An import/export business provides loads of opportunities for every entrepreneur and there is a considerable amount of money to be made in this business. A key attribute that makes a trade business highly appealing is the fact that some goods and services are relatively less expensive when purchased from foreign countries. Through this article, we will evaluate the different types of import/export businesses, the opportunities those businesses create and the important factors to consider before starting an import/export business.
Types of Import/Export Businesses
There are various businesses in the import/export sector for anyone who wants to start up as an entrepreneur. Some of the major variations are as follows:
- Import/export merchant: Entrepreneurs participating in this sector can be regarded as free agents. Such individuals do not have any specific client base and don’t tend to specialize in a specific sector, industry or product line. As a matter of fact, such entrepreneurs tend to directly purchase products from a local or international manufacturer and then distribute those goods on the basis of their own convenience. These merchants are responsible for all the risks and rewards arising from the business.
- Export trading company (ETC): An ETC evaluates and identifies what the core needs of potential buyers are and what they want to spend their money on. In this manner, they can also have an idea of the local sources that are ready to export. In some cases, an ETC has the privilege to take ownership of the goods while in other cases he can work on a commission based business.
- Export management company (EMC): From a general point of view, an EMC is responsible for handling export related operations which are relevant to a local company that focuses on selling its services and products overseas. However, it doesn’t always know how to sell them. In this regard, the EMC is responsible for recruiting distributors, agents, dealers and other representatives. Moreover, they are also responsible for marketing and promotions, advertising, packaging and shipping. In other scenarios, they are also responsible for taking ownership of the goods. As a result, they can become a personal distributor.
Various opportunities for entrepreneurs
A trading business can allow a potential entrepreneur to promote his business to a larger global audience. At an initial level when an entrepreneur has been able to complete a few business transactions on a local or foreign scale, it is important to promote and market the business for attracting more clients. This helps in providing business exposure and establishing wider contacts and creation of a trading portfolio. An entrepreneur can further expand his horizons by joining a commercial or foreign trade association and it can help to attract more exposure.
An import export business can provide considerable opportunities of profit maximization for potential entrepreneurs. However, profit of every import/export business depends mainly on the state of the economy. Some of the most common strategies to boost profits that could be helpful in this regard are following up leads and developing an aggressive sales approach.
By engaging in an international trading business, exports in particular, an entrepreneur has a massive opportunity to diversify his business risks. A company would have the opportunity in protecting itself from various local adverse scenarios such as natural disasters, inflation, financial meltdown, civil war etc., if it can spread its business in other parts of the globe. In such adverse conditions, the domestic market for a potential entrepreneur may be unstable, but the business could continue its revenue generation if it has spread its operations to a larger audience worldwide.
Important factors to consider before starting an import/export business
Being a trader in the international market, there is always a need for an intermediary for buying, selling, importing or exporting during a specific transaction. For this reason, it is important to determine the product price but also the overall price of the services. Another important point to note for a trader is that prices of their services have to be added to the products they are trading as this can have a substantial impact on the competitiveness in the marketplace. As the overall fee for a trader’s products and services is directly impacted by the success of his product, a trader is allowed to determine his pricing structure.
One of the most important things to do before embarking on a journey towards an import/export business as an entrepreneur is to determine the overall startup costs. One of the key advantages of an import/export business is that the start up costs are usually low to moderate. Until an individual has been working as a distributor, he does need to purchase any inventory. The major financial investment as an entrepreneur will be primarily towards business equipment and market research analysis.
A very important point to note as an entrepreneur is the target market. Every business needs brand loyal consumers for its services and products as this allows a business to grow and prosper. For effectively running an import/export business, it is highly important to plan, target, market and determine their potential clients in a highly effective manner and also to determine what specific products and services they will offer those customers. This is certainly important from an entrepreneur’s perspective as in-depth market research allows improvement and boosts a company’s trading operations and that can turn it into a profit earning powerhouse.
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