Running an import/export business can be challenging. Disruptions in your supply chain, currency exchange rate variances, not to mention language difficulties, all conspire to create a host of problems. Nevertheless, thanks to the internet, international trade has never been so easy. In 2016, figures revealed the number of African businesses exporting overseas has risen from 32% to 39%. It’s a growing sector and businesses opportunities in many African countries are growing by the day.
Import/export can be very profitable, but whether you are importing electrical goods from China and selling them on to EU customers, or exporting locally made fashion garments, here are three ways to boost your trade and make a larger profit.
Be More Organised
When your supply chain is long and complicated, things are more likely to go wrong. For this reason, it is essential that you streamline your businesses processes. The business administration department needs to be on the ball. The more regions and countries you deal with, the more complex things will be. Use an online payment processor that can handle payments in different currencies. Not all banks offer a cost-effective service in this regard. The same applies to your accountants – make sure to hire someone who can handle cross-border transactions and complex tax affairs. The last thing any business owner needs is an investigation triggered by discrepancies in company tax returns.
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Managing Currency Risk
Trading with overseas partners is often risky, but when you both deal in different currencies, your risk is far greater. For example, say you negotiate a fixed price contract to buy goods from company A, based on a particular exchange rate. If the exchange rate moves in an unfavourable direction, you could end up losing a lot of money on the deal. Online forex trading for beginners is a good place to start if you want to become more familiar with the forex markets, but it is worth dealing with partners who can offer support for businesses that buy/sell services, products, or even talent from overseas markets. This will lower your risk exposure, manage payments, and enable you to invoice in your own currency.
Understand Your Trading Partners
It isn’t always easy dealing with different cultures and clients based in other countries. There may be a language barrier to negotiate, not to mention time differences. Spend time building an effective working relationship with your overseas trading partners. Get to know them personally, visit them, and build a good working relationship. Learning their unique preferences and how they do business will pay dividends in the long-term. If you want your import/export businesses to be a success, you need to cultivate these relationships. Ideally, if your trading partners speak a different language and there are significant cultural differences, consider hiring a local person to provide translation services and/or cultural advice. This should help you to avoid any embarrassing hiccups that cost you money in lost business.
With the right approach, you can take your import/export business to the next level while minimising the risks.