Africa Business Communities

[Column] Maria Auma: So you think you can import? (Pt 1)

by Maria Auma

I recently joined the highly capital intensive and somewhat prestigious industry of importation. I’ve always wanted to join this sector to test my limits. I must advise anyone even remotely interested in taking that leap of faith to carry out in depth research into the kind of market they are entering and explore every point in their value chain. You will need this later on. Below is a simple overview of my lessons learned so far and how you can pick several leaves to make your start much more smooth and streamlined than ours was.

1.    Research your process flow: When importing goods of any nature, you need to have a detailed process in flow in place to guide the team on who will be responsible for what. A simple table that shows roles and responsibilities or a chart that tracks the activity from bond storage to customs release will go a long way in helping you as a company meet your set targets on time and within manageable costs. Imagine importing a fleet of cars into the country with no idea of how you will get the containers transported from port of entry to bond store, duration of this process and all the other process that come after that. You would not be able to plot your sales strategy well, because everything would be handled on a “as the process unfolds” basis. This will waste a lot of time, a lot of resources and obviously disrupt your sales strategy, especially if you already have clients that have placed their orders or paid in cash.

2.    Research your clearing and forwarding agent: No-one wants to hire a clearing agent that has not the foggiest idea of how to handle their account. What makes this point even more crucial is that we are in Africa where business is generally done slooooowly. So before you sign a contract with a potential clearing and forwarding agent, do your research to determine costs vis-a-vie stock brought on board. Does the clearing agent know what is required of them? Will they treat your account with the necessary importance that it deserves i.e. like they would their own account? Are their handling fees fair as compared with the current market price and competition? What are other people saying about them? Simply doing online research is not enough to guarantee that you have collected all the necessary data to make an informed decision. Go the extra mile by sending your local representative to their headquarters to discuss details of the proposed engagement and to find out their process flow and lead times. Longer lead times are generally frowned upon, processes without time frames attached to them are a no go. Remember you are dealing in a market where time is everything. Do not sell a second of that time to someone who will not value it. Insist of procuring a list of requirements that you will need when the time for clearing a consignment comes so you are fully prepared.

3.    Research your target market: Who is your target market? Will they buy your product at the selling price? If not, you may need to consider incentives like offering discounts for purchase of large stock, delivery to client’s residence etc. You can always revise your target market, but the trick is to never stop approaching them, especially if your product is a new entrant. You are already at a disadvantage and need to keep the word-of-mouth spreading with your sales team. As a first time importer, you may not have the luxury of spending on expensive adverts so you have to make the most of all the opportunities for publicity that come your way. This means everyone in the team has to pull their weight, whether they are in the finance department or the administration department. These are beginning times, and to be successful you need to play like a team.

4.    Research the necessary tax compliances ahead of time: During the short period of time that I have been in this business I have discovered that there are ways people evade taxes. We all bemoan the high taxes on goods that go to governments who are barely doing anything towards developing the services and infrastructures of their nations. But this does not give us the pass card to stop remitting these taxes. It’s important to know how much you will be paying on your stock, what duties they are and how this will affect your profit margin. Doing this will help you price your product within the market price without losing sight of the need to make profits, which is why you are in this business. Research the duty fees for all your products more than twice so you are not caught off guard when the entry is captured by the relevant tax authority and the figure is not quite what you had expected.

5.    Never underestimate the importance of documentation: Always keep file copies of every transaction and communication between you and any other party involved. You never know when you will be asked for a certificate of conformity or proof of payment, or even email correspondence when trying to resolve a query. Be organised and you will save yourself a lot of time searching for documents when asked to present them.

6.    Revise your process flow: Once your goods have successfully entered the country of destination, you might discover that business transaction is conducted far differently from the way you are accustomed to in the country of origin. Processes might be slower and verification by relevant authorities may take longer. Make sure you have designed room for this and revise your process flow to accommodate extra time.

7.    Hire the right team: No-one wants to waste resources on a team that is underperforming. Ensure that the team you have put in place has a sense of what needs to be done, are quick studies and are conscious about meeting set targets. Always carry out appraisal sessions every week and keep in constant contact everyday within the first few months. The team will need your constant communication for guidance and to know that you care about your business enough. They will respect you more for it and you will be able to monitor progress easily without many surprises. If a problem arises, you will be able to deal with it before it turns into a full blown crisis.

Maria Auma is CEO of Blue Luxury Investments, Kampala, Uganda.

 

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