by J.F. (Jim) Straw
Importing as a small business has long been shrouded in the mysteries of International intrigue. While, in actuality, importing is just about as mysterious as buying from the “Sears” catalog.
The fantasies surrounding the import business have been passed down generation after generation. — As a matter of fact, I would venture to say that some of these misconceptions go back to the days of Black Beard and tall-masted sailing ships.
Because of these mysteries, fantasies, and misconceptions, most small business people (and beginners) shy away from the fabulous profits to be made in importing. But, these same elements of intrigue keep the competition low and the profits high.
If you approach IMPORTING in the right way, you could end-up with a sizable fortune — and then some.
– HOW TO –
As in beginning any business, the first step is the selection of your product line. — What you will be selling.
Unfortunately (or, maybe, fortunately for you), when most people think of imports, their minds turn in one of two directions. They either think of Imported Novelty Items and Toys, or (those who have delusions of grandeur) consider such items as Arabian Crude Oil, African Diamonds, South American Coffee, and other international commodities.
Having been directly, and personally, involved in both of these fields of importing, I can tell you for a fact that the number of fortunes made are few. And, the amount of money lost by beginners is overwhelming.
To select your product line, look around your own little corner of the world.
If you work in a factory, investigate the peripheral items used on the production line (not the raw materials). For example: work gloves, aprons, bundling materials, packing materials, inks, dyes, wire staples, etc.
If you work in an office, consider the many items that are used-up each day — staples, pens, pencils, erasers, typewriter ribbons, etc.
No matter what your profession or occupation, there ARE items that you use every day (usually without even noticing them) that could lend themselves to your money making endeavors. — MAKE A LIST of those items.
Once you have a list of necessary items, your next step is to find out their costs. — Take nothing for granted. Investigate. Find out the lowest possible price you would have to pay for each item. — Look in catalogs. Contact manufacturers. Ask someone you know who buys those items regularly.
This investigation will not only aid you in pricing your product later, but by doing it, you will gain knowledge about the product itself, allowing you to better judge the quality and adaptability of the products you will be offered from overseas.
Having prepared your list of items, you are ready to start your search for a foreign manufacturer, or exporter, who can supply them to you.
Contrary to popular belief, searching for overseas sources is not that difficult. As a matter of fact, you may be able to start your search right in your own home town. — Look in the telephone directory “white pages” under the heading “United States Government.” Find the listings, under that heading, for the Department of Commerce, the Small Business Administration, and the Customs Port Director.
If your community is not large enough to have these government offices, try a larger city, or your state capital.
Contact each of these offices and simply ask them if they can advise you of an overseas company that offers the products that you want. You will be amazed at the amount of “Free” (tax dollars) information you will get from these sources by simply asking.
For additional sources, contact the “Embassies” of the various countries — addressing your request to the “Trade Consulate.” The addresses of the various foreign embassies can be found in most public libraries.
When writing to the embassies, simply ask them if they have a source of supply for the product you want to find in their country. They will be more than happy to respond with the information you need — as it means more export sales for their country, thereby, evening-up their balance of trade.
By using the “free” (tax-paid) services of the various government offices, you can actually locate more sources than you will ever need and it will only cost you some small amounts of postage, and a few telephone calls.
Once you have the names and addresses of some possible sources, write each one of them a letter asking if they can supply the particular product that you need. Be very sure to include the most complete description of the product as possible, using the catalog descriptions you have gleaned in your research of the product.
In these letters, ask the contact to furnish prices and catalog information. DO NOT ask for samples, or any other form of “freebie.” — If samples are regularly provided, the company will send them along with their prices and catalog information. — When you ask for samples, you appear to be someone simply looking to receive something for nothing … and rightly so.
The foreign sources are familiar with the regulations governing their exports, so they will respond giving you all of the pertinent details.
When you receive these responses, sit down and READ them; word for word, line by line. Note all conditions, quantities, and prices. Figure your cost per item, at their end.
Most authors of material about Importing try to boggle your mind with definitions of terms and abbreviations. I won't do that, because it isn't necessary. Any library can furnish the definitions that you need. Or, better yet, ask the U.S. Department of Commerce for clarification — it is their job, and your “tax dollars” paid for it — ASK THEM!
Having determined the per item cost at the exporters end, you are ready to start calculating your total costs delivered to you.
