Venturing into the import and export business increases your chances of generating substantial revenues. Understand that it will also expose you to massive losses if you do not do it right. To avoid disappointment, it is essential to familiarise yourself with the pitfalls to avoid when venturing into the business. This article highlights some of the common mistakes to avoid.
Ignoring Exchange Rates
Currencies fluctuate daily. If they shift drastically, they are going to affect profit margins either negatively or positively. If they swing in favour of the other party, you will suffer more massive losses. In case you would be making long-term deals, you should take measures to protect yourself against currency fluctuations. It is advisable to reach an agreement with your clients on how to proceed in case of drastic currency fluctuations.
Failure to Insure Goods
Theft, damage, and delays can leave you with heavy losses. If you ship the goods via a sea vessel, they will be exposed to different elements because the ship will sail on different types of waters. This increases the chances of damage to your goods. Your shipment might arrive in time but still take too long to reach your client, which can mean losses on their part. For your peace of mind, it is crucial to not only insure your goods but also protect them adequately. Understand that only the right insurance company can offer the best demurrage insurance or other types of coverage.
Not Researching Country Regulations
Assuming that you can ship anything to any country is a bad decision. Most states have strict regulations regarding what goes through their borders. If you send restricted goods, they will be confiscated. Losing your shipment means that you will lose both product and money. While you can always follow up to have the goods released, it can take too long. It will also cost a lot in time and money. Understand that violating packaging and marking regulations will most likely see your goods shipped back.
Choosing the Cheapest Shipper
A cheap shipping company can still deliver. However, since you will get what you pay for, you must not work with a ridiculously cheap freight company. Competitive companies usually cut corners to remain profitable. Choosing one means increased risk because their vessels will be insecure or poorly maintained. Others do not buy proper insurance packages, which exposes you to losses.
Failure to Keep Records
You should keep precise records of all sales, products shipped, and clients you do business with. This is important because of tax compliance. With the increased cases of money laundering, the authorities will come knocking at any time. Keeping your records straight helps avoid inconveniences or even fines when investigations become necessary. Understand those investigations might happen anywhere. This makes it essential to respect the laws in the specific countries you would be operating in.
If you are seeking to venture into the import and export business, you should not plunge into it blindly. While there is a potential to make money in this industry, the many pitfalls in the industry can easily drag you to the ground. Doing your homework first would help you know how to navigate them.