Do you want to start an import export company from home? If YES, here is a guide on how to start an import export business with no money and no experience.
An import and Export business has little financial requirement to set up thereby giving you a good profit margin and an operating cost that is manageable. It also gives you the opportunity of working with clients from different parts of the world. To start this type of business, you need to pay attention to details and have a flair for organizing things.
Table of Content
- What It Takes to Import or Export Successfully?
- Interesting Statistics About the Industry
- Market Research and Feasibility Studies
- Franchise vs Starting an Import Export Business from Scratch
- Possible Threats and Challenges You Will Face
- Best Legal Entity to Use for an Import Export Business
- Catchy Business Name ideas for the Business
- The Best Insurance Policies
- Is Professional Certification Needed to Import and Export
- Legal Documents You Need for an Import Export Business
- Writing a Business Plan for your Import Export Business
- Cost Analysis for Starting an Import Export Company
- Financing your Import Export Company
- Technical & Manpower Details
- Marketing ideas and Strategies
- Tips for Running an Import Export Business Successfully
What It Takes to Import or Export Successfully?
In the import and export business, there are some skills such as sales, relationship and marketing skills that you need to possess which are crucial to the success of the business. As a good sales person, your ability to speak the language of the people you are doing business will always work well in your favour.
Another important factor to pay close attention to in this line of business is the legal aspect of importing and exporting different items because a lack of required legal knowledge can make an otherwise good deal turn sour.
An import and export business person is like a match maker who makes a connection between the manufacturers of domestic goods and foreign distributors or the buyer of products or raw materials and since foreign manufacturers favour the American market, your job is to help these two independent bodies make a connection by bringing them together.
If you are hardworking and determined, then you will make progress in the import and export business, this is because the more experience you get, the easier the business becomes for you to run. Within a short period, you will soon start turning in a profit.
The possibilities in the industry are endless and the market is wide because a lot of manufacturers are on the lookout for foreign distribution. Once there is a demand for a particular product and you can get it, then you are in business.
The government of the united states is one that supports exports because the sales of the goods helps to strike a balance with the huge number of goods that are imported into the country on a regular basis. As a result of this, government agencies are always very supportive when you want to set up an import and export business.
Starting an Import Export Business from Home With No Money – A Complete Guide
- Industry Overview
According to the United States Department of Commerce, importations account for an annual $1.2 trillion in goods. Exporting is equally as big in its own right as American companies exported $772 billion worth of goods to over 150 overseas countries.
Interesting Statistics About the Industry
The world’s third biggest exporter is the United States and its exports accounts for 13% of GDP. Its exports fell by 2.1% in January of 2016 to $176.46 billion. This was the lowest it had fallen in more than 5 1/2 years. From 1950 till 2016, exportation was at an average of $48,995.11 million with a record low of $772 million in March of 1950 and an all-time high of $197,759 million in October of 2014.
More than 40% of the rise in GNP of the United States was as a result of the contribution of merchandise exports from 1986 to 1990. Exports totalled a high of $394 billion in 1990. As a result of the increase in the U.S exports in the late 1980s and early 1990s, there was a significant lower trade deficit and an addition of 2 million jobs attributed to exports.
The United States Department of Commerce has made an estimate that one job is created for every $45,000 in export sales. The United States claimed a 16.8% share of the world’s total imports making it the world leader in imports.
Export is an important vehicle of growth for companies in the United States. This is because a lot of domestic products and the service market in the country are already saturated and there is only room for limited growth opportunities.
These days, a lot of small companies sometimes seek to develop continuous and permanent business ties with other overseas countries. 15% of the exporters in the United States make up 84% of the value of manufactured export in the country. Less than 20% of the exporters and less than 3% of all the companies in the United States export to over 5 markets and half of the exporters sell in just one foreign market.
The market for import and export for many product lines are already saturated and there is information to back this up. So to avoid facing any kind of problem in this business, make sure that there is a genuine need for the products you want to deal with. When you have done this, with a lot of commitment from your end, your business is off to a good start.
The factors and incentives that encourage an entrepreneur to go into this type of business lies in the little start-up capital that is needed for the business and the ability to make a lot of profit without incurring too much overhead cost in the running of the business.
Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that need the services of import and export companies cuts across the private sector, the public sector, communities, households and people from different walks of life. The following is a list of the people and organizations that need the services of import and export companies:
- Manufacturers looking for new markets in the United States
- Manufacturers in the United States looking for new market in foreign countries
- Raw material suppliers looking for buyers in foreign countries
Niche ideas Within the Industry You Can Specialize in
If you want to start an import and export company, there are a couple of niches ideas within this industry that you can choose from. In the early stage of your business, it is important to focus on a target niche. As a new company, it will be beneficial to you to focus on a particular niche so that you will use that to have the necessary experience and enable your company to gain a bit of a reputation.
The following are the niches that an import and export company can specialize in:
- Export Management Company (EMC)
- Export Trading Company (ETC)
- Import/Export Merchant
The Level of Competition in the Import Export Industry
Surviving in the business world as an import and export company requires a lot of hard work and also studying the market well to know what goods are going to sell if they are imported into the country as well as the goods other countries are in need of when you want to exports products.
There are loads of big time investors such as DuPont, that have a stake in the import and export industry but there is still room to accommodate the new entrepreneurs that are just starting out in this field. As a new company, if you take charge of your company and research the product you will be importing and exporting very well, in no time, you can also become a big time player and start raking in lots of profits.
List of Well-known Brands in the Industry
There are a lot of well-known brands in the import and export industry whose presence can be felt all over the United States. These companies are so big that they rake in a lot of profit yearly. The following are some of the leading import and export companies in the United States of America;
- Sam Smyth Imported Car Service Inc.
- Emerald Coast Imports
- Fosbender Imports
- Mccloskey Imports & 4X4
- Lair Imports
- Palm Beach Import, Export LLC
- Paragon Export & Amp; Import
- Reliant Imports Worldwide
- Universal Imports Inc.
Starting an import and export company is a serious business and as such there is need for critical economic analysis to be conducted to make sure that the risks and other threats associated with setting up a business from the initial stage or investing in a business idea are reduced.
If you are considering starting an import and export company in the United States, your concern should be more than just getting an office space and equipping the place with state of the art furniture and equipment neither is it about hiring the best hands in the industry, your primary focus should be on how to find business contacts.
If your intention is to go into importation, then you should be concerned about getting a manufacturer but if it is export you intend to concentrate on, then you need to get buyers. By and large, setting up and running an import and export business in the United States can be cost effective simply because there is no need to maintain a large workforce when you are just starting the business.
You can start the business on your own initially but if you want to hire staff from the beginning, with a good company’s profile, highly qualified, highly trained and highly experienced members of staff on your team, you will be well grounded in the business in no time and start turning in profit.
Franchise vs Starting an Import Export Business from Scratch
If you want to start an import and export company, you need to think carefully if you would like to start from scratch or buy the franchise of an already successful company or you can even consider going into partnership with a bigger company if you want to own an investment in this industry,
People will always be motivated to start a business based on various reasons. If you are therefore looking towards building the kind of business that you can have proper control of, the type that the ownership of the business brand can one day be transferred to your children and you can possibly sell the franchise in the future, then setting up the business from scratch should be your best bet.
On the other hand, if what you are interested in is in making money and increasing your wealth, then you should consider buying the franchise of a successful import and export company that is willing to sell its franchise.
Possible Threats and Challenges You Will Face
In the import and export industry, there are some threats and challenges the industry is subjected to. Some of these include the problems of unreliable suppliers. Having the right suppliers are important to the success of importing therefore ensure that you find out much about a supplier before using them.
There is the challenge of the risk involved when you are dealing with goods that are fragile as they could become damaged before getting to their destination. As an importing and exporting company, underestimating the exchange rate fluctuations can also affect the price you pay for your supplies, therefore in order to avoid this, you should try to open a currency account to use for trading in the local currency.
Other challenges you are likely to face will be how to figure out the handling of shipments through a freight forwarder, ensuring your manufacturer makes your imported product according to required standards and making sure the exported products meets the standard of the buyers. With time you will be able to surmount these challenges and become a pro at handling all the issues.