Using the information furnished by the U.S. Department of Commerce, determine where your “nearest” Port of Entry is located. Contact the “Customs Port Director,” giving him a complete catalog description of the items you will be importing and ask him to give you an idea of the amount of duty which can be levied on that item. Add the highest possible collectible duty amount to your overseas cost.
If, by chance, your foreign supplier has quoted a price including freight, you won't have to figure any further. However, if your supplier has not included freight costs in his price quotation, you will have to determine, as nearly as possible, what those costs will be.
If you are planning to have the items delivered by “Air Freight,” contact your local airline's freight office. Take the original quotation, from the foreign supplier, with you, as it will contain the packing and weight information necessary in computing the air freight costs. Using this information, your airline's freight office will be able to give you a very, very close estimate of air freight charges TO YOUR NEAREST PORT OF ENTRY. Add this amount to your cost calculations.
If you are planning to have the items delivered by “Surface Freight,” your chore becomes a little more complex, but NOT difficult. Contact the U.S. Department of Commerce in your area and ask them to furnish the names and addresses of “Freight Forwarders” in your area who can quote surface freight rates from overseas. (Remember: your tax dollars pay for this type of information.)
Contact the “Freight Forwarders” nearest you, give them all of the information from your overseas quotation (packing, weight, etc.) and ask them to give you the estimated freight charges from your foreign source — by surface — TO YOUR NEAREST PORT OF ENTRY. Add this amount to your cost calculations.
Now, add-up your estimated costs, and figure your “per item” costs. Compare this cost with the “cost” figures you determined when you chose that item. — Can you make a profit and still beat the prices now being offered?
Your total estimated cost per item should be between one-third and one-half of the local price in order to make a profit. Less than that can make you money, but it is a lot tougher.
When you have determined that you can make a profit handling this item, you are ready to place your import order. Using your previous market research, figure out how many you can afford to buy on your first order.
If the quantity you want to buy (or can afford to buy) is less than the minimum quantity offered by your foreign supplier, write him a letter. In this letter, explain to your supplier that you are trying to open a market in your area for his product. Ask him if he would accept smaller orders in the amount that you require, until you have established a market large enough to merit ordering in larger quantities. Also, ask him to quote prices in these small quantities shipped Prepaid air freight.
Some of your suppliers will respond, others won't. — That is why I advised you to contact as many sources as possible. — Those who respond to your request will be the ones you deal with; taking the lowest price, of course.
Too many beginning importers get discouraged because the offers they get from foreign suppliers set minimums far above their capabilities. But, you can almost always get lesser quantities — IF YOU ASK!
Another point that usually frightens the beginning importer is that almost all offers from overseas contain the terms of payment as “Irrevocable Letter of Credit.” — Since not one beginner out of a thousand really knows what a Letter of Credit is, they quit before they start.
The notation “Irrevocable Letter of Credit” is like saying, “we accept credit cards.” A letter of credit is acceptable, but so is “cash.” Well, not really cash, but a bank money order is just as good.
So, when you place your order with your foreign supplier, simply enclose a Bank Money Order (available at most banks). It is the same as cash-money, and will be accepted in lieu of a Letter of Credit.
Other questions raised by beginners are due to their location. What if a shipment comes into Los Angeles (or some other coast city), and I am not there to get it? How do I get my shipments delivered to me, since I live in Tennessee (or some other inland area)?
The answer to these questions, and the multitude of others like them, is in the placing of your order with your foreign supplier. Simply instruct your supplier to make all shipments “In Bond” TO YOUR NEAREST PORT OF ENTRY.
As an example: Nashville, Tennessee, was my nearest Port of Entry. Therefore, my instructions to my suppliers were something like this: “Please mark all shipments, FOR ENTRY, IN BOND, U.S. PORT OF ENTRY, NASHVILLE, TENNESSEE, U.S.A.”
This notice on your shipment from overseas will insure that they are not delayed at any other “Port” through which they may pass.
Another way to insure that you get your shipments is to make sure that you have a “listed” telephone number under the company name you are using. If your shipment is mis-routed, someone in a customs office will telephone you. Remember: They cannot collect the duty until you get the shipment. Should you ever receive such a call, simply advise them to forward the shipment, “In Bond,” TO YOUR NEAREST PORT OF ENTRY.
In our age of sophisticated freight systems, the chances of your not getting your shipments is almost nil.
When your order is received by your foreign supplier, he will send you an acknowledgment and advise you of “how” and “when” your shipment will be made.
