How To Start & Operate Import/Export Business
How To Start & Operate Your Own Profitable
Import/Export Business At Home
What is a good way to build up a successful business from nothing
and have fun doing it? The import/export business may be your
answer. Not only does it require little financial investment to
start, but it offers the prestige of working with clients from
all over the world.
You don't need previous experience in the field, but you should
have a good head for organizing. Fulfilling a successful
import/export business requires constant attention to little
Do you know some local manufacturers looking for ways to increase
their market for the goods they make? Or are you planning a trip
abroad and want to make some contacts for setting up a business?
If you have the ability to sell, and an air of diplomacy, the
import/export business might be right for you. All you need is
the desire and determination to make it work.
As you progress in the business, many factors become obvious and
easy to handle. For example, you'll need to find a person to
handle shipments, called a freight forwarder. And you'll need to
create solid contacts and strong relationships with reliable
suppliers. But after a short time, you can be well on your way to
making a sizeable income, with a very low overhead.
Do you like the idea of running your own business? How would you
like a tax deductible trip to foreign places a couple times a
year? The advantage of an import/export business are great.
The biggest advantage is the money you'll make.. Once you get the
business underway,, the commission for setting up sales is very
profitable. And after you establish and maintain a number of
exclusive accounts, you'll find the time you spend is highly
rewarded with money.
Take a look into the import/export business. Consider the risks,
and consider the advantages. Talk to people in the business. Is
it for you?
HOW IT WORKS
Of all the manufacturers in the United States, only a small
percentage distribute goods outside of North America. The goods
that do find foreign markets are exports. On the other hand,
anything that is manufactured outside the country and brought in
for sale is imported.
Although it seems obvious that all manufacturers would want a
worldwide market, it is not easy for a company that is limited in
its scope and abilities. That's where you come in.
An import/export agent is a matchmaker. Manufacturers of domestic
goods seek foreign distribution; foreign manufacturers want a
United States market. You need to find them, make a solid
connection, and establish a business relationship with these
The agent's commission is generally about ten percent. Now, think
of ten percent of $500,000 or ten percent of a million. Although
that may seem like a large order, it wouldn't be, if you're
talking about machinery, raw materials, or computers.
The market is unlimited and there are hundreds of manufacturers
looking for foreign distribution. Sporting goods, clocks,
electronic games, radios, housewares, garments, tools-anything
can be readily imported or exported if there is a consumer demand
and if you can get the products.
The United States Government encourages exports. Indeed, it is
those sales that keep our balance of payments with the vast
amounts of goods are imported.. And you'll find government
agencies helpful in establishing your business.
You can start your import/export business at home with a
telephone.. You'll need a file system, business cards, and a
machine to answer the phone calls. Once you get going, you'll
want a cable address or a telex hook-up.
And you'll need a classy letterhead. Until you establish personal
contacts, it is your letterhead that represents you. Make it look
professional, possibly embossed or two-color, or gold leafed.
Have it printed on light-weight paper for airmail correspondence,
but don't have airmail envelopes printed. You'll have a lot of
domestic correspondence too.
More than office equipment, you need the determination to make
it work. It will be slow at first, and you'll need to plan your
moves, make contacts and SELL YOURSELF. But once you make a few
sales and sign several exclusive contracts worth money, you'll
know your dedication was worthwhile.
The most important step in setting up your business is finding
the contacts. You may have relatives in a foreign country;; you
may have frequently visited and established business
relationships in a country. Or, you might just have a feeling for
what will sell where. A person who keeps well-informed in the
business world can pick up and ride the crest of worldwide
Foreign consulates located in the United States have commercial
attaches who want to establish outlets in the U.S., and they're a
good place to start.. Sometimes these consulates can help find
indices of their own import/export enterprises.
The Unites States embassies abroad are another place to find
contacts for commercial distribution. They can help you find out
about a company's solvency and reputation.
Another way to establish contacts is through the Chambers of
Commerce of every city you are aiming for.
Start small-don't tackle the world.. Where do you want to sell
American goods you might have in mind? Which countries have the
merchandise you want to import? Find out about the countries,
what they have to offer, what is generally in demand.
