How Does Import Export Business Work, 7 Steps

How Does Import Export Business Work

7 Steps to Start an Import Export Business

If you are looking for a lucrative and flexible way to make money, you might want to consider starting an import export business. Import export businesses connect buyers and sellers of goods and services across the globe, and they can operate in a variety of industries and markets. In this article, we will explain how import export businesses work, and how you can start your own in 7 simple steps.

Step 1: Choose your product or service

The first step to start an import export business is to decide what product or service you want to offer. You should choose something that you are passionate about, knowledgeable about, or have some experience in. You should also do some market research to identify the demand, competition, and profitability of your chosen product or service. Some of the factors to consider are:

  • The size and growth of the market
  • The customer preferences and needs
  • The existing suppliers and distributors
  • The regulations and tariffs
  • The costs and risks involved

Step 2: Find your target market

The next step is to find your target market, which is the group of customers that you want to sell your product or service to. You should narrow down your target market based on factors such as:

  • The location and demographics
  • The income and spending habits
  • The culture and values
  • The problems and pain points
  • The benefits and solutions

You should also research the potential opportunities and challenges of entering your target market, such as:

  • The political and economic stability
  • The legal and ethical standards
  • The cultural and language barriers
  • The infrastructure and logistics

Step 3: Choose your business model

The third step is to choose your business model, which is the way you will operate your import export business. There are three main types of import export business models:

Export management company (EMC)

An EMC acts as an intermediary between a domestic manufacturer and a foreign buyer. It handles all the aspects of exporting, such as marketing, sales, shipping, documentation, and payment. An EMC earns a commission or a fee for its services.

Export trading company (ETC)

An ETC acts as a wholesaler that buys products from domestic manufacturers and sells them to foreign buyers. It sources the products, negotiates the prices, arranges the transportation, and handles the customs clearance. An ETC earns a profit margin for its transactions.

Import export merchant

An import export merchant acts as an independent entrepreneur that buys and sells products on his or her own account. He or she assumes all the risks and responsibilities of importing and exporting, such as sourcing, financing, storing, transporting, and distributing the products. An import export merchant earns a profit margin for his or her transactions.

You should choose the business model that suits your goals, skills, resources, and budget.

Step 4: Register your business

The fourth step is to register your business with the relevant authorities in your country and in your target market. You should choose a suitable name for your business, obtain a tax identification number, open a bank account, and apply for any licenses or permits that you may need. Some of the common licenses or permits that import export businesses need are:

  • Business license: A general license that allows you to operate your business legally.
  • Import license: A specific license that allows you to import certain products into a country.
  • Export license: A specific license that allows you to export certain products from a country.
  • Customs bond: A guarantee that you will pay the duties and taxes on your imports or exports.
  • Certificate of origin: A document that certifies the country where your products were made.
  • Certificate of inspection: A document that certifies the quality or quantity of your products.
  • Certificate of insurance: A document that covers the loss or damage of your products during transportation.

You should consult with a lawyer or an accountant to ensure that you comply with all the legal and financial requirements of your import export business.

Step 5: Find your suppliers or buyers

The fifth step is to find your suppliers or buyers for your product or service. You can use various methods to find them, such as:

Online platforms

You can use online platforms such as Alibaba, Global Sources, TradeKey, or Kompass to find suppliers or buyers from different countries. You can browse their profiles, contact them directly, or join their trade shows or events.

Trade associations

You can join trade associations related to your industry or market, such as the International Trade Association (ITA), the World Trade Organization (WTO), or the Federation of International Trade Associations (FITA). You can access their databases, directories, newsletters, or forums to find suppliers or buyers.

Trade missions

You can participate in trade missions organized by government agencies, trade associations, or chambers of commerce. Trade missions are trips where you visit a foreign country to meet potential suppliers or buyers face-to-face.


You can ask for referrals from your existing contacts, such as your friends, family, colleagues, customers, or suppliers. Referrals are a great way to find trustworthy and reliable suppliers or buyers.

