The import-export business is not easy. If it was, more people would get in on it because it can be very lucrative if you know what you’re doing.
But between the hassles of finding good overseas suppliers or the right export partners, filing the right import documents, getting a customs bond, and figuring out the logistics to get your products into your customers’ hands, importing and exporting can be extremely daunting. Fortunately, you’re not the first person to venture into this business so you can learn from their mistakes so you don’t make them yourself.
Exchange Rate Ignorance
Exchange rates can kill an import-export business faster than any other factor. If you don’t know the exchange rate when you trade internationally, you’re not only going to be affected by fluctuations in the rate, but you’re also not going to be able to get the best price on your goods or plan ahead for upcoming demand.
If you’re not sure what you’re doing when it comes to exchange rates, then only deal in U.S. dollars. That way, you can be better protected against exchange fluctuations. You can also work with a banker to help you lock in your profit on each transaction so that you aren’t impacted by those fluctuations. It’s always good to go to an expert when you’re not well-versed in a subject, especially when it concerns money.
Poor Customs Relationships
Thinking you know better than customs officials or customs brokers when it comes to getting your products into or out of the country will get you in serious trouble with fines, delays, and penalties.
Listen to what they tell you and follow their advice. They’ve been in the import-export business a long time and know how to get goods through customs as smoothly as possible. Partner with an export company who knows all the regulations you need to follow and stay on good terms with Customs Border Patrol officials who are in charge of releasing your goods.
Familiarize yourself with the Foreign Corrupt Practices Act (FCPA) so that you don’t take any actions that could be perceived as a bribe. This is not only bad for your business, but it could also be dangerous as well, depending on which country you’re working with. Don’t bribe anyone to get your goods into or out of a country. It isn’t worth it.
Import Restrictions Ignorance
There are a lot of restrictions on imports, ranging from permits, licenses, and quotas to ISF forms, customs bonds, and declarations. Not knowing all the restrictions that apply to your goods can cost you fines, penalties, and delays.
You could even end up losing your entire shipment for not following the rules. No business can afford that, so learn everything you can about the import process for your products.
These four mistakes are common and some are obvious, but people keep making them. If you’re serious about becoming an importer or exporter, make sure you avoid these pitfalls at all costs. And if you don’t understand something, hire an expert to help you through at least your first few imports or exports. It will be money well spent.