can't claim that you're experienced in interior design (or mulch or whatever) sales in the United States and Europe (or wherever), then come up with something else. Maybe you're only experienced in the United States so far. That's fine! That's where you'll be selling. Maybe you're not experienced yet, but you've done a great deal of research. Fill that in instead. Use your creativity!
Whether you're planning on exporting or importing, be prepared to present your prospective client with a marketing plan. If the manufacturer is close to home, you'll naturally present it in person. If she's overseas, you may still have to (make that get to) arrange a personal visit to close the deal. If you feel strongly enough about the product's U.S. potential, the trip will be worth the time and expense.
To prepare your marketing plan, you'll need the information you've already asked for: pricing, product brochures or literature, and samples. If your prospect balks at supplying these materials, tell her that you'll need them to further explore the market potential and develop a presentation for her, outlining the market strategy you plan to pursue.
Once you have the materials in your office, sit down and figure out every possible expense you'll have so you can arrive at your sales price. Then, if you've already been in contact with distributors or representatives, find out if this price will sell in their market. If you don't have any representatives yet, you'll need to locate one and determine if he can work with that price. Assuming the answer is yes, you've got a viable product.
Now write out your marketing plan, which should include the following elements:
- Target: Which country or countries will you or your representatives sell in? Why are these markets viable? Include positive market research information and be sure to assemble it in a clear, concise, easy-to-digest format. This is where your desktop publishing programs will shine--you can make charts, graphs and tables interspersed with facts, figures and text.
- Sales: Explain at what price you'll sell the product, give your annual sales forecast, your fee structure and the profits the manufacturer can expect.
- Marketing: Briefly touch on any special marketing or promotions for the product; for example, foreign or domestic trade shows or any local advertising your reps will do.
- The American Association of Exporters and Importers
- The Federation of International Trade Associations
- International Chamber of Commerce
- The International Federation of Customs Brokers Associations
- International Organization for Standardization
- International Small Business Consortium
- World Trade Centers Association
- Entrepreneur's business startup guide Creating a Successful Business Plan
- Entrepreneur's business startup guide Financing Your Small Business
- Entrepreneur's business startup guide Successful Sales and Marketing
- Importing Into the U.S.
Helpful Government Agencies
- Bureau of Industry and Security
- Business Information Service for the Newly Independent States (BISNIS)
- Commercial Service, Canada
- Commercial Service, Mexico
- Country Commercial Guides
- The Export Legal Assistance Network
- Foreign Agricultural Service
- International Trade Administration
- Overseas Private Investment Corporation (OPIC)
- Showcase Europe
- Ex-Im Bank, Small-Business Programs
- U.S. Census Bureau, Foreign Trade Division
- U.S. Customs and Border Protection
- U.S. Department of Commerce
- U.S. Commercial Service (The Commercial Service)
Magazines and Publications
- The Journal of Commerce
- Tradeshow Week
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Import Export Business Plan Template
Written by Dave Lavinsky
Import-Export Business Plan
Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their import-export businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an import-export business plan template step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your import-export business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start an import-export business, or grow your existing business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your import-export business in order to improve your chances of success. Your import-export business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Import-Export Businesses
With regards to funding, the main sources of funding for an import-export business are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the lender will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for social media marketing businesses.
How to Write a Business Plan For an Import-Export Company
If you want to start an import-export business or expand your current one, you need a business plan. Below are links to each section of your import-export business plan template:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of import-export business you are operating and its status. For example, are you a startup, do you have an import-export business that you would like to grow, or are you operating import-export companies in multiple markets?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the import-export industry. Discuss the type of import-export business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of import-export business you are operating.
For example, you might operate one of the following types of import-export companies:
- Export management company – these types of businesses handle all the details (hiring distributors, handling logistics, creating marketing materials, etc) for companies wishing to export a product.
- Export trading company – these types of businesses determine what products foreign buyers want, and then find domestic companies who make the product.
- Import-export merchant (or free agent) – this type of business buys merchandise from a manufacturer, and resells that merchandise around the world.
In addition to explaining the type of import-export business you will operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the volume of products you have exported or imported, number of import-export contracts signed, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the import-export industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the import-export industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy, particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your import-export business plan:
- How big is the import-export industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your import-export business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your import-export business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: manufacturers, wholesalers, retailers, and consumers.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of import-export business you operate. Clearly, individuals looking to purchase coffee beans online would respond to different marketing promotions than mobile phone manufacturers, for example.
Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most import-export companies primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other import-export companies.
Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes manufacturers with vertically integrated distribution operations, or consumers who prefer to purchase similar products made domestically.
With regards to direct competition, you want to describe the other import-export companies with which you compete. Most likely, your direct competitors will be import-export businesses located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- Do they specialize in specific products, or in imports from a specific country or region?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide a wider variety of products or maintain distribution contracts with more manufacturers?
- Will you offer extra services, such as brokerage?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an import-export business plan, your marketing plan should include the following:
Product : In the product section, you should reiterate the type of import-export company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to mobile phones, will your import-export business offer other consumer electronics such as laptops or wireless headphones?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place : Place refers to the location through which you will sell your imported/exported goods. For example, will you distribute your goods directly to consumers online, or will you maintain supply contracts with retailers and wholesalers? In this section, document each method by which you will sell your products.
Promotions : The final part of your import-export marketing plan is the promotions section. Here you will document how you will drive customers to your business. The following are some promotional methods you might consider:
- Advertising in trade papers and magazines
- Direct contact with potential clients (cold calling)
- Social media marketing
- Exhibits at Trade Shows
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your import-export business, including determining which products are needed, sourcing product manufacturers, securing and maintaining all necessary licenses and permits, arranging logistics, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign your 100 th supply contract, or when you hope to reach $X in revenue. It could also be when you expect to expand your import-export business to a new market.
To demonstrate your import-export business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in managing import-export companies. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in logistics, or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you import from one country, or will you operate globally? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your import-export business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an import-export business:
- Warehouse build-out including fixtures, construction, etc.
- Cost of buying or leasing the necessary transportation equipment (containers, cargo ship / airplane, etc.), or otherwise securing the means of transporting your goods
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your warehouse lease, or contracts with manufacturers and distributors.
Putting together a business plan for your import-export business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the import-export industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful import-export business.
Import Export Business Plan FAQs
What is the easiest way to complete my import export business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Import Export Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of import export business you are operating and the status; for example, are you a startup, do you have an import export business that you would like to grow, or are you operating a chain of import export businesses?
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Other Helpful Business Plan Articles & Templates
Start An Import Export Business: Complete Step-by-Step Guide
Start an import export business with our step-by-step how-to guide. More and more these days, interest in how to Import and export is growing in popularity. The global trade landscape is shifting and supply chains are in flux. Many entrepreneurs are deciding they have the resources and know-how to take advantage and test the international market themselves.
