International trade is one of the hottest industries for the millenials. But the point to note is that the business is not so new. Import export business has existed for hundreds of years. But what is making it much more captivating now? It is the development in technology. Subtle advancements in technology have paved way for thousands of import export opportunities.
Now, how to start an import export business? One might think obtaining all the clearances from the government is good enough to start. But that’s not true. More thought has to go in and a deep research has to be done before you jump right in. We have indicated a few ways you can and need to follow on how to start your import export business.
Step 1: Choose the right type of business for you
As you know like any business, Import Export business can be done in different ways.
- EMC: Export Management Company is the one that handles the export operations of a domestic company that is not well equipped to export on their own. EMCs will take care of the entire export operations right from invoicing, marketing, on time deliveries, acquiring payments, etc.
- ETC: Export Trading Company is the one that has connections across the globe. They help connect businesses that are looking to sell in the foreign market with the interested buyers in the domestic market. They sometimes do this by transferring the title or do it on a commission basis.
- International Merchant: This is someone who is free to do any import export business. They acquire international goods and resell them at their free will. They are more like EMCs. The only difference is that the merchants have to assume all the risks and on the bright side, all the profits involved in the business.
Step 2: Acquiring clearances from government
Gather all the documents required to register your business with the government. Things to be done are to
- register your company and acquire a Company Registration Certificate,
- Based on the type of business, apply for a PAN card,
- Obtain the 10 digit IEC (Import Export Code) from the government,
- Open a Bank Current Account,
- And finally get your RCMC (Registration Cum Membership Certificate).
Step 3: Decide your target audience
Whatever business you choose, you need to have a target audience. You need to choose your target audience right from their demographics to their geographic location, and what kind of products or service you will offer your target audience. Everything matters.
So, it is ideal to do thorough research on the products, the requirements of the target audience and make the right choice. This research will help boost the profits of your business multifold.
Step 4: Sort your finances
It is essential to have a working capital for any business, more so if yours is an international trade related business. Because, the wait time involved in getting your payments is much higher than any other business. Besides the currency fluctuations will keep you on your toe. It is essential to be prepared financially for any situation that may arise and to run your business uninterrupted.
Step 5: Everyday Operations
Now, we have crossed half the bridge. The rest of the part is to figure out how you are going to do your daily business operations. There are various permissions to be taken to do your import or export business.
If you are in export business, you need to follow the following steps religiously:
A. provide proforma invoice to the customer
- Get the letter of credit for the entire business transaction
- Fulfill the terms of LC without exceptions
- Collect and present documents of timely delivery to your bank
If you are in import business, follow these steps:
A. Receive the PI
- Open an LC at your bank
- Ensure the reception of goods
- Clear Customs and get hold of your goods
- Pay the sender
These are some of the important steps you need to follow to setup your import export business. Following them will enable you to setup and run a profitable import export business.
