How to Start Profitable Exporting Businesses
Exporting businesses come in many forms, from the small home-based to internationally recognized multi-national organizations.
Exporting from Home
Exporting Businesses are an ideal home-based business. Many exporters work from home and are responsible for many of the products that are imported and exported from other countries. Some exporting businesses operate from a small office, a warehouse, or even a garage. Some may not even have a facility. Like most other businesses the export business needs to be carefully researched. You have to be aware of the various factors that can affect exporting businesses.
Collections for New Exporting Businesses
New exporting businesses should be aware that they cannot collect their money from the letter of credit upon the shipment of the goods. They need to complete and provide the shipping documents to their bank as required by the letter of credit. Your bank then submits these documents to the importing bank for collection. If everything goes smoothly, you should receive payment on the shipment in 30 to 60 days.
In many cases where a company is buying goods from a new exporter, they normally wait for the goods before authorizing their bank to make payment on the letter of credit. Because of this lag in payment, exporting businesses should be prepared with enough funds to pay their suppliers while waiting on the money. It is often difficult for exporting businesses to ask for an advanced payment on the products from buyers because of credibility issues.
In exporting businesses one of the most important factors is fulfillment and reliability. If you can find a reliable source of an exportable product and you can fulfill the customer’s orders according to the terms and conditions of the sale, then you’re on your way to a successful business. Exporting businesses have to take many factors into consideration before embarking on these profitable ventures including product, target market, supplier reliability, shipping costs, prices, and customs tariff.
The Right Product
The first item of concern for new exporting businesses is finding the product to export along with the right market or target country. This product can be anything from shoes, clothing, sporting goods, electronics, industrial products, household products and more. You also need to make sure that you can fulfill any orders that you receive. Keep in mind that you will be shipping merchandise with a volume of at least 20 tons or enough to fill a 20 foot shipping container. Smaller quantities make your product very expensive to the buyer in terms of shipping costs.
Exporting Businesses should Aware the Right Price
Exporting businesses should be aware that prices on their products are governed by many factors. Many times it depends on the type of product that you intend to sell. Sometimes countries give export incentives to promote their agricultural goods. Manufactured goods can also receive government support to facilitate trading. But, in most cases the importer is charged a high tariff on the goods. This does not directly affect you but it does increase the overall cost to the buyer and may affect his reordering decisions.
Many of the businesses you recognize day to day are exporting businesses. With the right target market, the right product, the best supplier and the best information on the way, your company may become one of those highly recognized businesses.
If you enjoyed reading about How to Start Profitable Exporting Businesses then see our next article Import Export Documents.
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