International Corporations and Trade Agreements

[FreeChile]

I am interested in building a multi-national or international business and need to get informed on trade agreements like NAFTA, CACAM, FTAA, PTT, etc. The main objective of the business is to import and export goods, and to sell them for work and profit.

As an individual, how would I go about forming such a business and what potential challenges would I face? What would be the most effective way to develop this business? As an incorporation, a partnership, an individual, etc.? What policies would influence the contracting of resources (human or otherwise) either locally or overseas?

Thank you for your responses.

[Geckko]

I am interested in building a multi-national or international business and need to get informed on trade agreements like NAFTA, CACAM, FTAA, PTT, etc. The main objective of the business is to import and export goods, and to sell them for work and profit.

As an individual, how would I go about forming such a business and what potential challenges would I face? What would be the most effective way to develop this business? As an incorporation, a partnership, an individual, etc.? What policies would influence the contracting of resources (human or otherwise) either locally or overseas?

Thank you for your responses.

First things first.

Find a need, fill a need.

Then get down to the details.

[The Central Scrutinizer]

I am interested in building a multi-national or international business and need to get informed on trade agreements like NAFTA, CACAM, FTAA, PTT, etc. The main objective of the business is to import and export goods, and to sell them for work and profit.

As an individual, how would I go about forming such a business and what potential challenges would I face? What would be the most effective way to develop this business? As an incorporation, a partnership, an individual, etc.? What policies would influence the contracting of resources (human or otherwise) either locally or overseas?

Thank you for your responses.

Step one: Incorporate

Step two: do some googling. I suspect there is probably a lot of free government information available on this topic

[FreeChile]

First things first.

Find a need, fill a need.

Then get down to the details.
Of course, the market is highly important. I am interested in business and I would try my best to sell something that would be profitable. My main logic is to buy goods are a lower prices, and sell them at a price high enough to cover operating expenses and provide a profit. So my market choice would be dictated by that logic. Of course, I would not sell anything illegally--meaning that I would sell cocaine to pharmacuital companies and not on the street, for instance--assuming it were profitable to do so.

The most basic need I would fulfill at this point is that of transporting a good that is in lower demand in one part of the Americas to another part where it is in higher demand.

[FreeChile]

Step one: Incorporate

Step two: do some googling. I suspect there is probably a lot of free government information available on this topic
How would incorporation help me in a financial sense? Initially, I am willing to take certain risks like getting sued. My main concern is to make a profit. I think it takes something between 200 and 400 to incorporate in Delaware. Will I get that money back through incorporation benefits? For example, will I get special benefits on tariffs or something? I want to cut costs so I can sell lower than my competition.

[drkitten]

Of course, the market is highly important. I am interested in business and I would try my best to sell something that would be profitable.

Um,...

My main logic is to buy goods are a lower prices, and sell them at a price high enough to cover operating expenses and provide a profit.

... how unusual. Why, I've never seen this strategy expresed or used before!

All right, sarcasm is over. Seriously.

You need a market. You need a product. You need a business plan.

Worrying about business development before you have a business is premature. Worrying about cutting costs so you can do better than your competition is silly unless you know what your competition is and what the costs are likely to be.

Many universities have "small business development" offices and such, and they would be happy to give you personalized advice for a nominal fee, often for free. Your local banker will be glad to tell you what you need to do in order to get a startup loan, because that's a profit center for them. But the first thing that anyone will tell you is to "find a need, fill a need." You don't have a need yet.

Just as an example, you talk about importing and exporting "goods" from "one part of the Americas to another." Depending upon what you're importing and exporting, the customs regulations will be entirely different -- Cuban cigars are a no-no, Jamaican cigars require ATF approval, Barbados sugar requires FDA approval, and possibly Agriculture as well. Are you shipping exotic plants in by the caseload, woolen cloth by the ton, or are oil in by the tanker-full?

[The Central Scrutinizer]

How would incorporation help me in a financial sense?

It's not that it will "help" you particularly, but more that it would "protect" you from a lot of things.

It costs $58 to incorporate in Missouri (last time I looked).

[FreeChile]

It's not that it will "help" you particularly, but more that it would "protect" you from a lot of things.

It costs $58 to incorporate in Missouri (last time I looked).
As I said, initially, I am not concerned about certain risks--depending on what those risks are. So I would have to see the arguments for and against it. So I am not concerned about getting sued because I bought and sold a bad product at this point. I am concerned about making a profit. I want my business to grow and be profitable financially, first.

[drkitten]

As I said, initially, I am not concerned about certain risks--depending on what those risks are. So I would have to see the arguments for and against it. So I am not concerned about getting sued because I bought and sold a bad product at this point.

You should be.


I am concerned about making a profit. I want my business to grow and be profitable financially, first.

