Six steps to starting an Import/Export Business (With Frequently Asked Questions)

For the longest time that people have existed on this earth, there have been trading activities. The potato found its way into Ireland through import and export activities. In a more modern perception, importation and exportation are how we can purchase furniture, drinks, food, clothing, and almost everything else we need to survive. So, what are imports? They are goods and services that a country brings in from other countries. On the other side, exports are services and goods that a home country produces for sale to other outside border markets.

Today, the international trade system is a complex web of export and import businesses handling distribution, delivery, and sale of goods and services between countries. With the growth of Import and export businesses, the shipping companies also face an increasing demand for their services. White Star Logistics offer a wide range of shipping options, including air, sea, and land transportation, as well as logistics solutions, to ensure the smooth flow of goods from one corner of the world to another. 

So, are you intending to launch a business in the import/export industry?

It is paramount to learn the types of import/export business. For example, you can focus on importing only or exporting only. Alternatively, you can be a particular manufacturer’s representative or an import/export agent or merchant who is more of a freelance broker.

This insightful piece highlights the six critical steps to help you start an import/export business.

But first, what does it take to start an import or export business?

Launching and import/export business

If your interests direct you to start an import or export business, you need to make a ton of considerations, like you would for any other business type. When it comes to an import/export business, it is vital to have background knowledge in global finance, business, and international relations. 

With all that said, here are the six essential steps to launching an import/export business successfully.

1. Get your entire business fundamentals in order.

We are living in the 21st century, and starting any business demands coverage of some certain bases. For example, begin by creating a business website without forgetting multiple social media channels like Twitter, Facebook, and Instagram. So, generally, the first step to starting an import/export business is getting all the basics in order. This step means you have to register your import/export business with the country where its headquarters will be situated. It also includes obtaining any business licenses your business needs to operate legally. Registering a domain name is also crucial.

Please don’t forget to create an import/export business plan. Why? Partly, your business plan will aid in covering how to deal with the regulations and rules of the international markets you intend to work in. let’s assume you want to import alcohol and tobacco products into the United States of America. In that case, you will require an Alcohol and Tobacco Trade and Tax Bureau permit. Although this permit document is free, it can take months to acquire it.

When doing business with other states, you need to do similar research, considering everything from insurance to legal back label requirements in every country. And most importantly, you need proper access to startup capital. In most cases, startup costs vary based on the type of export/import business you decide to venture. Here, the recommendation is to have your capital upfront. Having capital upfront when starting an international trade business helps you protect it from a legal standpoint and the brand’s equity that you will create. It also helps in ensuring that you invest in the quality of whatever import/export business you launch.

Experts in international trading suggest newcomers should begin by testing a market or a city and then graduate to testing a state and finally a region. That way, you will have greater chances for long-term sustainability and success.

2. Pick a specific product to export or import.

The next stage to beginning an import or export business lies with finding an industry or product you think has higher chances of selling in the international markets. You could also be following your passion as many people are passionate about international trade and end up profiting from it.

For example, you might be passionate about wine, connecting to wine and wine products from the quality and taste standpoint to social justice perspective. And after identifying the product that you intend to export or import, it would also help if you establish the right market for your product. After all, your import/export business needs customers for sustainable growth and development. Identifying the ideal market for your import/export business is where your trend-spotting skills come in.

From an expert point of view, the perfect products to deal with in an import/export business are those beginning to become popular in a region, thus showing some promises and signs of being more popular soon.

On that note, conducting your research by checking with local government websites and officials like the data and analysis of the Department of Commerce International Trade Administration can be helpful. Additionally, resources such as GlobalEDGE’s Market Potential Index can also help with your research. That’s not all. Reports on the position of the exports/imports industry are also accessible with the Census Bureau Foreign Trade.

3. Begin Sourcing your Suppliers

Now that you have a specific product that you intend to trade internationally, the recommendation is to look for a local manufacturer that produces your product. It would also help to find a local manufacturer with high chances of leading to a stronger partnership in the long run. Today, most imports/exports businesses significantly depend on good relationships with their suppliers to achieve long-term success in the industry.

And finding suppliers isn’t that challenging, especially with the ever-evolving technology. Companies such as Global Sources, Thomas Register, and Alibaba can help you find reliable suppliers for your export/import business. However, one thing is for sure; you will have to convince your supplier of choice of the advantages of entering America’s market, for instance. Or any other identified market you intend to trade with. You will also have to work out the logistics of taking your supplier’s products from their local production facility or warehouse to another warehouse, potentially on the other side of the earth.

But an export/import business doesn’t limit you to sourcing suppliers only. As is evident with many international entrepreneurs, you can also decide and be your own supplier. For example, still in the case of exporting or importing wine, you can own an interest in a vineyard.

4. Price your product

So far, as a newcomer in the import/export business, you have identified the product that you want to trade. You have also established your target market and sourced the best suppliers for your goods or services. So, what next? It would be best if you comprehended how much you would charge.

Typically, an imports/exports business features a business model that includes two primary understandings;

• The volume of units that you have sold, and
• The commission that you make on that volume.

