HOW TO START AND 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
details.
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 an 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 of times a
year? The advantages 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 companies.
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 that are imported. And you'll find government agencies
helpful in establishing your business.
THE BASICS
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.
MAKING CONTACTS
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 trends.
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 you find
indices of their own import/ export enterprises.
The United States embassies abroad are another place to find
contacts for commercial distribution. They can help you find out
about a com§pa§ny'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 the
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, and 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
compa§ny, requesting the names and addresses of appropriate firms to
contact. Ask to have the notice published in the monthly bulletin or
posted in an appropriate place.
From the names you get back, write another letter, again
introducing yourself, and asking information about their company.
You can use a questionnaire, which fill out and invites a response.
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 oth§er
cities? What are the basic details of operation - history, a ssets
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 countr y.
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, but you have to be sure to study where
they are in demand and can get the price to make exportation viable.
Your questionnaires will tell you what further and read the journals
published by that country - and many are available in English. Do
these publications 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 import ed
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 an d 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 keep your
credit afloat. In fact, that is one of the best factors abo ut an
import/ export business. Aside from office supplies and
correspondence, or possible business trips, you need no personal
cash outlay. All you need is good credit and a good reputation.
Your banker is your credit manager and will give you valuable
advice and references when you deal with both American and foreign
manufacturers and distributors.
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 finan cing.
Read these sources 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.
MAKING CONNECTIONS
As you continue your correspondence with foreign companies, build
up a good rapport with their representatives. 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
demand?
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
conglomerate.
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 m ake contacts
in the larger retail chains if you have retail merchandise.
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 fore ign
distribution.
The manufacturers in return provide quotations, and you put your
fees on top of that - you cost them nothing.
The manufacturers have everything to gain - an increase in sales, a
broader market, and more profit. And you have everything to gain -
establishing your business, an a commission on the cost of the
goods. That is the basis of a firm business connection a nd 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 you 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 na mes 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
distributors 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 the
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.
THE SALE
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 quotation on the price of a cert
ain 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 arrang
ements from the factory.
You add 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 the
transportation.
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
responsibilities.
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 goo ds 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 and 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
from there.
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 fina l
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 who you can work with, since this may become a long-term
business relationship
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 f
orwarder's fees, ocean freight costs, marine insurance, duty
charges, and any consular invoice fees, packing charges, or other
hidden costs.
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
overlooked.
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 literature.
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 mai l 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 by the bank, the currency exchange
is also 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 then 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 that 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.
In 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 destination.
Be informed of the date the goods are loaded onto the ship. The
factory should have them freighted in time to avoid costly dock
storage charges.
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 manufacturer.
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.
IMPORTING
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
manufactured elsewhere. There are hundreds and hundreds of items
manufactured all over the world, now being used by the American
consumer.
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 United
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 agr eement
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 the
sole agent distributing to North America - or the world, depending.
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 the 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 li ght
of the 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 that 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
pric§es, 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
destination.
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.
PROMOTION
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 contacts 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
distribution. Show them your credentials and pick them up on
exclusive contracts. With a little experience, you can market almost
a nything 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 c ontinual 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 your
reputation.
Contact as many manufacturers and distributors as you can on both
sides of the ocean. And solidify these contacts. You may be able to
work out an arrangement with someone to work in a 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 a 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 business 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 you 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 manufacturing
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 profit
potentials. 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 is recommended.