How To Do Import and Export: Everything You Need to Know
To learn how to do import and export, you want to first find a product or service to offer to your customers.3 min read
To learn how to do import and export, you want to first find a product or service to offer to your customers. To pick something that will sell somewhere, if not everywhere, you need a sense of what's trending or even a touch for creating trends of your own. You also want to consider who you want to serve and areas of the world.
Types of Import and Export Businesses
- An export trading company (ETC) identifies what foreign shoppers are looking for and then finds domestic companies that can provide those goods.
- An export management company (EMC) handles the shipping of goods overseas for other companies. It takes care of details like hiring distributors, logistics, and putting together marketing materials.
- A free agent, also called an import/export merchant, buys products from foreign or domestic factories and then resells them all over the world.
How to Start an Import/Export Business
You'll have some upfront expenses to start your business, including a phone line and an internet connection, business cards, and a website. These expenses will have to be calculated into your pricing to make sure you make a profit.
Your import/export business must meet licensure and regulatory requirements. The United States Department of State has a process called SNAP-R for business registrations. When you submit your information, the Department will email you instructions on how to get a company identification number (CIN) for tax purposes. You'll use this same number to register with the United States Department of Commerce.
Pricing Your Products or Services
Competitive pricing is important when you're starting out in the import and export business. You must build in your profit when you're setting your markup. Consider these factors.
- Is your product unique and/or new? If you are first to market or newly available, you can charge more.
- Is what you're selling of low, average, or high quality? The more upscale the product, the higher you can price it.
- What is your cost? If the product is expensive on the wholesale market, you'll have to go with a lower markup percentage.
- Did you find the customer, or did the customer come to you? If the buyer sought you out, it's likely he's willing to pay a higher price.
- How is your product positioned in the market? Make sure you're putting the best image forward so you can charge more and increase your profits.
- Are you selling directly to the end user, or are you a wholesaler selling to retailers? Selling directly means you can charge more by eliminating the middleman.
- How competitive is the market? If you have many competitors, you'll have to consider at what price similar products are selling.
- How heavily regulated by the government is your industry? Strict regulations impact your cost and therefore your pricing.
- Is your product or service endorsed by a celebrity? A well-known spokesperson makes it possible for you to charge more.
Controlling the Finances of Import and Export
In the import and export business, just as in any other kind of business, you can't wait until the end of the year to figure out whether you made or lost money. Monthly financial reports, such as income statements, balance sheets, and cash flow statements, will ensure that you know how much you're profiting or losing at any given time.
If you're just getting started with your business and you haven't made any sales yet, it may seem odd to think about detailed financial records. However, even at this early stage, you're probably already spending money in an effort to get your business off the ground. It's important to keep track of these expenses so you can work toward building capital.
Even after you've been up and running for a while, it's still important to keep up with the expenses and income carefully. If you need to apply for a bank loan to help you grow, the financial institution will use those statements to decide if you're a good credit risk. The loan officer will evaluate your profit and loss statements, annual sales, expenses, and other relevant data. If you can have these prepared by an accountant or a reputable firm, that gives them greater credibility.
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