Your business will not be profitable if you are sued.

More importantly, your life will not be profitable if you are sued and don't have appropriate protection.

Was "insurance" also among the "costs" you were planning on cutting in order to be profitable?

[FreeChile]

You should be.

Your business will not be profitable if you are sued.
I am willing to take that risk.

More importantly, your life will not be profitable if you are sued and don't have appropriate protection.?
I'm not saying I won't incorporate eventually. I say that is secondary. For now, I rather use those 50-300 bucks to buy merchandise or pay for other necessary costs.

Was "insurance" also among the "costs" you were planning on cutting in order to be profitable?
Yes, depending on the amount of risk involved. Most people have no life nor health insurance. I presently opt to have health insurance and not life insurance. So it would depend on the risk involved. I also have car insurance but not the one most insurance companies would love to sell you.

[drkitten]

I am willing to take that risk.


Fair enough. I can thus advise you on your proposed business venture in one word.

Don't.

You will almost certainly lose your shirt.

[FreeChile]

You need a market. You need a product. You need a business plan.
The products would be those imported and exported between the United States (as a start) and its trading partners that are most likely to give me profit. I am in the initial research stage. So I have not chosen any particular products. The choice of product is part of the plan and not the reverse. I may even choose to drop or add products as necessary. That would be an element of my business plan. Take Peru, for example, according to the CIA World Fact book, they export possibly gold and import possibly machinery. So I could import gold items and export auto parts.

Peru's Exports

$15.95 billion f.o.b. (2005 est.)
copper, gold, zinc, crude petroleum and petroleum products, coffee
US 31.1%, China 10.8%, Chile 6.6%, Canada 5.9%, Switzerland 4.6% (2005)

Peru's Imports

$12.15 billion f.o.b. (2005 est.)
petroleum and petroleum products, plastics, machinery, vehicles, iron and steel, wheat, paper
US 18.2%, China 8.5%, Brazil 8%, Ecuador 7.4%, Colombia 6.1%, Argentina 5.1%, Chile 5.1%, Venezuela 4.1% (2005)

https://www.cia.gov/cia/publications/factbook/geos/dr.html

Worrying about business development before you have a business is premature. Worrying about cutting costs so you can do better than your competition is silly unless you know what your competition is and what the costs are likely to be.
I don’t mean development in that way. I just meant getting started. Assuming there would be a competition ahead of time is quite realistic—especially for someone starting. I would hate to incorporate and then later find out that noone else does in the business because it does not profit them or that it actually reduces their profits by doing so.

Many universities have "small business development" offices and such, and they would be happy to give you personalized advice for a nominal fee, often for free. Your local banker will be glad to tell you what you need to do in order to get a startup loan, because that's a profit center for them. But the first thing that anyone will tell you is to "find a need, fill a need." You don't have a need yet.
I already have a high-level definition of that need: the need to supply goods originating at market point A to point B and vice-versa. That applies to any import/export goods. Which products those will be remains to be detailed. Is that a need or not? So far I am brainstorming and don’t have a high-level plan.

Just as an example, you talk about importing and exporting "goods" from "one part of the Americas to another." Depending upon what you're importing and exporting, the customs regulations will be entirely different -- Cuban cigars are a no-no, Jamaican cigars require ATF approval, Barbados sugar requires FDA approval, and possibly Agriculture as well. Are you shipping exotic plants in by the caseload, woolen cloth by the ton, or are oil in by the tanker-full?
This is all part of the business plan task to choose the products. It is like Microsoft deciding whether or not to enter the video game market. It is cost-benefit analysis. Those are details at this point.

[drkitten]

The products would be those imported and exported between the United States (as a start) and its trading partners that are most likely to give me profit. I am in the initial research stage. So I have not chosen any particular products. The choice of product is part of the plan and not the reverse. I may even choose to drop or add products as necessary. That would be an element of my business plan. Take Peru, for example, according to the CIA World Fact book, they export possibly gold and import possibly machinery. So I could import gold items and export auto parts.

Wow. Um, again, don't

It's precisely the things that they already export in large numbers and import in large numbers that you're going to have the most competition, because those are the things that the large corporations already have infrastructure set up to deal with.

Not to put to fine a point on it, but,.... "find a need, fill a need," remember? There's obviously not a need for someone to export gold from Peru, since it's already a major export.

You're more likely to find a need in taking wine from Peru and selling them video games in return, something -- anything -- that the major players haven't already locked up.

I would hate to incorporate and then later find out that noone else does in the business because it does not profit them or that it actually reduces their profits by doing so.

Actually, that's exactly what you should do. That's where you will "find a need" to fill.


I already have a high-level definition of that need: the need to supply goods originating at market point A to point B and vice-versa.

