Export planning entails all the necessary considerations you take to make sure that your export business is profitable and sustainable. Just like any other business, planning is very vital in the export business. If you fail to plan, you are planning to fail.
So many people have entered the export business in a hurry only to get frustrated and even quit before seeing profits. This is a result of poor planning.
To carry out an effective export planning process, you need to ask yourself the 5 questions I will share with you in this post. They are very necessary and will ensure the long-term profitability of your export business.
Export Planning – Answer these 5 questions
1. Is the Product Readily Available?
Before you plunge into the business of exporting goods to the international market, you have to ask yourself: how available is this product? Where can I get it from (product location)?
It is not enough to decide to export, say, Sesame seed. You need to make sure you will have a steady supply of sesame seeds when and how you need it. If you cannot supply the product, your buyers will switch to ‘more serious’ people and your business will plummet.
One important factor which affects the availability of a product is the season of a product. Most of these agricultural commodities are seasonal. And it is at their seasons that you can get them in large quantities and cheaply too.
For instance, cashew nut is usually harvested between February-May/June, this is the season when this commodity is widely available. Therefore signing an export contract with a buyer demanding large quantity of cashew nuts around November or December would not be a wise move. Reason being that, by that time of the year the availability of cashew nut would have reduced by more than 90% and it will prove difficult, if not impossible for you to deliver.
2. Do you Have a Ready Market?
If the product is available, who wants to buy it? What country has a high demand for my product? You have to consider the availability of the market where you sell your products.
There are many ways to source for foreign market or buyers for your products. The most common process for sourcing buyers are through the internet and employing the services of a contract sourcing agent.
3. How Much Do You Have?
The amount of money in your pocket will determine what commodity you export. Some commodities are more capital-intensive than other. For instance, the cost of shipping a container load of cashew nuts (# 2.5 million) to Europe is higher than the cost of shipping charcoal (#800,000). Therefore, before you choose a product to export you need to know how much it would cost from the beginning to shipping.
The unique thing about the export business is that irrespective of the cash at your disposal you would always find a commodity that you can export. As time goes on and your profit increase you can always add more commodities to your export list, or move to exporting more profitable commodities. Some factors that may affect the capital cost of export include:
- Form of packaging required by the buyer.
- Trade regulation in the export market.
- Selected country to export to.
- Documentation required by custom or the buyer.
4. What is the Expected ROI (Profit)?
You need to know how much you expect to make from each export cycle. This will inform you if that particular venture is worth your time or not.
The profitability of the business will depend on the scale of operation you practice, some products are more profitable than others and exporting to some countries is more profitable than others.
The most significant factor that affects profitability is the current exchange rate. Therefore, you should make sure you carry out appropriate calculations in view of the current exchange rate before exporting.
5. Can You Sustain Supply?
Can you ensure a steady supply of a particular commodity after the first delivery? Is the business sustainable? Export contract are usually signed as an agreement that you will supply a particular quantity of product, within a particular time. You don’t want to sign an export contract which you can’t deliver probably because you are unable to get a stable supply.
Identifying the season the product is cultivated and the measure available for you to buy will determine if the supply of a product can be sustained within a particular season. It is better to have about two more buyers on standby so that when your original buyer fails to deliver, you can have a plan B to fall back on.
Export planning is very essential if you must succeed in the export business. To what extent you are able to answer the questions will inform if export business will swing in your favor or not. When you are sure you have a sustainable and profitable business, this comprehensive article will show you how to start your own export business.
Start your own profitable export business with ease [export business e-book]
If you are serious about starting your own export business, this is the only e-book you will ever need.
One thing I realize from experience is, sometimes an article, no matter how long, does not do enough to cover the depth of information beginners need to launch their own business in some difficult areas.
When such becomes the case, it calls for something much more revealing and informative than just an article. That is what I have done in presenting this e-book on exportation and international trade in Nigeria. Every bit of information you will ever need to start your own export business is contained in this 71-page information guide.
Here are some of what to expect when you get a copy
- A step-by-step approach to exportation – from export planning to getting your money in your bank
- How to get export license certificate with ease
- Action points – things you can do at the end of each chapter to solidify your knowledge
- How to plan your export business to not only get best results but also convince banks and lenders to raise capital for your business
- A breakdown of all the documentation you will need
- How to find buyers for your export produce
- Top 10 trade websites and portals around the world where you will find serious buyers
- How to negotiate an export contract with a buyer to avoid being cheated
- Top 10 banks and organizations who are willing to give you export capital to boost your business
- Top places around the world where you can export to and what you can export there
- Plus so much more…
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