Every business any entrepreneur builds has its risks. Merely establishing a business, not having assurance of its success, is a risk.
Businesses which involve importing and exporting items can be exposed to higher risks, particularly because these businesses deal with goods and people overseas. Dealing with suppliers or clients from another country can be difficult not only because of distance, but because of cultural differences as well.
Having knowledge of the possible risks of engaging in import and export business can help you prepare for it. You may also minimise the probability of risks and plan strategically to avoid them if possible.
So, what are the risks of having an import and export business?
Having your own business related to importing or exporting goods can help you earn big sums of money. You can import goods with lower costs. Additionally, there are many customers who are interested in products from foreign lands. When it comes to exporting, you can sell exported goods at a higher price overseas.
The risk of your imported goods being damaged while being delivered from your supplier is one of the risks of importing. The event wherein your ordered goods are damaged in transit is beyond your control. Still, you can establish an agreement with your supplier prior to doing business regarding who will be responsible if the goods are damaged while being shipped. A clear, firm contract is what you need to avoid spending money on damaged goods.
Another risk is the inevitable delays in delivery or shortage of supplies due to uncontrollable factors such as natural calamities. It wouldn’t hurt to stock some extra products or place orders in advance so you still have something to offer your customers while waiting for the new imports to arrive.
Changes in exchange rates are also one of the risks of importing goods. Discussing this with your supplier and sticking to the agreed payment currency can help you resolve this.
Just as with importing goods, exporting goods to other countries has its risks too.
Being an exporter entails making sure that your goods will reach your customer safely and in time. One of the risks of exporting is the possibility of your products being delayed, damaged, or even lost while being shipped.
Not being paid by your customer is also one of the risks of being an exporter. You may want to adjust your payment conditions with the customer to prevent being unpaid.
If you have a new customer, you may be unable to fully check this customer’s credit standing. You may not have enough resources to make sure that your customer is capable of completing payment. One of the best steps you can take is to gather adequate, correct details about the customer before starting business. A contract with a clearly settled payment terms can also help you ensure payment.
These risks should not stop you from creating an import or export enterprise, these should just help you prepare so you can have an idea on how to handle these risks in case you encounter them in the future.