Start an import export business using these steps:
- Choosing the Products You Want to Import Export
- Registering Your Business
- Growing Your Online Presence
- Sourcing Your Products
- Becoming a Registered Importer
- Securing a Customs Bond
- Developing a Plan for Logistics and Distribution
- Marketing Your Import Export Business
Our comprehensive guide on how to start an import export business covers everything you need to know, including startup costs, paperwork, insurance and more. The guide also details how working with a trusted customs consultant or 3PL provider can help you get started.
Worried about the Strict Regulations? Ask Our Experts.
Our 30 Minute Licensed Expert Consulting Will Personally Guide You.
Cargo insurance, how do importers and exporters get paid, getting help to start an import export business with usa customs clearance, what are the types of import export businesses.
Before you decide to start an import export business, you have to decide what type of import export business you want to create. Some companies simply oversee global transactions, while others act as a middleman. A few businesses take a purely entrepreneurial approach handling all of the import/export operations themselves.
Listed below are the three main types of import export businesses , along with a short description of how each one works.
- Import Export Merchants
Individuals who start an import export business of this type are considered free agents. They may or may not specialize in any one particular product or market. Instead, they manufacture or purchase merchandise from other vendors and then resell it overseas. This type of business is risky but it also provides an opportunity for greater profit.
- Export Trading Company (ETC)
The work of an ETC is similar to that of a middleman, or a distributor. Rather than developing its own product line, an ETC will seek out foreign buyers for goods and then find a domestic seller to export those goods. In some cases, the ETC will take ownership of the goods themselves and export them, working on a commission.
- Export Management Company (EMC)
An EMC does exactly what the name implies - it manages trade operations for an exporter. If a domestic company plans to export its products overseas, an EMC will handle all of the logistics. This includes hiring distributors, creating marketing materials, and getting the goods shipped.
In regards to the types of businesses listed above, none of them can be classified as the best or worst. Ultimately, your decision of which one to move forward with comes down to a few important factors. These factors include personal preference, strengths and weaknesses, and risk/profit comfortability.
How Do I Start an Import Export Business?
Starting an eCommerce business isn’t always easy, but if done right, it can be very rewarding. Not only does it require time, money and effort to get off the ground, but a certain amount of know-how and the ability to learn and adapt on the fly. We’ve put together this step-by-step guide to help you get started.
- Decide Which Products You Want to Import and Export
Two of the most important questions you can ask yourself when choosing products to import or export are:
- Can I sell this commodity?
- Am I passionate about this commodity?
Whether or not you can sell the products will determine how long you can run the business. Your level of passion for the products you’re selling will determine how long you want to run the business.
No matter what you choose, it’s crucial that you do your research beforehand. You should know what markets your product is most likely to sell in, how to reach your target market, and your opportunity for growth in those markets. You also need to consider the level of competition you’ll be facing, both for the product itself and in the foreign markets you choose.
Market research doesn’t stop after starting your business. Your research should be continuous to keep up with current market trends and ensure that you remain an expert on the products you’re selling.
- Register Your Business
Once you’ve actually done the proper research and determined that it is a viable option to start an import export business, it’s time to make it official.
Depending on the size and scale of your business, you’ll need to register with the local, state, or even national government. You may also need to file for foreign qualification and obtain the proper licenses. The U.S. Small Business Administration has a step-by-step guide on everything you need to know to get your new business registered.
- Expand Your Online Presence
There’s almost nothing that matters more for a business than its online presence. To get your new business off the ground, you need to create a website, social media accounts, add contact information and show visible online activity. This will give you a chance to open up channels for communication, market your products, grow your customer base and deliver excellent customer service.
- Source Your Products Through a Trusted Supplier
Now that you can call yourself a registered business and have decided which products you intend to sell, it’s time to source your products and find a reputable supplier. That could mean a local manufacturer, an international supplier, or even yourself. Once you find a supplier, it’s your job to convince them that it would be beneficial to work with you.
There are a number of companies out there that can help you find suppliers. One of the largest is Alibaba, a Chinese-based company that can help with sourcing products from Asia. If you’re looking for an alternative to Alibaba , Global Sources, DH Gate and All.Biz are all popular options.
However, new importers and exporters should exercise caution when selecting which companies to partner with. Some require high order minimums, while others offer prices that don’t accurately reflect costs, to name a few risks. In addition to thoroughly vetting these companies and suppliers, you’ll want to make use of incoterms ® , also known as international commerce terms, which act as guidelines that are mutually agreed upon between a seller and a buyer that help protect all parties involved in international transactions.
Many imports records, like your products and suppliers, are available to the public - including your competitors. Want to make sure your import data is secure? Check out our article Manifest Confidentiality: Do Import Records Affect Business?
- Become a Registered Importer
If you plan on importing into the U.S. from international suppliers, you’ll be required to register with Customs and Border Protection to become an Importer of Record (IOR). As an IOR, you’re responsible for all import compliance associated with your products. Import tasks include customs clearance documentation, paying duties and tariffs, and more.
To become an IOR, you’ll need to complete the Importer Identity Form, also known as CBP Form 5106. We can give you 1-on-1 support and help you become a registered importer in 24 hours.
Filing Is Time-Consuming.
Avoid Making Mistakes and Extra Costs.
We Submit Directly To The CBP.
- Obtain a Customs Bond
You may also need a customs bond to start your business. A customs bond is essentially an insurance policy for the duties and taxes owed on imported goods. Customs bonds, also known as import bonds, are required on shipments valued at $2,500 or more and they ensure a smooth and efficient flow of cargo between countries.
If you’re starting a business, you’ll likely need a continuous customs bond which will cover your shipments for a 12-month period. It’ll also cover Importer Security Filing (ISF) rules. With USA Customs Clearance, powered by AFC International, we make getting a customs bond easy, giving you more time to focus on your new business.
You Must Pay Import Duties & Taxes for your Goods.
- Develop a Plan for Logistics and Distribution
Once you’ve sourced your products and completed all of the necessary paperwork, it’s time to tackle the next big task. You need to start making plans for how to get your products from the manufacturer and into the hands of your customers.
This can be an extremely complicated step with a lot of moving parts. Not only do you have to figure out how to move your products (whether by land, sea, or air), but you also need to know how to package them for distribution. Additionally, you need to determine how to store them for greater accessibility, and organize first- and last-mile transport.
To overcome this challenge, the key is to partner with a trusted 3PL provider. We have the experience and know-how to provide a solution for all of your distribution and logistics needs. Our services include warehousing, pick and pack services, shipping and customs clearance.
- Market Your Import Export Business
The last major step you need to take in order to launch a successful import/export business is to begin marketing your products and services. Depending on the size and scale of your business, this could mean anything from cold-calling potential customers to rolling out a dedicated digital marketing campaign.
