Copy URL to Clipboard
Figuring out how to start an export business is essential for motivated individuals that want to begin a new enterprise. Companies like these can earn high revenue streams by selling American-made products to buyers overseas. However, there are many regulatory concerns and market research that must be completed before you can get a company off the ground.
The U.S. Commercial Service, a government organization that helps U.S. exporters, recommends these steps when starting an export business:
Following these steps will ensure goods travel abroad without incident.
Learn how to start an export business with a guide crafted with the expertise of our specialists.
The idea of taking a business from a local market to the global stage can be both exhilarating and daunting. In today’s interconnected world, starting an export business from the comfort of your home is more feasible than ever. By breaking the process down into simple steps, it’s possible to start shipping goods in no time.
We’ll break down the steps that you can follow to make this your reality.
Determining the right market for an export business is a crucial step that can dictate the success of a company. Fortunately, there are numerous ways aspiring entrepreneurs can find a viable market.
According to the International Trade Administration, businesses should research the following:
Researching country market conditions is essential for exporters. It will help them understand the economic health and consumer behavior in a potential market.
FTAs between the U.S. and other countries significantly influence the decision-making process for various export businesses. The U.S. has FTA’s with 14 countries as of the writing of this article. These agreements have many benefits, such as reduced or eliminated tariffs, improved intellectual property regulations, and ease of investment rules.
Popular U.S. FTA nations for exports include:
Conducting industry-specific research can uncover the demand for products and the competitiveness of the sector within a market. This ensures exporters will be able to sell the goods they have.
Market intelligence requires gathering different types of information and data, such as:
Armed with this information, businesses can set up timely updates about opportunities and conditions in certain markets.
Trade statistics offer quantitative insights into the flow of goods and services between countries. With this kind of raw data, business owners can find trends and determine which markets are growing the fastest.
Rankings can provide a starting point for exporters by giving them a better way to compare opportunities in different sectors. Each rank will highlight leading markets and future chances to earn profit.
Finally, exporters should check which countries have foreign trade remedies. This includes determining if a nation has antidumping and countervailing duties imposed on any incoming products. It may be harder to enter markets in nations that have these in place.
Now that a target market has been identified, businesses will need to handle certain legal requirements. The first thing an entrepreneur will have to do is register their business with the government. This can be done by filing for a federal tax ID.
For most companies, this is all that has to be done to become a legal entity. However, certain businesses may register with the federal government for trademark protection or to obtain a tax-exempt status.
Next, it’s necessary to determine the legal requirements for selling goods to other countries. While most products don’t need an export license, there are certain items that do.
To determine if one is needed, business owners will need to consider three government bodies that regulate U.S. exports:
The U.S. Department of Commerce, through their Bureau of Industry and Security (BIS), administers the U.S. Export Administration Regulations (EAR). These rules set export control guidelines for products that have a military or dual military use.
Exporters will need to determine if their items are on the Commerce Control List (CCL). This is done by checking the list and seeing if their product has an Export Control Classification Number (ECCN).
If an exporter’s goods are on the list and has an ECCN, exporters will need to determine the following:
ECCN information will determine if an export license is required or not. The U.S. State Department administers the International Trade in Arms (ITAR) Program. These guidelines apply to exports that are designed, modified, or upgraded for military purposes.
Businesses that plan to sell these goods to buyers in other countries will need to consult the U.S. Munitions List. This will let exporters determine if ITAR licensing is required.
The Office of Foreign Assets Control (OFAC) under the U.S. Treasury Department has regulations as well. They maintain a denied parties list, which contains individual, organizations, and entities that cannot be sold exported goods.
Finally, company owners should consult the Consolidated Screening List (CSL). This is a compilation of different screening lists from various federal agencies. The CSL is a list of parties the U.S. government places export restrictions on.
Learn more about ITAR and EAR compliance in our article on these two important U.S. export laws.
The next part of starting an export business is formulating a plan. This will act as a blueprint for a company to follow. Exporters will need to work out a few details to formulate their business plan.
This includes:
The initial step in the process is selecting an appropriate product or service to export. The goods offered by a business should be in demand from buyers in a foreign country.
The market research analysis you should have conducted at this point will help. Using it, you can evaluate whether your chosen product(s) should be modified to align with different market regulations and consumer preferences.
When it comes to building out an effective pricing strategy, a business needs to strike a balance between covering their costs and offering a competitive price.
To figure out the right amount to charge, companies should consider:
The last part of formulating an export business plan is buyer acquisition. Companies need customers that will purchase their products to thrive and grow. When just starting out, there are a few strategies available to find potential buyers.
This includes:
Entrepreneurs that find buyers early on will start earning money fast once their business launches.
Financing is another important step that goes into starting an export business. Without start-up capital of some kind, options are very limited. Fortunately, company owners can obtain loans from the SBA to help them with this financial support.
Funding includes:
The Export Express Loan program provides entrepreneurs with small term loans that will help them develop the export side of their business. Maximum funding can be as high as $500,000, which can be used to buy goods or produce services that a company can export.
The International Trade Loan Program is used to improve the competitive position of businesses that are engaged in or are preparing to engage in international trade. Funding for this program has a maximum of $5 million that can be used to upgrade tools and facilities.
Another option available to entrepreneurs is the Export Working Capital Program. This system provides short-term, transaction specific capital loans given to companies that can generate export sales, but need additional support. Funds for this program also have a limit of $5 million.
Entrepreneurs that don’t want to pursue these loans can seek out financing support from the Export-Import Bank (EXIM Bank) of the United States. There are two financing options provided by the EXIM Bank.
