Trading has evolved meticulously, and now it is more monetized than ever before. Trading is how textile, FMCG, and many other goods produced in one country are available in another. The trading system involves two important concepts: Imports and Exports.
Imports refer to purchasing goods/commodities from the host country and utilizing/selling it in the home country, and exports refer to producing something in one’s home country and selling it in the host country. Needless to say, both phenomenons are a source to generate revenue. Imports may seem to impact the economy negatively, but conversely, they can boost the country’s trade.
The question of whether one should establish an import business or an export business solely lies on the nature of the product, availability of raw material etc.
This article contains strategies and steps to start an import-export business from home in the USA.
Do Your Homework
Since the article aims to give a head-start to readers on how to start a business from home, it is essential to cover all the basics before jumping to the main deal. Import and export business can be complicated; therefore, it is crucial to know all the rules and requirements that need to be fulfilled.
If you are planning to import goods from any country to the USA you will have to file documents, insurance plan, learn about customs requirement, tariffs, free trade agreements etc. The Importer also has to make up mind about the category of goods that he will be importing, because certain imported goods are not allowed to enter the USA such as arms and ammunition, food, drugs, counterfeit products etc.
Similarly, when you are exporting from the USA, there are regulations for that too. Learn about those regulations and maneuver about the next step.
If you have a made a mind about the type of good you want to sell, it will be easier for you to move to the next step.
Decide a Product to Import-Export
In the paragraph above, we discussed deciding a category of goods one wants to trade, and the industry one can tap in. The second step is to brainstorm and specify the exact product you want to import-export. This may be done by identifying a market gap or finding your interests.
If you are new in the business, try to indulge with other startups and learn the strategies they used to choose a product to trade. Also, searching the market gap will have you analyze a product not offered in a particular region.
Another important piece of advice would be to grab a cup of coffee, unwind, and identify your interests and what type of business excites you.
Conduct Market Research
You will have to research the market you intend to penetrate; the information should be related to customers, competitors, suppliers etc. This also involves learning about the trade regulations imposed in the country you want to export to or import from.
Luckily, market research does not necessarily mean collecting primary data by visiting markets; one can also approach agents having relevant information or use social media to conduct thorough research.
Social media is a great source for market research; you can select a segment of population and conduct surveys before finalizing your target market.
Find the Target Market for Your Product
The Target market refers to the group of people who are potential customers of your brand. Having a classic innovative product would not matter much if you have not searched the right target market. One should analyze the nature of the product and identify the region where it would perform well.
For instance, if you are exporting coffee, you need to search for a region where the weather remains cold for most of the year; the region would be a suitable and billable market for the exporter.
If you have an import business, the products you sell will most likely be costly compared to local offerings, so you have to target a group of people willing to pay more for better quality.
Name Your Brand and Setup a Website
Once you are done with the research of the market and the product and you have made your mind for import or export business, then set up a website. The world is called a ‘global village’ for a reason; it is more connected now than ever before. People like shopping online; therefore, having an online presence is very important for any type of consumer goods.
Also, import-export businesses involve uncertainty and risk factors; therefore, having a website will not only boost sales but also build trust among the stakeholders.
Tax and Legal Business Obligations
You have started a business so do it right. Every person importing or exporting is liable to pay taxes to the country as it is their legal obligation. The location and business type will alter the type of tax that you will pay.
If you are a sole proprietor, then you will be required to pay personal and business tax. If you are the owner of a corporation, then you will pay business tax and employee insurance.
Although we are discussing how to start a business from home and it would cut major expenses that would have been incurred in case of setting up an office, financing is still required for any business.
You need to estimate your budget and analyze your resources.
If you have the required financial resources and good credit history, then the entire process will be smooth.
Also, the USA offers small business administration (SBA) loans to businesses that are looking forward to entering the export market. The agency aims to promote trade in the USA; therefore, it supports and promotes businesses by providing loans.
If you have an import business, then an important question is where you are going to import the goods from. Usually, people source goods from websites such as Alibaba, DHgate, Global sourcing etc.
One needs to maintain strong relations with suppliers; the inability to maintain a sound relationship with suppliers may result in finding new suppliers every now and then which would not only impact the finances of the company but your supply chain will also bleed.
Similarly, in terms of export business, people in the US can register themselves on e-commerce websites as suppliers and trade goods and services.
Setup a Logistics System
Doing a business does not only require locating efficient quality-checked goods but also transporting that product through reliable channels.
It is the most prominent aspect of the supply chain; by now, you have located your customers; you have decided on a product and the finance requirement etc, but none of this would matter for your import-export business if you have not decided on shipment terms.
One can hire companies such as DHL, FedEx, and UPS to ship the products to the USA or out of the USA. Many people prefer hiring freight forwarders instead of transporting themselves, as the process becomes much easier and quicker.
Freight forwarders will help you with shipping, packaging, and labeling solutions. Moreover, freight forwarders will also help with customs clearance and provide a warehouse for your goods until clearance has been dealt with.
Price Your Products
Pricing goods for a local business is very straightforward compared to pricing for an import-export business. There are multiple fees, clearance, port charges, and other factors that would increase the cost of your goods.
Make sure that the markup on goods is not exceeding the perceived value of your goods in the customers’ minds. Also, do the costing for your import-export business by making a table as it would help you to decide the percentage of markup that you want to charge.
Analyze the market as well. If you have an import business, and you are shipping products from China to the USA, then you are paying shipping, clearance, tariffs etc, but the price of your goods should not be higher than the market rates as it may reduce the attractiveness of your goods.
This article is a basic guide for anybody looking forward to starting an import-export business from home in the USA. It is a challenging process, but the article sums up everything on how one can start a business.
The key takeaways are:
- Do your homework
- Decide on a product to import-export
- Conduct market research
- Find the target market for your product
- Name your brand and set-up a website
- Tax and legal business obligations
- Setup a logistics system
- Price your products