6. Start the Business

IMPORT – If Importing is required

What is Importing?
Many people have the wrong image as to what is associated with importing. All they see are big profits, the glamour of visiting countries overseas and being able to deal with interesting people all over the world. The problem with this type of picture is that people don’t see all the hard work and the financial risk that goes with being involved in any import type operation.

If you are looking at import you should weigh everything carefully because even though your product may appear to be of low cost from overseas, by the time you add on all the other extra expenses your final cost may not be that low by the time they land on your doorstep.

Businesses will import products from overseas mainly because they are either cheaper or of better quality for the price.

Why Import At All?
People import for one of the following reasons.

  • They see a product overseas which is cheaper than other products on the local market and an opportunity for profit raises itself.
  • They find a product overseas that is unique and not available over here.
  • They need to import materials or products which form part of manufacturing products that they make in their country.
  • They have an overseas associate or family member who is involved in the export of those particular goods so it is quite easy to tie up an export / import type arrangement with them.

Check Out All the Risks
There are many risks in importing.

Some of these are:

  1. Price changes.
    Price can change from the source country because of fluctuations in their charges as well as taxes and other costs.

  2. Merchandise is obsolete.
    There is always the risk of importing goods which go on the market but because of the delays or because the trend has passed, the merchandise is obsolete.

  3. Foreign Exchange.
    You have to watch the fluctuations in foreign exchange because this can have an impact on your cost and therefore on your profit. You may need to set up some sort of hedging arrangement with the bank or agree to set the price firm in your home currency. This would mean that any fluctuations would not be your care but that of your supplier.

  4. Changes in Tariff.
    Make sure you are fully aware of any customs changes which could affect the tariff or any other costs like that that could be imposed.

  5. Delivery Times.
    Your supplier will have to be reliable because the transportation side of imports can cause you problems if difficulties arise.

  6. Other risks.
    There will always be other risks but they apply also to other businesses such as natural disasters, terrorist strikes and other similar problems at the port of export overseas.

A lot of the risks can be taken out of the mixture if proper planning is put in place and you are monitoring every situation closely and keeping good communication with your overseas people.

Your Import Check List
Before your start importing from overseas go through this checklist and be sure of your answers to these questions:

  • Are you happy with the payment method when paying overseas suppliers?

  • Have you projected what profit you should make? Are you confident of achieving enough sales? Is the whole exercise likely to be a profitable one for you?

  • What is your plan for distribution around the USA

  • Have you worked out all your costs to import? Have you brought in costs such as shipping or air costs, insurance, clearing charges, agents costs etc. Have you accounted for any unexpected costs that may arise?

  • Are the products you are going to import already selling in the country? If they aren’t why is this? Are you sure of the demand for them? Are any similar products made in US sufficient to meet the demand?

  • Are there any restrictions on bringing in the product?

  • What duty and taxes are leviable on the product? What about Sales Tax?

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