International trade is one of the most attractive avenues for starting a new venture as dealing in merchandise that is in short supply in one country but can be found in abundance in another usually guarantees high returns on investment. The complexities involved in starting such a venture make it a somewhat risky proposition, which makes planning in advance and understanding all the aspects of the business necessary. In this article we are providing some tips to start your import-export business which will be helpful in devising a road-map for the new venture.
✅ Determine The Products You Want To Trade
The products you want to sell must be determined after taking into consideration factors like whether you need to purchase those items from somewhere or they can be manufactured at a facility owned by you. A commodity that can be used for a trade of this nature is usually not available in the target market or it can be produced at a low cost in a place other than the intended market. Another factor needed to be considered before zeroing in on a commodity that can be imported/exported is that it should be unique or superior in quality than your competitor’s goods besides being priced at a lower rate. A locally produced item that is renowned for its quality can also be chosen for the purpose of this type of trade.
✅ Identify And Assess Your Target Market
Any business is based on the principle of demand and supply and identifying an ideal target market where the demand for your chosen product is high is essential for your venture to flourish. Another important factor apart from the requirement of commodity is pricing advantage which is essential for generating profits. Besides, local currency rates, rules and regulations and secure payment procedures are some other vital considerations that must be kept in mind during the market identification process. A thorough research before starting a business is a must for understanding the dynamics of the chosen market. Visiting events like trade shows and conferences will be beneficial for analyzing the expected competition as well as for finding out potential partners.
✅ Estimate The Costs Involved In Starting The Venture
An estimation of the costs required for beginning the new enterprise needs to be done in order to identify the appropriate sources of funding. An existing commercial organization does not require substantial investment with the expenses limited mainly to procurement or manufacturing and establishing of the network in the target country. On the other hand, a startup requires money for infrastructure as well as operations making the amount of investment to be of a significant proportion. It will be wise for such enterprises to start on a small scale in the beginning and check out the customer response before scaling up the operations.
✅ Understand All The Compliance Requirements
This is one of the most important tips to start your import-export business as awareness of all the legal and governmental compliance requirements is necessary to prevent any problems in future. Most entrepreneurs involved in such trade are expected to get import export code registration online apart from obtaining any other licenses which may be necessitated due to the nature of the product. Startups must also decide upon the legal type of their organization and get it incorporated with the requisite government agency. Engaging professional business registration service providers at home as well as abroad will be helpful in meeting the compliance requirements of both the nations.
✅ Outline And Plan The Operations
Draft a plan for the operations of the venture which involve the acquiring of a product and then transporting it to another country for selling. Whether an importer or exporter, the steps are the same and a competent partner in the foreign nation is needed for efficient conducting of business who will take care of all aspects like storage and transportation in that region. Having a website and internet based system for communication will be advantageous as it will save time as well as money. The nature of the commodity and the distance between the two locations will dictate the mode of shipping as perishable goods need to be moved quickly, requiring transfer by air while other items can be sent by sea which is a cheaper option.
✅ Devise A Pricing And Payment System
International trade has its own dynamics with foreign exchange risk involved in the form of fluctuations in the value of different currencies and a suitable one must be chosen for pricing the goods and for making or accepting payments. Frame clear and precise terms of payment and insist on their strict adherence at all times. You will have to involve banks in both locations for setting up money transfer facilities like letters of credit and choose a financial institution that has experience in the field.
A commercial venture of this nature can be extremely profitable with amazing opportunities for growth but it requires the preparation of a comprehensive blueprint before starting the enterprise and these tips to start your import-export business will provide the necessary guidance for framing a plan.