Throughout this process, you’ll need to build a strong brand, offer competitive pricing, boost your online presence and make your voice heard through advertising. Consider your target audience and the market you’re entering and provide solutions to the needs of your customers. Once you start to build a solid customer base, the process should become easier as the reputation of your business and products grow.
How Much Does it Cost to Start an Import/Export Company?
While the costs to start an import export business are comparatively low, they still aren’t cheap. On average, startup costs for a new import/export business will run you between $5,000 and $25,000. Let’s break down all of the capital you’ll need to get started.
The first thing you’ll need to consider is the initial costs it takes to start an import export business. That will include things like office space, a computer, phone, internet, etc. Fortunately, for entrepreneurs looking to keep costs low, it’s common to start an import/export business from home . This option reduces costs since many of these items are already covered. You’ll also need to cover the costs of the initial paperwork, like permits, licenses, registration fees, legal fees, and more.
Next, you have to consider operating costs. That includes costs like employee salaries, insurance and additional equipment. Depending on how you plan to source your products, supplies and labor can be two of the largest operating costs you’ll encounter. You’ll also have to pay for the distribution and logistics of your products, including fees for services like packaging, storage and shipping.
It’s important to remember that many of these costs require an investment that you likely won’t start seeing a decent return on until months or even years into starting the business.
Documents Needed for an Import Export Business?
If you’re going to start an import export business, there’s going to be a lot of paperwork no matter what industry you plan on entering. It stands to reason that an import/export business with so many compliance rules would come with a lot of paperwork. And that’s not even taking into account differing governmental regulations, foreign baking information, etc. The list goes on.
If you’re serious about starting an import/export business, there’s a lot of paperwork in your future. Below we’ve laid out the most common documents that you’ll encounter when starting an import/export business.
- Pro Forma Invoice
Once you find your first customer, one of the first documents you’ll need to begin the transaction is a pro forma invoice. A pro forma invoice is used for quotes as you and an international buyer negotiate on the sale. It can also be used to arrange financing, open a letter of credit or apply for the proper licenses. A pro forma invoice includes a description of the goods and a guarantee by the seller to provide said goods to the buyer at a specified date and price.
- Commercial Invoice
A commercial invoice is essentially an evolution of the pro forma invoice and a bill between the seller and the buyer. It includes much of the same information as the pro forma invoice, like a description of the goods, price, language to be used, etc. However, a commercial invoice also includes information like reference numbers, payment and banking information. The value of the items listed on the commercial invoice is used by customs officials to determine customs duty.
- Packing List
Once an order is ready for shipment, it’s time to create the packing list. The packing list is an extremely detailed and extensive document. Details contained on the packing list include quantity of goods, packaging, weight, dimensions and more. The packing list is not a substitute for a commercial invoice, however, it is often used by customs officials to check cargo.
- Bill of Lading (Ocean and Inland)
A bill of lading (BOL) is essentially a contract between the owner of the goods and the carrier moving those goods. Depending on the method of transport that you’re using to move your products, this can either be an inland or ocean bill of lading.
If using an ocean bill of lading, you can use either a straight bill of lading or a shipper’s order bill of lading. A straight BOL is non-negotiable and directed to a specific consignee. On the other hand, a shipper’s order BOL is more flexible and does not have to be directed to a specific consignee.
- Air Waybill
Similar to a bill of lading, an air waybill is used for international shipments moved by air carriers. It’s also used to provide information on the goods being moved and allow them to be tracked during the shipment. Air waybills are shipper-specific and are non-negotiable.
- Certificate of Origin
While not required for every product or between every country, you may find that the product you’re shipping does require a certificate of origin. This can also be required for letters of credit or at the request of the buyer. Goods that require a certificate of origin require the document to be signed by a government official of some kind.
While this was formerly a physical document, you can now opt for an electronic certificate of origin. Certificates of origin come in two forms. The first form is generic, meaning that there are no trade agreements between the importing and exporting countries. A Free Trade Agreement certificate of origin means that preferential treatment like free or reduced tariffs may be in order.
- Import/Export License
Depending on the item you plan to import, its destination, composition, and a number of other factors, you may need either an import or export license. This type of license is required to ship your goods. More information on import and export licenses can be found below.
- Electronic Export Information Filing
The EEI filing is submitted to the Automated Export System and is used when the value of your shipment exceeds $2,500 or when a validated export license is required. This information allows the U.S. Census Bureau to collect trade data on U.S. exports and ensure customs compliance. EEI filings are not required for most shipments to Canada or to most U.S. territories.
While these are the most common documents you’ll encounter, there are a number of other documents that can come into play. The Department of Commerce’s International Trade Administration has a list of some of these documents. Additional documents include certifications for products overseen by other governmental agencies, for temporary shipments, inspections, and more.
Do I Need a License to Import or Export?
The short answer is: No, CBP does not require a license to import or export the vast majority of items. However, there are some commodities that do require some sort of documentation, such as licenses or certifications to import or export.
As a rule of thumb, you’ll want to check with the government agency tasked with overseeing the specific product that you’re looking to trade. They should be able to give you a binding ruling on whether or not a specific item requires a license. Similarly, you should check with state and local officials to determine whether or not they require any additional regulations that national agencies do not.
Our team of Licensed Customs Brokers has complete awareness of which products require an import license. If you’re not sure if your products require an import license, our experts can help you. Even better, we’ll guide you through the exact requirements that your products will need to comply with.
The good news is the vast majority of internationally traded products do not require an import license to be imported into the United States. There are some exceptions, however. CBP doesn’t offer an exhaustive list of all items that require a license, but they do give guidelines for merchandise that may require additional clearance. Commodities that are likely to require an import license include:
- Cheese , Milk and Dairy products
- Arms, Ammunition, Explosives and Implements of War
- Radioactive Materials and Nuclear Reactors
- Biological Drugs
- Biological Materials and Vectors
- Wildlife and Pets
An export license is a document that grants permission to export an item. It’s the exporter’s responsibility to research their products and do their ‘due diligence’ to determine whether or not their product requires an export license . If it does, the license will then be issued by the appropriate government agency. Typically the Bureau of Industry and Security or the U.S. Department of State’s Directorate of Defense Trade Controls handle export licensing.
Like products that require import licenses, the vast majority of internationally traded items don’t require an export license. Ultimately though, the determination is made on a per-item basis. When determining whether or not you need an export license, you’ll want to consider four things:
- An item's technical characteristics
- An item’s destination
- An item’s end-use
- An items’ end-user
To better understand what items do and don’t require an export license, you should look to the Export Administration Regulations (EAR). EAR is administered by the U.S. Department of Commerce and regulates the export of dual-use items - items that have both commercial and military uses. These items can be found under the Commerce Control List (CCL). The CCL is broken up into 10 categories:
0. Nuclear Materials, Facilities and Equipment (and Miscellaneous Items)
- Materials, Chemicals, Microorganisms and Toxins
- Materials Processing
- Part 1: Telecommunications; and Part 2: Information Security
- Sensors and Lasers
- Navigation and Avionics
- Aerospace and Propulsion
If your item falls under the jurisdiction of the U.S. Department of Commerce and is not listed on the CCL, it is designated as EAR99. Most EAR99 commercial products do not require a license to be exported, however, some do.
