How to Start Import Business

Business

Introduction:

Import business is one of the most popular, valuable and very old business model all over the world. Import business is such a model that some countries producing or manufacturing products/commodities that other countries do not have the same products, but they have demand of that products/commodities in their countries. In that case other countries are importing the products/commodities from producing/manufacturing countries – simple is that the import business in short description. If you want to start import business in your country, you have to go through step by step processes and procedures to execute the business.

Why Import:

There are many reasons that some countries import merchandises from another countries. But we are pointing out main two reasons that creates import business:

  1. Availability – Availability of any merchandise in specific countries that other countries do not. Due to the availability of the merchandise, other countries import to their region to fulfill their market needs.
  2. Price – Price is one of the most important factor to import merchandise from another countries. For example, price of toys made by China is less than they made in importer’s own country. In that case, they consider to import from another country to satisfy the local customers and keep the product price in reasonable manner within the ability of the local consumers.

Type of Import Business Players:

There are mainly thee kinds of Import Business Players:

  1. Re-manufacturer: Re-manufacturers generally do import of materials and manufacture products in their own factory/mill and sell the finished products to local or international market. Re-manufacturers are generally import raw materials to produce their goods.
  2. Direct Importer: Direct importers generally import finished products/merchandise/commodities by their own and sell it directly to the local market to fulfill consumers’ need.
  3. Trader: Trader are those who act as a middle man between hole seller and supplier. They do not do direct import but the entire import procedure maintained by them in place of some commission.

Your Role:

Identify which role you are playing to import. Considering your financial strength and environment, chose your role to act as an importer. After define your role, take preparation to import the goods.

Preparation:

So, you have selected your role and decided to import any kinds of goods from outside of your country, now take primary preparation to start your import business. To start your import business, you have to have a positive mindset first and have to be dedicated with this business. Because import business is for long term. Just do it one-time is not a business at all. If you can get preparation to continue the business for a long time, start it now. And before you start, you have to make a business plan first.

The Business Plan:

Business plan is not just some ideas that comes in mind. Business plan is that written all about the entire business process from beginning to end. Take some papers and make a primary import business plan. Don’t worry about the hundred percentĀ  accuracy of the plan, some points need to be changed or corrected time to time. This is the normal practice. There are many factors to be considered in business plan, but we are going to figure out some major and common points to make a complete business plan.

  1. Overview/Summary: Write an overview of your business plan. Remember to prepare it in one page. If you cannot make your business overview or summary in one page, that plan is useless off course. Your targeted business concept should be clear to you first, then you will be able to execute the business successfully.
  2. Financial Flow: Consider your financial strength to import the goods. This is very important to run your business. Make a budget for primary investment, risk management, overseas payment, storage cost, marketing and so on. So, figure out your financial strength to invest your hard earned money to start your import business journey.
  3. Capability: Consider your capability how you can perform in this sector of business. Personal strength and positive mindset is very important to run any kind of business. Always be proactive in any kind of situation to execute your business.
  4. Market: Do some market research about you niche products/merchandises. Check your local market needs and demands, select your niche products and compare the availability and price.
  5. Count Competitors: You must have to have clear concept of your competitors’ activity, their business policy and capability. Considering their activity, make your business strategy to survive to the targetĀ  market.
  6. Market Position: You have to target your market position. After set your market position, product & price strategy, compare market price and then go to sourcing country to check the import price.
  7. Required Documents: List your required documents to import (i.e. Licence) and other papers to be qualified to be an importer.
  8. Marketing Policy: Make your marketing policy to promote your imported products in your local market.
  9. Do some other researches by your own to know more details about your market and update your business plan.

First Thing First:

Prepare your legal documents to import products from outside countries. Without legal documents you cannot import anything. Primary general documents, essential things and licences lists are as below, but remember that you may need to get additional licences or permission from relevant authority based on your imported products.

  1. Physical Office Spaces
  2. Trade Licence
  3. TIN Certificate
  4. VAT Registration Certificate
  5. Bank Account
  6. IRC (Import Registration Certificate)
  7. Certificate of Incorporation (Memorandum of Articles – for Limited Liability Company)
  8. Customs Passbook
  9. Membership Certificate from any Trade Association in your country

That’s it. You have to make agreement with some Forwarding Agencies, Shipping Lines and Air Lines who will take care of your shipment to be imported to your country.

