6 Primary Causes For Import Export Business Failures
If you want to open up your potential earnings market and live the life you have always dreamed of, then starting your own import export business may be the answer. However, most businesses fail in the first year, and this field is no exception. There are many factors at play which lead to failure. Of the most common, all are linked through good old-fashioned laziness. Not having a head for smart business on your shoulders will lead you down some pretty unsavory paths and ensure the failure of your company. But just what paths guarantee your derailing?
Committing to an unproven product. Before you commit to things such as pricing and inventory, you better make certain that there is a market where you are for that product. If exporting, you want to make sure that the target area understands the product, and above all, that your over and under is financially favorable. Too many people grow eager with the possibilities and venture out into untested waters without any of the essential legwork.
Not engaging in reputable payment transactions. Online payment transactions such as those overseen by PayPal are very useful in protecting you from the dangers of fraud, but you’d best be prepared to give up a significant portion of your earnings from transaction fees. If you’re serious about running your business, it is far better to initiate and conduct the process through a financial institution via letters of credit. This ensures that the product purchased is the product preferred, and it also makes sure payment is received and valid before final delivery can be made.
Refusing to research a potential business partner before working with them. Over eagerness kills the small business person every day. The Internet has made it easier to reach a global market, but don’t let that give you unrealistic ideals. Make sure you can verify the legitimacy of your partner before you agree to transfer funds or product.
Failing to investigate the area where the export import transaction will occur. There may not be a need for the product, no matter how good it is. There may also be risk factors at play such as unusually high tariffs initiated by that country’s government, which eat into or deplete your profit margins altogether.
Not meeting all the government standards and regulations for transferring materials over borders and through customs. It is not uncommon for materials to be confiscated and for your company to bear the brunt of the financial and legal ramifications. Keep this in mind before you agree to trade.
Tax failures. Just because you are receiving monies from overseas, that does not get you off the hook for domestic taxes. Factor this in when determining a product and price, and avoid the unpleasant surprises that come with ignorance.