Global trade volumes last year amounted to over $28 trillion. According to import and export industry experts, this is a record high, indicating growth across all major trading economies, after a record low in 2020 due to the pandemic. Therefore, your enthusiasm to start an import and export business is more than valid. Now might even be the best time to double up. Here are five vital steps to starting an import and export business.
1. Determine The Type Of Business You Want
Like many industries, there are various options to choose from if you want to start an import and export business. The main import and export business types include export management company (EMC) and export trading company (ETC). An export management company manages export operations for companies seeking to sell their products in other countries. EMCs can also operate offices in multiple countries for convenience. On the other hand, an ETC sells its own merchandise, sourcing buyers in foreign markets.
You can also be an import and export merchant, working as an agent, free to trade with either an EMC or ETC. Knowing the business types available can be a great first step. It’ll influence everything from your financials to the amount and tools required for the job. For instance, you may need to hire a haul away auto transport partner in multiple trading areas where you establish yourself.
2. Determine Your Target Market
Who is your target market or prime customer? To avoid marketing mistakes, it’s one of the important questions you’ll face as a prospective business owner, regardless of your industry. The import and export industry is very diverse, with a long list of actors participating in its value chain. You can’t serve everyone, especially not as a young company in the face of industry leaders.
If you did a great job choosing the type of import and export business you want to create, this step would solve itself. For instance, you may be dealing with retailers directly if you’re a merchant, while an EMC’s target market can include the merchant and other manufacturers.
3. Get Your Numbers Right
The import and export industry is a numbers game. Any partner you talk to will be interested, or licensing provider you talk to will be willing to ask for your projections for the future. Therefore, it’s crucial to start your business knowing your core numbers, like operating expenses, licensing, sales projections, etc.
Experts advise new founders to build their ideas on a solid business plan or growth plan. That document can be a one-stop source of all information you need about your business’s numbers.
4. Seek Funding
The type of import and export business you want to create can determine how much you’ll need to finance your businesses. For instance, an EMC or ETC may not need to purchase an inventory since distribution may be reserved for their agents in multiple countries. Starting your import and export business can be financially draining, and personal financing might not be viable. Luckily, opting for external financing solutions like loans and joint venture partnerships can be easier if your numbers are sorted out.
5. Break The Ground
You now have crossed your business type, target market, projections and capital off your checklist. All these give you the green light to break ground and test the import and export market. At this point, you need effective business and financial management to help you achieve your business goals. Generally, starting any business can be daunting; more so if you’re starting up in an industry as volatile as import and export.
Beyond these tips, you need a lot of experience and knowledge about international trade to successfully start and manage your import/export business.