How to Go Global: Importing and Exporting
Going global can help you grow your business, diversify your customer base, and help insulate your business against economic ups and downs in the United States.
In honor of Global Entrepreneurship Week, we’re focusing on the unique challenges business owners face when growing beyond the U.S.
Here’s a guide you can use to get started exporting your products, importing products for distribution, and finding overseas suppliers and partners.
How to Start Exporting
Do you manufacture or sell a product that you think would be a hot seller overseas?
To find potential markets, start by looking at countries that have a similar demographic to your U.S. customer base. Then do some research:
- Is that market growing or shrinking?
- What type of demand exists for your product in the country?
- How much competition is there for your product?
- What’s involved in shipping products to that country? How far away is it and what is the infrastructure like? What types of tariffs, shipping laws and other import-export regulations will affect your profit margin?
- How similar is the country to the United States in terms of attitude, culture, business norms and language?
- What types of legal protection exists for foreign companies?
- Do you have existing contacts or prior experience that will make it easier to start exporting to that country? If not, can you find a foreign partner in the country to help?
Once you’ve identified the country you want to export to, look for potential customers in your chosen country.
Trade shows, networking, industry contacts and online directories are all potential sources of customers. (Check out the resources at the end of this post for more help finding customers overseas.)
Plan for logistics. How will you get your product overseas? International shipping is complex business, involving customs, duties, taxes and clearance. Using a freight forwarder can save you time and reduce errors. Freight forwarders manage all your shipping needs, such as obtaining insurance, licenses and permits, dealing with customs and more.
Figure out how you’ll handle payments. Of course, you’d like to get paid as soon as your customer receives your shipment (or even before), but they may not be so agreeable. Talk to your accountant and business bank to get advice on how to safely handle international payments and what types of payment terms to offer.
Plan for financing. Before you start exporting, create financial and sales projections and use them to assess your capital needs. Have adequate financial resources to meet those needs—plus a cushion—before you start. If you get a big order but don’t have the working capital to finance buying or manufacturing the products, your global expansion might end before it begins.
Tap experts in your network for help. Talk to your financial advisor about possible financing methods, and consider looking into alternative sources of capital. Fundbox offers a variety of financing options suited for exporters, including a business line of credit, purchase order financing and Fundbox Pay for accelerating payments.
How to Start Importing
Importing gives U.S. distributors access to unique products that don’t exist in the States, as well as low-cost products for resale, such as cell phone accessories.
Get familiar with the market. To find potential products you can import, attend trade shows featuring international exhibitors, or visit websites that match overseas suppliers with importers. Alibaba, Global Sources, and the Thomas Register are three well-known marketplaces for international sourcing.
Do deeper research. Once you’ve found some potential suppliers, take your time and do some research before choosing the right one for you. Start by researching the suppliers’ countries. You may want to avoid countries with unstable political climates, which could make it hard to get products out of the country, or fluctuating currencies, which could affect your costs.
Factor in all the fees. Before you choose, you should also find out what trade restrictions, taxes, license or permit requirements, customs fees, and insurance coverage would be involved with importing from that country. Then, factor those costs into your pricing and margins to avoid surprises later.
Next, do your due diligence on the supplier itself. Can they keep up with demand? Are they reliable? Talk to their past customers (not just the references they give you). Visit online industry discussion groups, search for online reviews or comments, and reach out to your social media connections to get insights into the company. Finally, ask to see sample products so you can assess product quality in person before you place an order.
Finally, tackle the paperwork. A customs broker may be able to help you manage the logistics of receiving shipments, dealing with paperwork, and inspecting shipments at the port or airport. (You don’t want to wait until a shipment arrives at your business to discover the product is damaged or the supplier sent the wrong item.)
If you’re based in the U.S., your contract should specify that you will pay in U.S. currency. This protects you from currency fluctuation in the other country. Talk to your business bank to see what types of foreign payment tools they offer. Your financial advisor, accountant, or banker should be able to guide you to the best way to handle international payments with minimal risk.
Overseas suppliers want to get paid as quickly as possible, but as a distributor, you’ll have to wait 30 days, 90 days or more for your customers to pay you. To ensure you have adequate working capital during this lag time, prepare in advance by investigating potential financing sources. For example, with Fundbox Pay your suppliers get paid immediately while you still have 30, 60 or more days to pay. Other options include a business line of credit or purchase order financing from Fundbox.
More help is out there
Both exporting and importing can involve a lot of paperwork, preparation, and bureaucracy, so it’s wise to get advice from experts.
We recommend that you start by finding an attorney and accountant who are familiar with global trade and your industry.
Next, visit Export.gov, a comprehensive website that covers everything you need to know about exporting overseas. From there you can access market reports and research, take webinars, participate in events, find out about trade missions and much more.
To get you started off right, here are some other resources for small and growing exporters and importers.
- Export-Import Bank (EXIM)
- Getting to Global Export Accelerator
- U.S. Export Assistance Centers (USEACs)
- State Trade Expansion Program
- Office of International Trade
- SBA international trade loans
- Office of the U.S. Trade Representative’s Trade Toolbox
- National Customs Brokers and Forwarders Association of America
- North American Importers Association
- Small Business Development Centers (SBDCs)
Disclaimer: The information in this blog doesn’t replace the advice of a tax or legal expert. Fundbox and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. If you have any questions about your small business tax situation, talk to a professional.