Starting an Import-export business is relatively straightforward and easy if you are following step-by-step guide. Still, it can be a daunting task to get started in import-export business if you are new to the entrepreneurship.
There are lot theoretical stuff and books out there about this topic. But the fact is – there is a lack of practical information about the real action-steps what one needs to take to get started in import-export business.
There is a lack of great and practical import-export training programs
In this article, you can get an overview of the practical steps in the right order for starting an import-export business of your own, Lets dive in!
12 Practical steps for starting an import-export business
1.Before starting an import-export business, decide export or import?
Your first lesson is to decide, are you going to export or import? If you are from developing country, let’s say from India, then most probably it’s easier for starting exporting business. India has a lot of products what all could be exported to the western countries. Exporting out is always easier for you than importing, If you are from the developing world.
If you are more interested in starting importing business, then you should already have a plan. You should know to whom you are going to resell your products, after imported. Also If importing, then you should already be sure, what products you are going to import.
Generally, for people from developing countries, it’s easier to start exporting business. For people from developed countries, like USA, UK, EU it is easier to start importing business.
If you are passionate about importing, then we have a case study, which shows you step by step, how we made 100,000 USD profit trough importing from China. You can learn from this and start your own importing business as well.
In this article, we focus mostly on the exporting side.
2. Learn about your country exporting sectors
Every country has its own export sectors and import sectors. You should learn what your country is exporting.
If your country exports something, then it means, that your country has a relative advantage with this type of products.
In case your country exports something, then this means, that the companies in your country what are exporting, are also making a good profit. If they can make profit and export, then it means you can do the same.
It’s important to learn about export sectors in your country because you should choose the products for export from these sectors. There are many ways, to make sure the export sectors.
You can ask information from your country trade bureau or similar institution. You can find the information online. Below is the screenshot of the Indias top export sectors of 2014, from Wikipedia.
Before starting an import-export business, make sure your country exports/imports
If you are from India or some other Asian country, then before starting an import-export business, you should make a list of the possible products what you could export abroad.
Attention new entrepreneur! Learn, how you can make money in import-export business, enroll our 100% FREE mini-course below:
3.Choose the best product for export
After you have a general list of the potential export products, then you should niche down and choose the best products for you, personally. Selecting the right product(s) for export means, it must meet the two criteria.
3.1. Product must be suitable for you
Only choose this kind of products and items about what you personally know a lot or have experiences with. You should not choose the product about what you don’t know anything. At least you should have interest in the product, so you are motivated to learn about it.
Choose the product(s) what are well suited for your personal background or education. Example, if you are a technical person, let say, engineer, then you can deal with electronics, machines, equipment, raw materials.
If you are the person who likes beauty, fashion, then consider clothes, fashion products.
So, niche more down, and make a sublist of the products that fit you personally and then take the next criteria below.
To help you find best items for your import-export business, we have the article about the best import-export business opportunities. This article lists you some of the most profitable items for exporting and importing if you are from India or some other developing country.
3.2. Select products what has biggest profit potential
Now, after you have a sublist of the products that best fit for you, it’s time to select the most promising ones out from there. You should make sure what are the potential profit margins for your products.
You need to compare the selling prices ( export prices) and the local prices what potential suppliers can give to you in your country. Selling prices you can easily check in Alibaba, just type the product name there and compare the prices of gold suppliers.
Then ask quotations from your suppliers in your country. Ask quotations from many suppliers, so you have many offers and you can easily make sure the local price.
Finally, you should have a new sub-list of the products what are the best fit for you and has also high-profit potential. I have written one in-depth article, about how to choose the best products for export, read here.
4. Establish company, apply export license etc
Now, after you have a profitable product(s) selected for your future business, it’s time to establish the real company and all acquire other relevant things.
You can choose the name for your export-import company and register the company. Also, you need to organize and apply following for your business:
- Register private limited company
- Open bank account for your business
- apply for export-import licenses
- Create a website for your business
- Make visit cards
It’s often easier to hire someone to do the registration and license applications for you, same with the website and design.
After this step, you are officially ready for starting an import-export business.
NB! For starting an import-export business successfully, there are 3 most important questions, your lesson is to find answers to them. Three most important questions are as follow:
- What product(s) to export or import? “Handled in chapter 3”
- To where should you export or import from? Chapter 5″
- How to find buyers? “Chapter 6”
5. Decide your target market(s)
After you have been selected product(s) for your export business, it’s time to also make sure the right target markets for you. If you are from India or from another developing country, then you should consider exporting to the developed countries and especially to the European Union.
It’s good to use the google to find information about your country greatest export markets. Below is a chart from Wikipedia. You can see, that Indias greatest export market is the European Union.
Before starting an import-export business, make sure your target markets!
About 5 years ago, the situation was different, then the European Union was maybe at the fifth position. Now, because of the rising costs in China, Chinese exports to the EU is decreasing and India is replacing it.
