Whether a business is new to the export business or seasoned, reviewing tips of the trade is always helpful. Each organization will establish its own methods and ideas for the process, but we have compiled a list of essential and helpful tips.
Decide Where to Sell
Once the product has been established, the next factor to determine is deciding where to sell. Research is the key to being successful! Determine which markets are in growth periods, and you will instantly narrow down options. Information can be found on websites including the Bureau of Industry and Security, and the Trade.gov website. These organizations will provide critical insight into where your exports might be most successful.
Maintain a Tariff Book
A useful tool for exporting to different countries is a tariff book. Consult international tariff regulations to find the rate of import duties and other fees associated with the countries’ import laws. The country-specific guide will outline requirements for different markets, including quantity limits and fees enacted by the local government. This is an absolutely wonderful tool, just be sure to keep it updated annually.
Marketing is a vital component of your exporting business, and the process will be improved by creating a network of business associates. This part will require travel to the countries and companies that will be part of your export market. Plan this portion well in advance, to ensure that meetings can be arranged with potential buyers or others who will be part of the process.
Marketing can be beneficial to sales, but can also be a huge benefit in the form of having someone on the other side of the transaction to help guide the deal. For example, import businesses based in other countries will be familiar with their local laws and regulations. This help will be invaluable when building your market.
Meeting and doing business with foreign entities is a cultural experience. Research local customs, courtesies, and business norms for the region you are working with. People enjoy working with people they find kind and respectful. Approaching a business with an arrogant or ethnocentric attitude will only turn away potential buyers. Learn the customs to guarantee that you will build appropriate relationships on their cultural terms, not yours.
Aside from learning the market rules, evaluating costs is the next most difficult aspect. The exporting business is fraught with various costs. Cost evaluation is a very lengthy and precise project.
Costs to be Considered:
- Various licensing fees, product-specific
- Import duties
- Port of destination charges
- Port of shipment pricing
Each individual aspect of the cost evaluation changes from market to market, so do not consider this list complete. In addition to cost projection, it is necessary to set a consumer price as well as a market price.
This will require an analysis of the consumer market, competition, as well as goods pricing that is region-specific. Businesses may be uncomfortable with determining all aspects of costs, so understand that professional assistance is always an option.
Incoterms are the International Commercial Terms set by the International Chamber of Commerce. In layman’s terms, this determines when in the process the supplier backs away, and the buyer takes over the shipping process.
This international set of rules provides guidance to importers and exporters, and simplifies the process. Incoterms are incorporated into contracts, so the regulation is already set. There are different options for Incoterms that will need to be researched. For controlling major costs of sea and air-freight, buy under EXW, FAC, or FOB. If the supplier will be controlling the costs, buy under CFR, CIF, CPT, CIP, or DDP.
Review and Question Invoicing
Business transactions require attention to detail. Every invoice, bill, or piece of financial paperwork needs to be reviewed for accuracy. If there is a charge that is not understood, make contact to find out why it’s there.
The extensive documentation that is involved in the export business can easily contain mistakes. If there is no one dedicated to the process of review, it may be in the company’s best interest to hire personnel or contract resources to ensure this step is being completed accurately.
Drake Finance is your go-to company for all your exporting finance needs. We will help you facilitate trade options and review invoicing to help promote efficiency within your business.