This business is one that is the basis of many a milionaire’s fortunes, probably of several billionaire’s these days! If this is the case, you might wonder why this business manual does not devote its entire contents to such a potentially great money making system? The truth is that most ideas will make a lot of money for some people, and little or nothing for others. There are so many influences and variables involved in developing a profitable income stream, and without huge effort and sometimes a similar amount of luck, the results are always disappointing.

International trade is the fulcrum of the world’s economy,and in prosperous times as well as recessions, there are huge profits to be made in this multi trillion dollar business. Making the first million is the hardest – but making the first 100 dollars is even harder!

What is involved?

The cornerstone of world trade is sourcing sellers of goods and then finding appropriate buyers for these goods. This is the skill you need to develop, a skill that many find hard to acquire. So what is involved finding a suitable money making system involving international trade?

Choose your products

Some people will enter this business using the scatter gun method. They will sign up to various trade directories, browse the Internet and fire off hundreds of communications to manufacturers of all sorts of goods around the world. Then, as soon as they find a party willing to sell to them in small quantities, perhaps offering credit terms, they will snap up the opportunity up and try to make a go of it. They are destined to failure!

It is best to research your product market and attempt to get an idea of the area that will suit you and has the potential for making profits. Therefore, it is best to start with something that you are interested in, perhaps through a hobby or your employment. For example, you might be a keen fisherman. You might think that trade in fishing tackle is something that could interest you. So start looking through the tackle brochures and get a feel for the sort of products you might be buying and potentially who is making them. A lot of the top quality products might be manufactured in the UK or USA – these might have the potential for very high profits per item but the vast majority of fishing tackle these days is manufactured in the Far East. This would be the source for quantity purchases at low prices that could provide you with the backbone for a high margin import export business.

My first advice is to test the water by obtaining some commercial samples and see how well they sell. Sounds easy? This is the hard part where you need to develop the sourcing and buying skills necessary. If you can find a reliable source of a product at the right price, you are almost guaranteed to be able to trade profitably.

Step 1: research the manufacturers of the chosen product who are seeking to export to the UK. Try a trading forum such as Alibaba and begin email dialogue with prospective suppliers. After some exchange you will be able to build up a relationship, obtain catalogues and eventually find yourself in a position where you must decide to commit money to a purchase of initial stock.  Often these samples can be obtained at the same price as you will get the goods when buying in bulk, but the transport costs may be proportionately higher. For instance, you may agree to have the samples shipped by air, whereas the bulk supply would come by sea.

Initial purchases might require paying for in advance, it just depends on the relationship you can establish with a particular supplier. You might be wary of paying for goods from China from somebody you hardly know – they will equally be wary of supplying on credit to a complete starnger. Sometimes it is possible to share the risk, you paying half up front with the balance on receipt. In this way the seller will just cover his costs and you will have a lower risk yourself.

Step 2: selling the sample goods. As this is early days for your business you will be unlikely to have a dedicated website that you can use as a marketing forum for your goods. Therefore, for test sales you would use a site such as eBay to sell your products. Even when you become established, having an eBay shop can be an extremely profitable avenue for your business.

Step 3: test sales of goods at different prices – find out what prices people are prepared to pay. You will already have some knowledge of this from your earlier research into the market – but now you are actively attempting to sell at attractive prices that will compete with any existing outlets. You need to take into account the need for selling volumes of stock – in excess of your test sales. The size of your chosen market overall can be ascertained from your earlier research – by visiting your local library to obtain the statistics from popular market research companies – but now you need to get a feel for the specific products you are introducing.

Decide on a business plan for your products

Each product that you source, which could be a different one each time, must have its own business plan before you order substantial quantities from your new supplier in China. Remember, a good rule of thumb when sourcing goods is to pay about one fifth (including transport and any taxes) of the price you hope to sell them for. This can be hard and often can only be achieved when economies of scale mean you are buying a whole shipping container full of your chosen goods! You can ignore the initial extra costs, such as extra shipping and packing costs by air, so long as you can be sure of the unit price you will eventually enjoy when buying in bulk.

Acting as an import export agent

If you feel the challenge of buying large quantities of goods from abroad is too much for you initially, you could always consider acting as an import agent. This requires similar skills are required – you need to find a seller who wants to export goods – now you need to convince him or her that you can find buyers for his product. By entering into an agency agreement with the seller, preferably as sole agent in your territory, you can earn a commission on the sales that you are able to arrange. You never need to take possession of the goods and do not have any financial risk of buying the goods to sell on. The margins involved may be lower than trading in the goods yourself, but this is balanced by the lower risk. And do not forget, many people have made millions by finding the right products to introduce into a new market. So long as you can get the initial agency agreement properly in place, you stand to earn income form all future sales of the product into your country. It may be a bit extreme as an example – but immagine finding somebody who had invented and was producing a product that became as popular as an iPod – and you had the sole agency agreement for Europe or South America.

You can export too

This brings me onto another benefit of agency work – you can live in the UK, source goods from China and export them to the USA. The goods never come to the UK, you never visit the USA or China (though this might change as you business grows and relations develop) and you are paid directly by the purchaser whenever a sale is made.

The Secret of International Trade

As I said earlier, International trade is worth trillions around the world. Why then, you ask, are more people not doing it and making millions?

Well actually they are – more people are involved in the trading industry than in any other business – and there are more millionaires (and probably billionaires) that have made their money from trading, including agency work, than from any other area of business or commerce. Think about it – our market place is now truly international. Companies that you thought were good old home grown USA businesses are now owned by Japanese, Chines and Russian oliogarchs. Fortunately, for our pride’s sake, many USA, UK and European investors now have asteak in the emerging markets too.

You can set up shop as an international trader overnight. However, as with any other business you need hard work, perseverance, investment and of course…luck. Drawbacks to this business, which can all be overcome but are the usual cause of early failure are:

  • Difficulties in choosing a product
  • Difficulties in finding somebody who will sell you that product
  • Obtaining the right price
  • Finding reputable sellers

You will notice that I haven’t included any of the selling bits – that is easier! But remember, you might find it hard sourcing products – but there is somebody out there will a mountain of goods that might interest you that he is desperate to sell off at a loss just to cover his overdraft and prevent him from going bust. It could be an opportunity that launches your business – you just need to look!

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Filed under: A Free Business Start Up GuideImport Export

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