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You are here: Home Mark-Hempshell-Business How to Start (and Run) a Profitable Hands-Off Export Agency

How to Start (and Run) a Profitable Hands-Off Export Agency

Right now, most businesses aren’t laughing. They’re 20% down on business... 50% down on business... even 80% down in some cases. So if I told you there was a business that is actually doing better right now would you be interested? Well here’s a business that is benefiting from a 20% boost. In fact, opportunities are booming... with every prospect it will be one of our best performing industries over the next few years.

Why hands-off export is such an exciting opportunity right now…

It is the best time for years – I would guess for at least 20 years – to get into this business. If you don’t at least consider it now you will miss a great opportunity... one that might not come knocking again for a very long time.

I’m going to tell you right now that I’m talking about the export business. Selling things that are made in the UK to other countries. (Why, as well as making money for yourself you’ll also be helping the economy.)

Now please don’t be put off if exporting sounds too complicated for you. I have discovered a way to turn it into a straightforward, virtually desk-based business. So please have a look.

Why exporters are laughing

Let’s start with a few simple economics. As you’ll know if you’ve been abroad on your holidays, the pound has been strong for the past few years. A few years ago £1 would have bought you 1.4 euros, or almost two US dollars. That made it cheap to holiday in those places, but not so easy to sell British made goods there.

Now, thanks to the economic downturn and the plummeting pound, everything has gone topsy-turvy.

You’ll probably not get that much more than one euro for your pound, or 1.40 US dollars. Terrible for holidaymakers. Terrible for importers. But absolutely fantastic for exporters from the UK. Because UK goods are cheaper for people in other countries to buy than they have been for years.

Look at this example:

Three years ago if you’d tried to sell a piece of machinery to a buyer in the Netherlands for £5,000 it would have cost them 7,000 euros. Because the exchange rate then was £1=1.4 euros. Today, if you sold the same piece of machinery at £5,000 it would cost that Dutch buyer just 5,500 euros. That’s just over 20% cheaper. OK, so the world economy isn’t doing too well either. But a 20% price advantage? That’s giving British exports real clout in the international trade markets. It almost seems stupid not to get involved! Now I’m not suggesting you should get involved with ‘complicated’ exports... like oil, or steel... or anything dodgy like military equipment. But it’s perfectly practical to consider exporting smaller, simpler products... things that don’t need any experience or expertise.

What you need to get started

You will NOT need a massive warehouse, a container ship or £thousands of start-up capital! This is a home-based which you can run parttime as and when you want. You will need a phone and a computer with Internet access. Some stationery and files. That’s it. You don’t need any expert or technical knowledge.

You will not need to travel for this business. (Although if you wanted to travel the world first class and stay in luxury hotels I suppose you could. It would be all expenses paid.)

Most of your deals can be researched, found and concluded online. The Internet has also single-handedly solved all the problems import-export used to pose, bar none, such as the high cost of communications, differing time zones and postal delays.

The secret of making it simple... commission agency

Now if you think you will be buying shiploads of coal and storing it in your garden, or filling your spare bedroom with soft toys, think again. You won’t. Because the way this business works is as a commission agency. This is a well-established system in the import and export business. A commission agent doesn’t need a warehouse, transport, staff, any money to speak of, nor even a product as such.

As a commission agent, all you do is this:

1.      Find a promising product.

2.      Find a buyer for it.

3.      Bring them together and create a deal.

4.      Claim a commission on the value of the sale –any amount you can negotiate, but normally at least 5%.

It is the buyer and seller who deal with all the ‘difficult’ stuff like shipping, payments, taxes, customs and so on. You don’t have to do any of this.

Examples of commission agency deals

Here are some examples of the sort of deals export commission agents might do:

** You get a commission agency deal with a company who makes jewellery in Wales. You work your agency two evenings a week and have monthly sales of around £8,000. That makes you around £400 each month.

** You get a commission agency deal with a cheese manufacturer in the West Country. You find just one buyer in France. Each week they order £5,000 of cheese. You get 5% or £250 on the deal every week. Do you think you could get more than one order a week?

** You get a commission agency deal with a company who sells lighting, to sell their products in Spain. You do a deal with a Spanish department store chain and they place orders worth £50,000-£60,000 three or four times a year. That makes you £10,000-£12,000 a year part-time.