These include:
Limited Recourse Project Finance is an option that’s great for newly created companies. With this plan, businesses can repay the loan using their future cash-flows.
Benefits of this program include:
For U.S. exporters, the Structured Finance program can make their bids more competitive on large international projects by providing their buyers with access to long-term financing.
Sourcing products is the next critical step for entrepreneurs that want to start an export business. Knowing what you want to export and having it readily available are different goals. Company owners will need to identify a manufacturer that can provide the goods they want to sell.
Fortunately, there are a few resources that entrepreneurs can use, including:
Regardless of where you find a supplier, they should ensure they have a proven track record and a history of reliability. It’s important to ensure the products meet the quality standards expected by the target market. Exporters can check the quality of goods at a trade show or by requesting samples.
Setting up logistics and operations is the last, though not least, concern that needs to be taken care of when starting an export business.
There are three elements to this part of export operations:
During product preparation, goods may require alteration to be operable, marketable, or legally compliant. Every country has unique standards, regulations, or certifications that products must adhere by to make entry. For example, goods going to the EU will require the European Conformity (CE) Mark.
Certain electronic equipment might need alteration to be operable. This could mean swapping out old plugs for new ones that will fit the wall sockets in a foreign country. Correct labels and marks are essential as well. Any words on a label should be in the foreign county’s native language.
Researching the local customs practiced by a certain nation is a good precaution to take. Certain colors might be associate with darker topics, such as death. Therefore, exporters will want to keep these off their labels.
Entrepreneurs should also check to ensure their company name and the products they’re selling don’t translate to something completely different in the native language of a foreign nation.
Now that the necessary preparations have been made, exporters can start focusing on how they will ship their goods. First, they’ll need to consider their transportation options.
Among these are:
It’s likely that exporters will have to use some combination of these shipping options to deliver goods to their foreign buyers. Numerous carriers are available to provide their services. Connecting with a freight forwarding service is a great way to research your options for international shipping.
Exporters should also get familiar with Incoterms™ before shipping their goods. These are internationally recognized agreements between buyers and sellers that dictate responsibilities to each party in the shipping process. These agreements can impact how much responsibility an exporter may have over things such as shipping.
After taking care of transport, entrepreneurs will need to obtain the correct information and documents required for export.
This includes:
Some documents will need to be submitted electronically, such as the Automated Export System (AES). Depending on the shipment, a license might be required. Each document is essential for goods to be successfully exported to another country. Therefore, it’s imperative that exporters obtain them all before shipping.
Startup costs for an export business can be somewhere between $4,000 and $26,000. Numerous factors will influence the expenses entrepreneurs can incur.
This includes:
Registering the business entity might include state and local registration fees. While most export licenses are generally free, there may be certain ones that have a specific expense. Opening an office space and obtaining supplies will also inflict costs on exporters.
Conducting thorough market research is essential and might include expenses for accessing detailed reports, market analysis tools, or consultancy fees. Entrepreneurs might need professional assistance to put together a comprehensive business plan, which can be costly.
Initial product procurement can be a significant expense, depending on the nature of the items and the quantities required. Inventory costs include not just the price of goods, but also storage and insurance.
Marketing expenses to promote the products in international markets can vary widely. This might include digital marketing, attending trade shows, or creating promotional materials. Developing a website and maintaining an online presence is also essential in today’s market. This will include web development and hosting costs.
Shipping is a major expense for export businesses. This includes freight charges, insurance, and packaging costs. Exporters will have to consider the costs from duties, taxes, and compliance with shipping regulations before they move their cargo as well.
Use our article on Schedule B numbers and HS codes to avoid confusion between the two.
There are many foreign buyers willing to purchase a variety of U.S. goods, which means exporters won’t have much difficulty finding customers. According to the United States Trade Register (USTR), there are five countries that import U.S. products more than other nations around the world.
These include:
While these are great markets to get into, there are other nations that make for great export opportunities. Keep in mind, the U.S. has FTAs with numerous countries. Any of these nations will be good to conduct business in. We’ve listed some data of nations engaged in FTAs with the U.S. and how many goods they purchase.
| Country | Amount of Goods Exported |
| Australia | $30.6 Billion |
| Bahrain | $952.42 Million |
| Chile | $22.3 Billion |
| Colombia | $20.8 Billion |
| Costa Rica | $8.5 Billion |
| Dominican Republic | $14 Billion |
| El Salvador | $5 Billion |
| Guatemala | $8.07 Billion |
| Honduras | $8 Billion |
| Nicaragua | $448 Million |
| Israel | $5.8 Billion |
| Jordan | $1.6 Billion |
| South Korea | $72.1 Billion |
| Morocco | $3.7 Billion |
| Oman | $1.5 Billion |
| Panama | $11.9 Billion |
| Peru | $3.8 Billion |
| Singapore | $46.2 Billion |
Provided by the USTR, ITA, and Trading Economics
We’ve excluded Mexico and Canada, as these countries have already been mentioned. That said, the other nations on this list make for great export opportunities. Entrepreneurs will need to research the specific FTAs the U.S. shares with these countries to determine the extent of the agreement.
Cargo Export USA can guide you through the startup of your business. The team we have will give you the tools you need to be successful. With our plethora of skills and offerings, your business will be running efficiently.
Services offered by Cargo Export USA include:
Starting an export business doesn’t have to be difficult. With the help of Cargo Export USA, your business will be operational and earning money at a rapid pace.
Let us help you unlock the door to international success. Connect with us through the site or call our team at (866) 301-0635.
I recently came across a tender looking for the supply of pharmaceuticals in a foreign country. I was looking to learn and understand the cost and the time period it would take to set up an export company to facilitate such.