Sourcing of Products:

Now it’s time to source your niche products. Find out which country makes quality products with reasonable price. Check the products’ selling price in your local market and compare the price with your suppliers. Source as much as best quality and negotiate price with the supplier. Remember that if you save money by purchasing the goods from suppliers, the chances to make profit by selling in your local market.

Negotiate Price:

After getting supplier source, negotiate price of the products from them. Moreover, check the Incoterms with suppliers that they offer (i.e. FOB, CNF etc.) because based on their offered incoterms, your shipping cost will be vary. Below list of incoterms that cover your knowledge and you can easily calculate the entire shipping cost from supplier’s warehouse/factory to your destination port.

latest international incoterms
latest international incoterms

So, calculate your products price and calculate your shipping cost based on above incoterms table. Also get detailed of your products packaging (Net Weight, Gross Weight, CBM) because your freight charge will be depended on this information.

Then talk with your Freight Forwarder/ Shipping Line/ Airlines for freight charge and handling costs. Finally get idea of your entire costs to import the goods. Then ask supplier for PI (Proforma invoice) and submit it to your lean bank. Generally the payment made to suppliers in to renowned way – by LC (Letter of Credit) and TT (Telephone Transfer). There are other payment terms internationally allowed like deffered, but generally the above two payment terms are most popular in international business. Ask to your shipper which payment method they prefer and PI should mentioned the payment terms as well. Then submit the PI to your lean bank to make payment to supplier. In that case, you have to have sufficient fund in your account to pay to your supplier.

Payment:

After submitting PI to your bank, bank will open the LC or make the TT payment to your supplier and you have to send a scan copy of LC/TT payment proof copy by yourself so that your supplier can track with their bank. After getting LC/TT, supplier will start production and shipment procedure.

Inspection:

If you are going to do business with new supplier, consider third party inspection to ensure good quality products to be shipped. This will cost you, but very important for you to save money and security. Hire any third party authority to inspect your goods before shipment and they will do it at supplier’s point on behalf of you.

Shipment:

Finally supplier load the shipment by sea or by air and handover to your nominated forwarder/shipping line/airline. Then ask buyer for necessary documents that will be used to release the goods at destination port. Generally following documents are needed to release the goods and finalize payment.

  1. Commercial Invoice
  2. Detailed Packing List
  3. Bill of Exchange (for Bank purpose)
  4. BL (Bill of Lading issued by forwarding company)
  5. Certificate of Origin
  6. GSP (for some specific countries, as per requirement)
  7. LC/TT copy
  8. Beneficiary Certificate issued by supplier
  9. Other documents if any

Release the Goods:

Finally you got all required original documents from your supplier and submit to your bank and forwarder. Forwarder will conduct customs assessment. In this point, you have to pay Import Duty to your customs authority. The import duty is calculated based on HS Code that internationally approved. So, before shipment, ask actual HS Code from your supplier and that should be mentioned on PI. Forwarder release the goods and you have arrange transportation to carry the goods from port to your own warehouse.

Meantime, submit the documents to your bank along with all necessary papers and Bill of Entry issued by Customs. That proves that you received the goods and give permission to your bank to release the payment to your shipper.

The goods are now in your hand.

Marketing:

You have to have a proper marketing plan to your local market. If you already have the plan, prepare your marketing team who can lead the market with corporate culture and professional manner. So, let your team drive to the market and sell your products and … off course make profit.

Some Other Points to be Considered:

Remember the risk of import business. Price and quality both are very sensitive issue for import business. Be careful to negotiate price from your supplier. Sometime you can see that your import cost is higher than the selling price of the same products to your market. So, be careful to market trends, consumer’s need, import cost, quality of your products and marketing strategy.

If you want to sell your products to your customer, most probably it will be difficult to sell. Let customers buy your products. Do highlight of your products quality and facility, functionality, warranty and guaranty. Give a good value to your customer and let them get a good experience by purchasing your products by them.

This is true that import procedure is far wider than you are thinking. It is difficult to explain the whole procedure in a short article. We are going to publish step-by-step guide about import, export, marketing, corporate culture, inspiration, success story and many more. Keep in touch with Onnodin.com.

Spread the love