** You get a commission agency deal with a company who manufactures printing machinery. In your first year you get a £30,000 order from the Netherlands, £50,000 order from Germany, a £70,000 order from Turkey and then a £250,000 deal from China. You get 10% on each deal... that’s £40,000 over the year.

Start with a product, or start with a demand?

So let’s get started. There are two ways of getting started as an export commission agent. You can choose a product and then find buyers abroad. Or you can find buyers abroad and then find a source of supply in the UK. Eventually there is no reason why you cannot do both simultaneously. But initially it is going to be easier to select a product in the UK, and then find foreign buyers for it. Remember, UK products have a big price advantage in lots of other countries around the world at the moment, so it could be a lot easier than you might think.

What kind of products are good to export?

The simple answer is anything or everything. It doesn’t really matter. Because you won’t actually be handling it yourself. But some things work for an export commission agency better than others. So let’s give it a bit of thought.

Things that the UK is known for, and which have a good reputation abroad – such as luxury goods, fashion or machinery.

Local products from local manufacturers, especially if they have a worldwide reputation such as Scotch whisky, Yorkshire textiles or Midland’s engineering.

Products that are of high value and good quality. The UK is strong in these exports. It means you’ll face less competition from cheap exports from places such as China.

Products that will generate repeat sales. These are the things to focus on if you can. This way you get what are known as residuals... commission for repeat and replacement orders in the future. Here are just a few thoughts. It’s not a conclusive list, but it might give you some ideas: Designer Clothes. Shoes. Electronics. Consumer Goods. Electricals. Audio & Video. Jewellery. Furniture. Furnishings. Household Goods. Carpets. Gardening Products. DIY. Food & Drink. Tools. Machinery. Office Supplies. Plant & Equipment. Hobby Supplies. Pet Supplies. Toys. Gifts. Motoring Accessories. Baby Goods. Cosmetics. Bikes. Business Supplies. Start with just one product, although long term you can handle several connected or unconnected products in your agency.

Finding products to represent

The next step is to look for companies who might be interested in appointing you as their commission sales agent, i.e. UK manufacturers who want to sell their products abroad.

Once you have a product in mind look for some suppliers. Ideally your supplier should be the actual manufacturer of those products. But in some cases they could be a major distributor or a wholesaler. There are lots of sources of leads to use. Use your local knowledge. Do you know of, for example, a motor accessories manufacturer who would like to get started in exporting? Or a company who manufactures specialist chemicals? It costs nothing to contact them and suggest a deal. Ask your local Chambers of Commerce for membership lists. You could even use the good old Yellow Pages at www.yell.co.uk. There are other online directories of manufacturers and businesses too. Applegate at www.applegate.co.uk is handy. It covers industry, technology and manufacturing companies. Secret Source Finder at www.secretsourcefinder.com offers a searchable database of manufacturers, distributors and wholesalers of almost anything.

Draw up a shortlist. Then use an enquiry phone call, letter or e-mail. Here’s the sort of simple and to-the-point e-mail you could send:

Subject:        Interested In Exporting?

Date:   01/04/09

To:     The Sales Director

Dear Sir,

I wonder if you might be interested in expanding your sales at the moment by selling into more export markets?

My name is [your name] and I am an export agent. Currently, I have identified a potential demand for the products you manufacture in several overseas markets, such as the USA and southern Africa. I wonder if you would be interested in my operating as a commission sales agent for your product in these overseas markets? I will find you new customers and pass orders on to you for a reasonable fixed commission on the order value. No sale – no charge.

If you would like to know, more please do not hesitate to contact me.

Yours faithfully

[Your name]

Agreeing an export agency deal

The next step is to sort out a commission agency deal with the manufacturer.

This should be a fairly simple proposition right now. All UK companies are hungry for more sales at the moment. It’s not a hard sell. You shouldn’t have to do a lot of tough negotiating. Either they are interested or they are not. If you can’t strike a deal then just move on to the next manufacturer on your list. Once you come to an arrangement you should sign a commission agency agreement with them. This sets out the terms on which you will sell their goods and the commission payment arrangements. This needn’t be a very complicated document – just cover the main points.

