Trading and Small Import-Export

Goods pass through several hands before they reach a buyer, and each step adds cost and risk. Drawing the chain shows where your business fits and where money is made or lost. You will map one product from maker to buyer.

• Name every step: maker, packer, trader, carrier, customs, importer, shop and final buyer, and write who pays whom at each step.
• Write the cost or price added at each step so that you can see the total from maker to buyer.
• Mark the points of risk, such as delay at the border, damage in transport, late payment and changes in currency rates.
• Decide which step you will do yourself and which you will buy from others.
• A common mistake is to forget small steps such as storage, handling and local transport, which can add several percent to the cost.

Activity. Draw a chain for one product with at least five steps, the cost added at each step and the three biggest risks.

Standard to meet. Give every step a cost, match the total to the final price and name three risks with a way to reduce each.

The cheapest quote is not always the best deal. You compare price, quality, delivery time and payment terms side by side. Samples help you check quality before you promise anything to a buyer.

• Collect at least two written quotes for the same product, quantity and delivery terms, so they can be compared fairly.
• Build a table with unit price, minimum order, lead time, payment terms and quality notes for each supplier.
• Ask for samples, test them yourself and ask a trusted adviser or the buyer to look at them.
• Check the supplier's papers, for example business registration and product certificates, and ask for references.
• Choose by total value, not by price alone, and write the reason in one sentence.

Activity. Compare two real or realistic quotes in a table and write a one-sentence supplier choice with reasons.

Standard to meet. Cover price, minimum order, lead time, terms and quality in the table, and explain the choice by numbers.

Every trade is bound by rules about what can be imported or exported, what tax applies and what papers must travel with the goods. Breaking the rules can mean seized goods and fines. You check the rules before you buy anything.

• Check with your local authority which goods are restricted, need a permit or need a health or safety certificate, and whether the goods come from inside or outside the EU single market, since customs duties usually apply only to goods from outside it.
• Find out which duties and taxes apply, and ask the authority how they are calculated, for example as a percentage of goods value plus freight.
• Keep copies of every invoice, packing list, transport paper and payment record in an organised folder.
• Never trade goods that are banned or that you cannot prove are legal, and walk away from any deal that asks you to hide something.
• Write a rules checklist with the date you checked each item and the person or office that answered.

Activity. Write a rules checklist for your product with each rule, the source you asked and the date.

Standard to meet. Cover restrictions, duties and papers in the checklist, and take the answers from the competent authority.

Landed cost is the full cost of getting goods to your door, ready to sell. It includes product, freight, duties, insurance and handling. Knowing it per unit stops you from pricing below your real cost.

• Add up the product cost, freight, duties and taxes (ask the tax office whether import sales tax can be reclaimed), insurance, port or handling fees and local transport, each with a currency.
• Divide the total by the number of saleable units, not by the number you ordered, because damaged or lost units add cost.
• Add a risk allowance, for example 3 percent, for currency changes and small surprises.
• Use one currency throughout and write the exchange rate and date if you convert.
• Keep the sheet updated with real invoices as they arrive.

Activity. Build a landed-cost sheet for your product with each cost line, cost per unit and a risk allowance.

Standard to meet. Give each line a currency, calculate per unit correctly and show the allowance separately.

Your price must cover landed cost, selling costs and a profit, even when something goes wrong. Margin is measured against the selling price, while markup is measured against cost. You will calculate both and test a price with a buyer.

• Margin equals price minus cost, divided by price, and shows the share of each sale that is profit.
• Markup equals price minus cost, divided by cost, and is always bigger than margin for the same numbers, so do not mix them.
• Subtract selling costs, such as marketplace fees, packaging and delivery, before you call it profit.
• Test your price with at least two buyers and note what they say, since a price nobody questions is probably too low.
• Allow for returns or damaged goods, for example 2 percent, in your margin.

Activity. Calculate margin and markup for your product two ways and record what two buyers said about the price.

Standard to meet. Check that the two calculation routes agree, include selling costs and write down the buyer comments.

Cash is the biggest risk in trade, because you often pay before goods arrive. Written payment terms and sensible protection reduce that risk. You will write terms that share the risk fairly.

• Agree payment terms in writing, including the amount, the due dates and the method such as bank transfer.
• Split the payment, for example 30 percent on order and 70 percent on delivery or on inspection.
• Check the supplier's bank details by a second route, such as a phone call to a known number, before the first payment.
• Consider insurance for goods in transit and ask your adviser whether it fits your order.
• Keep every payment receipt and match it to an invoice.

Activity. Write payment terms for your trial order with amounts, dates, method and a check of the supplier's bank details.

Standard to meet. Put the terms in writing, check that both parts add up to the full price and check the bank details by a second route.

A small first order tests your whole plan at low cost. You track dates, costs and problems from order to delivery. What you learn here is worth more than the profit.

• Place a small order, for example 100 units, that you can afford to lose.
• Write down the date of every step: order, payment, dispatch, arrival, inspection and delivery to the buyer.
• Record every actual cost with its invoice and compare it to the landed-cost sheet.
• Inspect the goods on arrival, count them, photograph damage and tell the supplier within the agreed time.
• Keep a problem list and note what you would do differently next time.

Activity. Run a trial order and keep a dated record of costs, dates, inspection results and problems.

Standard to meet. Record every step with dates and costs, and give all problems a note and a next action.

A review compares plan with actual and turns the trial into decisions. You list lessons and set a next order. Honest numbers matter more than a good story.

• Compare planned and actual cost, time and quality in one table, with the difference in currency and percent.
• Find the biggest gap and ask why five times to reach the root cause.
• Write three lessons in plain words, each with a number that proves it.
• Decide whether to repeat, change supplier, change price or stop, and write the reason.
• Plan the next order with a quantity, a date and a budget.

Activity. Present a plan-versus-actual table, three lessons and a decision for the next order.

Standard to meet. Show differences in currency and percent in the table, and cite a number for each lesson.