Then prepare a massive mail campaign
The easiest way to mail hundreds of letters is to use a typing
service that has the equipment to produce the same letter with a
different address each time.. It's worth the money it will cost;
you'd go crazy typing so many identical letters.
To every possible contact, write a letter introducing your
company, requesting the names and address of appropriate firms to
contact. Ask to have the notice published in the monthly bulletin
or posted in an appropriate place.
From the names to get back, write another letter, again
introducing yourself, and asking information about their company.
You can use a questionaire, which is easy to fill out and invites
What goods do they want to import? What products are now imported
and how are they distributed?? Does the company have a certain
territory, does it have sales representatives, branches in other
cities? What are the basic details of operation--history, assets
and liabilities, plans for growth?
Request any information you need, to find out what they will buy
and what they have to sell. If the company is a manufacturer, ask
for samples or a catalog, the facts and figures of current
foreign distribution, and the product demand in their own
ANALYZE THE MARKET
Keep informed. Read everything you can find about world trade.
Look at trade publications, international newspapers, news
magazines, and financial reports. Who is selling what to whom?
Although the market for American-made airplanes is sewn up, there
are thousands of medium to small sized manufacturers in every
state of the union.
You can get goods to sell, buy you have to be sure to study where
they are in demand and can get the price to make exportation
viable. Your questionaires will tell you what foreign importers
want. Take it a step further and read the journals published by
that country; many of them are available in English. Do these
publication confirm the desire for certain products?
The American market for imported products fluctuates with the
value of the dollar in comparison to the value of each other
country's currency. And, importation prices reflect that
directly. Can American consumers afford to pay the price of
certain imported goods? Or will they?
Finding the right market is as important as the actual
particulars of making deals and selling goods.. What do you think
will sell? If you do some careful studies and think about the
trends, you'll be able to come up with hundreds of products to
import and export.
The import/export business is actually smaller than you might
think.. There are only a few of these businesses; that's why
there's plenty of room for more.
WHERE TO FIND HELP
Establish a good business relationship with a local bank that
handles international business.. Your personal banker will follow
through on the actual foreign transactions, and will help you
keep your credit afloat, In fact, this is one of the best factors
about an import/export business. Aside from office suppliers and
correspondence, or possible business trips, you need a no
personal cash outlay. All you need is a good credit and good
Your banker is your credit manager and will give you valuable
advice and references when you deal with both American and
The United States Government agencies are great places to find
help... These agencies promote the import/export business, and
publish many small booklets and pamphlets. They also distribute
continually updated reports on foreign markets, commerce and
Read these source of information and find out the particulars of
exports, global surveys and ocean freight guidelines. Become
familiar with the market share reports, current laws and
regulations, and government promotional facilities.
As you continue your correspondence with foreign companies, build
up a good rapport with their representative.. Pin down a few
companies- perhaps in the same country or similar territory--to
their exact needs. What are the two or three products most in
Consider their methods of distribution. You may be able to work
directly with a wholesaler of an overseas importing company. Your
commission will be lower, but you won't need to handle as many
particulars , and they will take care of distribution.
Or, you may need to supply catalogs and samples, working with a
network of small companies or sales representatives from a larger
The highest fees that you can collect are for raw materials taken
from the source and delivered directly to a manufacturer. But you
must be certain of a guaranteed quantity and the continued
ability to deliver.
If you are importing goods, you'll need to find U.S. distributors
that can handle the quantity of goods at a high enough price for
you to profit by. A single retail outlet or two is not enough to
make your time worthwhile. Look into how buyers work and make
contacts in the larger retail chains if you have retail
GETTING THE GOODS
There are hundreds of American manufacturers with limited
distribution looking for an overseas market. Exporting their
goods is the place to start your business.
You have many selling qualities for convincing the manufacturers
to engage you as the sole export agent. You have foreign contacts
and know the demand for specific goods.. You will handle the
sale,, the paperwork, the money, all shipping, customs, and
The manufacturers in return provide firm price quotations, and
you put your fees on top of that; you cost the manufacturer
The manufacturer have everything to gain--an increase in sales, a
broader market, and more profit. And you have everything to
gain--establishing your business, and a commission on the cost of
the goods. That is the basis of firm business connections and a
mutually profitable arrangement.