Another way to determine whether or not an item you intend to export requires a license is by checking its Export Control Classification Number (ECCN). Methods of finding your item’s ECCN include:
- Classifying the item yourself by using the CCL
- Asking your product manufacturer or supplier
- Requesting commodity classification from the Bureau of Industry and Security
Do I Need Insurance to Start an Import Export Company?
When you start a new business, there are a variety of insurance policies that you should be looking into. General liability insurance, workers’ compensation and property insurance are all standard coverages that a new business should consider. However, in the case of an eCommerce business, there are a couple of insurance options that the typical business wouldn’t normally consider.
Export Credit Insurance
One of the first insurance options you’ll want to look into is export credit insurance, courtesy of the Export-Import Bank of the United States (EXIM) . There are a number of options to choose from, including policies for new exporters, as well as small to mid-sized businesses. That could mean single-buyer coverage, multi-buyer coverage, letters of credit, and more. These options are there to protect your business from lost profits and help expand your reach.
Export credit insurance, also known as Trade Credit Insurance, protects you in the case that your foreign buyer doesn’t pay. It covers both commercial and political policies to 95-percent. This protection helps give businesses the confidence to enter new markets, increase sales, and become more competitive by offering global customers open account credit terms.
These policies can be used to extend credit to foreign customers and insure against nonpayment by international buyers. Trade credit insurance policies also cover both commercial and political risks. In these policies, financing is arranged through a lender by using insured receivables as additional collateral.
Equally important when shipping goods is cargo insurance. There are a number of types of cargo insurance you can purchase, each with varying levels of protection and pricing. In general, however, a plan that includes ‘all-risk’ insurance is recommended. An all-risk policy protects you in the case of any lost or damaged cargo. In many cases, this policy also compensates you for lost time and profits as well.
No matter what type of cargo insurance you choose, you, as the shipper, have the responsibility to mitigate any potential opportunities for loss or damage. That means choosing a reliable carrier, packing your goods properly and ensuring safety for your cargo across the board. We offer access to a number of reliable 3PL partners that can help you with your shipment at every step in the supply chain. From order fulfillment and distribution to hauling freight, and more, we’ll take every precaution to ensure your products are secure.
How Do Import Export Companies Make Money?
It should go without saying, importers and exporters make money based on the number of goods and services they sell. The costs of labor, supplies, shipping, vendor fees and any other operating costs should all be taken into account. Anything leftover is considered profit.
For example, in 2018, the average cost of importing watermelons was $857 per ton, or 43 cents per pound. Let’s say you imported two tons of watermelons and were able to sell them domestically for 75 cents per pound, after shipping, vendor and other related fees. Calculating those costs comes out to a profit of $1,280. Obviously, this is an overly simplistic example, but it works to demonstrate how the process would work.
Depending on the type of import/export company you plan to start, you may be paid by commission, salary, or retainer plus commission.
Are Import Export Businesses Profitable?
Just like any business, whether or not your import/export business is profitable depends on a number of factors. The prices you set, the cost of production and distribution, and how large you’re able to grow your business will all play a role in your profitability.
It’s estimated that the average profit for an individual that chooses to start an import export business is $75,000 . On the higher end, you may see profits in the hundreds of thousands of dollars, and for the very few, profits can reach into the millions.
The best way to become profitable running an import/export business is to understand all of the costs involved, do your research, and ensure that your business is keeping up with market trends.
How Much Can You Charge Customers for Imports and Exports?
The amount that you charge for your products will obviously vary depending on the products you sell and the cost of production and distribution of those products. While there’s no hard and fast rule on product pricing, between 10 and 15 percent over cost is considered a good rule of thumb.
There are a number of ways that you can get paid as either an importer or an exporter, and each comes with a certain level of risk. It’s important to take each method of payment into account and determine which works best for you, your customers and the situation. We’ve detailed the most common methods below.
- Cash in Advance: Cash in advance is the most secure payment method for an exporter because it means that they receive their payment before the buyer receives their product. Credit cards, wire transfers and escrow services are all common cash in advance options. It’s important to note, however, that this method may scare off potential customers. If a buyer is worried that they may not actually get the products they paid for, they may end up choosing a competitor instead.
Conversely, for an importer, this method carries the greatest risk. When sourcing your products, it may be wise to shop around for a different seller to find a more secure transaction. By paying in advance, there’s always a chance that you won’t actually get the products you paid for.
- Letters of Credit: Letters of credit (LC) are a fairly secure method of payment all around. LCs are a commitment by a bank on behalf of a buyer. In short, an LC ensures that an exporter will receive payment for their goods, provided all terms and conditions of the sale are met. LCs are most commonly used when credit information for a buyer is unknown or difficult to find, but the credit of the buyer’s bank is trustworthy. LCs also protect importers because payment is not provided until the goods have shipped.
- Documentary Collections: A documentary collection (DC) is a transaction in which banks act as facilitators for their clients. When a payment is made using a DC, an exporter entrusts the collection of payment to its bank (also known as the remitting bank). The remitting bank will send the required documents to the buyer’s bank (also known as the collecting bank), which will then send those documents to the buyer for payment.
The importer will then either pay the face amount on sight or on a specified date. While DCs are typically cheaper than LCs, they offer no verification process and limited recourse in the event of non-payment.
- Open Account: An open account gives importers the option to wait for 30, 60 or even 90 days in some cases to pay for goods after they’ve been delivered. Because there is so much competition for exporters, it’s not uncommon in some markets for a buyer to push for an open account. While this is riskier for the exporter, that risk can be mitigated by purchasing export credit insurance.
- Consignment: When paying through consignment, the exporter isn’t actually paid until the buyer (or in this case, independent distributor) actually sells the goods to the end-user. However, the exporter retains ownership of the goods until they’re officially sold.
The benefit of consignment for the exporter is that it allows for faster shipments and greater availability of their product, which makes them more competitive on a global scale. It can also help reduce storage costs. If you plan on using consignment, insurance and the help of a trusted 3PL provider are a must.
When you start an import export business, it’s more important than ever to ensure that you’re following the correct protocols and that you’re compliant with customs enforcement. As the importer of record, you are fully responsible for your business and the goods you’re trading.
That’s why it’s so important to work with a licensed customs consultant . If you’re still learning the ins and outs of international trade, our team of experts can help you with the finer points of starting your business. Not only can they walk you through the import/export process and customs clearance, but they can also help you become a registered importer, secure a customs bond, accurately classify your products, and more.
At USA Customs Clearance, powered by AFC International, we’ll work with you every step of the way to make sure you have all the information you need to help get your business off the ground. Speak with one of our import/export consultants today and get started.
