frequently asked questions on import export business
Now, let’s look at the frequently asked questions on import export business. Your answers to these can be the beginning of your business plan.
1. Why are you thinking of starting a business? What are your objectives?
If your answer is “to make money,” you should probably spend extra time on good planning with realistic financial projections. Is This Business for You? If you basically want to experiment with international trade and perhaps deduct some travel expenses from your income for tax purposes, you are at a lower level of commitment and can start your business in a less formal way. If you are unemployed and want to start a business because you don’t feel like looking for a job, please think again. Some people who are in this position succeed, but many would be better off getting more work experience, even at low salaries.
2. Do you plan to import, export, or both?
Small-scale importers outnumber exporters by a wide margin. I think this is because selling is usually the harder part of the business, and if you import, you will be selling in your own environment. If you export, however, you can get free help from federal, state, and often local government organizations. I do suggest picking one or the other, at least at first. It’s hard enough to start one business; you don’t want to be starting two at the same time.
3. Do you plan to work as a merchant, an agent, a broker, or some combination of these?
The easiest way to go into this business is usually by buying and reselling, which makes you a merchant. Unfortunately, this model usually requires quite a bit of money and involves risk. You might, for example, buy and sell some goods and not be able to collect from your customer. Some people begin as commission agents, and you can be a selling or a buying agent for a India or a foreign company. There is usually a formal written agreement by which the principal designates a firm or individual to act his agent in return for a commission on completed transactions. The third alternative is for you to just try to broker, or arrange, deals between unrelated parties. You can try to collect a commission from either party to the transaction, or from both. This model does not always require written contracts. Brokers usually do not take title to or possession of products, but there are some who do. Produce brokers, for example, work very differently from real estate brokers.
4. When you start, will you be working full-time or part-time?
Many people try to start businesses on a part-time basis, and sometimes they do well. Often, however, they find themselves under a lot of pressure and have to surreptitiously make phone calls or do other work on their small ventures while they are being paid to do something else. Another option is for one person to work on a new business while a partner keeps pulling in a salary. This can work well if the one salary covers the couple’s expenses. A final option is simply to quit work and try to build up the new business. This maximizes the chance of being successful but it entails a risk that you will use up all of your savings and have to go back to work. This recently happened to a person I know. He and his partner are still working at their business in the evenings and on weekends.
5. Who, if anyone, can help you with the work in the beginning?
Even a very small business involves buying, selling, accounting, and a variety of other tasks, and most people aren’t good at all of them. It is very helpful to have a partner or an employee and/or to subcontract some functions such as preparing tax returns. One importer I know, is working full-time on his new business while his wife continues at her regular job but also has specified responsibilities in the new firm. So far, the arrangement is working very well. Is This Business for You?
6. What is your target market?
This is the most important questions.how to select export market.see,whole world are export market and every product can export but we can’t export every product to every country some criteria work here if your product and market fit its criteria when you can export or import products or services.
7. How do you plan to sell to customers in the target market?
If you can find a product that will bring customers running to you, you’ll be among the fortunate few. Most people have to attract customers by promotion and then sell to them. You will probably need a plan for promoting sales and a “sell sheet” to use in meetings with potential buyers. For example, suppose you want to import from Russia a system to detect computer network invasions and attacks. If you pick banks as a target market, you might advertise in The Banker magazine and develop a sales presentation for bankers. If you want to sell that Russian product in Colombia, you might look for a local agent and use a sales presentation that shows that person how much money he or she can make by selling the new system.
8. Which type(s) of product(s) do you plan to deal in?
The best answer to this question is that you will deal in a product for which you already have a customer. If you cannot do that, try looking for a product that you like and know a lot about, that is available in sufficient quantity, and that can be transported to and entered (through customs) into your market country. Whichever product you choose, you will probably find that companies import it, export it, or both. Nearly every product is traded internationally, and you may find a way to get a piece of the action.
9. What will be your sources of supply—companies and countries?
Both importers and exporters usually try to deal with companies that produce merchandise, rather than buying from intermediaries. Middlemen have a role to play, but each one has a profit and costs that increase the price to the consumer. There is information later in about how to find manufacturers in the India and abroad. If you import, you will probably find potential suppliers in several countries. Some factors to consider in selecting a country from which to buy are its reputation for quality, its cost structure, transportation to the India, and customs duties.
