How to Start an Import-Export Business: Complete Guide

Running an import-export business can be a great business opportunity, but there are other considerations that need to be kept in mind to make sure it becomes profitable.  

This article will look at how to start an import-export business in the US, with an extra focus on certain key aspects for importers and exporters. 

We'll also talk about how Wise Business can be a great business account for your import-export business. For instance, you can manage 40+ currencies all from one account, which will also help you save on currency conversions along the way.

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Table of contents
How to start an import-export business Finding a Business Idea and Doing Market Research Creating a Business Plan and Considering Funding Opportunities Import-Export Partners: Manufacturers, Freight Forwarders, and Warehouses How to start an import-export business from home Is an import-export business profitable?

How to start an import-export business

If you’re starting your business from zero, then we’ll go over the parts you’ll need below. Then, we’ll spend some more time discussing the particularly important aspects of an import-export business.

Skip this table if you already know the basics of starting a business!

The Basic Steps for Starting a Business	Description
1. Find a business idea	We’ve already reached the point where you are getting into import-export businesses as a potential option for you. Have you noticed any products missing from your home country or in the country you're currently living in?
2. Do market research	You might still want to dig deeper into exactly what you will import or export through doing market research, as this will be important for you in the future. Is there already a company out there doing this If there isn’t, why not?
3. Create a business plan	You can think of your business plan as the roadmap for managing and growing your business. This document is also important to coming up with the strategies, goals, and main value proposition your company offers.
4. Consider your funding opportunities	Some funding examples are business loans, business grants, finding investors, crowdfunding, and inventory financing.
5. Find a business location	This might not be necessary in the beginning, as you can operate your business from home. Of course, this depends. If you are exporting or importing perishable products or a large quantity of products, make sure you have a proper storage environment.
6. Choose a name for your business	It’s beneficial to choose a name that reflects your business' industry but also is not too generic that you can never forge a brand for yourself.
7. Pick the structure of your business	Some examples are a Sole Proprietorship, Partnership, Limited liability company (LLC), or a Corporation. Each one has their own benefits and weaknesses.
8. Register your business and obtain state and federal tax IDs	Documentation will vary by state, and states also offer different benefits to businesses—most of the benefits revolve around low tax rates. One typical thing you will need to get is the EIN (Employer Identification Number).
9. Get your business licenses and permits	Again, this varies by state and industry. We will go into the import-export licenses in more detail below.
10. Get a business bank account	A business account is essential to begin paying bills and, hopefully, earning money. Look for accounts with transparent fees and low currency conversion costs, such as Wise Business.

Finding a Business Idea and Doing Market Research

It’s hard to talk about a typical import or export product because of the broad range of global trade that happens in today’s economy. For instance, the top imported products include diverse items, such as gold, crude petroleum, mobile phones, and cars.⁶ Of course, most small business owners won’t be starting a gold import-export business anytime soon, so you might want to consider what's missing from your daily life.

Here’s a question to consider: What products can’t you find? If you’re a non-resident living in the US, what’s missing that you could import? From the other side, what’s missing from your home country that you could export? These are the types of questions that help many import-export businesses start their journey.

If you find some interesting answers to these questions, you may want to conduct market research. Your business plan must also include market research and analysis to show how your business will become profitable.

The first step is to do an analysis on the products you’re interested in importing or exporting. What is the demand for it in your target markets, and who are your target customers?

From there, you can start to develop the analysis to understand:

• Do you have competitors? If you do, who are your they?
• What does pricing look like for the products you’re interested in?

Creating a Business Plan and Considering Funding Opportunities

Both of these items will be crucial to your import-export business.

A few questions to consider during this process:
How long will it take you to earn revenue and then turn a profit?
How are you going to separate yourself in the marketplace?
What are your costs?

One of the major aspects of an import-export business is managing cashflow. Most businesses die because of cashflow management issues. This problem affects import-export businesses even more because your goods will need to be shipped to the location where they will then be sold. This can take a long time!

Along the way, your business will be charged various fees and taxes for shipment and customs. You will also need to consider the types of products you’re shipping. For example, exporting food products to the UK may require a special label or even require testing to determine its chemical makeup before being able to sell it.

The cost of simply getting your products on shelves is important to know in the beginning so when you seek funding opportunities, you’re prepared to answer these questions.

Inventory Financing

Aside from seeking a standard business loan, you can seek inventory financing, which is when you obtain a loan to purchase new products. The reason for doing this is that you may have spent all your money on inventory (This is a cashflow issue) and cannot afford to pay your bills, even though you’re successfully selling your product(s). This specific type of loan may be unfamiliar to you, but it could help you keep your import-export business afloat.

How to get an import-export license

After developing a business plan, the next step is to look at any relevant import-export licenses you may need. It is advisable to even consider these licenses during your business plan as well, as goods with special licenses may also mean that you pay more in fees, which will ultimately affect your bottom line.

95% of exports don’t require a specific license, and the same pretty much goes for imports.⁷ However, you should still do the necessary research to ensure that your product can be imported or exported. This research may also require you to communicate with the countries in which you’re planning to import goods.

Read More: US Customers and Border Protection
US Customs and Border Protection have put together rules and regulations for what items may need an import-export license

Certain types of commodities such as agriculture, food, livestock, and others will require an import license. You can apply for these licenses with relevant agencies, while US Custom and Border Protection will act in an administrative capacity to verify the license⁸.