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How To Start An Import/Export Business
There is money to be made in the import and export business and for several reasons. For one thing, certain products just seem to have more appeal when they come from exotic locales. Another factor that makes international trade businesses appealing is the fact that certain goods are much less expensive when purchased abroad. Finally, some products just cannot be produced in certain areas, and so importing them into one market from another creates an opportunity for both the producer and the buyer.
One of the great things about import/export businesses is that they can provide good profit margins with fairly minimal investments, and manageable operating costs. However, there are certain skills that people who are successful in this business tend to have.
Salesmanship is important, as is the ability to develop rapport with clients. If you’re doing business with clients who don’t speak your native tongue, then being bilingual is definitely a plus. You’ll also have to pay close attention to the legality of importing and exporting certain things, or a potentially lucrative transaction could end up turning into a very poor business decision.
Types of Import Export Businesses
There are three basic types of import export businesses. Import/export merchants purchase goods with their own capital, and then sell them. While this business model allows the business owner to keep all of the profits, it also involves a high degree of risk, if the products don’t sell as well as initially anticipated.
Export management firms team up with domestic companies in order to export their goods abroad. Finally, export trading companies find domestic buyers for foreign goods. Many import export businesses are a hybrid of the three types listed above.
Define Your Specialty
You may already have skills that lend themselves to certain markets or types of products. For instance, if you speak Spanish and have an eye for style, you may want to think about importing clothing from Mexico. Analyze your skill set and interests, and you should have a pretty good idea about where to start.
You can always branch out into other categories of merchandise later, but starting with something you’re familiar with can only make it easier — not only for you, but also for your clients.
Making It Official
Depending on what types of products you plan to specialize in, you may need to get licensed. For example, If you’re importing military surplus, you’ll want to make sure you’re doing business well within legal bounds. Other goods, such as furniture, are not as likely to require much in the way of licensing.
You’ll also need to register your business, obtain an FEIN, and complete the usual legal requirements necessary for most businesses.
Networking Is Key
In order to make deals happen, you’ll have to get out there and find clients who have a need for your services. Start with a list of businesses in the field you’d like to specialize in. Then, contact them and find out what their needs are. You’ll want to find out who does the sales and purchasing for each company, and direct your efforts toward establishing strong business relationships with them.
For example, if you are interested in home decor, then contact a few interior designers in your area, and schedule a meeting or a phone call with them. Talk to them about what they tend to buy, if their clients’ tastes tend to follow any particular patterns, and how you might be of service in a potential partnership. When you later travel to new markets in order to find goods that you can import, you’ll have a well-trained eye and a much better sense of what you can sell when you return home.
Connecting the Dots
Once you’ve established a list of contacts who are interested in doing business with you, make a chart connecting the needs and offerings of your potential clients. From there, you just need to connect the dots, and you’re on your way.
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Import & Export Business Plans
Did you know each of these plans was created in LivePlan? Learn More
Artificial Flowers Import Business Plan
Fantastic Florals, Inc. imports exclusively handmade flowers by artisans from Indonesia.
Coffee Export Business Plan
Silvera & Sons is an ongoing manufacturing company which prepares green Arabica coffee beans grown in Brazil for exportation to American specialty roasters.
Ethnic Food Import Business Plan
Aztec Food Imports will supply authentic Mexican food imports to Richmond area retail stores and supermarkets.
Export Automobile Parts Business Plan
D.A.P. Exports is an automobile parts and lubricant exporter to Latin American countries.
Export Watch Manufacturer Business Plan
Grutzen Watches will build and import to the U.S. high-quality watches designed by the best German engineers.
Fitness Equipment Business Plan
Circuit Fitness Importing is a start-up business that has been formed to become the exclusive importer of the Wega Corporation’s innovative Esercitazione Diritta fitness equipment.
Furniture Import Business Plan
Poppi Designs' mission is to supply imported Spanish chairs and other furniture items to certain market niches which are not well served by the large domestic manufacturers.
Import Export Business Plan
Visigoth Imports will provide complete import/export brokerage services including purchase contracts, shipping, warehousing, and delivery scheduling.
Vending Services Business Plan
Chef Vending is a start-up vending machine and commercial food and beverage dispensing equipment company.
Give your import/export business a leg up on the competition by writing a winning business plan. Get a head start by checking out these sample business plans for fitness equipment importers, artificial flowers importing, ethnic food imports, furniture importers, and other import/export businesses.
If you’re looking to develop a more modern business plan, we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance to help you develop the perfect plan.
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Home » How to Write a Business Plan for Your Import-Export Business
How to Write a Business Plan for Your Import-Export Business
January 20, 2021
The world is more interconnected than it’s ever been. This provides a perfect opportunity for you to create your own import-export business. Whether it’s importing beautiful textiles from another continent or exporting local Canadian products abroad, all you need is passion and drive to get started.
You probably have plenty of ideas swirling around in your head, but the only way to make your business a reality and ensure your success is to write a winning business plan. Business plans are notoriously long and complex but don’t be disheartened. Here are 6 steps to writing the perfect business plan for your import-export company:
1. Start with an Executive Summary.
Think of this as the ultimate introduction to your business. It should concisely delineate exactly what you want as a business owner. Remember, you need to know where your business is going. It’s up to you to clarify your vision. No one is going to be as passionate about your import-export storefront as you are.
Your executive summary should have:
- Your business concept : what you’ll sell, who will purchase it, and why your business will work
- Financial points : your sales, profits, cash flows, and ROI
- Required finances : what capital is needed and how it will be used
- Current business state : a short history of your business including key members of staff
- Achievements : may include test marketing, facility locations, important contracts, etc.
Keep it short and sweet. Ideally, your executive summary will be no more than half a page. The rest of your business plan is where you’ll go into greater detail about these components.
It might be helpful to go through How to Start an Import Export Business before you create your executive summary to ensure everything is carefully thought out before you present it in your business plan.
2. Include a Business Description.
This is your opportunity to describe exactly what you’re importing or exporting and how it will succeed. Are you importing Congolese avocados? Show how you can guarantee perfect ripeness when they reach stores. Are you exporting blenders to Bolivia? Demonstrate you’ve found the perfect blender to suit the demand of that market.
Here are some questions to consider and incorporate:
- How does the industry look now and how might it change in the future?
- Is your business brand new or already established?
- What kind of business is it (e.g. partnership, corporation)?
- What are the ins and outs of the distribution of your product?
- How is your business better than your competitors?
- What exactly makes your business profitable?
Don’t forget insurance. Investors and lenders need to see you’re responsible and won’t lose money from major oversights. You might think skipping product insurance will help you make more money, but this is a huge mistake in the long run. Find a premium insurance company and include that information in your business description.
