6 Steps To Become an Export Business from Home

Export Business from Home

How to Start an Export Business from Home

1. Learn about the market

The export market in Nigeria is so complex, you will fail if you take a plunge without having gathered enough knowledge and experience. So, before starting out, you need to take your time to learn vital details about the export business such as licensing requirements, port procedures, product sourcing, working with foreign agents and distributors, locating profitable international markets, and so on.

In Nigeria, you will find many e-books on how to become a successful exporter. Ironically, most of these e-books are written by people who are not exporters themselves! You need to be wary of these.

The best way to learn about the export business is to contact a seasoned exporter with years of experience in the industry and ask them to teach you all you need to know before kick-starting your own business. Practical teaching in a face-to-face setting is best.

2. Figure out what products you will sell

In Nigeria, some more-than-countable commodities and resources can fetch you huge profits in the international market. But you will fail woefully if you try to sell too many items at once. So, you should focus on only one product from the start. As you gain more experience, you can expand your scope to include other products.

As a recommendation, start with products that you can easily make available in the required quantity whenever there is demand for it. Cassava, cashew nuts, bitter kola, cocoa, charcoal, and kola nuts are excellent examples of products to start with.

3. Decide how you will source the products

After deciding which product you would like to export, you need to determine how you will source the product. Basically, you have two options: you can either produce the product yourself or buy from manufacturers or producers in wholesale quantities.

For a start, buying from someone else is the more comfortable and cheaper option, as you might not be able to afford the cost of setting up and maintaining a production point. If you are going for this option, then you need to find suppliers or producers of the product. It is recommended that you have one or two ‘standby’ suppliers aside from your primary supplier, so you won’t have many worries if your leading supplier suddenly runs out of stock.

4. Register your business

Legalizing your business is one of the most important steps towards starting any business in Nigeria—and the export business is no exception. You must register your export business with the Corporate Affairs Commission.

Aside from giving you the legal permission to operate your export business, registering your business will boost your credibility. Before doing business with you, most foreign distributors will try to establish your credibility by requesting a certificate of incorporation and other documents showing that your business is legally registered in Nigeria.

5. Find your buyers

With the internet, the export business has become easier than ever. You can find buyers for your products and seal trade deals right from the comfort of your room without necessarily holding a face-to-face meeting with the buyers. All you need to do is join trade websites, become an active member, and start sealing trade deals with interested buyers.

6. Exhibit your products

Trade fairs and missions provide excellent opportunities for exporters to showcase their products. As your export business grows, you will need to attend more of these events to create awareness about your export products. You have bright chances of meeting with potential buyers and sealing new lucrative trade deals.
How to Finance Your Export Business in Nigeria

When you are planning to start your own export business in Nigeria, there are many things you need to put in place. You need to register your business and obtain specific licenses and permits issued by the Nigerian government. You need to fulfill all legal requirements imposed by the government of your foreign target market. You need to have a deep understanding of the export market and how the business works. And you need to adequately plan everything about your business: export commodities, target foreign markets, connections, startup costs, and so on.

However, one major factor that stops most aspiring exporters in Nigeria from kick-starting their export business is funding. The cost of starting and running an export business in Nigeria is far more than what most people can afford—though this varies depending on the products to be sold and the foreign markets targeted.

If the lack of funding is the only challenge preventing you from starting out, here are proven tips on how to finance your export business and get it off the ground:

a. Ask family and friends

When you are sourcing for funds for your export business, don’t overlook any possible source. And this is not the time to be an introvert, either. Approach members of your family, as well as your friends who you think,  can afford to lend or give you all or some of the money you need.

The advantage of seeking startup funds from your close ones is that there is little or no protocol or formality involved. And trust won’t be an issue since they have known you for years. Chances are that they will be willing to help you if they have the money—unless you have done something terrible in the past.

So, an approach that rich uncle of yours or contact that your good friend. Schedule a meeting with them, and go with a copy of your business plan to show that you are really serious about starting the business. If you can get funding from a friend or relative, be sure to clarify if it’s a gift or a loan.

b. Approach angel investors

Angel investors are wealthy individuals and serial entrepreneurs who are willing to invest in business opportunities with huge profit potential. In return for the funds that they invest in your business, angel investors will take a share of your market, hoping to get back their investment with time alongside huge profits.

You can use the web or your connections to locate and contact angel investors in your locality who might be willing to invest in your export business. Once you can get in touch with an angel investor, schedule a meeting with them during which you present your business plan.

However, you must bear in mind that angel investors are only willing to invest in promising business ideas and opportunities. So, you need to prove beyond all levels of doubt that your export business will turn out profitable.

c. Approach venture capitalists

Venture capitalists are limited liability companies that are looking to invest in lucrative business opportunities. A fund manager invests the funds on behalf of investors who contribute money to the venture capital fund.