Also, you can find guidance for commodities such as tobacco, steel products, dairy, wildlife, plants on US government websites.

Common Documents Needed: Importing and Exporting

Once you start going through the process of importing or exporting goods, you'll have to provide certain documents throughout the process to ensure that your products get where they need to go.

Here's a list—it's also important that you speak with your customers or partners during the process as there may be special documents.¹⁰

• Pro Forma Invoice
• Commercial Invoice
• Packing List
• Air Waybill
• Bill of Lading
• Export Compliance Documents, such as the EEI (Electronic Export Information) Filing
• Export Licenses
• Destination Control Statement

Additional documents that may be relevant for import trade:¹¹

• Customs Bond
• Proof of IRS number
• Importer Security Filing

A Note on Incoterms
Another set of terms that will come up once you start importing or exporting are Incoterms. They have a three-letter designation (EXW, FCA, CPT) that decides how customs and shipping will be handled between the shipper and the recipient in international trade. It's important for you to understand these terms so that you understand your responsibilities when conducting business overseas.

Import-Export Partners: Manufacturers, Freight Forwarders, and Warehouses

Manufacturers, freight forwarders, and warehouses could become common words for you when you start an import-export business.

1. Manufacturers

Manufacturing your products can mean forming relationships with another business domestically or overseas that will create your product according to your specifications. Both domestic and overseas manufacturers have their own benefits, whether it’s faster lead times (Time from manufacturing until it's ready to sell) or pricing. These types of questions should be answered before establishing a relationship with a manufacturer—you should also request a sample to ensure that the quality is good and that they are legitimate.

2. Freight Forwarders

Freight forwarders figure out how your products can get to their desired destination and which route is the safest, quickest, and most cost-effective. They're experts in arranging the storage and shipping of merchandise on behalf of shippers.

3. Warehouses

A warehouse is where you store your merchandise before shipping directly to your customers or to a storefront. Owning or leasing a warehouse becomes more important as your company grows. After all, you can’t use your garage forever. This means you’ll either need to look into warehousing or go with a 3PL warehousing provider that can label, store, and even do fulfillment for your products.

While these services incur extra costs, they may be extremely useful to managing your business. For instance, a 3PL warehousing provider may help you cover a lot of key tasks for your business that you couldn’t do yourself or couldn’t hire someone to do for you.

How to start an import-export business from home

Much of the advice for starting an import-export business from home remains the same as with brick-and-mortar. Setting up your brand is crucial, as well as identifying where your products fit within the market.

However, if you’re running an import-export business from home, it’s doubly important to have a strong online presence. So you have to learn the ropes of how to start a business online.

Ecommerce import-export businesses need to have a marketing strategy that is primarily focused on digital marketing to ensure they can acquire new customers.

That’s why your import-export business should have a well-designed website and social media accounts on platforms like Facebook, Instagram, Amazon, and Etsy with regular content updates.

Is an import-export business profitable?

Import-export business profitability is dependent on several factors, including:

• The cost of producing goods
• Where the items are being produced
• Cost of shipping and freight
• Competitors
• Price point they are sold at when introduced in the market
• Taxes, duties, and levies incurred
• Any laws or regulations both in the producing country and importing country

The key to becoming profitable as an export-import business is to balance these elements while finding a niche in the market.

For example, many import-export businesses are successful because they offer hard-to-find items from different countries or unique items that are not available with other retailers. Differentiating themselves from competitors allows them to thrive.

Other businesses may work out deals with suppliers to purchase items in wholesale quantities, thereby lowering the cost of the items and passing those savings on to customers.

Businesses may face some difficulties in the first few years as they establish their footing and enter the market but many businesses, both large and small have seen success through importing and exporting goods.⁴

Exporting products to other countries gives businesses opportunities to grow their business by increasing sales in new markets with less competition⁵.

In addition, international imports bringing products into the United States can be beneficial to offer customers more choices and options in the market.

Consider Re-negotiation as your Business Matures

It’s essential throughout the entire process of creating and operating your import-export business that you consider negotiating down the cost of various services, such as manufacturing and warehousing. This advice also goes for the cost per unit of products you import and export. If you’re a good customer, you will find that a lot of your partners will be receptive to giving you a better deal or even slowing down repayment periods to keep your business.

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Wise Business for Receiving and Sending International Payments

Wise Business is a unique account that lets you receive funds in global currencies. After a one-time fee, you can get access to major currencies such as USD, GBP, EUR, AUD, CAD, JPY and more. You can then get paid like a local business.

Once you've received the funds, you can conveniently spend or send them in the original currency or convert them to numerous other currencies as needed.

One of the reasons for Wise's low fees is that they use the mid-market rate, ensuring transparency pricing for your business.

Receive money
with Wise Business >>

Save with Wise local account details on Amazon, Shopify, Etsy, and more
No minimum balance required and no monthly fees
Accounting Integration with QuickBooks, Xero, Wave, and more

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Sources:

1. Wise Trustpilot
2. United States Census Bureau - Common Trade Definitions - Foreign Trade
3. U.S. Department of Commerce - A Basic Guide to Exporting
4. International Trade Administration - Why Export?
5. Top Examples of Import-Export Products
6. Export Licenses - US
7. cbp.gov - Importing into the United States A Guide for Commercial Importers
8. usa.gov - Importing and Exporting
9. Common Export Documents - US Trade
10. Documents for Importing to the US - Borderbuddy