Sample commission agency agreement: To make it easier here I’ve sourced a sample commission agency agreement document for you. All you need to do is copy it, amend it, check it to make sure you’re happy with the details and then you can use it in your own business. To get a free copy just download it from here: www.canonburypublishing.com/export.

Having said all this remember, trust is much more important than written agreements. If you get sales for them and they turn out to be reluctant to pay, well, don’t send them any more orders. Find another manufacturer who wants to export instead.

How much commission should you ask for?

There is absolutely no going rate for the amount of commission you can get on projects like this. It simply depends on what you can agree with the seller. As a general guide you should be thinking around 5%. Though there may be some products where you can get 10% or even more. Bear in mind your costs are fairly minimal. So with many things you could still probably make a decent profit at 1% commission. (It also depends on the value of the orders you are likely to be getting. For example, just 1% of a £1,000,000 export order for building materials is still a fair bit of money.)

Finding export buyers

With a commission agency sewn up you can move on to finding export orders for the product you are representing. Here’s some more good news: You can do most of this from your computer in your spare time. Again your operating costs are minimal. There’s no travelling, hotels, printing or postage. In the event you don’t find a buyer for your Wellington boots, or ceramics, or whatever you’re exporting, you won’t lose out at all.

First have a look for countries where your chosen goods might sell well. You might need to make an educated guess to start with. But try and think of places where UK produced goods will be known and/or respected.

Also, and this is the clever bit, focus on countries where the pound is weak against the local currency. This gives your exports a big price advantage.

Try and focus on countries where you are more likely to find English-speaking buyers. This will makes things easier. This includes countries like the USA, Canada, New Zealand, Australia and Ireland. Former British colonies in the Caribbean. Most business people in India speak some English. Some African countries also speak English, including South Africa. Within Europe some countries have more English-speaking people than others – such as the Netherlands and Scandinavia.

The Internet means that libraries are virtually obsolete when it comes to researching countries to trade with. There are lots of sites you can use to find out which countries might make good markets: World Facts and Figures at www.worldfactsandfigures.com is very easy to use. Nationmaster at www.nationmaster.com is a unique site that allows you to collect data and display it in your preferred format. And you’d never have suspected America’s secretive CIA might help you. But they will, and it’s free! The CIA publish one of the world’s most comprehensive insider guides to almost every country, with masses of useful trade data. It’s known as ‘The World Factbook’ and you can find it online at www.cia.gov/cia/publications/factbook. It is researched by agents in the field and updated frequently. Now narrow it down to finding actual buyers.

There are various sources of leads:

Embassies and consulates will often give you leads. Most have a website nowadays – and some of them have excellent trade promotion or commercial department mini-sites. Here’s a site which can link you to any embassy in any country worldwide in seconds: Embassy World at www.embassyworld.com.

Now look for actual buyers. There is now a good choice of company directories on the Internet, where you can track down companies who may be in the market for what you are exporting. Here are a few:

  • Kellysearch at www.kellysearch.com is the newest online version of the age-old paper company directory.
  • Kompass at www.kompass.com is also a very comprehensive business directory.
  • Thomas Register at www.thomasregister.com is an online searchable database of US companies – even in a recession the USA is the biggest buyer of exports in the world.

Try some random Internet searching for leads!

To develop the most effective search for buyers you first need to identify what type of organisation your ideal buyers are. Chances are one of the following key words will apply: ‘retailers’, ‘manufacturers’, ‘distributors’, ‘stockists’, ‘suppliers’ or ‘agents’. In some cases they might be: ‘academic’, ‘government’, ‘public’, ‘defence’, etc. Now run a search using the buyer term or terms you’ve just selected with the appropriate product you are handling. For example, ‘toy retailers’ or ‘furniture distributors’. Save the website addresses that are produced for later research. If you want to sell these products to a particular country then incorporate that into your search – for example ‘shoes stockists Finland’.

Contacting potential buyers

Once you’ve drawn up a list of possible overseas buyers you can actually contact them to introduce the product you’re dealing in. You can do so using email or traditional letters through the post, with email being a much more economic choice if you can find a reliable e-mail address.

Below, I’ve drafted some copy for a simple but effective e-mail you could adapt and use:

Subject: Buy More Cheaply From The UK

Date:   01/04/09

To:     The Head Buyer

Dear Sir,

As you might know, the UK pound is weak right now. That makes it a great time to consider buying from the UK.