When you receive this acknowledgment, contact the Port Director at your nearest Port of Entry and advise him that you will have a shipment coming-in, soon. Give him the information just as you received it from your foreign supplier.
As soon as your shipment is scheduled for transport, you will receive copies of the Invoice and Bill of Lading. Again, contact the Port Director and advise him “when” and “how” the shipment is coming; exactly as stated on the documents received from your foreign supplier.
At this time, ask the Port Director to telephone you (collect, if long distance) as soon as your shipment arrives. — As public servants go, I have found these men to be very, very congenial, cooperative, and helpful about assisting the novice.
If your shipment has a cost value (excluding freight) of less than $250, you will be able to clear it through customs yourself. — To do this, simply go to the Port Director's office with the paper work you received from your supplier.
The Port Director will collect the levied duty from you, have you sign the necessary papers, and release the shipment to you.
If your shipment has a cost value of over $250, you will have to have a licensed Customs Broker clear your shipment through customs for you. — Since you will know when placing the order that it's value is over $250, you should make arrangements in advance.
To find a good, reliable Customs Broker, simply ask the Port Director to refer you to one that can handle your customs clearances, etc.
In many cases, licensed Customs Brokers are retired customs officials — so — they can work easily within the system, because they know its internal workings.
By locating and contracting a licensed Customs Broker during your initial research, you can find out how much they will charge for their services. And, thereby, include these costs in your initial cost determinations.
I, personally, recommend the services of a good licensed Customs Broker, even on shipments of less than $250. The reason being that they can simply take charge of your shipment as soon as it arrives at the Port and get it cleared immediately through customs. Then, if required, they can have your shipment delivered to you “freight collect” including their charges. — Saving you a trip to the Port, if you live some distance from it.
Once your shipment is in your hands, you can follow through with your marketing/sales as your initial product research indicated.
If you note, throughout this business plan, I have refrained from advising you to learn everything you can about importing. The reason is simple; you don't need to clutter your mind with all the trivia of importing. Just know “who” the professionals are and use their services. — This is one field where knowing “who” is a great deal more important than knowing “how.”
Now — I'm going to share with you one of the biggest success secrets you'll ever find anywhere. The really startling fact of the matter is that it isn't even a secret.
Back when I started in business (at the tender age of 9 years), I had a hard time finding out How, Where, etc., of making money. As a dirt-poor farm kid, money just was not available to buy information. — So, I learned the best unkept secret in the world.
GO TO YOUR PUBLIC LIBRARY!! — Sounds childish, doesn't it? — But you can find more direct contact, “who” information, in your own Public Library than through any other single source. — As a matter of fact, more and more Public Libraries now carry my stuff on their shelves for enterprising money-makers.
Even now, with my own extensive library of business materials, I still use the Public Library for in-depth research. — Use it. — it's free. — And, you probably won't have much competition for the books and materials you want to read, because, although the Public Library is common knowledge, it is usually overlooked as a primary source of information by small business people.
– HINTS –
1) Before attempting to import ANY item, be sure to check with the Department of Commerce to determine if there is a quota on the number of items that can be imported each year, if the item is banned or restricted in any way; or if special licenses or permits are required to import that particular item.
2) When corresponding with foreign suppliers, always use a top-quality letterhead and typewrite all correspondence. — Your letterhead should be set in very simple printed letters; no script or fancy scroll lettering. Remember: Your supplier will be reading a foreign language.
3) When placing your “first” import order for an item, DO NOT over estimate your market. — Figure out about “how many” of the items you think you can sell; then order about 1/2 that many. — Even the most experienced merchandisers sometimes make the mistake of ordering too many. DO NOT make that mistake. A large, well financed company can afford to eat their mistakes; you cannot.
4) In all of your initial correspondence with the foreign supplier, use the best “Catalog Description” you can find to illustrate your needs. — Ask for exactly what you want; leaving as little as possible to chance or imagination.
5) STAY AWAY FROM gadgets, novelties, tricks and other such dime-store doodads that you see in every other import catalog. Granted, there is a market for these items, but, getting your share of the market, on limited capital, will be nearly impossible. Stick with the items that are USED every day — preferably those that get used-up.
Having spent over 50 years in business, doing business successfully, J.F. (Jim) Straw now shares “Practical Instruction in the Arts & Sciences of Making Money” at the Business Lyceum. — http://www.businesslyceum.com