There is nothing worse than being one-sided with the extra costs you don’t calculate. Especially when you have to deal with administrative borders to get your first shipment across the border, these surprises can instantly turn an anxious hoper into a discouraged worrier and negatively impact your first experience in the trade. To keep you from Drowning in the financial pit, we’ve prepared a few questions you need to ask to avoid unnecessary financial mistakes.
1). Can you afford to import Costs?
More often than not, import business is cash-intensive. It is essential to make sure you can afford your first step into the trade business. In the import business, you need to consider consistently high transport costs and VAT and duty charges. The mode of transport also influences the overall costs of imports – for example, the sea is less expensive than a flight. It is also less costly to place larger orders less often than smaller orders, so import orders are usually large and costly.
Most importers make the mistake of not calculating extra costs, and therefore they are not prepared for the financial implications of importing products to other countries. It will be good to engage the services of an agent or broker to assist you with understanding the trade terms & conditions and talk to your bank to understand the financial suggestion of the orders you are thinking of placing.
It will be good to keep in mind when calculating importing costs:s
- Always keep in mind about VAT and Other Import duties.
- Always do cargo insurance.
- Always make sure that you have complete paperwork to clear all your products on customs so that you do not pay any other fees.
2). Always make sure the worth of products so that you can sell them at a profit?
Finding the right product to import requires sufficient attention or making a reasonable effort for product hunting. As a potential importer, you need to establish a sustainable demand for a product, import it legally in another country, and make a decent profit from selling it or using it in a manufacturing process to increase margins.
Also, consider the money for product hunting. For import business always travel abroad for product search, visit manufacturers to learn about local products. Alternatively, you can use a sourcing advisor that will help you find the right product at the right quality from companies that you can trust.
3). Are you considering the variation in exchange rates?
Exchange rate undulation is another potential risk that you could be exposed to as an importer. You may be buying goods in foreign currency, which means that the difference in the exchange rate can affect the final amount you pay in foreign currency. The rate may be in your favor or against you. Some ways to deal with this problem is mentioned below:
- Always ask for a quote from another country to transfer the risk to the supplier.
- Always purchase forward cover to protect you from price increase at any point.
- Include the exchange rate risk in your margin and take the risk yourself.