Aspiring entrepreneurs may find the idea of starting an export business daunting, but the process is actually quite straightforward. The first step involves completing various government compliances, such as establishing a firm, opening a current account for foreign exchange, obtaining a ABN and or ACN from the Income Tax Department, obtaining a GST number online, and acquiring an Importer-Exporter Code (IEC) number. Once these formalities are taken care of, there are several steps to follow in order to set up a successful export business.
First and foremost, choose a product that has a Unique Selling Proposition (USP) and is in high demand in a foreign country or has the potential to replace an existing product exported from Australia or another country. Next, identify the target market by utilizing the internet or referring to the Australian Business website to locate countries where your product has the potential to sell. Once you have narrowed down the countries, it is essential to gather information on buyers for your product in foreign countries through different websites, the Australian government, the Embassy, and other sources.
Once you have identified potential buyers, it is time to select the most suitable one for your product. After selecting the buyer, determine how your product will be sampled by them. It is also crucial to consider the cost benefits provided by the government, such as the Duty Drawback scheme, GST refund, and Export Scheme while determining the cost of your product. This will help you keep your prices low and competitive. In the beginning, it is advisable to focus on generating high volumes instead of high profits as profitability comes from volume in today's internet era where buyers are price-sensitive.
It is important to note that the government encourages banks to lend money to exporters, with loans provided at 5% interest to exporters instead of the typical 10% interest for SMEs. This can be a significant benefit for those starting an export business.
Finally, it is essential to overcome any challenges that may arise during export. If you face any problems, contact organizations like Australian Business, export promotion council, and other related organizations for help. For instance, Australian Business conducts chat sessions to solve exporters' problems, and you don't need to be a member of Australian Business to participate.
The global trade industry is worth an impressive $19 trillion, and with the Australian economy valued at $2 trillion, entrepreneurs have plenty of opportunities to succeed in the import-export business. While it can be a challenging field, it also comes with significant rewards.
Where to find information about export products?
If you're in search of valuable insights on export products, the export profile of China, India, and Australia is an excellent resource. Australia has a diverse range of export products to choose from, including engineering products, which are the most frequently exported, along with chemical and pharmaceutical products, mining, gems and biotechnologies, and various services such as IT, financial, and architectural services. You can take advantage of any of these products listed above for export purposes.
How to get finance for export business?
As an exporter, there are various schemes available to obtain finance for your exports. Some of these include pre-shipment export credit for raw materials or inputs, the government's interest equilisation scheme, post-shipment export credit, and credit in dollars. It can be challenging for new exporters to export against a letter of credit, so they can opt for taking advance payment from the buyer, which benefits both parties. Alternatively, they can take export credit guarantee from the government owned corporation, a government body that covers credit default against the buyer. This is particularly useful when exporting products with documents against acceptance or payment, as it protects against buyer default and prevents the loss of money.
Freight forwarding plays a crucial role in the export business, especially for small entrepreneurs who cannot manage all the logistics involved in the process by themselves. For instance, if an exporter from Brisbane needs to export products from Sydney, they would need to hire a freight forwarding agency to handle the logistics.
When selecting a freight forwarder, it is advisable to choose one that provides value-added services, such as obtaining export documents like the Bill of Lading and Shipping Bill. Additionally, the freight forwarder should be a big and creditable agency with Customs house agent facility to help with clearance. If you are a small company, you can hire an agency to select a freight forwarder and handle customs clearance, but as your business grows, you can keep dedicated manpower to handle these tasks.
Overall, a freight forwarding agency is responsible for overseeing all the steps involved in transporting goods from your shop to the buyer's shop/warehouse in a foreign country.
Are you worried about your money getting stuck in exports?
Many businesspeople avoid entering the export industry due to this fear. However, there are ways to ensure your money remains safe. Consider taking a Letter of Credit (LC) for safeguarding or credit cover insurance, which can cover up to 90-95% of your money. If you have not taken any cover, you can contact arbitration agencies for assistance. Export Finance Australia has tie-ups with some of these agencies, and they will negotiate with the exporter and take a commission if they recover the money. This way, the exporter can avoid additional burdens if the money is not recovered.
Here are some key learnings to keep in mind: start an import-export business to take advantage of growth opportunities, keep your product costing competitive, and avail of all the benefits provided by the government to exporters. Contact export organizations like Export Finance Australia and export promotion councils for help, and check Austrade profile to learn more about Australian exports. Lastly, take export credit guarantee to safeguard your money in the export business.