A Dozen Tips for Starting an Import/Export Business
Thinking of starting an import/export business? Jennifer Henzel, a Certified Import/Export Trade specialized offers these tips for getting started:
1. Many countries have set up offices (Consulates or Embassies) in foreign countries to promote the exporting of their goods. The Consulates will supply you with industry directories and more. Embassies are located in a nations capital and Consulates in different cities. In many situations, the Embassy web site will contain directories and manufacturer lists, in addition as an email link that you can use for sourcing
2. To import goods, communicate with that countrys Consulate located in your own country. If you are uncertain what products the other country wants, you can acquire catalogues and lists of manufacturers.
3. Contact your countrys taxation department to ask about registration numbers or other procedures that you must follow. For example, if you are Canadian, you will require a Registration Number, issued by Canada Customs and Taxation Agency (CATA). When you inform CCTA of your plans to import or export, they issue an extension to your business number. This number is used on all related documents.
4. Find out about licensing requirements, if any. Many countries do not have licensing requirements for most products. However, if you are importing or exporting high-risk products (pharmaceuticals, liquor, chemicals, arms, certain food items and certain articles of apparel), you might need a license. I strongly recommend that people start out with low risk items that can be easily traded and have fewer barriers like giftware and consumer items, said Henzel. Certain industries, like dairy, are guarded by lobby groups in some countries. You will be faced with quotas and restrictions.
5. Embargoes are trade barriers set up against other countries. Many countries have embargoes against Cuba, for example. First, contact your own government to determine whether there are restrictions or embargoes against the country you are considering. Next, contact that countrys Consulate or Embassy to see if there are restrictions against goods from your country.
6. Participate in the local Boards of Trades (or Chambers of Commerce if there is no local Board of Trade). In addition to networking, you have access to research libraries and other resources that will offer good trade information.
7. Use customs brokers. Small businesses attempting their own paperwork can run into delays at borders. If you make a mistake, you can be fined, said Henzel. A custom brokers service is well worth the fee you pay.
8. When exporting, understand that there is no one solution to shipping and customs handling that will work in every situation. Every deal is different. Each company and each set of products will require a different set of sets, or a combination of sets. Engaging the sets of a freight forwarder is one possibility. Freight forwarders position shipping and customs for goods going to other countries. You have to shop for these sets and do your research, Henzel explained. Ask a lot of questions. Its no different than buying a piece of furniture. You shop around first.
9. Be familiar with Incoterms, as posted to the International Chamber of Commerce Web Site (http://www.iccwbo.org/index_incoterms.asp). Incoterms are standard trade definitions that dictate the shipping and payment responsibilities of each party. The two companies involved negotiate Incoterms for each deal. The best known Incoterms include EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To). You negotiate according to the Incoterms, Henzel said. You decide who pays for shipping, who pays for insurance, etc.
10. Consult your bank for information about Letters of Credit, the most shared form of payment when trading internationally. With a Letter of Credit, you minimize your risk because the edges assure that the goods are delivered before the money is exchanged. As an importer, a Letter of Credit reduces the risk of having to pay in improvement for goods, or of paying for goods that are inconsistent with the product description in the Letter. As an exporter, you have the buyers banks assurance that you will receive payment provided you ship the goods as stated within an agreed-upon time.
11. Participate in Trade Missions. Consult your Board of Trade or local Chamber of Commerce to discover what is obtainable.
12. Finally, look to the Web for information about international trade. Many web sites offer an range of information that you can access for no charge, including Henzels site (www.importexportcoach.com).