Like angel investors, venture capitalists also seek to take some shares in your business in return for the funds they invested. And they will be looking to get back their money by implementing an exit strategy between five to ten years after your business launches.

To find venture capitalists in Nigeria, check a physical business directory or an online business directory such as Vconnect or Nigeria Galleria. You must bear in mind. However, that Venture Capitalists seek to take more control of your business than angel investors do. So, if you are not willing to trade your power to make decisions on your business for anything, then this option is not for you.

d. Loans

Another common way to finance your export business in Nigeria is to take loans from banks and other loan-issuing institutions. Although getting a loan might be difficult if you’re new to the industry or do not have connections with influential individuals. But it’s not impossible, provided you have a convincingly promising business idea. If you have no luck with the high profile banks, the microfinance banks will more likely fund your business.

However, note that you will need a valuable property as collateral for securing a loan. And you will pay a fixed amount as a monthly interest on the loan. There you have them! If you have a promising export business idea but have no funds to get started, you just learned four realistic ways to get funding here in Nigeria.

10 Challenges to Expect When Starting an Export Business in Nigeria

Whoever told you that starting and running an export business in Nigeria is easy definitely knows little or nothing about the company. As with any other activity, the export business in Nigeria has its fair share of challenges. And to succeed as an exporter in Nigeria, you need to know these challenges as well as the strategies for overcoming them.

In this section, I will explain ten of the most typical challenges that you will most likely face when starting out in the Nigerian export market.

I. Lack of access to quality information

Your interest in the export business must have been fueled by some information you got about it, no doubt. But chances are that you still need to learn a lot about the company. Unfortunately, most of the resources available on the internet are not tailored to the export business in Nigeria. Yet, most of the seasoned and successful Nigerian exporters who can teach you all you need to succeed in the Nigerian export market will hardly have the time for that. So, you will most likely start out with a trial-and-error approach.

II. Lack of startup funds

The amount of money you will need to start your export business depends on many factors, including the type of products you want to export and your target foreign market. However, even if you’re exporting cheap commodities to countries that are inexpensive to break into, you will still need a decent amount of money as startup capital. Remember, you will need funds for business registration, obtaining licenses and permits, purchasing export commodities, visiting the target market (if necessary), and so on.

III. Difficulty in finding reliable foreign agents

It goes without saying that you will need to sell your products in another country with the aid of a distributor or agent in that country. That is, the distributor or agent will be the link between you and the consumers of your products in that country. Finding agents or distributors that are credible and reliable could be a daunting task. Many new exporters have fallen victim to fraudsters who disguise as agents and distributors. So, you need to really take your time to carefully find out about any agent before working with them.

IV. Unplanned extra costs

Even after you have planned adequately before starting your export business, you will most likely need more funds than you earmarked. This is due to the ever-changing nature of most foreign markets. For example, new importation policies in your international target market might require the payment of specific fees, which you never planned as part of your budget. Such extra costs could significantly reduce your profit.

V. Rejection of products in the foreign market

In many countries, there are specific safety standards that must be met by imported products. This means you need to modify your products to meet the standards of your target foreign market. For example, if you import electrical gadgets with a voltage rating of 220V to a country where the standard voltage rating is 110V, you will have your products rejected—for obvious reasons. This can lead to huge losses.

VI. Financial risk

When dealing with a foreign market, you will most likely use payment collection methods that are more time-consuming and more complicated than those you will use for a domestic market. Worse, these payment methods are not entirely secure, as there are chances, you could lose your money to fraud. So, you must carefully weigh the financial risk involved before starting an export business.

VII. Lack of enough market information

Many Nigerian exporters rely on incomplete information about foreign markets, and this leaves many badly burned in the end. For example, assume you got the news that certain electrical appliances are selling like wild in Colombia, and you quickly jumped at the opportunity by exporting the tools to that country. Unfortunately, you sent machines with a primary voltage rating of 220V because your source didn’t state that Colombia uses 110V appliances. You can guess what the outcome would be.

VIII. Slow transportation

When you are starting out as an exporter, you will most likely settle for cheaper means of transport. But unfortunately, most of these affordable options are quite slow. This becomes a big deal if you are exporting perishable products such as fresh vegetables or fruits that need to get to the target market in a new state. To ensure timely delivery of such products, you need to pay enormous costs for faster transport options.

IX. Problems of packaging

When you are just starting out as a Nigerian exporter, chances are you will get your packaging wrong a few times before getting it right. This means some of your export products will either be spoiled or damaged before they arrive at the target market. When this happens, you will incur loses proportionately with the number of volumes of damaged products.

X. Lost shipments

There are times when exporters lose their goods-in-transit. Although it rarely happens, it usually results in huge losses. An excellent way to check this is to always track where your products are. But a better approach is to purchase an insurance policy that will provide coverage for your business in the event of a lost shipment


9 Mistakes to Avoid When Starting an Export Business in Nigeria

While starting an export business in Nigeria could be your best business decision ever, it can also be your worst nightmare. With the vast profit potential of the company comes huge risks and pitfalls that could cripple anyone who is not wary of them. Unfortunately, most casualties are the new exporters who are just starting out.

