Investment is an essential part of any business in the market. Therefore, it is important to calculate the investment needed to start a business. Investment capital can be different for every business because every business has a different nature, some are small, and some are big. That’s why minimum investment for import export business can only be determined by the choice of the product.
Investment capital depends on the different factors like the structure of the company, the number of co-founders, business type, choice of the product, size of the business, etc. All you need to do plan everything and do proper research to invest in import export business or any business.
Trader or manufacturer must calculate all the costs and expenses involved to start the trading business and get it to breakeven. Breakeven is the point in which you neither get any profit nor lose money. And once you take your import export business to breakeven, you will surely make it profitable.
Now the point is how you can calculate the investment for import export business. Keep reading the article, and we will make sure you understand the calculation process.
How to Calculate the Investment for Import Export Business
To calculate the investment for import export business, you need to understand the 3 main cost types. These cost types are considered in every type of business. There are also complex cost types like indirect costs and progressive costs. But to start import export business and estimate its minimum investment, these are not important. The following are the three main cost types.
- Onetime costs
- Fixed Costs
- Variable Costs
Onetime costs are the ones that you have to bear only one time, which means there is no need to pay for them again and again. For example, the company registration fee, bank account opening fee (although bank charge for transaction fee which would be different on the different amount), business certification, or license fee. You need to consider all of these costs as a basic essential investment for the import export business.
A fixed cost is a cost that you have to bear every month. The fixed costs include office rent, warehouse rent, the monthly salary of the employees, etc. All these mentioned costs may change, but they change after the year. You need to consider all these expenses and calculate how many months the company has to operate to get to the breakeven. When starting a new import export business, make sure your fixed costs have to be as low as possible.
The cost that depends directly on the product is known as a variable cost. The most common variable expenses in import export business are the cost of the product purchased, packing cost each unit, transportation charges per product, external labor charges if any, customs duty and taxes, insurance, bank transaction charges, etc. These charges may change every time due to government policies and third party companies involved, that’s why these are known as variable charges. So do some research about the customs duty and taxes, and always try to get the best minimum price for the packing material, transportation, product, and freight insurance.
To get the minimum investment for the import export business, consider all types of costs, and add them together to get the price per product. That way, you can determine the investment for the business. Make an import export business plan to execute your trading business properly. Import export business is a profitable business if you do it right. Keep one thing in mind you cannot start import export business with zero investment.