Global trading is perhaps the most important branch of business in the world. The concept of trading is almost as old as humanity itself. Without import/export of products, many commodities would be inaccessible. International trade allows us to easily get our hands on the basic necessities.
There has always been, and will always be, an export market for businesses. Each country has a specific commodity that it imports. For example, most countries’ top import is refined petroleum as they don’t have oil deposits. There are many other examples of countries lacking production facilities for specific goods. In that case, they import such goods to ensure that their demands are being met. This shows that through a proper strategy, export businesses can be successful.
In this article, we will cover the strategy that a starting export business should adopt. By following these steps, you will lay a solid foundation for your business. Here are 10 important things you should know before starting your export business.
Before getting started, you might want to learn a little about the field of exporting. Spend some time learning about international trade. Learn about the primary import of each country. Do some research on any trade agreements that your country might be a part of. Look for areas with favorable export/import regulations.
If possible, you should also consult with someone already in the export business. Through expert’s knowledge, you will understand the complexities of the industry you are targeting. So, you will get an idea of the common problems that your business might encounter.
The export sector is usually divided into 2 categories. They represent the different routes an export business can follow while trading. Based on what’s suitable in your case, you can choose either of these two types.
An export trading company (ETC) identifies such products initially. After researching it looks for local businesses willing to sell such products abroad. An ETC provides a link between local businesses and foreign markets.
It involves handling the international sales of companies willing to sell products abroad. An export management company (EMC) handles all the export operations in this case. This includes every aspect of making products accessible to foreign buyers. An EMC doesn’t hunt domestic businesses on its own. It just manages the foreign sales of their partner domestic business.
It is of immense importance to research potential export markets. Before partnering up with a manufacturer, you should know if the venture would be profitable. You should dig up relevant export data first. This should include your country’s major exports and its biggest markets. If you have been approached by a business, you should know its products’ export feasibility. Information like this would help you dive into the world of exporting without any risks. Export businesses face many complications in their international dealings. So before getting started, you should at least know that there are no miscalculations.
It is important to understand the way you should price your products. For each product sold, an exporter gets a percentage of the sale price as commission. This is usually 15-20 percent but can vary based on the product type. There are two important factors when deciding the price for the products to be exported. The first one is the number of units sold, and the second is your commission.
You should make sure that your commission doesn’t exceed your customer’s affordability. It should remain below the price that the customer is willing to pay. However, the price should be enough to earn you a profit from the total sales.
Without promotion, your potential customers wouldn’t be aware of your products. In this age, internet marketing is the way to go for exporters. You should hire international SEO experts to enhance your online presence. Through proper research of your market, you can target your potential customers. This research will help you develop relevant websites and social media handles. Your search engine ranking will improve, and your website traffic will increase as a result. Through compelling content and brand development, you will become recognizable. A lot of your business’ success will depend on the international SEO of your export business.
No part of the export business is risk-free. The most complex, however, is transportation. Export/imports often involve long supply chains and require extra care. It is crucial to make arrangements depending on the shipping distance. It is also important to see if product quality will be maintained over transportation time. Intercontinental transfers should be done through sea, as they are economical.
Steps should be taken to minimize financial losses in case of any accidents. Your export fleet should be insured to get financial recovery if that occurs. All unfortunate possibilities should be considered before arranging transportation.
Successful shipment of products is not the end of your ordeal. Your international customers might not be speaking the same language as you. For a smooth export deal, the linguistic barrier must be cleared. Arrangements must be made to make sure that the transaction is smooth. To stay clear of this issue, you should hire translators for your export locations. This ensures that nothing is lost in translation and both parties understand everything. It helps build trust with your customers, and paves way for successful future dealings.
With the passage of time, translation software are also improving. They are expected to take over as the primary translation medium in the next few years. For now, however, human translators are more reliable.
A trade deal might be hindered by any missing documents or inconsistent information. It is important to pay close attention to your paperwork. You should take some time to be acquainted with the legalities of your export. That would depend on the laws of your export location. Make sure you have a trading license to be able to legally export goods. Your company needs to be registered with the authorities of your target countries.
You can ease through these complications by hiring a legal team. Your lawyers can take care of any legal barriers that might end up hindering your export business.
The exchange rates for currencies are changing constantly. You must make sure that your monetary dealings don’t end in financial losses for you. Payment methods at your export destination might also be different. Due to these differences, your process might be hindered, causing problems for both parties involved.
To make sure these issues don’t persist, you should hire accountants to handle your finances. With their help, you will get sound advice on financial matters, and won’t encounter such issues.
As an exporter, you must make sure that your foreign customer is not scamming you. You might get into hot water if the party you’re dealing with is shady. You should carefully draw up trade agreements with foreign organizations. Have your lawyers look up the legitimacy of the business you’re dealing with. You should only complete the agreement once you are fully aware that you’re not being ripped off.
You should do some research and run background checks to see if your customer is legit. By doing so, you ensure a clear business pathway for your company. You also get to fully trust your customers this way.