Seems like you have made up your mind to enter the import-export business. You should know that this industry is thriving at the moment and if you are looking for opportunities to expand your business globally, it could be a gold mine for you. But before you enter this sector, let’s talk about a few mistakes that you might be prone to making and that are easily avoidable. Let’s begin:
1. Signing A Contract Without Reading It
If you wish to expand your business globally or want to enter into the import-export trade, it is very important that you first verify the legitimacy of the vendor you are dealing with. Such a degree of ignorance can result in huge losses for your business. Make sure that the company you are dealing with does not indulge in any unfair trade practices or illegal activities. Remember, to maximize your profit and shorten your logistics cycle, you should not compromise your business ethics or prefer to go the “shortest” route. So make sure to confirm the legitimacy of the business before entering into any contract with them regardless of how long it might take for you to go global.
2. Not Doing Proper Research
You cannot imagine getting into the import-export business without having proper knowledge about this sector. This is also one of the most common drawbacks of this business because the rules and regulations of international trade keep on changing. It is a highly volatile sector and if you do not have enough knowledge about this industry, you might end up making greater losses than you could ever anticipate. Let’s say that you have decided to do business with a country in Africa. You must be aware of export regulations in your country and import rules and protocols in that particular African country as well. This will help you avoid delays in paperwork, shipment-related stalls, fines, and penalties as well.
3. Choosing The Wrong Customs Broker Service
This could be detrimental to your business because you are operating on foreign soil. The duties of such a professional are very diverse and multilayered. A lack of professionalism in the customs brokerage solutions provider that you choose can really impact your business negatively. The import-export industry is characterized by the compulsion that a player has to follow very strict rules and regulations of the governments of all the countries where he conducts his business. This means that both the place of origin and the place of operation matter. For example, if your customs brokerage provider does not have all the documents and fails to verify the papers that he has, it will only result in great losses for your business. You should always go for a professional who can ensure fast and efficient documentation and verification of all the paperwork that is required to supply the products from the point of origin to their final destination.
4. Ignoring Foreign Exchange Rates
You, the seller, and the other party located across international borders, the buyer must understand what the foreign exchange rates are. If you both decide upon a common currency, you should also have the necessary reserves to carry out that transaction. Whether you are importing or exporting products, you can never overlook the risk factors that are involved in calculating profit margins. This will largely depend on the value of the currency that you have decided to trade in. It could be your currency or that of the vendor you have associated with. It can also be a third currency that is suitable for both of you. Foreign exchange rates are always fluctuating. You might want to halt the movement of your raw materials and semifinished goods across ports until the exchange rates get stabilized. This will ensure that you have smooth transactions throughout your dealing with the international vendor.
5. Little To No Familiarity With International Commercial Terminology
Before you enter into the international trade sector, wouldn’t it be practical for you to educate yourself on the most frequently used international commercial trade terminology? If you are not aware of those terms, it is advised to do proper research about certain abbreviations and technical terms such as FOB which means free on board, EXW which means exchange works, FAS which means free alongside ship, and the like.
Conclusion
There are several aspects that you will have to look into if you want to make it a success in the import-export business. Doing your homework is going to help you avoid several critical mistakes that can be hazardous to your business.