Starting an Import/Export Business? 4 Questions You Must Ask Yourself First

A game my 8-year old son and I love to play in a department store is to race to be the first to find an item that is Made in the U.S.A. Sometimes the race takes more than 60 seconds. Try it yourself. Our marketplace has turned into a global bazaar. Shirts made in Honduras, mangoes from the Philippines, dog collars made in Indonesia, Italian leather handbags made in China. In this day and age, importing from abroad is not just good business sense, it is necessary for survival.

But you don’t want to be just a consumer at the end of the growing multi-billion-dollar trade chain. You want to be part of the international trade money flow. Before you order your first shipment though, you need to ask yourself - is this business right for you? Here are 4 simple questions to help you decide that.

Question #1: Do you have a connection to the supply source?

You are trying to import something from a foreign country to sell in the U.S. What’s different about you that you can do this more profitably than others?

Familiarity with the source country – maybe you spent a number of years in the country, you are familiar with the culture, the language, the industry. Those things provide considerable advantage.

Contact with sellers – you may know of reliable suppliers in the foreign country, you may have met them in person, or have been referred by a trusted source; you may have established a prior business relationship with them. Trust is key in the business and having prior relationships with sellers you trust gives you a leg up.

Merchandise with huge price gap – You may be aware of merchandise that cost much less abroad than in the U.S... A large price gap allows a lot of room for testing, learning and experimenting marketing channels.

Love and pride for a product or process – you have in-depth knowledge about a certain traditional manufacturing process - hand-batiking, for example. Marketing is about crafting stories and your love and pride for a traditional craft will make a great foundation for a marketing story.

Question #2: Do you have a connection to the demand market?

Familiarity with the destination country – you are familiar with the culture, the language, the seasonality of the market, the clientele. That knowledge and familiarity provide considerable advantage when it’s time to market your products.

Contacts with buyers – One of the surest ways to start an import business is when you already have a buyer in mind. Maybe you work in a corporation that purchases a certain merchandise from a U.S. broker. You have contact to a supplier abroad who can supply the merchandise at a much lower cost. When you have cartons of products crossing the Pacific or Atlantic Ocean, those importers who already have buyers for those products sleep a lot better than those who will have to look for buyers when the shipment arrives.

Knowledge of the competitive landscape – You are aware of the competitors in the market for your particular product line. You know where they are strong in and where they are weak in and you have targeted for yourself a niche where you can provide the greatest differentiating edge and advantage. For example, I am aware that skilled crafts labor in the U.S. is very expensive. In Bali, Indonesia, young girls start crafting beaded sandals as part of their cultural heritage. By the time they are adults, they can skillfully craft beautiful exotic beaded sandals at one tenth the prices here in the U.S.

Knowledge of market trends – whether it’s pashmina scarfs or ipod cases, knowledge of development of market shifts and trends in your home market can help you identify whether there is a growing or shrinking demand of your product line.

Question #3: What business skills do you bring to the table?

The business skills you have picked up in your day job or prior jobs will come in very useful.

Industry experience – Many successful importers worked in the import/export industry before they launched their own business. Not only had they become familiar with the customs and regulations of the business, they made many contacts that they can consult and seek help from. Do you have work experience in the industry you will be importing products for?

Sales and Marketing skills – Even Donald Trump says that very few are born salesmen, ‘the rest of else can learn it’. If you have been learning and developing your sales and marketing skills in your day job, you will find yourself using and enhancing them even more. You should spend the biggest proportion of time on income-producing activities.

Organizational skills - This is not a career for the organizationally challenged. This business involves a lot of details and follow-up, compliance to rules and regulations. Definitely not for the let-the-devil-handle-the-details type. Hopefully your day job has developed your organizational skills as well.

Analytical skills – any start up business requires you to analyze performance of product lines or marketing channels or promotion programs. You cannot improve if you do not measure. If your day job has familiarized you with using spreadsheets and creating simple what-if scenarios and simple spreadsheet formula, you will be comfortable analyzing your new business, strategizing changes and improvements, and analyzing the results of those changes.

People management skills – You will find that entrepreneurs need to manage other entrepreneurs. This may be harder than managing employees. Entrepreneurs are not tied by organizational structure but by win-win partnerships.

Question #4: Are you crazy enough to be an entrepreneur?

Do you have the mental courage and perseverance to be an entrepreneur? I worked in corporate America for many years before jumping into business. I found that corporate America is about my physically showing up for work and applying my intellectual training and experience to accomplish preset goals. When I became an entrepreneur it struck me how it is mostly a mental game. The struggle is mostly mental, and less about your physical or intellectual abilities. For example, you will find that your biggest competitor is not ABC company. It is you.

Do you have friends and family support? That’s great. The most important supporter and cheerleader you need is…You. You have a winner and a loser in you. Don’t let the loser win. That depends on who you feed and encourage: the loser or the winner. Your first 12 months will be wrought with successes and misses. I always tell myself, “Sometimes I win, and sometimes I lose, but I always learn.” I’ve found this quote so true in my own journey: “While you build the business, the business builds you.” You will end up at the end of this journey a very different person.

About Author:
Myrtha Chang, based in Boston, MA, is an importer of hand-crafted sandals and bags from Bali, Indonesia. She also helps entrepreneurs start up their import/export business. Her latest book, "Your First Year in Import Export Business" can be found in http://www.1styearimportexport.com/