Starting an Export Business Without Support and Funding: A Comprehensive Guide

Hi Isha,

Without the support and funding you might be thinking of, I would suggest you explore the following three options to start your export journey:

Option 1: Mail Order Business

Option 1: The Mail Order Business can be a viable choice if you are set on sending small packages via post or air, as long as they meet the conditions of international trade. Documentation and necessary formalities are essential here. Mail order businesses offer an endless list of items at a lower cost, making them well-suited for packaging or carton boxes.

Advantages:

You can avail an extensive list of items at less cost. The products can be sent in packages or carton boxes.

Disadvantages:

Big bulk orders are rare unless you have regular clients who offer such orders.

Option 2: Liaison Agent/Trade Representative/Commission Agent

Option 2: Operating as a liaison agent, trade representative, or commission agent can also be advantageous. In this role, you can procure orders for third parties or exporters for a premium, from product sourcing to reaching the end user overseas or a warehouse.

Advantages:

No investment required. You can earn a commission without needing to bear the financial burden.

Disadvantages:

Terms and conditions for payment must be fixed and documented in the sales or purchase contract, or commercial invoice. NCD agreements can be beneficial in such scenarios.

Option 3: Becoming an Exporter or Importer Yourself

Option 3: You can also consider becoming an exporter or importer yourself. Exporting comes in two types, as suggested by its name:

1. Merchant Exporter:

Merchant exporters can have a vast range of items and products to choose from.

2. Manufacturer Exporter:

Manufacturer exporters export products that they make in their own factories specifically for exports.

Export finance is a crucial aspect of international trade, with banks and the government offering a wide range of funding options and incentive schemes. Export finance includes pre- and post-shipment finance, export finance based on the collection of bills, deferred export finance, and export finance against allowances and subsidies.

Export Finance Explained

Export Finance: Export finance is financing that an exporter can obtain based on the bills or invoices collected from an importer. The finance company compensates around 80% of any default amount, and it is known as post-shipment finance because it occurs after the goods are shipped.

Types of Export Finance:

1. Pre-Shipment Finance (180-270 days)

Pre-shipping finance is provided when the exporter wants payment before the shipment of products. This includes financing for raw materials, processing, storage costs, packing, and marking of goods prior to shipment. Pre-shipping finance is granted for a period of 180 days, which can be extended to 270 days in unforeseen circumstances.

2. Post-Shipment Finance (180 days)

post-shipping, the exporter presents the bill to the financial institution, which provides finance. This helps in paying wages, shipping charges, or advertising in the overseas market.

3. Export Finance Against Collection of Bills

This type of finance is used for invoicing purposes.

4. Deferred Export Finance

This is a type of financing that provides a period of deferred payment for goods shipped.

5. Export Finance Against Allowances and Subsidies

This finance is provided based on allowances and subsidies received from the government.

In conclusion, these options can help you start your export journey without needing immediate support and funding. Whether you opt for a mail order business, act as a liaison agent, become an exporter or importer yourself, or utilize export finance, you can successfully navigate the world of international trade.