In today’s global economy, owning a business that deals with exports and imports can be quite profitable, provided that you have a thorough understanding of how to properly move goods and services, and that you stay within the required industry compliance.
Making money with an import / export business does not require that your company grow to substantially large proportions. In fact, given that many products are in high demand, it often times simply takes matching up the right items with a hungry market – along with a bit of determination – in order to succeed.
How the Imports Exports Business Works
Although there are numerous product manufacturers in Australia, there are really just a small percentage overall that actually distribute their products outside of Australia. Of those companies, the products that are sold in foreign markets are considered to be exports. Conversely, products that are produced outside of a particular country and are then brought into that country and sold are considered to be imports.
While most companies would ideally like to have as large of a market as possible, it can often times be difficult for product manufacturers to market their goods to potential customers in faraway places. It is in performing this task successfully where an expert in importing / exporting can really shine – and essentially, where it can profit.
In its most basic sense, an import / export specialist is an individual or company that essentially focuses on matching product manufacturers with foreign distribution. It is in making this connection between a product and those who want to purchase the product that successful importing / exporting is established.
How to Make Money in Importing / Exporting
Although many importing / exporting businesses have grown quite large over time, most of these companies actually begin quite small. In fact, these types of companies can be started at home with only a computer and a telephone. This can keep your initial overhead costs extremely low.
In terms of making your business “official,” you should also register a company name, as well as a business structure such as a corporation, partnership, LLC (limited liability company), or sole proprietorship. In addition, you will also want to choose a name for your business. Typically, a name that reflects what your company does can make it easier for clients to find you. This is especially the case if they are searching for your company on Google or other online search engine.
For marketing purposes, it will also be wise to set up a company website. Without a website that at least describes your company and what you do, many potential customers may move on to your competitors, feeling that there is not enough information about your company for them to be comfortable giving you their business. Typically, purchasing a website and a corresponding domain name can be done very inexpensively.
As your company grows – and as it increases in profits – the amount of your overhead expenses does not necessarily have to rise in proportion. It will be important for you to determine who your target market will be. For example, just going out and talking to or trying to meet with “everyone” is not a good business plan. Rather, you should narrow down your ideal customers in terms of either a demographic area, a type of product, or some other type of specific criteria.
In fact, in order to be truly successful, the most important concept for starting an import / export business is locating the proper contacts. To help establish yourself and your company, you should initially write a professional letter to individuals who are in a decision making capacity regarding the importing and/or exporting of products and services.
Once you have made some contacts, you will also need to obtain essential information, such as:
- What goods or services would they like to have imported?
- What products do they currently have imported, and how are those products imported?
- Are there any territory rules or regulations with regard to current imported products?
In addition, you should also request any information that you may need, such as what – if anything – they have to sell. For example, if the individual represents a product manufacturer, you should ask for a product catalog or some product samples.
Over time, as you continue with your correspondence, you will be able to build up a nice rapport with the contacts that you have made. Although you will not likely secure a great deal of business overnight, you will be able to slowly secure a steady stream of clients as your relationship strengthens with each contact. This may also lead to referrals to other contacts in the future as well.
Determining the Right Market
When getting your business up and running, it is essential that you determine the right market for your business. In doing so, you should obtain as much information as possible about world trade. This can be accomplished by reading trade publications and international newspapers, as well as by reading financial and news magazines.
Once you are familiar with the various world markets, as well as the type of supply and demand that exists in each, you will be better able to make a determination regarding which products will – and which products will not – sell. Keep in mind, too, that even if a particular product has a good profit margin, if there is no demand for it, then it will not likely be a good money-maker for you or your business.
In keeping abreast of the news, this should not be considered just a one-time occurrence at the start of your business, but rather an ongoing task. This is because local economies, as well as the world market, change continuously – so, what may be true of particular markets one day, may be different in the future. Likewise, many imports and exports move based on the value of various countries’ currencies. With that in mind, you should also have a good idea of the financial markets and currency value in the areas where you plan to trade.
Obtaining the Products
Once you have built up some solid contacts, along with a hungry market for products, you will need to have an actual product to offer. Certainly, the product manufacturers that you work with will have a great deal to gain from your relationship, as they will be expanding their sales exponentially.
Therefore, it is essential that you do your homework on the manufacturer prior to signing any type of agreement with them. For instance, you should research the background on the company by finding out information such as:
- How long the company has been in business.
- Where the company currently distributes its products.
- Is the company currently reliable with its other product deliveries.
If the manufacturer checks out as positive, you will need to move forward with a binding, written agreement. This agreement should be drawn up by an attorney, and it should be between you (as the representative) and the product manufacturer.
Ideally, the agreement should grant your company the exclusive rights to distribute their product to all areas, other than where they already currently distribute. In turn, you should agree to do all that you possibly can to successfully distribute the manufacturer’s products to the best of your abilities.
While establishing contacts will likely be the most time-consuming step that is involved with starting your import export business, if done correctly, it can also lead to a great deal of profit. It is important to remember during this step not to become discouraged. Although you may hear some “No’s” from people that you contact, even just one or two “Yes’s” can make all of your hard work worthwhile.
Generally, importers and exporters will take a mark-up of 10 to 15% over the product cost. Therefore, if you are dealing with products that are in the $1 million range – or more – then it is easy to see how this business can be extremely lucrative for you.
Transporting the Product
Once you have established some good relationships with manufacturers and you have worked out an agreeable contract for both you and them, your next step is to transport the products to where they will be sold. This means that you will also have found an end customer and not only solidified the terms of the sale, but have also set up a means of getting paid by them.
At this time, you will need to work with a freight forwarder. The primary function of a freight forwarder is to act as an intermediary between the person or company that is hiring them and the transportation service that will move the product overseas to the end customer.
Depending on where a particular product is being shipped to and from, it may be possible that more than just one transportation company will need to be used. And, in some cases, the freight forwarder may need to deal with various import and / or export issues that come up during the process of shipment.
Typically, the freight forwarder’s services can save you a great deal of time. This is because the freight forwarder can take care of making all of the shipping arrangements, which can include the documentation, insurance, licenses (if necessary), permits, tariffs, quotas, and / or restrictions. In some cases, a freight forwarder may also be able to assist in helping you to get paid.
Many of these issues can be complicated – especially for someone who is relatively new to the import export business. When looking to hire a freight forwarder, it will be important to ensure that you find someone whom you can build a good business relationship with, as you will generally be intending to work with them for a long period of time.
Once the goods have been delivered to the customer, it does not mean that the deal is done. In fact, this is the perfect time for follow-up and additional customer service – and, provided that you do a good job, it can lead to a good long-term relationship with the customer, as well as additional deals. With this in mind, it is absolutely essential that you always say thank you to your customers for their business. Doing so can not just lead to additional business with that particular company or customer, but also to possible future referrals.
The Bottom Line
Although the importing / exporting business may not be the ideal business for everyone, it can be very profitable for those who can truly make it work. If you are prepared to put in the time to become educated on what it takes to become successful in the import / export field, you will already be a step ahead of the rest in terms of your success.