I am a young Malawian social entrepreneur. I have been trying to establish a successful business importing agricultural produce, specifically rice, beans (various),soy beans, ground nuts, tea, coffee, potatoes, sweet potatoes, mangoes, amongst others.
My idea is to set up an exporting company in Malawi, which I have registered and obtain the necessary licenses for, and an importing company here in South Africa, which can then manufacture and process these commodities.
The challenges I face are:
- I need mentorship from a company or individual who has been in this type of business. How do I approach the opportunity step by step? Where do I start? Given the limited or no capital that I have, are there possible partnerships I could form?
- Logistical (supply chain management) what are the options? How do you minimise costs? What are the costs? What quantities are profitable to import?
- Market information. Which companies buy or import such commodities? Are there any companies looking for these services and who are they?
- Financial assistance. Manufacturing and processing equipment is expensive. Where do I start?
First and foremost you need to do some research about your industry in general and agricultural import/export in particular between Malawi and SA. A good place to start would be the Department of Trade and Industry website.
It is extremely ambitious to contemplate being both the exporter and the importer if you have no previous experience or training in these fields.
You would need to establish (and meet the associated costs) two companies in two different legal environments.
Do your homework
Before you proceed, you need to do several things.
Familiarise yourself with Companies law in both countries and find out what is involved in company registration.
Do some research on what is involved in running a business – there is lots of info available on the internet.
You need a plan
Download a template for a business plan from the internet. You’ll find a business plan template here.
Attempt to complete a plan for setting up each company, i.e. the export one and the import one.
This will get your creative juices working and you will have a better idea of what is involved.
Do some further research into the regulations in South Africa that govern the import of fresh food products (Visit the Department of Agriculture, Forestry & Fisheries’ website – they control this) and the regulations in Malawi (if any) that govern the export of fresh produce from that country.
Finding financial assistance
See if you can get an appointment with the heads of Business Partners, the Embassy of Malawi in South Africa (part of their mandate is to promote exports from Malawi to this country), Credit Guarantee Insurance Corporation’s Social Responsibility unit, Nedbank’s Small Business Unit, any other bank’s small business unit; the SEDA (government agency) office closest to you.
The head of trade facilitation at the provincial trade promotion agency nearest to you, etc. and use the opportunity to gather information on how you should proceed.
Brush up on your interview skills beforehand – you have to impress upon these people that you are someone who should be taken seriously.
Draw up a list
When you have a clear idea of what is involved in trading agricultural products across borders, and a better understanding of whether or not your idea is workable, make a list of exactly what it is you think you will need (in specific terms) in order to realise your dream, for instance:
- Training in entrepreneurship
- Help with putting together a business plan
- Training in import/export
- Relevant market research (which market? On what, precisely?)
- A business partner/mentor
- Finance (how much?), etc.
Ask for help
Once you have a concrete idea of exactly what help you need, you can set about finding companies that are a good fit for your requirements. There are several ways that you can ask for help:
- Phone in to a talk radio station and ask listeners for help
- Enter one of the many local competitions aimed at entrepreneurs just like yourself (for example Pitch & Polish or Rize Mzansi)
- Send an article to business magazines outlining your plan, how you have gone about bringing it to fruition, and the success you have had to date.
No one company is going to provide everything you need as companies all have their own areas of specialisation. However, if companies recognise something that they can easily contribute, a number may come forward with offers to assist you.
Want To Start An Import Business – Here Are The Importing Terms And Documents Involved
An informative guide to understanding the terms, tariffs and documents involved with importing.
The following sections will be able to assist you in setting up your importing business:
How do I know whether my product is export-ready?
Your product has to tick several boxes before you can consider exporting it.
I want to start exporting my product into Africa. I’ve made contact with some buyers in Nigeria and they’re interested in signing a contract. How do I make sure that my product is ready for export?
Whether or not your product is export ready depends on the buyer’s needs, your product’s ability to meet those needs, and how your product will shape up against international competition.
In order to determine export readiness, you need to research the following:
- Your target market
- Any potential competitors
- The buyers themselves.
Common factors that would affect the exportability of a product include:
Unless there is a market for it, your product won’t sell. Look at your domestic market for an indication. If you are meeting a need locally, you should be able to meet the same need internationally.
This, however, is not the only consideration. International markets are usually further away, meaning that you will have to add transport costs, and will most probably have to include the cost of import duties and taxes in the final delivery price.
2. Product adaptability
A key quality of an export product is its ability to adapt to suit an international market. Cultural differences between countries could affect the use or acceptability of a product in each country. A product name could have a totally different and possibly derogatory meaning in another language and might have to be changed for that market.
3. Cost structure
The cost structure of the product will obviously impact on its competitiveness. For example, depending on the cost of materials, and whether or not those materials can be locally sourced, international transport costs and customs duties in the importing country will collectively determine the final delivery price.
The more you know about your competitor’s product, the better your position when determining your own chances of succeeding. Price is an important factor in determining success, but not the only way to compete. You can also differentiate your product by highlighting some of its unique selling points.
5. Product complexity
The greater the complexity of your product, the more important the strength of your business. Products that need a high level of support or installation assistance will need a strong local network with trained staff to support them. The investment in setting up a sales and support structure in the importing country could be prohibitive, making it unviable to export the product.
For more information, read more here.
How do I verify foreign suppliers?
Do your homework to reduce the likelihood that you’ll end up out of pocket.
I run a small import business and want to find some new suppliers in the Far East. How do I establish their credibility from South Africa?
It’s essential to establish that any new suppliers that you intend to do business with are credible and reliable. Here are some ways that you can check up on their credentials:
- Use internet trading forums such as that on eBay to establish whether the supplier has a history of being trustworthy and dependable
- Do online research to find out more about the company, including how long it’s been in business for and how long it’s had the product line that you’re interested in.
- What does their website look like? Has it been professionally designed and kept up to date? Does it have proper contact details including a physical address and telephone number?
- If you can’t afford to visit the supplier, contact them by phone or email and discuss your requirements. Find out about delivery times, payment methods and ability to deliver what you need, when you need it. These discussions should give you a feeling for how professional the supplier is in conducting its business.
- Ask for references and check them.
- You can consider using the services of a reputable inspection agency to make absolutely certain that the supplier is trustworthy.
- Obviously a site visit is the number one way of establishing a supplier’s credibility.
See the full article here.