Import export businesses can be very profitable in the long run. And the good news is that it doesn’t take much to get started in this direction. If you know the basics of how to start an import export business, you should endeavour engage in such trade because it is highly lucrative and profitable. Though it is very competitive business, it is not complicated. Even if the process itself is not a complicated one, it can be a challenging one if you don’t know how to create it most beneficially
The best part of the entire process is that you can create such a business from the comfort of your home or office. It implies very little investment and not a lot of resources which works in the benefit of every beginner. However, as a new entrepreneur, it is important that you know about the procedure and documentation process required to start your own trading firm which involves import and export of goods and services.
Start-up cost:You can start your own import/export business with little upfront costs. At a minimum, you need a phone and a reliable Internet connection. You’ll also want to invest in business cards, a website and a fax machine. And it doesn’t hurt to hire somebody for your branding, including a unique business logo.
More important than the office equipment is your determination to make the business work. You must bear in mind that the business will move at a slow pace at first, and that you will need to make contacts and sell yourself in order to make profits. But as you go further down the route, you will be able to make sales more easily and sign more contracts that are more lucrative.
Define your market:One of the most important factors you must consider before even pondering on how to start an import export business is to select the target goods. This is where the need for feasibility study comes in .You must know what present imported goods are patronized in India or whatever your country may be. You also need to ascertain the hottest products in demand both locally and internationally. By niching down, you can focus your attention on a market you can serve best. Think about:
Customers you want to serve.
Areas of the world you’ll target.
Types of goods you’ll offer.
Take your time to dig deep with your research. The extra time you spend finding profitable niches will pay off in the long run. Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.
Writea business plan:If you really want to succeed in the import export business, then you definitely need a business plan. Aside helping you formulate a strategy, a plan will also help minimize your mistakes and prove to your financiers or investors that you have done your calculations well. In fact, no bank will finance your transaction without a business plan.
A rule of thumb is to pick a commission model if you think a product will be easy to sell. If you think a product will be difficult to sell, however, price your business based on a retainer. The thinking is based on this: If you’ll sell a lot of product, you want to be paid based on performance. On the other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime. Finally, if you’re confident in your ability to sell products you acquire, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a way to profit from the merchandise.
Create your website:You can’t exist in the import export type of business if you don’t invest in a well-built website. Your website will be the first impression that you make to potential new customers, and it is crucial to building it in a very attractive way. Luckily, nowadays, you can set up your website by using different platforms. Some of them are even free, or they offer you a free trial to enjoy until you afford to pay for a subscription. Many new potential clients will make their decision of collaborating with you or not based on your website. So you can easily win or lose clients through it! It should determine you to build a rich website and offer as much information as you find suitable. Any online export-import business should be based on a strong online campaign to support the offers and promote the entire set of products. Investing in some SEO might also help you reach new clients worldwide.
Making contacts:The most important step in setting up your business is finding the contacts. You may have relatives in a foreign country; you may have frequently visited and established business relationships in a country. Or, you might just have a feeling for what will sell where. A person who keeps well-informed in the business world can pick up and ride the crest of worldwide trends. Another way to establish contacts is through the Chambers of Commerce of every city you are aiming for. When you want to build an import export business from home, being an active presence online is crucial. Try to access the forums and the portals that can offer you information and guidance on a regular basis. The international trading is in a constant change, and if you want to keep up with it, you need to stay involved in it.
You can also establish contacts by searching the web with relevant queries. Sometimes, you can find buyers and manufacturers on the same platform. A good example of such a platform is Alibaba.
Obtain a PAN card for the business:Once you have received the required registration, it is mandatory to have a PAN card issued by the Income Tax Department.
Register your firm: You need to get your business registered first with the government of India. It doesn’t matter whether it’s a sole proprietorship, in partnership, private limited company, or LLP. You can hire a lawyer for this purpose to help you with the company registration process. You also need to obtain a Service Tax registration or a VAT registration certificate.
Open a current account:After receiving your business registration and PAN card, you need to open a current bank account with any commercial bank exclusively for your business.
Obtain an Import Export Code (IEC): The import-export code issued by the government of India is mandatory to start an export-import business in the country. This is one of the most important requirements to get your import and export business started. IEC is required in all cases except in case of restricted or prohibited goods or services. You have to apply for it online at the DGFT website. Here is the list of documents required to apply for it.
· Personal PAN card or Company PAN card
· Applicant’s photograph
· Copy of a cancelled cheque from the business’ current account
Getting a Registration-cum-Membership-Certificate (RCMC): Once you get the IEC, you need to obtain the Registration-cum-Membership-Certificate (RCMC). It is granted by the Export Promotion Councils. You can obtain the certificate from any one of the 26 export promotion councils. After getting the IEC and RCMC issued, you can set up your import and export business from India. The IEC and RCMC issued are valid for all branches or business premises across India, and it takes only between five and seven days to get all the registrations done.
Hire an ecommerce Shipping Company: After you have all your paperwork in order and you know what products you want to trade, you will have to focus on the details. The shipment method might not be a constant one for all your trades, but you need to be informed about all the options before making a decision. Some goods are imported or exported better by sea while others are safer by air. Moreover, each country has different import export options. You also need to hire a logistics company that would be responsible for delivering your products to the customers worldwide. Ship Rocket is a courier aggregator that helps such businesses by providing them multiple shipping partners to ship their products internationally on cheapest shipping charges.
If you neglect the shipment method, this can easily become a problem. And you have to establish your options even before you open your business to be prepared. If you postpone this concern until the last moment, you might not have time to set up all the details and if delays appear it can cost you a lot of funds. Also, make sure to have a section in your budget destined for shipping since this is a sure part of your business.
Contact a Customs Clearing Agent: You might need to take the assistance of a customs clearing agent who will guide you about the process of getting your stuff cleared at the ports, customs duty charges, transportation charges, etc involved in the import-export business. Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting goods. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.
The import/export business is for people who love building relationships in other countries. But it also requires an organized mind that can handle logistics. You will certainly face some challenges when you are just beginning, such as figuring out how to handle shipments through a freight forwarder, making sure your manufacturer produces based on your required standard (imports), ensuring your product meets your buyer’s standard (exports), and creating solid contacts with reliable suppliers. But after a short time, you will overcome these challenges and find them easy to handle.
In conclusion, you need to consider the commission you will get from the manufacturers; that’s if you decide to start as an agent. This will however depend on your sales. Make sure to write agreements regarding your commission. As an agent, you can ask for a 10% commission fee from a product’s sales price. Another important factor to starting an import export business is to sign agreements that you have established with the manufacturers. You must make sure that the company you choose is legitimate and reputable. You can tell your lawyer to make a contract regarding this matter. If performed with prudence and care, export and import businesses can always be encouraging and help open up new avenues for your company.