Contact local manufacturers first and then move into larger
territories. You can make these contacts by phone, in person,, or
by personal introduction from contacts you may already have.. Or,
you can advertise in business publications and newspapers.
Before yo do get into a legal agreement, be sure to check the
reputation of the company. How long has it been in business?
Where are the products distributed domestically? What is the
solvency and reliability of the company and its goods? When you
make your sale, you'll want to be able to deliver.
MAKING AN AGREEMENT
ONce you have agreed to represent the manufacturer as the export
agent, you need to have a written and signed contract to bind
this agreement. Your attorney should be the one to draw up this
contract; later you can just use the same one, substituting names
of other manufacturers.
Basically, the contract is between the manufacturer and you as
the export representative. You are granted exclusive rights to
distribute goods to all countries except those they already
distribute in. The manufacturer will pay you the specific
commission quoted to the distribution on top of the price of
goods. The company will also provide catalogs and samples for
your use in distribution.
You, the export representative, in turn will promise to do
everything possible to make contacts and distribute
manufacturer's goods in foreign territories..
The terms of the contract should then be stated: how many years
the contract will be signed for, the terms of cancellation by
either party voluntarily or because of no sales action over a
certain period of time.
You've made your contacts with foreign distributors who will buy
the merchandise. You have a signed contract with an American
manufacturer that will deliver the goods.. Perhaps one of the
distributors now asks for a firm quotations on the price of a
certain amount of goods.
You go to the manufacturer and get a price quotation on the
quantity of goods. It should be valid for a certain stated
period... The manufacturer may agree to deliver the goods to the
ship,, handling the freight to that point, or you may need to
make arrangements from the factory.
You ass on the commission you want to the price of the goods.
Then you add on all the extra costs of getting the merchandise
from the factory to the warehouse of the distributor.
If you've made an agreement with a foreign import/export company,
their representatives may take over the shipping, paying you the
price of the goods and your commission. That;s the easiest, but
your commission will have to be reasonably lower.
If your sale is to a company that will distribute the goods
wholesale or retail from its premises, you have to arrange all
TERMS OF SHIPPING
You will become more familiar with the terms of shipping used in
quoting prices and delivering goods as you gain experience. Your
responsibilities vary with the terms of the agreements and
orders. Check with your freight forwarder to be clear about your
A bill of lading is a receipt for goods shipped. It is signed by
the agent of a ship or common carrier and assures the buyer that
the goods were unloaded in the same condition as they were
accepted. These are the documents you'll need to produce for your
banker to release the letter of credit.
FOB means free on board. The seller delivers the goods to a
certain destination with no additional charges. The seller
insures and takes the responsibility until that point. The buyer
takes the responsibility and pays the charges after that. For
example, FOB New York means the seller's price quotation includes
full responsibility and shipping to New York.
FAS means free alongside. The seller delivers the goods to the
ship that will carry the merchandise. The buyer pays to load onto
the ship and takes responsibility from there. FAS New York, for
example, means that the seller will deliver and store the goods
until they are ready for loading onto the ship.
C & F means cost and freight. The seller pays the freight
charges. The buyer insures the merchandise and takes full
responsibility after the destination.
CIF means cost, insurance, freight. The seller is responsible for
the value and condition of the goods, and pays both insurance and
freight charges to a certain point.. The buyer is responsible
THE FREIGHT FORWARDER
A freight forwarder is a person who takes care of the important
steps of shipping the merchandise. This person quotes shipping
rates, provides routing information, and books cargo space.
Freight forwarders prepare documentation, contract shipping
insurance, route cargo with the lowest customs charges, and
arrange storage. They are valuable to you as an import/export
agent, and they are important in handling the steps from factory
to final destination.
They can be found by looking in the yellow pages or by personal
referrals. Find someone who can do a good job for you. You'll
need someone you can work with, since this may become a long term
You'll need the help of a freight forwarder when you make up the
total price quotation to the distributor. Not only do you
include the manufacturer's price and your commission-usually
added together, but you need to include dock and cartage fees,
the forwarders fees, ocean freight costs, marine insurance, duty
charges, and any consular invoice fees, packing charges, or other
Be especially careful when you prepare this quotation It
certainly isn't professional to come back to the distributor with
a higher quote including fees you forgot... You might go over the
price quotation with your freight forwarder to be sure nothing is
Usually the quotation is itemized into three main categories of
cost of goods, which includes your commission, freight charges
from destination to destination, and insurance fees.