Best Legal Entity to Use for an Import Export Business
The type of legal entity you choose can determine how big your business will grow. In choosing a legal entity for your import and export company, there are several options available for you to choose from. You have the option of choosing from a sole proprietorship, an LLC, a “C” corporation, or an “S” corporation.
The different forms of legal structure for business has its own advantages and disadvantages therefore you must weigh your options properly before making a choice on the legal structure to use for your import and export business.
You can start your company as a Limited Liability Company (LLC) and in the future convert it to a ‘C’ corporation or even a ‘S’ corporations especially when you have the plans of going public.
Catchy Business Name ideas for the Business
To choose a company name for your import and export business, you need a name that is simple and easy to recall so that people can remember it and can easily find your business. Also you should pick a name that can easily fit into a domain name or a web address.
The following are samples of business names you can use for your import and export business:
- Diamond Coast Imports
- Express Imports
- Allen Imports Distributors
- Resort Import, Export Loc
- Amplified Export &Import Worldwide
- Basement Imports Worldwide
- Empire Imports Inc.
- Flow packaging
- Frontline Solutions
- Real Tool Corporations
The Best Insurance Policies
In setting up a business, you need the right type of insurance policies which as required by the industry in which you operate. If you have the right insurance, it will make the difference between a business that is successful and an unsuccessful one because of the problem of under-insured and non-insured losses.
In the import and export business industry, there is a need to have a proper insurance in place to protect your business interest. It is important to create a budget for insurance and if you need proper guidance on the best insurance policy to use for your business, it is best to use the services of an insurance broker.
This person will be able to give you the necessary advice after the evaluation of the risks involved in the business. The following are some of the insurance policies you should get if you intend to start an import and export business:
- Business Package Insurance
- Industrial Special Risk Insurance
- Fire and Defines Perils Insurance
- Burglary/Theft Insurance
- Accidental Damage Insurance
- Business Interruptions
- General Property Insurance
- Goods in Transit
- Motor Vehicle Insurance
- Marine Hull Insurance
- Aviation Hull Insurance
- Credit Insurance
- Fidelity Guarantee Insurance
- Corporate Travel Insurance
- Personal Accident/Sickness Insurance
- Public Liability Insurance
- Products Liability Insurance
- Professional Indemnity
- Product Recall Insurance
- Product Guarantee Insurance
- Workers Compensation
- Life Insurance
- Buy/Sell Insurance
Intellectual Property Protection and Trademark
If you are considering starting your own import and export company, then consider filing for intellectual property protection. Filing for intellectual property protection for an import and export company is not only about protecting your company’s logo and other documents; it will also enable you to protect your software applications and your Business Name.
To file for intellectual property protection and register your trademark in the United States, you should begin the process by filing an application with the USPTO. Final approval of trademark is then subjected to the review of attorneys which is a requirement of USPTO.
Is Professional Certification Needed to Import and Export
It is important to have some professional certification so that you can have an edge over your competitors. You might think setting up an import and export business is no big deal, but the truth is that having a professional certification will make a difference in the way you run the business.
The following are the types of professional certifications that can be advantageous to the success of an import and export business:
- International Trade Certificate
- Export Management Certificate
- Certified Exporter
- Certified US Import Professional
Legal Documents You Need for an Import Export Business
To run an import and export business, you are expected to meet the stipulated requirement necessary for obtaining a license to run a business in the location where your business exists. You should also check with the Chamber of Commerce and the custom agency to make sure that embargoes and trade barriers do not exist in the countries you want to do business with:
The following are a list of the legal document you are expected to have to be able to set up an import and export business:
- Certificate of Incorporation
- Business License
- Business Plan
- DBA business name
- Company Identification Number
- Export License
- Import License
- Non – disclosure Agreement
- Operating Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
Writing a Business Plan for your Import Export Business
These are some key areas that should be covered in your business plan and they include the following:
Executive summary and Company’s descriptions-: here you are expected to write about the concept of the business, the company description, the company’s vision statement, mission statement and where the company will be located. Information of your intent to sell a franchise or open outlets in different cities of the United States of America and in other parts of the world should also be included.