Step 6: Negotiate the terms and conditions

The sixth step is to negotiate the terms and conditions of your import export deal with your supplier or buyer. You should consider the following aspects:

  • Price: The amount of money that you will pay or receive for your product or service.
  • Quantity: The number of units that you will buy or sell of your product or service.
  • Quality: The standards or specifications that your product or service must meet.
  • Delivery: The time and place that your product or service will be delivered.
  • Payment: The method and schedule that you will use to pay or receive money for your product or service.
  • Warranty: The guarantee or assurance that your product or service will perform as expected.
  • Liability: The responsibility or obligation that you or your supplier or buyer will have in case of any problems or disputes.

You should also agree on the incoterms, which are the rules that define the responsibilities and risks of each party in an import export transaction. Some of the common incoterms are:

  • EXW (Ex Works): The seller delivers the goods at his or her premises, and the buyer bears all the costs and risks of transportation and customs clearance.
  • FOB (Free On Board): The seller delivers the goods on board the ship at the port of origin, and the buyer bears all the costs and risks from there on.
  • CIF (Cost, Insurance, and Freight): The seller pays for the cost, insurance, and freight of the goods to the port of destination, and the buyer bears all the costs and risks from there on.
  • DDP (Delivered Duty Paid): The seller delivers the goods to the final destination, and pays for all the costs and duties involved.

You should use a written contract to formalize your agreement with your supplier or buyer, and consult with a lawyer to ensure that it is legally binding and enforceable.

Step 7: Execute the deal

The final step is to execute the deal according to the terms and conditions that you have agreed upon. You should follow these steps:

Arrange the transportation

You should choose a reliable and cost-effective mode of transportation for your product or service, such as air, sea, road, or rail. You should also hire a freight forwarder, which is a company that handles the logistics of moving your goods from one place to another.

Prepare the documentation

You should prepare all the necessary documents for your import export transaction, such as invoices, packing lists, bills of lading, certificates, licenses, etc. You should also ensure that they are accurate, complete, and consistent.

Clear the customs

You should comply with all the customs regulations and procedures of both your country and your target market. You should declare your goods, pay the duties and taxes, and obtain the clearance from the customs authorities.

Make or receive the payment

You should use a secure and convenient method of payment for your import export transaction, such as cash in advance, letter of credit, documentary collection, or open account. You should also keep track of your cash flow and exchange rates.

Provide after-sales service

You should provide after-sales service to your supplier or buyer, such as answering their questions, resolving their issues, soliciting their feedback, or offering them support. You should also maintain a good relationship with them and seek repeat business or referrals.

By following these 7 steps, you can start an import export business successfully. Import export businesses can be rewarding and profitable if you do them right. However, they also involve many challenges and risks that you need to be aware of and prepared for. Therefore, you should always do your homework, plan ahead, and seek professional advice before you embark on your import export journey.

How Does Import Export Business Work?

The import export business is the exchange of goods and services between countries. It involves importing products from foreign suppliers and exporting products to foreign customers. The import export business can be a lucrative opportunity for entrepreneurs who want to tap into the global market and expand their customer base.

There are different types of import export businesses, such as:

  • Manufacturer’s representative: This is someone who represents a manufacturer in a foreign market and sells their products to local distributors or retailers.
  • Import export merchant: This is someone who buys and sells products from different countries without being affiliated with any manufacturer or supplier.
  • Import export agent: This is someone who acts as a middleman between buyers and sellers in different countries and facilitates the trade process.

The import export business can be profitable if done right, but it also comes with many challenges and risks, such as:

  • Finding reliable suppliers and customers in different countries
  • Negotiating prices, terms, and contracts
  • Complying with local laws, regulations, and customs
  • Dealing with currency fluctuations, tariffs, and taxes
  • Managing logistics, shipping, and delivery
  • Handling quality control, customer service, and returns

To start an import export business, one needs to:

  • Conduct market research and identify a niche or product that has high demand and low competition in the target market
  • Create a business plan and budget that outlines the goals, strategies, costs, and risks of the business
  • Register the business name and obtain the necessary licenses, permits, and certifications to operate legally in both the home country and the target country
  • Find potential suppliers and customers in different countries using online platforms, trade shows, directories, or referrals
  • Establish a relationship with the suppliers and customers and negotiate the best deals for both parties
  • Arrange the payment methods, shipping methods, insurance, and documentation for each transaction
  • Monitor the trade process and ensure that the products are delivered on time and meet the quality standards
  • Provide after-sales support and handle any issues or complaints that may arise


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