That's not a "need," any more than "buy low, sell high" is a business plan.



That applies to any import/export goods. Which products those will be remains to be detailed. Is that a need or not? So far I am brainstorming and don’t have a high-level plan.

Which is why you should not be worrying about questions of incorporation and such yet.

if it turns out that there is a need that you can fill, but that you need ten million dollars in loaned capital to get into the need, then you'll probably need to incorporate in order to talk to the banks at all. If you are looking at low enough capital requirements, you may be able to get by with other business structures, even run it out of your basement.

But the business determines the appropriate structure and you don't yet have a business in mind.

Having said that, the costs of incorporation are low enough (and the protection is important enough) that there's almost never a reason not to incorporate. If you think that paying $1000 for legal advice and paperwork on startup is too great a cost, you don't have a real "need" that you're trying to fill, or your pockets aren't deep enough for you to be in this game.

[FreeChile]

Wow. Um, again, don't

It's precisely the things that they already export in large numbers and import in large numbers that you're going to have the most competition, because those are the things that the large corporations already have infrastructure set up to deal with.

This is part of the challenges I am also interesting in exploring. Isn’t it possible for me to simply go directly to the suppliers in Peru transporting some let’s say copper wares or materials and selling it here to retailers?

Not to put to fine a point on it, but,.... "find a need, fill a need," remember? There's obviously not a need for someone to export gold from Peru, since it's already a major export.

Then I misinterpreted what you meant by need. See the fact that it is a major export means that people here want it, therefore need it. Copper is needed by various industries (e.g. computer and electronics, plumbing, etc). That’s what I thought you meant by need. So my question would be how do I take part in fulfilling that need to make a living. That means dealing with the whole process of getting that good from extraction to delivery or consumption, which includes dealing with the competition.

You're more likely to find a need in taking wine from Peru and selling them video games in return, something -- anything -- that the major players haven't already locked up.

Are you trying to make my point? Isn’t that an import/export part of the business you’re describing there. Tangentially, you are also helping me in the business it appears by going through the goods selection process with me. I may disagree with you and we will have to go through the risk and cost-benefit analysis to determine if Gold, Copper or wine is a better product.

You’re assuming there’s less competition there. There is also the risk of offering people something new and alien to them, video games. The major players don’t touch it because there is no profit yet. It presumes Peruvians will like or afford video games as much as Americans or that their infrastructure will support it. Then you would say, oh then Peruvians need computers. No. They need computers because you want them to need video games. So you’re trying to create a market where there is none. The CIA does not even mention wine and video games on their list of most traded goods. How could that be something they need, then? Quite a risky enterprise.

Actually, that's exactly what you should do. That's where you will "find a need" to fill.

I’m not sure what you mean. Can you elaborate?


That's not a "need," any more than "buy low, sell high" is a business plan.

I think we need to get that definition straight first. What do you mean by a need and please give me examples? People need food to survive. So to me food is a need. In the business context, I guess we can say that needs are continuously changing—meaning that the world creates them and destroys them. So for Peruvians, video games may not be a need and for Americans, Peruvian wine may not be a need. The fact that some needs are fulfilled does not prevent someone from making a profit in that business. Restaurants open and close all the time.

"buy low, sell high" is not a plan, it is one of the business objectives and it is the objective of most businesses, to profit and increase their profits. I am willing to break even or even take a slight cut to get started. As I said before, I don’t have a high-level plan yet. So why would you imply that is my plan?

Which is why you should not be worrying about questions of incorporation and such yet.

if it turns out that there is a need that you can fill, but that you need ten million dollars in loaned capital to get into the need, then you'll probably need to incorporate in order to talk to the banks at all. If you are looking at low enough capital requirements, you may be able to get by with other business structures, even run it out of your basement.

The issue of incorporation would be part of an overall risk and cost-benefit analysis. I inquired about incorporation in the context of trade regulations. I am more inclined to start it as a home business first without leaving my present job.

But the business determines the appropriate structure and you don't yet have a business in mind.

Having said that, the costs of incorporation are low enough (and the protection is important enough) that there's almost never a reason not to incorporate. If you think that paying $1000 for legal advice and paperwork on startup is too great a cost, you don't have a real "need" that you're trying to fill, or your pockets aren't deep enough for you to be in this game.

But I will accept the proposition that the whole international trading business may not be a good business for anyone new to become involved in. We would have to explore that for me to fully accept that. Some small businesses are involved in this all the time. But they sometimes buy directly from peddlers who get their merchandise from a more direct source. I’ve seen people do this in the jewelry business. Some people sell wallets, stationary, among other things directly to stores. The problem many times is these salespeople don’t go directly to the source to get their supplies. That tends to cut their profits.