The other key components that should not be missing in the business plan are products and services offering, SWOT analysis, marketing and sales analysis / strategies, competitive analysis, costing and financial projection, target market, market goals, pricing, expansion and growth strategies, publicity and advertising strategy, budget and start – up capital generation et al.
Cost Analysis for Starting an Import Export Company
There are several expenses to be incurred before you can launch your import and export company successfully. The location you intend to use to launch your business will also impact on the total cost of starting the business; therefore it is very important to have carried out your market survey and feasibility studies and before drawing up a budget and sourcing for funds for your business.
The following are some of the basic cost you must look towards fulfilling when starting an import and export company in the United States of America;
- The Total Fee for incorporating a Business in the United States of America – $750.
- The budget for Insurance, licenses and permits – $5,000
- The Money for renting a suitable office facility with adequate space in the United States of America (including reconstruction of the office facility) – $50,000.
- The Cost of equipping the office (computers, printers, fax machines, telephones, furniture, filing cabinets and other electronics) – $15,000
- The Cost of Launching an official Website – $700
- Additional Expenditure (Business cards, Signage, Adverts and Promotions) – $2,500
- Miscellaneous – $1,000
According to the report from our research and feasibility studies, we will need about $20,000 to set up a small scale import and export business in the United States of America.
On the average, you would need over $150,000 US dollars to set up a medium scale import and export company in the United States of America. If on the other hand, you choose to start a large scale import and export company, then you should be thinking of having a budget of about $3,000,000 and above.
Financing your Import Export Company
If you want to start an import and export business on a small scale, you don’t need a lot of capital to start it. It is only when you want to launch the company on a large scale; you will need to raise the required start-up capital. If you are starting an import and export company on a large scale, you need to get an office space with enough space, furniture, equipment for the office, budgeted capital for the payment of a minimum of three months salaries and capital for supplies.
To finance your business, you need to have a good business plan written down for the business. If the business plan is good and workable, you won’t need to trouble yourself in getting friends, investors and banks to buy into your business idea and loan you the required capital for your business.
Consider and explore the following options when you are trying to source for funds to start-up an import and export business.
- Sourcing for capital from the sale of personal stocks, properties and from personal savings
- Sourcing for capital from business partners and investors
- Applying for loans from banks
- Obtaining credit letter from the bank
- Applying for seed funding and business grants by pitching your business idea to donor organizations and angel investors
- Sourcing for soft loans from friends and family members
- Getting money from your Credit cards
- Taking a cash advance against the income from your credit card
- Sourcing for money through venture capitalists
choosing a location for Your Import Export Company
Doing some consultation before choosing a location for your company is very important. This is because if you don’t choose the right location, the business will struggle to make ends meet. Getting a good office space in a good location can be challenging but it is important to the success of the business you intend to run. A company located in a wrong business location will in due course fail and close up shop.
Nevertheless, if you want to build an import and export company that is successful, you should get an office space in a location with healthy business activities. If you are able to build a successful brand and become a household name, then you can go and open branches of your company in any part of the world and be a huge success.
You should consider the following factors if you want to choose a location for an import and export company:
- The style of operation
- The demography of the location
- Proximity to other business and services
- Ease of access to the office location
- Adequate parking space for your clients
- Knowledge of the local laws and regulations in the community / state
- Traffic situation
- Security of the location
- The zoning regulations to determine if your business can be conducted in that building
- The building’s infrastructure in terms of requirements to support the high technology needs of modern day business
Technical & Manpower Details
If you want to set up an import and export business, you need to equip your office with necessary things like phone lines, computer, printer, photocopier, fax machine and other equipment, filing cabinets and furniture as these constitute the basic needs of what you should spend your capital on when starting off your company.
If you want to acquire an office space, you should consider between renting and leasing an office space to run your business. You should make a choice based on the size of the company and the budget at your disposal. If you have enough money, you should consider leasing, this way you can plan for the long term.
To employ members of staff for your team, you need to work within the budget you have. On the average, you will need to have a chief executive officer (you can take on this role as the owner of the business), a human resource manager, a Business development executive, receptionist and accountant.
To kick off the business, a minimum of 8 staff is okay to manage a medium scale import and export business. You also have the option of partnering with other import and export companies that have specializations in areas you do not have.