3. Conduct a Market Analysis.
Roll up your sleeves—this part takes a lot of effort. If you put the work in and do the research, it will pay off. The point of your market analysis is to demonstrate your knowledge of the market and your ability to claim a significant share of it.
A great market analysis can look like this:
- Define the market : talk about size, trends, rules and regulations, prospective growth areas, and sales potential
- Nail down the total feasible market : specifically address the portion of the market your business can realistically capture
- Estimate market share : take into consideration industry growth and your product’s life cycle
- Determine pricing : discuss your reasons for pricing and how you will cover costs
- Explain your promotion strategy : this includes advertising, packaging, PR, etc.
Factor in exchange rates. As you’re figuring out your price, be sure to include exchange rates in your calculations. Neglecting this could sink your business. You might want to consider using the local currency of the country you’re working with, especially if they use an international currency such as euros or US dollars. Are you planning on exporting to the EU? Don’t miss this helpful guide .
4. Summarize a Competitive Analysis.
Not quite the same as your market analysis, your competitive analysis focuses mainly on the strengths and weaknesses of your competitors. Planning to import Italian cars? Put yourself in your buyer’s shoes. What options do they have for purchasing an Italian car? What are the strengths and weaknesses of each option?
After you make a list of all your potential competitors, you’ll want to organize all the information in a competitive strength grid, which outlines which competitors are strong in each skill category and which ones are weak (e.g. price, product quality).
Lastly, you’ll need to clearly define your competitive advantage. Do you have a lower price point? Are your cars of better quality? Do you have a more solid advertising plan? Can you break into a new market?
Your price equates to your product’s value. If you price your product too far below your competitors, it may cheapen your product in the eyes of consumers. There’s nothing wrong with trying to outpace your competitors in pricing, but make sure you don’t overdo it and cause your customers to overlook your product due to a lower perceived quality.
5. Create a Design & Development Plan.
This is where you focus on details, details, details. How are you going to make your business a reality? Now is your opportunity to get it all on paper.
Here are some questions to answer in this section:
- What are your goals for product development?
- Which procedures will you have in place for product review, marketing, and distribution?
- What is your exact production schedule?
- What’s in your detailed development budget?
- How many employees need to be recruited and in what areas?
- What possible risks are apparent?
- How will your business function on a continuing basis?
- What is the organizational structure of your business?
If you’ve left any of these questions unanswered, you’ll need to add more details.
Don’t go it alone. You might prefer to do everything on your own, but that will only leave you overworked and exhausted. There are so many specifics in the import-export world that you can easily get overwhelmed. Do yourself a favor and hire a team to help.
Are you planning on selling your product on Amazon? Check out these useful logistical tips .
6. Don’t Forget the Financial Data.
When it comes down to it, this is what investors really want to see. This is how they’ll determine whether your business – anything from exporting dresses to importing sailboats – will succeed or not.
You’ll need to include three statements in the financial section:
- Income statement : a simple report on monthly sales and expenses
- Cash flow statement : a schedule of what money is needed and where it will come from
- Balance sheet : a summary of your business’s assets, liabilities, and equity
Let your words be few. You should include a short analysis statement after the income statement, but resist the temptation to ramble. The idea is to let the financial statements in this portion speak for themselves.
Once you’ve finished your business plan, send it out to investors and lenders you’ve already established a connection with. Make big asks—you never know who might say yes! With an excellent import export business plan at your disposal, you’re well on your way to becoming a successful business owner.
BorderBuddy creates importing and exporting solutions for any size of business. We specialize in smoothing the process for you—handling the paperwork and logistics so you can focus on growing your company. We love supporting small businesses and are proud of the success stories we’ve been a part of. Give us a call and let us help you create a unique and sustainable import-export business today.
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How to Start an Import Export Business
Many dedicated entrepreneurs are dying to test the waters of importing and exporting. Import Export businesses can prove challenging and rewarding, so here are some tips to get people started.
By: Brad Nakase, Attorney
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Import & Export: An Overview
Trade is one of our oldest and most valuable traditions and the foundation of our global market change. When we look around us, almost everything, from food and drink to clothes and furniture, can be directly traced back to importing and exporting goods. Our national and global exchange of goods is a constant force powering the US economy and economies across the world. Technically, exports can be described as services and goods produced in a home country and then sold to other markets, and imports are goods and services brought in from a different country. One’s position as an importer or an exporter simply depends on one’s orientation.
International trade is a complex, modern system that has evolved. Import and export businesses deal with the sales, delivery, and distribution of goods from nation to nation. There are vast opportunities for entrepreneurs in this field, but the sheer number and type of businesses can be overwhelming. There are numerous types of import/export businesses, and all of them have different focuses and can be placed in various categories. For individuals interested in leaping importing/exporting, the opportunities are varied. One could focus solely on importing or only on exporting. An individual could start as a merchant, agent, or representative for a specific manufacturer. There are many ways to become involved in what is generally a very lucrative industry.
As our nation and the world become more technologically advanced, international trade becomes more rewarding and accessible. Importing/exporting is worth $1.2 trillion dollars in goods annually, according to the US Dept. of Commerce. Next time you are in the grocery store, take a look at how many products are imported. There is room for entrepreneurs to carve out new niches, and smaller importer/exporter companies are now the businesses that account for most of the trade-in and out of the country. The key is to tap into the vast amount of products that flow from country to country every day in an original and calculated way. Of course, becoming a part of the US trade industry requires a strong plan, intelligence, and dedication, but that is why you are here. If you are interested in starting an import/export business, here are some considerations you will want to make.
1. Starting Out With Importing and Exporting
Let’s begin with the essential considerations hopeful entrepreneurs need to make to get involved in the industry. First, if someone is interested in starting an import/export business, it is helpful to have a business background to fall back on, or perhaps knowledge of global finance, international relations, trade theory, or even public policy. These sorts of interests and academic fields are helpful in draw understanding from when attempting to understand the processes of buying and selling from a company and supplier that is located overseas.
2. The Right Individual for the Job
Not everyone is prepared to enter the turbulent, exciting waters of international trade. Even successful entrepreneurs with a proven track record sometimes do not have what it takes to focus on importing and exporting. An importer/exporter must have impeccable organizational skills and thrive on attention to detail. At the same time, he/she must also be used to making sales pitches to various parties in various parts of the world.
However, if you are enthusiastic, organized, and motivated, you might have a future in international trading. It also helps if he/she is creative, full of new ideas, and ready to travel and experience different cultures. Of course, if the entrepreneur has been building up to this career move and has a background in trading, they will be more prepared for both the highlights and rigors of the position. If you do not have a background in importing/exporting, we suggest you spend plenty of time researching your chosen field and the topic at large so that you are ready to go when the time comes. Keep reading for more knowledge and tips that should prove helpful, even before you get your feet wet.