My name is [your name] and I am an export agent. Currently, I represent a UK manufacturer producing a range of packaging machinery for the food industry. The machinery meets all current world and European quality standards and, right now, is available for export at very competitive prices. If you would like more details, photographs, specifications and a trade price list please let me know and I will send you more information by return.

Yours faithfully,

[Your name]

Beware of spam! Whatever you do, DON’T use bulk e-mailing which can be confused with spam and may be ignored. All your marketing e-mails should be individually mailed, preferably to a named person. (You can use a standard e-mail but personalise each one so that it appears to be individual.)

Another clever idea... using an agent’s agent Working with other sales agents in other countries is a good way to find buyers for the products that you are handling for export. They will probably know who the buyers are for your products in their own country. You can find them easily through the International Union Of Commercial Agents & Brokers (IUCAB) website at www.iucab.nl. IUCAB represents over 470,000 agents in Austria, Belgium, Canada, Cyprus, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Lithuania, Mexico, Netherlands, Norway, Spain, Sweden, Switzerland and USA. Many agents work on a commission-sharing basis. (You can also join yourself and generate useful business leads.)

Tying up the deal

Once you get interested buyers, find out what products and quantities they want to buy. For example, 5,000 units of a particular spare part – or 100 designer hats – whatever it might be. (Do not, at this stage, reveal details of who your supplier is if at all possible – since you do not want them to go direct to the manufacturer at this stage.) Now go to the manufacturer and obtain a quote for their requirements. Send it on to the prospective buyer. Depending on what you are selling there might be room for a bit of negotiation on the price and terms of business here. Ask your manufacturer whether there is or not.

Once the buyer is ready to place an order, you simply put them in touch with the manufacturer and they make the arrangements. Simple. And this is the really good thing about being a commission agent: You do not have to get involved with any of the details of actually delivering the goods. (You can if you want... but why would you want to?) This includes arranging shipping, contracts, or dealing with insurance, taxes and Customs etc. All this is handled by either the buyer or seller or both.

Getting paid. You should be paid by your seller when the buyer pays them. Depending on the deal they have this may be up front, on delivery of the goods, or anything between one and three months later.

Very important! Keep in touch with your buyer. Contact them every month or so at least. Whenever they need more goods they place their order through you and you also earn a commission on that! This way you can earn a residual income long into the future, long after the initial sale has been made.

Lastly, although this is a perfect business for right now it does have sound long-term potential, too. Even if the pound picks up in the future (the exchange rates I mentioned were correct at time of writing) international trade is still one of the best long-term, proven money-making opportunities.

More useful resources for export

Here are some websites you will find useful:

Alibaba at www.alibaba.com calls itself ‘global trade made easy’! Here you’ll find literally millions of buyers and sellers worldwide for every product imaginable from 27 industry categories. You can post, view and respond to buy/sell offers as well as browse offers to work with partners around the world. A good feature of Alibaba is that suppliers are pre-qualified using a third-party credit agency, to minimise fraud risks.

EC21 at www.ec21.com is a global business-to-business marketplace. It has 600,000 members from 200 countries listing thousands of products for sale and wanted. With EC21 listings aren’t checked, but it is moderated to minimise fraud.

Zentrada at www.zentrada.co.uk. A wholesale business-to-business marketplace, operating in the UK, Germany, France, Netherlands, Poland, Italy and Hungary. Smaller than Alibaba or EC21 but handy for leads.

Wade World Trade. If you are interested in studying import-export in more detail then take a look at the courses offered by Wade World Trade: www.wadetrade.com.

Secret Source Finder. If you want more help with tracking down manufacturers, distributors and wholesalers then I strongly recommend you take a look at our Secret Source Finder website. Secret Source Finder contains a searchable database of companies who may be able to supply whatever you want plus information, tips and techniques. The Secret Source Finder website contains only genuine manufacturers, wholesalers and trade suppliers... we’ve hand-picked and screened all the entries ourselves. You can find it at: www.secretsourcefinder.com.

by Mark Hempshell

Business Opportunities Expert



Mark Hempshell is a regular contributor to What Really Makes Money. You can sign up for the free weekly eletter here:

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