Give a date the quotation is valid to, which should be the same
as the date given on your quotes. You may also include
information about the products, including any new sales
A formal letter that accompanies the price quotation should push
for the sale. You can inform the distributor of the shipping date
as soon as the order is received and confirmed by a letter of
credit. Send the letter and price quotation by registered mail to
be certain of its delivery.
THE LETTER OF CREDIT
A letter of credit eliminates financial risks for you, the
manufacturer, and the distributor. When your distributor confirms
the order, a letter of credit is drawn from that company's bank
to a branch in the United States or to your bank.
This letter of credit confirms that funds are available from the
distributor to cover the same costs you quoted. An irrevocable
letter of credit assures you the order will not be cancelled at
any time... When that letter of credit is likewise confirmed by
your bank to deliver the goods, the distributor is assured of
delivery. Once the letter of credit is confirmed, so you don't
have to worry about the fluctuation in currency.
Basically, the bank holds the money until all shipping documents
are presented. The letter of credit states the terms and
conditions to make it legal and negotiable into money, usually
holding for proof of shipment of the goods. Your freight
forwarder helps you attain all those documents. When you hand
them to the banker, the letter of credit is turned into liquid
assets for you to pay the manufacturer and all other invoices
from the transaction.
Never work on promises. Not only do you take a gigantic risk, but
you create bad risks for everyone you are involved with. A letter
of credit is the only sure way to transfer these payments.
DELIVERING THE GOODS
There are many combinations of people and methods you can use to
deliver the goods that were ordered. When you produced a price
quotation for the goods, you had to go through all the steps the
merchandise will follow. Now, before you proceed, check again.
Do you have a confirmed order signed by the authorized
representatives of the distributing company?? Has your banker
approved the letter of credit from the company?
Compare the amount of the letter of credit to the amount quoted
for the goods. Be sure they match exactly. Or, if the distributor
chose a certain quantity of several offers, check the prices
again and confirm the quantity.
Confirm the quotation and sale with the manufacturer, and do the
same with the freight forwarder and any marine insurance agents
you are working with. Then follow through.
I order to assure the quality of merchandise, some manufacturers
prefer to handle freight to the loading docks,, which makes it
easier for you. If you handle overland shipping, follow through
to be sure the merchandise is picked up and arrives safely at its
Be informed of the date the goods are loaded onto the ship. The
factory should have them freighted in time to avoid costly dock
Since all conditions of the sale must be met to comply with the
terms of the letter of credit, you need all the signed documents.
Have your freight forwarder or other contacts get authorized
bills of lading for the merchandise each step of the way--from
destination to destination..
Once you have all the signed documents, present them to your
banker. If all the terms are met, the funds will be released.
Since your commission is part of the quoted price of the
merchandise, you'll usually collect your fees from the
When it is totally complete, you collect your money--and make a
sizeable profit for simply making connections. Consider the
commissions when you have dozens of orders coming and going.
Take a look at the household items and equipment you have in your
home. Made in West Germany, made in Japan, made in Korea. You may
have clothing from India, shoes from Brazil,,, a leather wallet
from Italy.. Your car may be an import; your stereo equipment may
be manufacturer elsewhere. There are hundreds and hundreds of
items manufactured all over the world, now being used by the
The market is huge. And there are many American firms looking for
foreign made merchandise to distribute. Some items are less
expensive;some are better made; some are imported because they
are made in a country now fashionable with the designers.
What can you tap into? Maybe you have contacts in the Unites
States, distributors looking for certain goods. And you've
already made contacts in the foreign countries that produce these
goods.. Follow through and get yourself an exclusive distribution
agreement with those manufacturers.
Importing requires the same diligence and follow up as exporting
does. You'll need a signed contract with the manufacturer to be a
distributor to North America, or even the world.
You'll also need to obtain firm price quotes from the
manufacturer in the quantities your distributor requests. These
quotes should be converted into the appropriate dollar figures
representing the currency exchange.