10. How will you ship your merchandise?
There are several different methods of shipping. Small items can be handled by couriers. You might use airfreight for larger shipments and sea or land for still larger ones, but the decision also varies with such factors as the value and fragility of the cargo. Inter modal shipments are very common; for example onion and potato export to nearest country like Bhutan,Bangladesh from India, might be moved to its destination by truck, train,. In international shipping there are a number of standardized terms such as FOB and CIF. It is important that you understand these; the main ones are explained later.
11. Which method of international payment do you plan to use?
Inexpensive, secure payment is vital to any business. In international transactions there is an extra element because money must cross international boundaries. This has been made easier by new methods of payment but, in some cases, is complicated by counter terrorism measures. Unfortunately, in most or all countries there are unscrupulous people who try to order merchandise from overseas and not pay for it.it is hard, but try to take 100% advance from buyer if not try 30 to 50 % take advance before complete order proceed.if buyer not ready to give any advance so get 100% confirm irrevocable letter of credit in international Bank.
12. Which India and foreign government regulations will concern you?
International traders are subject to the laws of multiple jurisdictions— federal, state, and local—in both the exporting and the importing countries. There are also bilateral and multilateral agreements that come into play with regard to many transactions. explains some of the regulations and gives you information about how to find out about many of the others.
13. What will be your company’s name and form of organization?
Should your business bear your name or a trade name that you create and register? Should you incorporate, and if so, which kind of corporation should you select? Your answers to these questions have important implications for liability and taxation. will give you ideas about how to make these decisions, but it is suggested that you consult a lawyer and/or an accountant. They can give expert guidance that will probably pay off in the long run.
14. What will you do for an office and office equipment?
Many people start businesses in their homes, and that has become easier and more acceptable than it used to be. You will save a lot of money, but of course there are disadvantages. You will have to find another place for business meetings, and you may suffer from being too close to your spouse and kids, the refrigerator, and the garden tools. Equipping a home office is not difficult, but, of course, there are costs involved. will give you some guidance as to the things you should have and those you can do without. You should avoid spending money for that big office and 100-gigabyte computer until there is cash coming in.
15. How will you communicate with your suppliers and customers?
There is an art to knowing when to use phone, fax, and e-mail, and a science to picking the most cost-effective services.Business example, many small traders now use the Internet as a telephone with services such as Skype/whats app. will help you explore some of the options. On the subject of communications, you can now start to practice speaking and writing in clear, simple English with no colloquial expressions. If you tell your foreign supplier that he is “pulling your leg” or that your best customer just “kicked the bucket,” confusion will reign.
16. Which service companies will you need, and how will you select them?
You may want to use the services of an accountant and/or an attorney to help set up your business. Then you will need a bank, an Internet provider, a telephone company, and perhaps an insurance broker. When you start doing business, you will need a freight forwarder and perhaps a customs broker, a courier service, and others.will give you more information about these kinds of companies and how to select them.
17. Where will you get information and help as your business develops?
You will often need clear, accurate, up-to-date information about such things as trade regulations and transportation costs, and you would like to be able to get information quickly and at a reasonable cost. will give you ideas about how to do it. There is a lot of free help available, but much more for exporters than for importers. You might also want to look for help with general aspects of organizing and operating your business. It is available in some areas from business mentors, the International Executive Service Corps, the Alternative Board (for a price), and other organizations.
18. How much will you invest, and where will the money come from?
No matter how you start the business, you will have to make some investment. It is wise in the beginning to determine your start-up costs, including equipment, the cost of your time, and “working capital” to see you through until you start to make a profit. Is This Business for You? Once you have a bottom-line number, you will know whether you have enough money. If you don’t have enough, you will know how much more you need and can look at possible sources. You can consider various kinds of loans as well as capital investment by friends and relatives.
19. What is your income and profit potential?
After you figure out the start-up costs, you should project sales and then project your income and your expenses. The difference between income and expenses is what you will have left to put back into your business and for personal use. Let’s look at two brief examples that will help you understand the financial side of small import and export businesses.
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