Why the Import/Export?
If you’re looking for a way to build a lucrative business with minimal capital investment then the import / export business might be right for you. It offers you the chance to work with people from a host of cultures and one doesn’t need any previous training in the field to get started. But it does require good mathematical and organizational skills as well as attention to detail.
The most attractive aspect of the import / export business is that you could make 5 to 10 times more money than a retailer could on a normal mark up which averages around 40%. It won’t take long for you to realize that you could make a substantial profit importing highly desirable and sale-able items not available in the US.
At this point you’re probably thinking: “Sure, I know I can make a lot of money in the import / export business. But I’ll probably need hundreds of thousands of dollars just to get off the ground. Where will I get the money?”
That’s the best part about the import / export business! You can start your very own import / export business with NO money at all! Let me rephrase that: You don’t have to put up any money at all to make BIG money in the import / export business.
How is that possible? Well, for starters, you must learn how to use other people’s money (OPM). Believe it or not, you can start tomorrow even if you have no money. All you need is the strong belief in yourself as well as the determination and desire to succeed.
Here’s how it’s done:
- You can start by choosing an item made in Hong Kong, as an example, which you believe is highly desirable and sale-able. You then contact the manufacturer in Hong Kong for samples, catalogs, price lists, and then ask for prices if you order by the bulk. There’s no need for you to travel to Hong Kong. You can do this in the privacy of your “home office” using an Internet connection.
- After negotiating the volume price, delivery, and other details, you then ask the manufacturer for a free sample. Some manufacturers will send you samples for free. Others will charge you at the factory price. Either way, it isn’t difficult to obtain samples, literature, catalogs, photos of the item, etc.
- Once you have all the details, you then search for a buyer. The buyer doesn’t have to be in the US. It can be any buyer in another part of the world. For example, you found a buyer for the item, which happens to be a German retail chain and does substantial business.
- Let’s then assume that the item you’re selling from Hong Kong is an electronic widget that costs $20.00 each and takes 0.1 cubic feet of space. Based on this example, you can ship about 23,000 pieces in one 40-foot container. The cost of the full container cargo is $460,000.00. This is the money you have to cough up (Please don’t hold your breath. Just continue reading.). You then sell the shipment to your German buyer for $25.00 each, for a total price of $575,000.00. This is the money your buyer has to come up with. Your potential profit on each item is $5.00 or a total profit of $115,000.00.
- You then ask your German buyer to open a Letter of Credit (L/C) in favor of your bank in the amount of $575,000.00. This is the total cost of the 23,000 widgets at $25.00 each. You then instruct your bank to issue a L/C to your Hong Kong manufacturer in the amount of $460,000.00, with instructions that when the container arrives in Germany, is cleared by Customs, and is received by the German retail chain, the money is to be released. Bear in mind that the import / export business is done mainly through Letters of Credit.
- In this business, you don’t need any startup capital at all. But you definitely need a good business relationship with your bank. Of course, there are some costs that were not taken into consideration such as freight, import duty, bank fees for the L/C, etc. These costs could be deducted from your own profits or from the buyer’s or seller’s invoice. It all depends on the parties involved in the transaction. In this business, everything is negotiable!
Starting an import export business can be a great way to earn money either full time or part time, depending on your personal goals and determination. With the proper training and guidance, it’s easy to become successful in this lucrative industry.