When you’re considering new ways to grow your business one option is to import to increase sales, profit, expertise capability or capacity.
Your business could benefit from:
- Lower prices – it can be cheaper to source product from other countries than buying locally or manufacturing yourself. Balance this benefit with customer preferences or if you have a competitive advantage of being ‘made locally’.
- New or exclusive products – you may be able to access materials or products that aren’t available. Trade shows, online research and talking with suppliers are good methods of finding out what you could import for your business.
- Complementary products or components to round out your products and services.
- Alternate suppliers can reduce your reliance on your local suppliers if you need to scale up, or the local suppliers are unable to supply you at certain times of the year.
- New skills and expertise – you can gain additional skills from further afield by sub-contracting specialist services to offshore companies.
- Faster delivery if you can ship directly to your customers.
- Increased production capacity if you can share the manufacturing or process with a business from another country.
Remember you’ll need to consider:
- Managing cash flow and having clear payment terms.
- Balancing the time and convenience of local delivery and logistics with imports.
- Foreign exchange fluctuations which can impact on your profit.
- Government regulations such as permits, quarantines, duties and taxes.
Best countries to import from
It’s worth taking the time to find out what would be the best country to import from, depending on what kind of goods or services you want to bring in. It’s also a good idea to familiarise yourself with what goods are restricted or prohibited.
Determine if you can make a profit
It’s wise to crunch these numbers sooner rather than later. You don’t want to begin importing until you’re confident that you can profit from your venture.
- Break-even analysis –work out if you’ll generate enough revenue in sales to cover all your costs.
- Cash flow forecast – make sure you have more money coming into your business than going out and identify the amount of initial capital needed to fund your import set-up costs.
- Sales forecast – do some research on your competitors to estimate your own sales and share of the market.
Be aware of the importing costs such as import duties or tariffs, shipping and land transport costs, a customs broker, and storage and distribution costs. Ensure you include all costs in your calculations. It’s important to have enough working capital to be able to survive the time gap between paying for your imports and getting a return. It can be a number of months between ordering and making a profit.
Importing offers you possibilities to bring in exciting new products to grow your business. Thorough research will help to eliminate the risks and pitfalls of importing, as well as obtaining financial advice.