I got an email from a reader (we’ll call him Gary) not too long ago asking whether or not I thought it would be a good idea if he opened up an import business in the Las Vegas area. Being the diligent follow-upper I am (and having a weirdly quiet afternoon at my disposal), I called him up and we had a very pleasant discussion about his future business endeavour.

When all was said and done, the big question Gary had on his mind was whether or not he could make this thing work without getting clobbered and sunk by some unknown and unforeseen roadblock – a very typical concern with any new business venture. We then spent the next thirty minutes or so running down the list of stumbling blocks and addressing them one by one.

I’ve summarized the main points below, but first…

Here’s Gary’s original email

Hello Keeton ~

My name is Gary and I have a question for you if you don’t mind. I am thinking seriously about starting an import business from Vegas, and wanted your thoughts and opinion on if you think this is a good or bad idea. I have been to China 3 times in the past few years, and as such, have gained an extraordinary respect and appreciation for Asia and its people. Last summer I spent about a month in Shanghai… almost opened a night club and restaurant there with 4 Chinese partners, but opted out. I have always wanted to do business with Asia, and I think this may be the right move.

And, I have founded and ran several companies over the past 17 years in Houston… but moved out to Vegas about 6 months ago to begin a new chapter in my life. I have developed strong contacts here in the hotel, casino and restaurant industries… and over the years have created a strong network in China as well, including being good friends with a guy in Houston who has an import business now. I just got to thinking that this may be the perfect business for me to start up?

I just read over your web site this morning and you just seemed like someone that has a strong company, and may be able to give me your thoughts and advice if you could… I guess the point is, or main question would be, do you think it’s a good idea for me to open this kind of business??

Xie xie ni!

—
Sincerely,

Gary

The main points

Here are the two main points from the conversation and how Gary intended to address them. These are the most often overlooked areas in the import industry, and once addressed the rest becomes a matter of paperwork. We went into bit more depth than what you see here, but this will give you the gist.

Marketing – What are you going to sell and who are you going to sell it to?

It sounds pretty straightforward, but I’m often surprised at the number of people who want to get into the import industry, but don’t have a product in mind. Normally my recommendation is to pursue something that the potential importer has experience in so that they can more readily identify advantageous pricing, quality, and a potential market. While Gary was unsure what product he was going to import, he addressed the issue with a strong background in sales, marketing and business operations and would apply those to first finding a receptive market, determining a price point and then addressing their product needs.

Product Sourcing – Where are your products going to come from?

This is a huge stumbling block for first time importers. If you’re bringing products into the US, they have to come from somewhere. In Gary’s case the intended origin of his potential products was Asia, or China to be more precise. The problems most importers face here are finding the suppliers, negotiating, and figuring out who to trust. Much of the time this involves “knowing a guy”, hiring a local middleman, or some fairly expensive international trips. Gary addressed the issue with previous overseas visits and the establishment of some local business contacts.

My follow up response

Hi Gary,

Thanks for the call!

From our conversation, I think you’ll do well in the import industry. Like I said, the local marketing and the international product sourcing challenges are the biggest stumbling blocks for most people in your situation. If you feel like you’ve addressed them already, then you’re definitely ahead of the game. Aside from those issues, my biggest concern would be knowing the ins and outs of import regulations for the specific products you want to import.

At this point, you should probably have a meet-and-greet conversation with a licensed US Customs broker and/or a logistics provider in your area (sometimes they have both in the same office). I would also start checking with financial institutions about an international financing tool called an irrevocable letter of credit.

See http://www.usimporters.org/irrevocable-letter-of-credit.html for an explanation.

Thanks again and best of luck! Let me know how it turns out and drop me a line anytime. I’m happy to offer as much advice to you as I am able.

Keeton