Now, at this point, you must carefully price your goods or services so that what ends up being your commission is not more than what a customer is willing to pay. But also ensure you do not make it too low to the point that it will be tricky to make a profit.

Usually, in the exports and imports industry, exporters and importers take approximately 10% to 15% markup above the manufacturer’s product price when buying the raw commodity.

5. Finding your customers

The second last and most fundamental step to launching your own imports/exports business is finding the customers to whom you will sell the goods or services. It is essential to note that deciding on a market varies significantly from finding the right customers. How? It is because you cannot just freight transport your goods to the Port of New York and begin trading them on the docks to anyone who walks by. You need to find and set up a distributor and client network that will receive your products and sell them to the final consumers.

The process gets even easier if you own a quality business website that features digital marketing campaigns because your customers might end up locating you even before you locate them. But to get started, it would be best to do things the old-fashioned way through cold-calling. So, you can check with any locals in the region. For instance, you can contact the area’s trade consulates, embassies, Chamber of Commerce, and other local contacts. Contacting these entities works to your advantage because they might offer you a local contact list that could be of critical help in maintaining a steady commodity flow throughout your export/import business.

6. Getting the logistics down

Maybe the whole idea of importing and exporting tends to become complex when you start to deal with the logistics of taking a product manufactured somewhere and selling it overseas. For example, how do you plan to freight transport the product from a South Africa’s vineyard to drinkers’ wine glasses in California, the United States of America?

Sometimes in the export and import industry, you might find yourself operating within a supply chain where your client is different from your customer, who is also different from your final consumer. In that case, you need to have an extraordinary coordination amount. So, you can use a freight forwarder to reach out to shipping lines like Maersk on your behalf.

Hiring global freight forwarders generally comes with added benefits for exports/imports businesses. An international freight forwarder will serve as an onsite transport agent for your moving cargo, thereby saving you a lot of worry about sending your products from the local factory to a warehouse. A global freight forwarder will also save you a lot of time. Essentially, all you have to do as an export/import business owner is to provide your freight forwarder with information about your business and what you intend to do with the product you are shipping. They will arrange the insurance, shipping agreements, and often tariffs, quotas, permits, and operating licenses within another country.

Frequently Asked Questions (FAQs)

1. What do networking skills have to do with importation/exportation?

One of the most critical skills to possess as an import/export manager and as a business person is to network efficiently and interact with multiple people in the industry. An import/export manager interacts and coordinates various stakeholders, including vendors, transport service providers, and customs officials who represent government agencies. For the business to have smooth running, these relationships must be nurtured and most crucially maintained. Appropriately harnessing networking skills will come in handy to create long-lasting relationships with other business people in different positions.

Additionally, due to the emergence and growth of technology, social media platforms also facilitate easy connections to customers. Also, as an import/export manager, you get a platform to showcase your business profile ideas and invite people for events.

2. Communication Skills; Are they important in an import/export business?

Since an import/export manager deals with many people in their field of delivering services, they, in turn, need to possess exceptional communication skills. Their ways of communicating should be clear and concise to avoid misunderstandings and misinterpretations of what they mean. Therefore, on should be able to adapt to their environments and, most crucially, the person they are communicating to at every instance. For instance, how one communicates with government officials is entirely different from communicating with potential customers. Since all these relationships are essential to the import/export manager, it is crucial to adopt ways to make them feel as such.

Apart from passing on the message, it is essential for the people they interact with to feel heard and understood. Once they articulate their wishes and desires, they need to feel that you will consider their input.

3. Do I need to understand finance and budgets?

Yes. Financial literacy is one of the building blocks for any successful business, a factor that anyone who has been in business is aware of. Consequently, this holds for import/export managers as well. Apart from possessing financial literacy, import/export managers must have the ability to discern accounting systems and be an addition to the budgeting process. Budgeting helps managers set business goals and priorities for any financial year. Some of the primary responsibilities of import/export managers are determining the budgets, drafting expenditure reports, and ensuring that the teams stick to the approved budgets. Financial literacy is critical for import/export managers when working with small businesses since such institutions often have financial constraints; thus, any extra expenditure could hurt their business.

4. What is the importance of understanding International Trade Compliance Requirements?

Trade compliance is the process of conforming to the laws and regulations of the trade agreement and the country in question by understanding and practicing them. The import/export trade has strict and complex rules depending on the country that one is dealing with. Although most countries have similar laws, some differ significantly depending on the cargo. In most institutions, the responsibility of trade compliance falls under the jurisdiction of the import/export manager. Thus, they should ensure that even their employees are familiar with the country’s laws and regulations even after the government updates them.

5. Why should importers/exporters have the ability to handle stress?

The logistics industry has many unforeseen scenarios; thus, the import and export manager will often find themselves in the position to make quick and crucial decisions under pressure. Therefore, you should be able to handle complicated and stressful situations without losing your cool and, at the same time, instill confidence in those around you even when things are going wrong.

Bottom Line

Ultimately, following the above six steps can help you get rid of headaches related to launching an imports/exports business in the international trade market.