Import/Export Business At Home
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 the 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 times a
year? The advantage 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 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 find
indices of their own import/export
enterprises.
The Unites States embassies abroad
are another place to find
contacts for commercial distribution.
They can help you find out
about a company'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
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, 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
company, requesting the names and address
of appropriate firms to
contact. Ask to have the notice published
in the monthly bulletin
or posted in an appropriate place.
From the names to get back, write another
letter, again
introducing yourself, and asking information
about their company.
You can use a questionaire, which is
easy to 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 other
cities? What are the basic details
of operation--history, assets
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
country.
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, buy you
have to be sure to study where
they are in demand and can get the
price to make exportation
viable. Your questionaires will tell
you what foreign importers
want. Take it a step further and read
the journals published by
that country; many of them are available
in English. Do these
publication 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 imported 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 and 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 you
keep your credit afloat, In fact, this
is one of the best factors
about an import/export business. Aside
from office suppliers and
correspondence, or possible business
trips, you need a no
personal cash outlay. All you need
is a good credit and 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
financing.
Read these source 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 representative..
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 make
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
foreign distribution.
The manufacturers in return provide
firm price quotations, and
you put your fees on top of that; you
cost the manufacturer
nothing.
The manufacturer have everything to
gain--an increase in sales, a
broader market, and more profit. And
you have everything to
gain--establishing your business, and
a commission on the cost of
the goods. That is the basis of firm
business connections and 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 yo 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 names
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 distribution
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
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 quotations
on the price of a
certain 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 arrangements from the factory.
You ass 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 goods
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, 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 final 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 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 forwarders 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 mail 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, 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 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 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.
I 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 manufacturer 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 Unites
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
agreement 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 a
sole agent
distributor to North America,
or even the world.
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 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
light of 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
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
prices, 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 contracts 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
distributions. Show them your credentials
and pick them up on
exclusive contracts. With a little
experience, you can market
almost anything 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 continual 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
side of the ocean. And solidify these
contacts. You may be able
to work out an arrangement with someone
to work in 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 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 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 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
manufacturers 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 are recommended.
