Import export industry is one of the most lucrative industries engaged in the provision of higher profits or returns. The process of buying and selling products internationally is not new. The only aspect that has changed with respect to the modern import export industry is the overall ease of doing business, better opportunities at a large-scale support, and improved transport management with relevant support from the government. In view of the same, businesses involved in the import-export industry should be attentive to IEC or Import Export Code to execute the business transaction successfully.
While import export industry helps in generating higher earning incomes or profits for those interested in expanding the business at an international level, still smaller mistakes cannot be ignored in the industry. It is because a single minor mistake can lead to higher risks while reducing the overall profit margin that can be earned through import or export.
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Mistakes to Avoid in the Import Export Industry
Once you have acquired knowledge about common aspects like the IEC or Import Export Code, documents needs, restrictions on products, and so more, you should aim at not making common mistakes in the import export industry.
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#Signing a Contract Without Asserting the Legitimacy of the Seller or Buyer
Most small-scale manufacturers or traders wish to expand their business in the field of international trade. However, they fail to check the overall reliability of the importer or exporter. When left unnoticed, the company will be at the risk of getting more losses.
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There are several agencies out there that lure in exporters or importers with fake profiles or product portfolios. It is important to understand your customers while also checking the legitimacy of the seller or buyer. You can take help from government officials to minimize the risk factors.
#Understanding Country Regulations
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A common mistake that an exporter can make while supplying goods to foreign nations is that they assume that they can supply any product to other countries. However, it is not the case while obtaining the IEC. It is because specific countries have proper norms or rules that allow only some products to be exported.
As you understand the IEC and its regulations, it will help exporters to save both time and money on their series of products.
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#Absence of Import-Export Knowledge
A typical myth that small or mid-sized enterprises might have is that they can easily transport a specific product in the international market without incurring any losses. However, the lack of proper knowledge about the import-export industry and the IEC can result in significant losses than anticipated.
There are specific terms implemented by the International Chamber of Commerce to ensure that a business in the import-export industry is implemented effectively with minimal risks and a higher profit margin. Understand the basic regulations of the import-export industry is critical to avoid the risks of penalties.
#Undercapitalization
As you start an import business, you will require access to ample cash upfront before you realize any profit. You are expected to pay duties before you take possession of the items. In most cases, you are also expected to pay due freight charges. If you are starting out in the import-export business, you might go along with the payment terms of the suppliers.
Therefore, it is essential to feature your existing business with ample funds as well as cash flow. It implies sustaining the initial phase of the business plan or having an abundance of cash.
#Poor Product Choice
Just because you are fond of the product and you think your pricing is right, do not assume that your product will sell. It is the best solution to feature a dedicated distribution or marketing system for complimentary or similar items.
Your imported products should be capable of adding to or enhancing the existing product line. The worst decision could be to operate on your instincts.
#Not Keeping Record of Transactions
Maintaining detailed records of your import-export transactions is crucial for your entire import-export business plan. There are several programs or applications that help with tracking import and export information. If you neglect this step, you will risk the chances of losing all your finances.
As you enter import-export transactions, make sure that you add dates, time, information of the client, or quantity of items. You should aim at writing down everything to maintain a safe record of your business.
#Not Paying Attention to Exchange Rates
Most businesses avoid foreign exchange rates while importing or exporting the product from one nation to another. It is because the traders tend to overlook potential risk factors while only focusing on profit margins. However, the existing fluctuations are reasons enough to deliver ample losses. You should focus on the exchange rates to ensure smoother transactions.
Conclusion
When you are involved in the import-export business, it is imperative for you to understand its in & out. Pay attention to common aspects the IEC, restriction on goods, and so more.