Running an import-export business comes with challenges and risks, especially if it is a small company. This business is subjected to the fluctuating global consumer sentiment and changing geopolitics. It becomes difficult at times to watch out for the changing global headwinds and keep an eye on one’s own import-export business at the same time. Here are five tips for managing those risks and keeping your international trade thriving.
1. Run on Global Time
Your import-export business runs 24/7. That means, even while you are asleep, another part of the world is waking up to another day and business continues at a steady pace. As a small business owner, you know that you cannot stay complacent. To that end, you need to incorporate some tools and habits into your daily work routine.
Keep an eye on the international trends and politics by following live television broadcasts. Add multiple time zone clocks on your phone to be able to send emails and schedule calls within business hours of your partner’s time zones. Additionally, you need to run your business and workflows in the cloud. Install chat or messaging apps your buyers and suppliers are using to communicate with them seamlessly.
2. Be Flexible
Working with numerous clients and suppliers internationally also means encountering and managing different cultures and preferences in doing business and completing transactions. It’s pertinent to stay adaptable and work with clients with their preferred methods of business transactions.
Take an effort to understand each country’s culture more deeply. This could go a long way in building a profitable business relationship. In Japan, for example, it’s best not to use Western tactics in the negotiation table but be more polite and obsequious. If you’re communicating with some clients in Australia and New Zealand, keep a tab on their local politics and sports as these two topics dominate the mainstream discourse. If you’re lucky to deal with tropical islands such as the Philippines, remember island time works differently and not everything there gets done on time despite the contracts.
3. Manage Multiple Currencies
In every import-export business, you have got to deal in multiple currencies. But it is very challenging to deal with different currencies if you’re still using paper or spreadsheets in your business. It is good to use a software solution to manage multiple currencies for your customers, suppliers, sales, and financial reports. Inventory management softwares, for instance, can be used for adding as many currencies as your business needs. It also lets you define all the currency pairs that you would require along with the exchange rate that you want to use.
You’ll also need to define the default home currency of your business, that is, the currency used by your business. Be careful when you choose your home currency because you cannot change it later and if you do, it will cause a lot of issues at the time of reporting your finances.
4. Keep an Eye on Cash Flow
For those doing international trade, the risks of cash flows are magnified. It may take months to convert your goods purchased overseas into sales, and thus cash. During this time, you will have incurred all import-related expenses upfront, including basic custom duty.
A good part of expediting and making the process efficient is to reduce the time lag between purchase and sales. The shorter the time to import goods, clear customs, and enter your warehouse, the faster you can sell them and convert them to cash. This requires you to review your sourcing methods and reduce the time your stock spends in shipping, trucks, and warehouses.
5. Stay Organised
When you are dealing with trading partners in multiple regions, efficient organisation and administration hold the key. To expedite operational workflow, automate where possible. Online tools like simple to-do list apps, online invoicing platforms, and B2B portal for import-export can be very helpful in this. An escrow account, for instance, can be effectively utilized for a variety of purposes, other than safety. You may check the trade history made on the site or add documents online, while also eliminating all the risks that may arise during a transaction. Besides, you may also use an online payments network to keep all of your payments, administration, and communication separate. You can install software for calculations and other time-saving tips so that you can focus on running your business. Use barcode technology in shipment for faster and more accurate workflow.