There are hardly any countries that do not engage in international trade at some level. It therefore should not come as a surprise that the viability of the import export business remains quite high. The import export export business is very profitable. Nevertheless; the widely held view is that the import export business is so demanding in terms of capital injections and logistical organization that it could be a no-go area for small scale entrepreneurs. This article challenges those perceptions by describing the possibilities of the business regardless of how limited your initial resources are. The fact that overhead costs are relatively low, lends itself to people who are not able to raise capital quickly. Instead the crux of the business is the ability to sell your concepts and build relationships with your clients. This article explains how to start a profitable import export business.
Legalities and procedures in focus
The local revenue authorities will take a keen interest in the operation of the import export business. This is because of the direct and indirect tax revenue that arises from imports and exports. The implication is that the paperwork burden will be considerably greater than one would expect for other low revenue businesses.
First of all, you need an export and import certificate. Secondly you must ensure that all the goods that are being moved have clearance. The clearance should be at the point of origin; the itinerary; and the point of destination. The best way to think about it is a kind of visa system for goods that cross borders. The state will often rely on import export businesses to implement policies within this area. Therefore, record keeping is of the utmost importance.
The import export business industry has been associated with tax evasion and smuggling. As a result, the registration process for import export businesses is quite detailed and complex. Not only do you require a myriad of permits to operate; there will also be differentiated licensing arrangements. Some countries like the USA have rescinded the requirement for a license in order to ease the pathways for import export businesses. It is best if you carefully review all the material that relates to the procedures within a particular country before proceeding. Watch out for any control lists. This ensures that you do not engage in merchandise that is going to slow down the entirety of your transactional chain.
Import Export Business formats and configurations
There are three major sub categories that are open to you:
- Export Management: These are companies which enter into partnerships with domestic sellers for the purpose of establishing links with foreign buyers. The domestic companies that are part of the arrangement are typically very limited in number. They tend to work together for a very long time.
- Export Trading: Under this arrangement you are required to provide services to foreign buyers who may want to access goods within the domestic market. This is a business configuration that requires you to do local market research so that you can match the right buyer to the right seller.
- Import and Export Merchant: This business configuration requires you to buy your own local/foreign goods before reselling them in a local/foreign market. Under this arrangement your will be liable for all the profits and losses that accrue throughout the process; so it is a rather risky venture.
Selecting the right niche and cultivating it
It is advisable to start off with a small niche that is specialized enough to attract loyal customers. However, it should not be so obscure as to be invisible to the industry as a whole. The specialization can be by route, destination, origin or product. The reason why you start off in this way is to gain the right experience. Eventually you will then be able to engage in the more competitive merchandise. Some of the niches that have worked for new entrants include relatively cheap staple foods like rice. Such products may not be readily available in the domestic market due to weather or seasonal changes. The ones that have a longer shelf life are a better option.
The niche is a conduit for much bigger things. During that time; you must ensure that you construct your brand around efficiency, affordability and reliability. Ensure that you retain contacts for all current, past and potential clients. This is your database of relationships that will eventually take your import export business to the next level. The marketing campaigns that you undertake during this phase are some of the most intriguing and rewarding regardless of the size of the business. You will be required to do direct sales and persuade customers that you have a better deal than the bigger importers/exporters. The power of the internet can complement good old fashioned marketing techniques.
Make sure you have a comprehensive import export business plan
The failure to plan is the beginning of business failure. The import export business plan must be clear and succinct enough to give your potential partners, clients and investors an overview of what your objectives are. At the same time, it must be detailed enough to explain the nuances of the business that you propose. At the very minimum you need to have the following included:
- The mission, vision and operational strategy
- Market Analysis And Customer Segmentation
- A business case showing that the business is financial viable and sustainable
- A marketing and customer care plan
- An organizational chart and human resource policy
- A three-year expansion outlook
- A risk and rewards Analysis
You will need to make an informed decision about the business type that you will adopt for your company. For example, you may decide to be a sole owner or may open up a Limited Liability Company (LLC) or even a Public Limited Company (PLC). Each of these options requires very specific application processes for permits and registrations. The business type you select will determine who owns, runs and supervises the operations of the company. It’s also better to have a website for your import export business.
Take care of the Import Export Business Financials
Remarkably, the import export business does not always require a lot of cash to start as long as you are not engaged in direct buying and selling. The overheads are modest. You could request a renewable line of credit to support your applications. Visit the small business associations, support groups and the chamber of commerce. This ensures that you gain an insight into the kinds of costs that your colleagues in the industry typically encounter. They will also introduce you to the bureaucratic forms and procedures that you are supposed to follow in order to get your business properly registered. Some people have been able to start an import export business with little more than $50,000. The real difficulty is in identifying, building and making use of business relationships within the industry.
Final overview of the industry prospects
The import-export business remains an attractive option for small investors. On an annual basis importers and exporters handle goods worth trillions of dollars. The range of products that are being imported and exported is constantly growing. The larger companies only make up 4% of export activity . Thus there is plenty of room for the small guys to join the fray. As people engage in the business, they are developing vital expertise that would be invaluable to an entrepreneur that is just starting out in this sector. The world is opening up; travel is becoming easier; and the consumer society is in its full swing. This is the time to get going with an import export business model.
We wish you the best in your import export business! Check out our collection of business plans , and more business ideas.