The Services Process Involved in the Industry
The service process involved in the import and export industry depends on the niche your company is into. If you are into importation of goods, you need to make contact with manufacturers who produce the goods you need to import into the United States. Once payment is made for the goods, the goods will then be imported into the United States of America.
On the other hand, if you are going to be exporting to other countries, you need to find the buyers for your products or raw materials. Once you have established this contact and payment for the goods or raw materials have been made, you are expected to export it to the buyer. You then get paid the commission on the price of the goods that is quoted to the distributor.
Marketing ideas and Strategies
Find out about the companies that want to sell their products in the United State of America and once you have established contacts in different countries, you need to market your import and export business to these foreign contact so that you can be their import and export agent of choice.
In addition to this, ensure that you produce a compelling personal and company’s profile that includes the profile of the company’s board of directors and management team. The following are some of the platforms you can use to market your import and export business:
- Reach out to foreign consulates in your country that have connections with companies that want to distribute their products in the United States.
- Search the internet to find foreign manufacturers and buyers
- Send emails to potential clients
- List your business on local directories / yellow pages (both online and offline)
- Attend trade shows
- Join local chambers of commerce around you for networking purposes
Possible Competitive Strategies for Winning your Competitors
Being in competition with existing import and export companies can be quite challenging, therefore, you should think carefully before you select the people you want to work with on your management team.
Carefully examine your competitors in the industry and make a comparison of your business idea with their own. Determine what their strengths and weaknesses are so you can use it to work on your own weaknesses and build on existing strengths.
Your clients will make comparisons between the service offering of many import and export companies before making their choice. Make sure your company is the one chosen by offering them the kind of service that they can’t refuse. You can also form partnerships with other import and export business agencies in the industry so as to have an advantage over your competitors.
Possible Ways to Increase Customer Retention
Customer satisfaction is one of the ways you can retain your customers irrespective of the business you are engaged in. With good customer relationship management practices, you will be able to keep and increase the patronage of your clients. The key is in satisfying your clients with the kind of services you render to them.
If there is poor service delivery, your clients will look for other sources to get their services. This is one of the major reasons why companies lose their clients. If you keep improving on the quality of your service delivery, then your customer won’t have any reason to drop your services to engage your competitors.
When you engage in good customer relationship practices, it never fails in helping your business to retain your clients. This can be achieved by keeping a proper database of your clientele or buying CRM software to keep up with the activities of your client.
Doing this will enable you have relevant information about your client which you can use in keeping in touch with them. You can send your client greetings on special occasion like public holidays, anniversaries and birthday and other important company information can also be passed on to client through this channel.
Strategies to boost your brand awareness and Create a Corporate identity
The calibre of clients you have worked for previously is important for the branding of your business. You can engage the services of a consultant to work with you in putting together a roadmap for publicity and advertising directed towards your target market so as to make your brand visible.
Brand awareness can be achieved by using the following platforms:
- Send introductory letters with a copy of your company brochure to the foreign manufacturers and buyers
- Advertise your company in websites and magazines
- Listing your business on local directories / yellow pages
- Through direct email marketing
- Leverage on the use of social media to give updates about your companies service
Creating a Suppliers / Distribution Network
Networking is a very important aspect of an import and export business as you will need to establish connections for manufacturers that want to bring their products into the United States and also for people that need to buy products or raw materials from the United States. You will therefore need to establish a solid business relationship with them.
Tips for Running an Import Export Business Successfully
No matter the kind of business you run, it is vital to the success of the organization to get all the members of your team on the same page at all times. As the chief executive officer, you are responsible for giving direction to the business. Ensure you create time for official meetings; this way relevant issue can be discussed and feedbacks got. Also make sure that the meetings are consistent.
Carry out performance appraisals regularly and give relevant training to your employees to help in the effective running of your organization. Encourage your staff members to go for certifications in their different area of specializations; this can help your organization’s profile and of course help the individuals. You can choose to fully or partially sponsor some of the certifications for anyone that is interested in taking these certifications.
In conclusion, you should keep an open door policy for suggestions from members of your team and your clients. Try to reward excellent performance in your organization so as to encourage healthy competition in your organization.