How To do Export Business, A Comprehensive Guide

How to Do Export Business: A Comprehensive Guide for Beginners

Are you interested in starting your own export business? Do you want to learn how to find profitable products, markets, and customers? Do you want to know how to deal with the legal, financial, and logistical aspects of exporting? If you answered yes to any of these questions, then this article is for you.

In this article, we will explain the basics of export business, the benefits and challenges of exporting, and the steps you need to take to start and grow your export business. We will also provide some useful tips and resources to help you along the way.

What is Export Business?

Export business is the act of selling goods or services from one country to another. Exporting can be done by individuals, small businesses, or large corporations. Exporting can be done directly, through intermediaries, or through online platforms.

Exporting can be classified into two types: direct and indirect. Direct exporting means that the exporter sells directly to the foreign buyer, without involving any third party. Indirect exporting means that the exporter uses a middleman, such as an agent, distributor, or trading company, to sell to the foreign buyer.

Why Export?

Exporting can offer many benefits for businesses of all sizes and sectors. Some of the main benefits are:

Increased sales and profits: Exporting can help you reach new markets and customers, increase your sales volume and revenue, and diversify your income sources.
Reduced risk and dependence: Exporting can help you reduce your dependence on your domestic market, which may be saturated, competitive, or unstable. Exporting can also help you spread your risk across different markets and currencies.
Enhanced competitiveness and innovation: Exporting can help you improve your product quality, customer service, and marketing skills. Exporting can also expose you to new ideas, technologies, and best practices that can inspire you to innovate and differentiate your products or services.
Improved reputation and brand awareness: Exporting can help you build your reputation and brand awareness in foreign markets. Exporting can also enhance your image and credibility in your domestic market, as customers may perceive you as more reliable and successful.

What are the Challenges of Exporting?

Exporting is not without its challenges. Some of the common challenges are:

Market research and selection: Exporting requires you to conduct thorough market research and select the most suitable markets for your products or services. You need to consider factors such as market size, demand, competition, regulations, culture, and logistics.
Product adaptation and compliance: Exporting may require you to adapt your products or services to meet the needs and preferences of foreign customers. You may also need to comply with various standards, certifications, laws, and regulations in the foreign markets.
Pricing and payment: Exporting may require you to adjust your pricing strategy to account for factors such as exchange rates, tariffs, taxes, transportation costs, and competition. You may also need to deal with different payment methods, terms, and risks in the foreign markets.
Marketing and promotion: Exporting may require you to develop a marketing plan and a promotion strategy for each foreign market. You may need to use different channels, media, languages, and messages to reach and persuade foreign customers.
Logistics and documentation: Exporting may require you to arrange the transportation, storage, insurance, and delivery of your products or services to the foreign markets. You may also need to prepare various documents such as invoices, packing lists, bills of lading, certificates of origin, and customs declarations.

How to Start an Export Business?

Starting an export business can be a rewarding but challenging endeavor. Here are some steps you need to take to start an export business:

Step 1:

Assess your readiness: Before you start exporting, you need to assess your readiness and capability to export. You need to evaluate your products or services, your resources,
your goals, and your risks. You also need to identify your competitive advantages, your target markets, and your potential customers. You can use tools such as SWOT analysis, PEST analysis, and Porter’s five forces analysis to help you with this step.

Step 2:

Plan your export strategy: After you have assessed your readiness, you need to plan your export strategy. You need to decide on your export objectives, your export mode, your pricing strategy, your payment terms, your marketing plan, and your logistics plan. You also need to budget for your export costs and forecast your export revenue. You can use tools such as SMART goals, export business plan template, and export budget template to help you with this step.

Step 3:

Find your export partners: Once you have planned your export strategy, you need to find your export partners. You need to identify and contact potential buyers, intermediaries, suppliers, and service providers in your target markets. You can use tools such as trade directories, trade shows, trade missions, and online platforms to help you with this step.

Step 4:

Negotiate your export contracts: After you have found your export partners, you need to negotiate your export contracts. You need to agree on the terms and conditions of your export transactions, such as product specifications, delivery terms, payment terms, warranty terms, and dispute resolution terms. You also need to protect your intellectual property rights,
your trade secrets, and your confidential information. You can use tools such as Incoterms, export contract template, and non-disclosure agreement template to help you with this step.

Step 5:

Execute your export operations: Once you have negotiated your export contracts, you need to execute your export operations. You need to prepare and ship your products or services to your foreign buyers, according to the agreed terms and conditions. You also need to collect and remit your payments, according to the agreed terms and conditions. You can use tools such as export checklist, export invoice template, and export payment methods to help you with this step.

Step 6:

Monitor and evaluate your export performance: After you have executed your export operations, you need to monitor and evaluate your export performance. You need to measure and analyze your export results, such as sales volume, profit margin, customer satisfaction,
and market share. You also need to identify and resolve any issues or problems that may arise during or after your export transactions. You can use tools such as export dashboard, export feedback form, and export problem-solving guide to help you with this step.

Some Useful Resources for Exporters

Here are some useful resources that can help you start and grow your export business:

Export.gov: This is the official website of the U.S. Department of Commerce’s International Trade Administration. It provides information, tools, and services for U.S. exporters, such as market research, trade leads, trade events, trade counseling, and trade finance.
SBA.gov: This is the official website of the U.S. Small Business Administration. It provides information, tools, and services for small businesses, such as business planning, financing, training, mentoring, and exporting.
Trade.gov: This is the official website of the U.S. Department of Commerce’s Office of Trade Promotion. It provides information, tools, and services for U.S. exporters, such as trade data, trade agreements, trade policy, trade advocacy, and trade compliance.
Export-Import Bank of the United States (EXIM): This is the official export credit agency of the United States. It provides financing solutions for U.S. exporters, such as working capital loans, export credit insurance, and loan guarantees.
U.S. Commercial Service: This is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. It provides assistance and support for U.S. exporters, such as market intelligence, business matchmaking, trade counseling, and trade advocacy.

Growth in Emerging Market Consumer Spending

Emerging markets are becoming increasing important target for exporters due to strong growth in consumer spending. In 2021, emerging markets accounted for 50% of global consumer expenditure, up from just 34% in 2010. By 2030 over 85% of global middle class consumption expected to occur in Asia Pacific, Latin America, Middle East/Africa. Exporters selling consumer goods and services should focus growth efforts on developing economies.

Expanding Small Business Exporting Activity

Exporting by small and medium sized enterprises (SMEs) continuing to expand globally. According to World Trade Organization, amount of SME involved in exporting increased by 22% from 2015 to 2020. Key drivers are ecommerce platforms reducing barriers and improvement in trade logistics infrastructure like shipping. For small business, exporting diversifies revenue streams and reduces reliance on domestic sales.

Growth in Cross-Border E-Commerce

Cross-border business-to-consumer e-commerce sales reached $440 billion in 2020, up 40% over 2019. It projected to grow to $1 trillion by 2024 according to eMarketer. Clothers and cosmetic are fastest growing e-commerce export categories. Pandemic has accelerated adoption of online shopping globally, changing how exporters reach international markets. Developing multilingual websites and digital marketing capabilities key for tapping e-commerce demand.

References:

http://www.investopedia.com/terms/t/tariff.asp

http://economics.about.com/cs/taxpolicy/a/tariffs.htm

https://www.pbs.org/nbr/site/onair/transcripts/060330b/

https://www.mckinsey.com/industries/retail/our-insights/here-comes-the-modern-global-consumer
https://www.wto.org/english/news_e/news20_e/stat_26feb20_e.pdf
https://www.emarketer.com/content/global-ecommerce-forecast-2021