So, before starting your export business in Nigeria, you need to know what to do to boost your chances of success and what you must avoid. Here are five common mistakes you should avoid when you are just starting out as an exporter in Nigeria:

A. Not understand the export business

As with any other company, starting an export business requires lots of learning and research. You need to really understand how everything works in the industry. To achieve this, you may need to contact seasoned and successful exporters who have an in-depth understanding of the Nigerian and foreign markets.

Now, beware of some so-called Nigerian “gurus” who sell e-books and try to teach people how to start an export business, but are not exporters themselves. Your ideal mentors are those who have really achieved massive success as exporters and can teach you the real, practical aspects of the business.

If you plunge into the export business without adequate information and knowledge, you will most likely fail, and you will quit much sooner than you can imagine.

B. Not targeting promising foreign markets

To earn maximum profits from your export products or commodities, you need to sell them in a country where they are in huge demand. While it could be tempting to send your products to any just country that you can establish connections in, selling them to a market that is hungry for them and has low competition is the smartest way to make maximum profits.

How do you figure out the most promising foreign market? You can do this merely by conducting structured research. This entails shortlisting countries where you think your products will sell well in, and then carefully researching the market in each country before making a decision. If you export your products to a foreign exchange that does not want them, you will record minimal profits—if any at all—or even huge losses.

C. Trying to enter too many markets at once

Many new Nigerian exporters are often tempted to target multiple foreign markets at once. This is a colossal mistake that leaves most of them badly burned because they get to spend more money, time, and resources than they can afford.

Even if you can afford the cost of sending your products to multiple markets at once, take your time to study all the aspects of the export business before doing such. When starting out, always stick with one foreign exchange at a time. After you have gained enough experience and know-how, you can then start focusing on multiple international markets.

D. Not carefully finding foreign agents or distributors

Another common problem that many new Nigerian exporters face is the inability to find the right agent or distributor in their target international market. Some of them fall into the hands of greedy distributors that leave them with very little or even no profit. Worse, some fall into the hands of fraudsters who disappear into thin air after receiving their products.

Though chances are slim that you can find the perfect agent or distributor on your first trip, with carefully conducted research, you will be able to find good ones that you will be happy working with. So, when choosing your export partners, choose with care. Make sure to invest ample time and effort to locate and secure the commitment of excellent agents, distributors, customs brokers, and other agents in your country.

E. Not visiting your target market

Many Nigerian exporters send their commodities to foreign markets without having a feel of those markets themselves. Though you can still achieve success without necessarily visiting your target market, the only way to really appreciate a new country and its people as well as understand its market is by visiting.

Aside from that, you will be able to perceive the demand for your product, you will also be able to meet with distributors face-to-face. Such face-to-face meetings will reduce your chances of landing in the hands of the wrong distributors (you never know the guy at the other end of your emails or phone calls).

F. Not understanding foreign product regulations and preferences

Countries all over the world have varying rules and policies regarding products that are accepted in their local markets. Unfortunately, however, many Nigerian newbie exporters neglect to find out and understand these regulations and modify their products accordingly. This usually leads to the rejection of products by different product regulatory agencies, which ultimately results in huge losses for the exporter.

To become a successful exporter, you need to modify your products and packaging to suit the preferences of your target market, even if it means completely redesigning your domestic approach. Also, ensure that your business methodologies are both legally compliant and culturally acceptable in your foreign exchange.

G. Reliance on inadequate relationships

In a rush to start making huge profits, some newbie exporters hurry through the process of choosing foreign distributors and agents. But they later pay the price the hard way when their budding export business becomes a tangled mess of distributions worries, shady transactions, and marketing breakdowns.

So, before you begin exporting, take your time to verify the credibility of any foreign partners you will be working with. Before going ahead to deal with them, be sure that they are reliable and capable of delivering what they promise.

H. Lacking a coherent international marketing plan

In certain aspects, selling to a global market is just similar to selling to a domestic market. Your products won’t find their way into your target market unless you have taken the time to put together and implement a marketing plan. Doing this for foreign exchange is trickier and more complicated, but it must be done.

Whether your products will enjoy massive patronage in your target foreign market or not depends on your marketing efforts. So, if you want to realize huge profits from your exports, you need to market like wild. Don’t leave this to foreign distributors.

I. Having money as the primary motivation

There are no doubts about the vast profitability of the export business in Nigeria. But then, going into the market with the sole aim of raking some quick profits is a recipe for failure. When starting out, you need to focus on a lot of aspects to get your business firm on the ground. These include building connections with foreign partners, finding profitable products to export, prospecting for lucrative international markets, and so on.

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