NB! Now its excellent time for people from India and other fast-developing Asian countries to start exporting to the European Union.
The European Union should be your no 1 target market for export, read more about why you should export to Europe, here.
6. Start looking for the customers ( buyers)
There are online ways and offline ways for finding and identifying the sincere buyers. The best option is to combine both. with online methods, you can find the raw-contacts and start first communication with the potential buyers.
For online methods, I suggest following:
- use bigger online marketplaces, such like Alibaba, Indiamart, and Tradekey. It’s enough when you use one of them.
- Social media. In social media platforms, like Linkedin, twitter, facebook, there are special groups. There are different kinds of export-import business groups. You can join with them and post your leads there.
- Experts and freelance portals. I suggest using Upwork.com, Freelancer.com, Clarity.fm. From previous sites, you can post your inquiries and projects. You can find people from there who can help you for sourcing the buyers for you.
- Use your website, make it attractive to the buyers you are looking for. Make paid advertisements and social media paid ads.
For offline methods
After you have found the contacts of the potential buyers, then it’s time to find the most sincere ones out. The best way is to finally meet a business partner in real life is possible. If signing contracts at the first time, it’s always reasonable to meet face-to-face.
After you have found sincere buyers, then you should make sure the exact requirements for the products what you are going to export. Also, you need to make sure exporting terms, needed certifications, packing details and delivery requirements. And most importantly, what would the target price what your customers are looking.
For looking and identifying the buyers we have again written one in-depth article. The article will handle this topic more in depth, I suggest you find it out here, how to find international buyers for your business.
7. Choose your suppliers
Hopefully, you have found sincere buyers and made sure all the requirements for the product(s). You need to know delivery terms and target prices, packing, requested documents.
Your next step for starting an import-export business is to source the best possible supplier for you.
You can use the same methods, like for finding the buyers, but you can also use your connections. It is necessary to introduce the terms and requirements for your country suppliers and ask the quotation from them. Also, you need to be sure, that the product what they offer are same, what your buyer is looking for.
It is wise to ask several quotations from different suppliers and then compare the offers. You should not only compare the prices, but also the delivery terms, payment terms etc.
It’s important, you are convinced, that your supplier is supplying exactly the same thing, what your buyer is looking for.
Finally, you should be able to choose what supplier is best for you.
8. Choose how you start the business
Now, you have a profitable product(s), buyers for this and you also sourced the supplier for this product. Hopefully, you have made the calculations and are convinced, that you can make enough profit. Now it’s time to decide, how you are going to start an import-export business.
You can participate as a direct exporter, then you need to buy products and export. You can also participate as an export agent, then you need to sign commission agreement. Also, you can participate as a sourcing agent. As a sourcing agent, you will ask one-time fee form the supplier or buyer, before bringing them together.
Learn about starting an import-export business as an agent here.
You should choose the best way based on your personal possibilities and experiences. A sourcing agent is the easiest way to do this. As a direct exporter, you have higher risks but you may make a bigger profit regularly.
9. Get freight forwarder and custom broker
Regardless what form you choose, you should find yourself a freight forwarder and custom broker. Even you don’t need their service, it’s good that you have them ready. You may need them if you have custom or delivery related questions.
10. Sign contracts and execute
After you decided, how you are going to work, then based on that, you should sign the deal.
- If you are a direct exporter, then start with signing the foreign buyer and wait for the advance payment. After payment, you buy products from your local supplier. Organize all the docs and take product ready to the port. Wait for the balance payment against the BL and ship the products wit required docs to the buyer.
- If you are an import-export agent, then sign commission agreement with your country supplier or buyer. After commission contract signed, then bring sided together. After buyer paid to the supplier, then you will get your agreed fee.
Remember, if you are working as an agent, then your commission agreement is very important. Be ready to pay for the lawyers to help you with this.
11. Give customer support
After the initial deal is done, then be ready to also support your customer, in case he has some further questions. Maybe he needs some extra docs for his import custom. You should be helpful for him, this will make the next deal most probably taking place.
Many fresh exporters make the mistake, to not pay enough attention to the already existing clients. But bear in mind, that it’s always easier to sell to the already existing clients that finding new ones and sell to them.
It’s smart to pay attention to the customer support.
12. Start looking another customer
After one deal, you have already the experience, so you can start looking another customer or you even want to deal with some other product. You can follow the same steps described in this article to find more clients for your import-export business.
If you get excited about import-export business, then we suggest reading what are the import-export procedures and documentation.
Previous steps were for those who wish to export. If you want to know what are other best money making import-export business ideas, then we suggest check out this list of best import-export business ideas.
Good luck in starting an import-export business!
Attention new entrepreneur! Learn, how you can make money in import-export business nowadays, enroll our 100% FREE mini-course below: