If you are an entrepreneur pondering over import-export business ideas and want to start a readymade clothes export business, then you have come to the right place. Undoubtedly, readymade garment export is one of the best export business ideas that you can start. India is the world’s second-largest exporter of textiles and apparel. As per the report by India Brand Equity Foundation, during April-July 2020, the export of articles of apparel and clothing accessories knitted or crocheted stood at US$ 1.32 billion. If you are still lacking clarity on how to start an import-export business, then this article will serve as a guide for you.
11 Steps to start a readymade clothes export business
Let’s explore the various steps involved in starting a readymade clothes export venture.
1. Establish an organisation
The first step in launching an export business is to establish your sole proprietary concern/ partnership firm/company as mandated by the rules. Next, come up with a name and logo for your firm that looks attractive. Also, open a current account with a bank authorised to deal in foreign exchange.
2. Procure the necessary licenses
Any importer or exporter must have a Permanent Account Number (PAN). Thus, obtain the PAN No. from the Income Tax Department. The next formality is to apply for the Importer-Exporter Code (IEC) Number. As an exporter, you are also required to get the Registration cum membership certificate (RCMC). The certificate is granted by the concerned Export Promotion Councils/Commodity Boards/ FIEO or the respective authorities. The other mandatory registrations are Goods and Service Tax (GST registration) and MSME Registration.
3. Develop an export plan
An import-export business plan is imperative for all business concerns dealing with imports and exports. The export plan details the steps required for your textile company to develop global sales. It helps you evaluate your strengths and weaknesses before you go out into the market and start exporting. The first step in developing an export plan is to identify the readymade cloth products you want to export. Also, check the export potential of those products. Once you have finalised the product, the next step is to conduct market research on the countries which are interested in buying your garments. Also, define a pricing strategy for your product and the strategy to find buyers. We will discuss these aspects in detail in the succeeding sections.
4. Financial analysis
Carefully analyse the internal and external sources of funds before starting your export venture. An equally important area is projecting the sales forecast related to your export plan. The pre-shipment and post-shipment finance options available in the market are a real boon for those planning to start an export business. In short, an efficient financial analysis is the cornerstone of a successful export business firm.
5. Decide on your product
Determine the nature of the product you wish to manufacture and export. Keep the product profile small so that you can focus more on those items. For example, if your interest lies in the manufacture of dresses, avoid the production of knitted items along with it. Also, have a rough idea about the volume or the number of dresses you are planning to manufacture in a day. Though the number may vary, you can still make modifications in the future depending on the budget and the fluctuation in demand from customers. Keep in mind that the infrastructure of your business is set up based on this estimate.
6. List out the type of machines
Now that you have a rough idea about the production figure and the nature of the product, the next step is to make a list of the type of machinery and the number of machines required. There are several essential machines such as tables used for pressing, machines used for cutting, diesel generators for power back up, etc. Also, list out other equipment required to carry out the operations.
7. Sourcing the raw materials
Pay proper attention while sourcing the raw materials that go into the production of readymade clothes. A poor-quality material can tarnish your brand reputation beyond repair. Make a comparison between various vendors and choose the right one based on the price offered and the quality of materials. Apparel Export Promotion Council is the official body of apparel exporters in India that assists Indian exporters who have chosen India as their preferred sourcing destination for garments.
8. Plan your factory area
To carry out the production of your clothes business, there are two options. