Exporting is defined as "the commercial activity of selling and shipping goods to a foreign country" (princeton.edu). The concept of exporting is not new, but the ever-increasing integration of human communications and transportation has opened up opportunities for upstarts and small players to break into the industry. Depending on the scale of the business, exporting can be started with relatively little overhead and costs.
Five Crucial Things to do Before Jumping into the Fray
1. The world of exporting and international trade is full of jargon and terms that can leave newbies scratching their heads. A good way to kick off a business in exporting is to learn basic terminologies to avoid confusion and other miscommunications along the way. Many terms may seem intimidating at first, but rest assured, they are very simple to understand.
2. Being a consistent follower of current events is an indispensable habit for an exporter. It is important to know market trends abroad in order to find products that will be profitable in the global marketplace. The demand for goods can vary from one country to another.
3. With the growth of economies in underdeveloped countries such as China and India, exporters must consider the competitiveness of American products when set against cheaper products worldwide. Some naysayers claim that the death of the U.S. export industry is at hand, but with the right products and proper positioning, there is still great potential to market American goods.
4. There is no way to get around international trade regulations. Starting an exporting business requires one to look into the various organizations and rules that govern global commerce. It may be a little bit of a pain to read through statutory fine prints, but they are well worth the effort in decreasing chances of accruing headaches in the future.
5. Having a good credit is important in starting an export business. People who have problems in this area must take measures to try and fix it as soon as possible. Often, credit lines are important in paying people to get products from one place to another. While exporting can be a low-cost business, a temporary source of cash flow is an important tool to have at all times.
Three Kinds of Export Businesses
In Entrepreneur Magazine's guide on "How to Start an Import/Export Business," the authors defined export businesses as one of these three: an Export Management Company (EMC), an Export Trading Company (ETC), and an Import/Export Merchant. Before starting out, it is important to determine which form to take in order to properly manage one's time and resources properly.
Export management companies and export trading companies differ based on their starting points. EMCs begin by finding a supply for a certain good. They look for companies that are willing to establish a global presence and then do all the necessary steps in promoting that company's products in a certain country.
On the other hand, an ETC does the opposite by first spotting demands for certain goods around the globe before looking for local suppliers that would meet that demand. Logistically speaking, an ETC is a simpler way to get started in exporting because it would be easier to sell a product that readily answers a market need as opposed to creating a demand for a product.
The last kind of exporting business is the import/export merchant. A good way to think about import/export merchants is to liken them to retail store owners who buy products in bulk from suppliers and then resell them for a profit. Whereas EMCs and ETCs are more like sales agents that sell other people's goods for a commission, merchants actually put upfront money to pay for the cost of products before they sell them.
Finding the Million-Dollar Gem
Perhaps one of the challenges in starting an exporting business is finding the right products to sell. A number of resources are available, but the most convenient place to look is at the local level. People who live close to manufacturing centers are at a great advantage because they can personally meet their potential business partners.
It is important to establish a close and personal contact with suppliers because the lifeline of an exporting business is dependent on reputation. A dishonest or inefficient supplier can be the death knell of an exporting business. Since an exporter's customer base is far away, the only way for an exporter to gain the trust of his clients is to be able to deliver on time.
For others who are far from manufacturers or suppliers of profitable goods, trade shows and business expos are good places to look. In addition, the Internet is also abundant with resources that anyone can access easily. The only thing to consider when dealing online is to find reputable companies that have a solid record of good performance.
Sources like the Better Business Bureau as well as online reviews of companies can give a good idea about a company's reputation. Also, it is a good practice to make sure that potential suppliers are easy to contact via phone to make sure that they are responsive to their client's needs. If time and resources permit, it is even advisable to spend some money to meet a distant manufacturer or supplier.
A Home-Based Opportunity
Despite the international scope of an exporting business, exporting lends itself very well to the home-based business structure. Regardless, people who want to get into exporting must carefully consider how to create a professional look from their home office and spend some money on good equipment. As the old adage goes, "You get what you pay for."
Raymond Aguirre - Hi. My name is Raymond and I am a freelance writer based in Los Angeles. I have experience writing as a news reporter and an editor for ...
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