The world has been steadily shrinking since the industrial revolution and with the rapid advancement of technology we’ve sped closer and closer to globalization. In today’s economy it’s all but essential for any business to be accessible to an international market.
There are many reasons for a business of any kind to engage in international trade. It’s likely that they seek to sell their product to a wider client base. And the advertisement and exposure available on the internet could easily reach potential customers in any nation on the globe.
Perhaps there’s some specific resource which is only produced in a certain part of the world, which is sought after by overseas buyers either for use in manufacturing other products—or simply for the novelty and exclusivity of owning some of it.
Maybe some products or resources are simply much cheaper and more efficient to import from a specific nation or more efficiently manufactured there before being resold to another distributor.
Whatever the specificities of the case, import/export businesses have been remarkably popular and successful for a good long time, and are only becoming more so as time goes by and the world advances.
For a relatively small business hoping to capitalize on this trend, it may seem intimidating to try and enter the fray. But in reality the import/export field is 96 percent smaller independent firms. Perhaps the intimacy and specificity offered by smaller companies are traits deemed more appealing and advantageous to customers. .
This post will show you ways you can get your foot in the door and operate a sustainable, profitable and successful import/export business.
- Consider what type of company you will be.
This means thinking about what goods you’ll be moving and how you’ll be moving them. There are three main types of trade companies like this, each with their own specific requirements and precautions which will be explored in more detail as we go on. Those types are Export Management Companies, Export Trading Companies and Import/Export Merchants.
- An Export Management Company partners with domestic sellers and works to find foreign buyers for their product. Export management companies are often paid by commission, salary or retainer, although sometimes an Export Management Company can take title to the goods it’s selling and act as its own distributor. Export Management Companies can specialize based on either product, foreign market or a combination of both.
- An Export Trading Company partners with foreign buyers and works to find domestic sellers who create products that suit their needs and are willing to export to them. Export Trading Companies are usually paid by commission or by taking title to the goods in question. Export trading companies usually specialize based in product, foreign market or both.
- An Import/Export Merchant may not always specialize based on any particular product or foreign market. They will purchase goods directly from a domestic or foreign manufacturer and then ship and resell them entirely on their own. In doing so, they assume both 100 percent of the profit and 100 percent of the risk. While Export Management Companies and Export Trading Companies can be looked at as counterparts to each other—two sides of the same coin if you will—an Import/Export Merchant can be thought of as the entirety of the coin by itself.
- Consider the product you’ll be specializing in and whether you need a license.
Believe it or not, you do not actually need a license to export certain products. This depends on the classification of your product and whether it aligns with the requirements of the U.S. Customs and Border Protection and other related federal agencies.
The type of your product is determined by its Export Control Classification Number. The Commerce Control List maintained by the Bureau of Industry and Security includes electronics, computers, sensors, chemical materials, nuclear materials, microorganisms, toxins, lasers, navigation equipment, telecommunication equipment, materials processing and more. Be sure to check your product’s Export Control Classification Number and see if it violates and governmental regulations.
If you do need to get a license to ship your product, or you simply want to get one in case you ever end up shipping something that needs it, you need to have a Company Identification Number and then use it to apply for an export license from the Department of Commerce. Be sure to pay close attention to the specific instructions given to you as procedures can differ based on what type of company you are and what you’re shipping. You will need to obtain an import license from each of the foreign countries you plan to ship to, in which case you should do research about their governmental proceedings regarding trade with the U.S.
- Establish a reputation by building out from a niche
When you begin any business, it’s a good idea to look for a niche. Some sectors have very specific demand, which you have the power to fill. This applies to international trade too. Don’t think that you have to find something brand new that no one’s ever done before, because even if you manage to find something new it’s possible that the reason no one’s ever done it is because no one is asking for it—and it won’t turn much of a profit.
Look for something popular, something that won’t go out of style or anything like that. Don’t be afraid of a crowded market. Just do it in a way that seems unique, put a spin on the marketing or target an audience directly.
Make sure that you can deliver on whatever you’re choosing as your niche, because this is the first step in building a reputation.
Use your niche as a gateway for your business. Look for foreign or domestic buyers or sellers based on whether or not they fit your niche and then approach them. Don’t be afraid to be bold sending emails or setting up a targeted marketing campaign.
Chances are, if you can offer a better deal for equivalent quality to what they’re already getting, they’ll at least look into you. Don’t be put down by rejection—every company is wary of someone who’s just starting out.
Remember, be persistent and cast a wide net so you can target as many people in your niche as possible. Eventually someone will give you a chance and then you can add that successful job to your repertoire. And someone else will see that, and hire you too.
From here, it’s just the same as any business. Climb the ladder, put yourself out there as much as you can, and build some credit for your brand. After you’ve become fairly prevalent in your niche, feel free to expand from there, getting more general and broad.
Just be careful not to go too ambitious too fast, biting off more than you can chew. Ending up with a lot of unkept promises is the easiest way to doom a startup company.
Be bold but be smart.
As a closing statement, a brief summary of the vital points in this post:
Remember to assess yourself. Define as clearly as you can what type of import/export company you are, what products or regions you’ll be specializing in and what niche you’re going to appeal to in the beginning. Use this information to hire the correct people, fulfill the correct legal requirements and play to your strengths as you seek out the partners you can help the most and in turn can help you.
This is essentially the same as your business plan for a more standard domestic company, and much of the same mentality and attitude of your previous domestic business can carry over to international trade negotiations.
The most important thing of all is to get extremely specific.
Depending on what you’re selling and to who, the rules can change. Have a clearly defined plan based on research and your strengths organized and set up front, never just go with the flow.
If you’re smart and you think all this through, you’ll be on the fast track to one of the most prevalent and consistently successful fields of business in history.
Aidan McHugh is an art student at the Bergen County Technical High School in Teterboro. He serves as an editorial & art intern for Meadowlands Media.