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How to Start an Import Export Company

First thing’s first you have to do is to position yourself. There are several areas within international trade where most people decide to focus. Specializing in one of these areas is usually a good idea for those new to the market although further down the line you may wish to expand.

Import Merchant

In essence you are a freelancer. You find a product overseas you believe will sell in your domestic market. You buy directly from the manufacturer and import into your market. After organising freight and customs clearance with a freight forwarder (or if you feel brave by yourself) you ship the goods to your warehouse – which could be your bedroom. From here you may decide to repackage the goods to meet official local standards and/or regulations. Then comes the final and hardest part… you have to sell what you’ve bought. Your buyers could come from retailers, whole sellers, individual customers, catalogue companies etc… anyone is a potential buyer. The risk here is that you buy the product and therefore if you can’ sell it you’re stuck with it.

Sales Agent

Here you work with your supplier to source buyers within your market. Your capital outlay is minimum as you do not actually buy the product instead you receive a commission for every trade you broker, usually around 5% of the value of the transaction. The logistical aspect of trades is also negotiated to suit the deal – for example your sole responsibility could be simply to book buyers and not worry about shipping the goods. Naturally as a sales agent you must first build up a solid level of trust with your supplier.

Distributor

Working as a distributor is one step up from a sales agent. Here you become even more interlinked with the supplier. Not only do you once again source buyers but now also all or some of the logistical considerations will be your responsibility – shipping, insurance, customs etc. Here you are also paid on a commission basis or there is also the option of purchasing the supplier’s product with your own capital and selling the stock when buyers are signed. Here the pinnacle is securing an exclusive distribution agreement with a supplier which grants you the right to be the only distributor of their product in a set country for a certain period of time – all dependent on certain conditions being met.

Now let’s talk about how to get involved in the business. Here I’ll use my own personal experience which some may disagree with but has worked for me. The following points are general and can apply to any of the three strands I highlighted above.

Learn Learn Learn – For the vast majority of us international trade is a Rubik’s cube. How to ship goods in containers from halfway across the world is complex and that’s why you have to learn what’s going on before even thinking about signing your first trade.

* Take an import export course. Make sure it is accredited in some way for example by a trade association or university. Although it may be pricey trust me it will be worth it. Buying books that explain import export are only so good, at the end of the day the entire sector uses new language and terms you’ve most likely never heard. Having someone from the inside explain it to you in plain English will make a significant difference to your understanding. Adequate course material handouts are a bonus. Make sure the course covers insurance, Incoterms, documentary letters of credit, customs clearance and import documentation as minimum.

* That being said, consider buying a book as a reference – something you can flick back to for help or even inspiration. Read reviews on Amazon to make sure you’re buying the correct one – some books are very country specific so beware. Carl Nelson provides good overall guidelines with a focus on the North America.

* If you have the opportunity (although unlikely) take an unpaid internship at one of the bigger and more reputable freight forwarding companies, this will help you gain massive insight in a very little amount of time… provided you get the right position.

Sprouting the business – After you have built up your basic understanding of how the market and international trade works it’s time to start thinking about how to make a business out of this and here you could consider which of the strands mentioned above appeals to you. Personally being an import merchant always appealed to me and it is also the easiest to start with – although also the riskiest and requires capital to get going.

* Think of how you’ll gain recognition and attract customers. Having a website presence is in today’s market essential so think about how you’d like to accomplish that. Hiring a web designer can be costly but the results are usually professional (although make sure you own the intellectual property rights to the website and its design – do not let the developer bully you into letting him take ownership of rights – if they insist find someone else… trust me, if your business grows to a multi $mn enterprise that web designer is going to get very rich at your expense)

* Else you can attempt to make your own site. This is hard work and requires a publishing program – I personally taught myself through Dreamweaver CS4. If you do it yourself in the worst case at least you’ve learnt web design and can out it on your CV/resume – and updating your site is free and at your convenience not that of the web designer.

* Find an office and register your company (here we assume we are in the UK). You can register your company in minutes using an online company creator and the fee is usually around GBP 40. Think of a good name for your company – I chose mine to avoid limiting the company to one sector going forward although you may wish to do exactly that. An office is a big expense so I recommend avoiding that to start with. Either use your home address or a virtual office – these cost around GBP 30/month and give your business a professional address and forward your mail to you.

* Once registered as a company get yourself a business bank account. HSBC is excellent for trade due to their massive international presence. Business accounts with them are free although additional charges arise when you need to draft trade documents. Consider also keeping multi currency accounts to make payment to manufacturers easier – i.e. a US dollar account will allow you to pay a client in the USA quicker and with less hassle. Also consider buying business insurance to cover you should anything go wrong down the line.

* A brand logo, business cards, phone, computer (with internet and fax) are all pretty essential necessities for your business but are self explanatory.

Finding products – So you now have a registered company, a business bank account and an office (could be your bedroom). Now comes your next hurdle, finding what to import. If you’re lucky enough to already know then excellent otherwise the following points may help:

* Get yourself known at foreign embassies. Here you will find trade commerce departments who’s job is to help promote trade between their home country and yours.. and you as an importer are what they need. Find out from them what foreign supplier are looking to partner up and sell their products in your country. Naturally start with small players and items you understand and believe will be able to sell. If nothing comes up make sure the embassy knows your company exists and that you’re on their system should something come up in the future. Not to mention the staff here are very knowledgeable in trade so will be able to help one you secure a transaction.

* Export journals. These are usually produced by a country’s trade and commerce department and list many manufacturers and the products they are looking to export. Have a browse as to what they have and then contact any supplier that takes your fancy.

* Internet trade directories. We recommend staying away from these unless you’re really desperate. It’s often hard to verify the supplier and the entire process is unprofessional. very few serious exporters list on web directories.

* Trade fairs. If the fair is in your local vicinity then these are great places to meet new suppliers and get a feel for where you could find your niche. Trade fairs are usually industry specific so search for what you might want to import and you’ll find a fair to match. Travelling abroad to a fair is usually too pricey to start off with. A good strategy is to contact the fair organiser and ask for an attendee list from which you can just visit the websites.

* Travel and friends. How many times have you been abroad or a friend bought you a gift that you thought wow, we don’t have that back home it’d sell great. Well… you have a company and you know how to trade, what’s stopping you now?

Now have an import company and found a product to import… now it gets harder.