Export / Import Information for Small Business Owners
Is Your Business Export Ready?
When any company decides to extend its range to overseas markets, it is of utmost importance to make sure that it ensures it is export ready. Steps need to be taken to allow a business to operate on foreign soil.
So what are the steps needed in this process?
License, financing, logistics, contacts.
Licensing & Legal Regulations
Most countries have terms and conditions which must be met legally before a product can be exported to them. This includes everything right down to the product's packaging and the labels that must be included. This may also include the process in which the goods are shipped, by air, or by sea. Some countries may allow all types of free trade as part of organizations such as NAFTA (North American Free Trade Agreement), or the United States-Australian FTA. Other countries may impose tariffs and sanctions against countries who wish to export to them. A solid export ready business plan provides all of these for the trading country.
Funding can be very multi-leveled in foreign trade, but the same principles apply to export as they do to domestic business. Typically arrangements are made between the company who is export ready, and the foreign buyer through a bank or individual banks. Letters of credit act as contracts between all parties and the terms set forth in them, such as the amount of goods requested, and the length of payment options. A letter of credit may, for example, give the buyer 90 days to pay for the shipment. Due to this fact, it is very important for an exporter to have an excellent line of credit with their financial institution.
Development & Logistics
Say that a company, “Brigham's Glassware”, already operates out of Australia, and sells its products to domestic retail distributors. The company wants to expand to the United States. They package their products according to US trade laws, get a loan from their bank, and have a buyer ready in California. The next step is they need to locate a distributor or a shipping company. This is the logistics phase and must also be taken into account within a good export ready business plan. Secondly, “Brigham's Glassware” must make sure it can handle the added production rate and development of product to not only export to its buyer in the States, but for its domestic market as well.
As important to a business as the very product it sells, having the right contacts is the key to success. From banks to loan financing, to buyers in foreign countries, it is vital that a company has solid export relationships. These contacts could be, other companies who manufacture components of the product another company exports; industry trade affiliates, and trade importers or distributors.
Choosing to export can almost add double the workload on an existing, domestic company. It could also be a difficult venture for a company that is just starting out. But just like any business, with the right information comes a better plan, and with a better plan comes better success!
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Getting Started with Exporting
Government Export Assistance