3. Business Basics
If entrepreneurs are dedicated to starting an import/export business, they may want to review your business basics and know-how. This depends on their level of experience and if they have started or run a business before since there is some overlap. Individuals will want a name for the company that fits their products and is eye-catching. They will want to secure a website and domain name and get established on social media. Registering the business in the state where the business will be located is also on this list, as well as procuring business licenses. Also, starting an import/export business is just like starting any other company: entrepreneurs will need a detailed and comprehensive business plan.
Much of these nuts and bolts can be applied to any new business, yet one unique aspect of an import/export business plan is to make sure that it covers the specific regulations and rules of the market you have chosen. Individuals need to take the time to research the regulations surrounding the goods/products that they have chosen to import or export. Whenever a business is going to deal with other countries, they must take into account additional legal requirements and make sure that everything is coordinated with federal guidelines, including insurance.
Energetic entrepreneurs who are interested in importing exporting will also need access to substantial capital. Depending on the type of company you are starting and what you are importing and/or exporting, a little research into startup costs for a new business can go a long way.
4. Choosing a Product
A crucial next step for a prospective importer/exporter is fairly apparent: what is the product that you want to sell? What industry are you passionate about, and what goods do you think you could sell in international markets or import and sell in your US location? This search depends on the nature of the entrepreneur. What are your interests, and what ideas have your diligent research yielded? While it is always a good idea to follow your passions and work with concepts that you know and are familiar with you, there is another angle to this. Where is the demand? For example, if you are considering importing bicycle tires made of rubber that is exclusively made in Europe, take a step back before placing your first order. Is there enough demand for high-quality bicycle tires in the area (physical or online) where you plan to make your first few sales?
When choosing a product, you may want to consider a few different traits:
- Availability: Where is the product made, and are there places that cannot produce it? How much demand is there for this product in the areas you wish to serve?
- Image: From German beers to Italian pasta, some products come with a sense of image and cachet. Likewise, people will pay more for imports with a certain idea. Where does your product stack up?
- Price: With the main example of Chinese electronics, some products are more inexpensive to import than others, meaning that they might be profitable for you to look into.
Generally, countries that import products that are either produced more efficiently elsewhere have an image that is related to that country or are actually of better quality because of the natural resources or traditions they contain, as is the case with Egyptian cotton. On the other hand, countries export goods that they can produce inexpensively, hoping to create a favorable profit margin. There are two factors that make products easier and less expensive for one country to create than another: technology and resources. Is it any wonder that so much oil comes from the middle east?
5. Target Market
Once you have decided on a product or series of products, the next task is to identify the market. A business simply cannot exist without its customers, so you will need to plan out who your clients will be, where they will be drawn from, and how you will entice them. So, it is back to the books for more research. Market research, if done well, can help increase profits and prepare you for the first day of sales. While the first few months of a new business can always provide challenges, knowing your target market and being able to focus on them makes things easier.
Are you able to spot trends, or is someone on your team able to predict which products will become popular next? Generally, the top products for an importer/exporter are those that are right on the verge of becoming popular. Promising product lines can create a splash for your business when they suddenly catch fire, and you want to be first to the party, not last. Test out your ideas, solicit opinions on your products, and even try giving some away at first for reviews and feedback. All of this preparation will prepare you for your exciting foray into importing/exporting.
6. Research for Marketing
Each of these areas will warrant some deep research:
- The nature of the service or product you plan to sell
- The countries or countries you will deal with/export/import from
- The channel of trade you will employ (distributor, representative, or direct sales)
- The client you have decided on (government, business, mass-market, hospital or medical or others)
Diving into these categories and including some of this information in your business plan will help you to become an informed and competent importer/exporter and increase your chances of quickly becoming a profitable company.
7. Locate and Lock Down Suppliers
Once you have decided on the product you would like to trade, the next step is to locate a local producer or manufacturer that makes your product and discuss partnering up with them. Relationships with suppliers are essential to success. Finding these suppliers can be difficult, but there are companies that allow you to search out specific suppliers and even can help to match you up with them, such as Global Sources. However, it is up to you to show the supplier that you have strong ideas and that there will be benefits for them if they enter the US market (or the market you are selling to).
The goal here is to figure out all of the logistical challenges and requirements associated with moving the product from a local facility to one that might rest on the other side of the globe. However, some importers/exporters become their own suppliers, and if you can create the product yourself and have the proper infrastructure in place, this can be a great option.
8. Products Need Prices
Knowing how much to charge potential customers is essential, but figuring out the exact amounts can be difficult. Generally, entrepreneurs will need to understand both the volume of units sold or what can be expected and the commission their company will gain based on that volume.
To start out, it makes sense to price your products so that the markup, or what will become the commission, does not go over the price a customer is willing to pay. However, making the price too low will sap your expected profits. Balance is key.
Research tells us that in the importer/exporter business, usually, companies go with a 10% to 15% markup over what the manufacturer charges them for the raw product. Do not be afraid to experiment and see where different price points get you; many startups all around you are doing the exact same thing.
9. Startup Costs
One of the first things to understand about being in business for yourself is that you need revenue to make money. Therefore, you need capital in order to afford to begin operating the business you have been working so hard on. Generally, these costs range from $5,000 to more than $25,000 for the import/export business, but this is an approximation since we do not know what type of business you are running. If needed, you can begin with a home office, low inventory, and only a few employees. These considerations will help you hit the ground running without too much overhead. You will need things like a computer, printer, and wifi, but many of us already have these things. Research tells us that many traders begin with a small home office and a laptop and go from there. At first, the two most valuable things you can put towards your business are your work ethic and intelligence.
10. Find Your Customer Base and Ideal Niche
An imports/exports business is just like any other company in that it cannot exist without customers. Again, we’ve discussed finding a target market, but this is different. Whether focused on importing or exporting, a thriving trade business must locate distributors as well as clients that are excited about the product and believe they can sell it to others.
If you have a quality website that includes digital marketing, prospective customers may end up finding you. But to get started, get accustomed to doing some cold-calling. Cold-calling is an alternative to the direct-mail approach and requires a certain amount of dedication. Some experts suggest using a script, especially if you are not used to this sort of call. Be friendly but determined, and deliver the information that you think not only best represents your business but will convince people and companies they should be involved. Also, be yourself, and do not get upset when people hang up or say they are too busy: it happens.
Contact your local associates and like-minded companies, even importer/exporters whom you admire. Also, try your area’s trade associations, embassies, and the Chamber of Commerce. What you are looking for is a list of contacts, including local and national businesses. Then, reach out to distributors who might want to work with you. For example, if you are importing salad dressing, call the local grocery stores. You might just make a quick contact that wants to take a chance on your organic balsamic that comes “all the way from Italy.”
Remember, any sort of manufacturer, crafter, supplier, retailer, or artisan is approachable and in play. When you choose to pursue a certain business, the only true requirement is that they want to move and sell their goods or purchase others’ products. The more you see yourself as the bridge between two parties, the better.
