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Your 6-Step Guide to Starting an Import Export Business

Import export

Hi everyone, Eric Goldschein here from Fundera, and I want to talk to you about starting an

import/export business.

No matter what’s going on with the global economy, there is always going to be an import-export

market.

Whether we’re talking capital goods, consumer goods, equipment, food and beverage, or any

other category, importing and exporting is an industry worth hundreds of billions of

dollars.

That’s because, for almost as long as there have people, there’s been trade.

Importing and exporting is how you’re able to get clothing from China, olive oil from

Spain, cars from Germany, and so on.

So if you’ve identified a product that you think could be a hit in another market, it’s

time to explore how you can import and/or export it, and make this into a business.

Keep in mind, there’s more than one type of import/export business.

You could start an export management company, or EMC, which exports goods for a domestic

business that wants to sell to a different market.

An EMC hires dealers, invoices all the necessary parties, and deals with things like advertising,

marketing, packaging, shipping, fin ancing, and more.

You could also go the other direction and start an export trading company, or ETC.

An ETC figures out what foreign markets want, and then finds domestic sources that can deliver

that product.

You could also become an import/export merchant, purchasing goods from a manufacturer and then

packing and shipping those goods on your own.

Here, you assume all the risks and all the rewards of selling that product overseas.

Regardless of what you’re looking to do, there are some steps that every import/export

business must take.

So where do you start?

Here are the six steps to starting your own import/export business.

1.

STEP ONE: Cover the Business Basics So here’s your first step: Get the basics

in order.

This means registering your business with the state where 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 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 can take months to acquire.

Similar research needs to be done when doing business with other countries, covering everything

from legal back label requirements to insurance.

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’s Foreign Trade page.

Perhaps most importantly, you need access to capital.

Startup costs can vary greatly depending on the type of imports/exports business you start.

Everyone knows it takes money to make money, so it’s helpful to have capital on hand

when you’re getting started.

Look into a business credit card with a 0% introductory APR offer if you qualify, or

a startup loan or line of credit, to get you going.

STEP TWO: Identify what you’ll import or export, as well as your market

This step goes along with step one, because in order to write your business plan and understand

what regulations you’ll need to follow, you’ll need to know what you’re importing

or exporting.

If you’re getting into this business, it’s either because you have a passion for international

business, or you’ve identified a product that would shine in another market, or both.

So let’s assume the former is your reason for getting into this business.

What are you going to export from your home market to another?

Maybe it’s wine from South Africa to the United States, or buffalo wing sauce from

the U.S. to Europe.

You’ll typically want a deep familiarity with both the product you want to import/export,

the market you’re targeting, or both.

That way you’ll understand the value proposition of what you’re selling, and any jargon or

industry-or-market-specific talk that will help you stand out in a crowd of other importers

and exporters.

Market research is a big undertaking, but the basic questions you’ll want to answer

include: 1.

what is the product or service you want to sell?

2.

Who is your target market or end user—is it the mass-market consumer, or for use by

businesses or governments?

3.

What country or countries will you import from or export to?

4.

Finally, who will be your trade partners?

Your trade partners could be a manufacturer’s representative, wholesale distributors, or

retailers on either side of the importing or exporting process.

These are the people you’ll deal with, so you’re not just buying up caviar in France,

putting it in a box that says “USA” and expecting someone to buy it when it hits the

ports.

STEP THREE: Source your suppliers When you get in touch with a wholesaler or

manufacturer’s representative, you’ll have a bead on a supplier for your product.

Generally, you can also find suppliers through companies like Alibaba, Global Sources, and

Thomas Register.

You will need to convince your potential 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.

Maybe you’ll become your own supplier.

You can investigate what it could cost to buy an interest in the product or service

you want to import or export, giving yourself an added incentive to find an international

home for the goods that you now have a vested interest in.

STEP FOUR: 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.

You might also get paid with a salary or a flat retainer plus commission if you are an

EMC.

But you don’t want to make it too low, so that you won’t make a profit.

Your overhead and the specifics of what you’re importing or exporting—its price, its cachet,

its availability—will play huge roles in dictating your price, of course.

In this industry,

Step FIVE: Identify your customers

It’s one thing to have an idea of who your customers are or what your target market is,

but it’s another thing to actually get them on the line and have them agree to buy from

you, or sell to you.

Again, you can’t just send your products to the Port of New York and start selling

your wares to whomever walks by.

You usually need to find distributors and clients, and there are a few ways to do that.

If you have a quality website that includes digital marketing campaigns, your customers

may end up finding you.

Cold-calling is also a time-honored and useful tactic.

Check with any local contacts you have in the area, or contact the region’s Chamber

of Commerce, trade consulates, embassies, and so on.

These organizations and offices might be able to give you a local contact list that could

be vital help in starting a imports/exports business.

Step six: Finalize the logistics

This is your biggest and most complicated step, and the one that covers a variety of

bases, from finalizing your supply chain to potentially moving into an office space if

you’ve started out as a home-based business.

This step will also be markedly different depending on what kind of import/export business

you decided to start.

If you are an import/export merchant, you may want to get in touch with a global freight

forwarder to 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.

You’ll give them information about your business and your intentions for the product,

and they’ll arrange the shipping agreements, insurance, and even the licenses, permits,

tariffs, and quotas of working within another country.

If you’re an EMC or ETC, you might do all of these processes in-house, and need to worry

instead about putting money and time towards marketing your services, or renting out commercial

office space as your operation grows.

Essentially, you need to start thinking about importing and exporting as a business, not

just as a series of transactions, and make suThanks for watching.

re that you’re taking all the steps necessary to remain profitable in the months and years

to come.

Joining an import/export association, finding a mentor in this space, and getting in touch

with local and federal government agencies will be a huge help in making this happen

for you.

Outro That about covers the basics of starting an

import/export business.

It’s a complex topic that requires a ton of research and hard work, but the thrill

of making your services a part of the framework of international trade can make it all worth

it.

Let us know if you have any questions or comments down below, and subscribe to our channel for

more insights into starting or growing any kind of business.

Also, visit us at fundera.com/blog for even more information on every aspect of entrepreneurship.