Investigate the reputation of the manufacturer and the
reliability of the goods. If you import something like electronic
components, check into other distribution market the manufacturer
has to assure the quality of merchandise.
Your commission will come through from the foreign manufacturer.
Have your bank investigate the solvency of that company and the
reputation of living up to agreements. Since it's on foreign
territory you'd have more trouble in any legal suits, even in
light of many international laws.
Prepare the price quotation. It is easiest if you request terms
of delivery to the port of that country. Your freight forwarder
can help you move the merchandise from port, overseas, and
through domestic customs.
Follow through with all the details of shipment. Be sure to
include any insurance, dock fees, storage rates, and shipping
overland. Overlook nothing so your price quotation to the
American distributor is accurate,
Itemize the quotation and give it to the American distributor..
Upon receipt of an authorized order, double check prices and
follow through on delivery.
The letter of credit will go from the American distributor to the
bank of the manufacturer. All terms and agreements regarding
prices, freight and insurance will be defined. The manufacturer's
representative will confirm receipt of the letter of credit,
which will release the goods for shipment.
Have your freight forwarder follow up on the shipment of goods.
They may have to be freighted from the factory to the docks..
Arrangements for shipping need to be carried out.. Customs duties
and unloading need to be followed through from the American port.
Then the goods may need to be freighted overland to the final
As soon as the goods have arrived at the proper assigned
destination, papers have to be documented and presented to the
bank that holds the letter of credit. Then, all carriers and
agents need to be paid, and you collect your commission.
After you have completed a few sales transactions to establish
yourself, you'll need to promote your import/export business to
get more clients. The first transactions give you the experience
to learn the ropes of the business, and to establish contacts and
agents both here and abroad.
Join organizations of commerce and foreign trade associations to
develop more contracts and extend your territory. Talk to
everybody you contact about importing and exporting, learning
from their mistakes and successes.
Advertise in the print media for distributors and for goods.
Manufacturers don't know how to make the contacts for foreign
distributions. Show them your credentials and pick them up on
exclusive contracts. With a little experience, you can market
almost anything anywhere.
EXPANDING THE BUSINESS
THe profit of the import/export business is in the quantity of
the goods traded. The higher the cost of the merchandise, the
higher the profit from your percentage. Since you need to go
through all the steps for each transaction, having more sales on
a continual basis simply adds to profit.
Send constant mailings to your original list of contacts and
follow-up leads. You might develop a sales approach. As you
develop more clients, you can convince the bigger companies of
Contact as many manufacturers and distributors as you can on both
side of the ocean. And solidify these contacts. You may be able
to work out an arrangement with someone to work in certain
country for a commission. Or, you might want to take a business
trip there to personally meet with the various companies.
get in-depth information on the products now selling.. Why are
certain products successful?? Maybe you can get into the same
market with more competitive product. Investigate ways to sell
more.. Do the products need to be better made? Do they sell
better at a reduced price? Know what sells and where to get it.
MAKING IT WORK
The import/export is a high profit enterprise. Because of the low
overhead, most of the money you make on commission is yours.. But
building a truly profitable business requires dedication and a
good knowledge of the business.
You need numerous contacts who know you, respect you,, and can
recommend your work. You need to have good agents both here and
abroad to help follow through on the delivery of the goods... You
need a good working relationship with your own bank and possibly
the others that letters of credit come into as branch transfers
from foreign offices.
Don't be hasty for orders. Investigate the manufacturers and
distributors to be sure the products and sales methods are
reputable.. Check out the particulars of shipping and
manufacturers from the foreign country. Each culture works in a
specific manner... Get to know how to work with those people..
The import/export business is not for everyone.. But it is a
personal operation that you can run yourself-- you don't have to
answer to anybody. The rewards of negotiating in a foreign
country are excitement, a touch of the exotic and the great
When you make the proper contacts and follow through completely
with reputable manufacturers, reliable shipping companies, and
responsible distributors, you have it made.
If you are ready to put in the time, sell yourself. Start making
inquiries and contacts. Try it on for size.. Does it feel good?
Then MAKE IT SUCCEED,
If you need specialized LEGAL advice or assistance on this
subject, the services of a professional person are recommended.
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