How do you know what products to focus on, then? If you have previous experience in a particular field, this can be helpful because you are already familiar with the procedures, products, and even terms and jargon. All of us speak more confidently and effectively about the things we are familiar with and passionate about, so this will help you in your pitch to prospective buyers or distributors. Also, many entrepreneurs come to the import/export world from other vocations. If an individual still has contacts in a specific field, they should absolutely utilize and exploit those contacts in the new venture.
Lastly: what is your niche? What is your specific category? The more specialized your business, the more unique the goods that you are moving, the more exclusive your company appears, the better. Your category or niche is the unique angle that will set your business apart and let your creativity and industriousness shine.
11. Pay Attention to Detail
The most interesting yet complicated aspect of exporting and importing is taking a product created elsewhere—let’s say, wine from France—and selling it in a completely and utterly different place. Wine drinkers might not contemplate how their French wine showed up in San Diego, California, but importers and exporters will.
Operating as part of a global supply chain is exciting, but it requires a strong plan and top-notch business acumen. Consider the coordination needed to make sure that every aspect of the process occurs on time, for example. New importers/exporters will find that communication is key, as is planning and strong attention to detail.
Another good idea might be hiring a global freight forwarder. This will provide a transport agent for moving your precious cargo and also can save a lot of time and consternation regarding getting products transported from the factory to the warehouse on time.
When dealing with a freight forwarder, seek out the companies with the best reputations since you will be providing them with valuable information about your company and products. In turn, they will arrange and process the insurance, shipping requirements, agreements, quotas that have to do with national and international trade, and sometimes even the permits and tariffs involved. This will allow you to focus on other aspects of coordinating, selling, and even laying down the ground plan for the next shipment. Keeping an eye on the future is key in this business.
12. Documents and Licenses
In order to import goods, certain licenses will need to be procured. These depend on the location of the country you are importing into or exporting from, as well as the nature of your company and its products. In the US, permits and import licenses may be required, and an entry form for Customs and Border Protection is generally always a necessity. In terms of documents, a government-issued form that authorizes your business to legally complete certain import/export functions and transactions is known as an export license. How does a company or individual obtain one? This license will be issued by the appropriate and corresponding agency once your company and its transactions have been reviewed. Here’s where to start: once you have a CIN or company identification number, contact the Department of Commerce.
A Complex Yet Rewarding Process
Research tells us that many import/export companies remain profitable, even with all of the challenges they face. In order to improve your business’s rate of profitability, it is essential to do the research and write—and revise—a detailed business plan. Make sure to really comprehend all of the costs inherent in this type of business since the charges can be numerous, and then figure out your prospective profit margins as you set prices.
The main goal, and the reason that importing/exporting can be lucrative, is that if you can sell your products for a higher price than you paid to the source or vendor, you will profit. If you establish a profitable supply chain and demand for your product and helpful distributors, you may find long-term success. However, there is a lot of work to be done before most importers/exporters reach that point.
Importing/Exporting: A Smart Business Choice? The Bottom Line
To many, the world of exporting and importing can appear exotic and lucrative. In reality, it is based on a lot of research and hard work. However, there will always exist demand on one side of the world for the goods, services, and products that shine on the other side of the globe. Importers/exporters are providing a service and making valuable connections, further spinning the wheel of global trade around and around.
If you are interested in becoming a part of the importing/exporting business, do not let the inherent challenges overwhelm you. The world of trade is open to anyone who is driven and willing to do the work. Conduct your research, write a top-notch business plan, document your successes and failures, and celebrate the milestones. You just might launch the next wildly successful importing/exporting business.
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Import Export Business Plan: Everything You Need to Know
Making an import export business plan requires funds, time, and determination, but it's worth the effort. 3 min read
Making an import export business plan requires funds, time, and determination, but it's worth the effort. Especially, an export business plan is the key to success.
If you have an import-export business, it's essential to understand how to make an import-export business plan. You can work with your team to create an import-export business plan. You can also use online software to make a business plan for you automatically. However, you must know your requirements.
You should know your company well in order to align your resources and objectives with your business goals.
Things to Consider Before Writing an Import-Export Business Plan
1. Advertise Online
Almost all businesses must have a quality website. It's impossible to attract foreign customers without having an online presence. Set up a website with information about your offerings.
If you are planning to sell your products in another country, your website must be targeted at foreign clients. Have a working contact form on your website to make yourself reachable to the prospective customers. You may have to spend several hours online responding to inquiries, but it's worth it.
2. Conduct Market Research
It's important to know your target market before you start selling. Conduct a market research to understand your commercial environment. Find out whether there are any entry barriers.
Know the standards and specifications of your target market to increase your profits. Estimate the size of the market, and know your major competitors. If you conclude that you don't have any competitors, you might have done your research wrong.
It's a good idea to offer something that your local competitors don't. A little but serious research can help you identify and exploit the opportunities present in the market.
You can find most of the information online. Reading marketing books can also provide some helpful insights. Consider building up a team of co-workers so different members can specialize in different fields to complement one another.
3. Create a Package
The look of your product can make all the difference between success and failure. However good your product is, you will struggle to sell it without good packaging and marketing.
Have attractive packaging for your product, and come up with special offers. Try to make your package notably different from your competitors. Remember that originality is an essential aspect of packaging.
4. Adjust to the Foreign Market
Position your product according to the demand of the foreign market. Your offering should meet the expectations of your customers. You may have to create special products for different countries. It may mean making additional investment, but it can be an important factor contributing to your success. You will also need to adapt your business policies to go with the regulations of the new market.
5. Stay Connected With Your Customers
In the end, your financial success depends upon your customers. Hence, you must be aware of their expectations and preferences. Keeping in touch with your customers is the best way to understand their requirements.
Consider adding a chat application on your website. Include your personal information such as email, address, and phone number. You may want to adjust the information depending upon your method of communication.
It's a good idea to visit your customers regularly, or at least connect virtually through Skype calls. Personalize your relationship with your customers; you should be yielding and compromising when required.
6. Make Necessary Investments
- You will need money to make more money.
- You will have to invest in quality products to grow your sales.
- You will also need to invest in promotion and advertisement.
- Have necessary allocations in your budget for different types of investments.
- Be sure to update and fine-tune your budget every month.
- You should always be on the lookout for investment opportunities to develop and strengthen your business.
- Make use of cost-effective tools and programs for lead generation.
- Consider placing ads on search engines (Google, Bing, etc.) and social media platforms (Facebook, Twitter, LinkedIn, etc.).
7. Participate in Trade Shows
It's a good way to get known to international customers, especially if your product is difficult to sell or such that the customers need to see it before buying.
8. Know Your Product
- Know your product well. Respond to customer inquiries swiftly and accurately.
- Give information about your production facilities, capacity, product quality, price, and shipping.
- In case of a service, provide information such as your field of expertise, portfolio, clients served, fee structure, turnaround time, etc.
If you need help with an import export business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
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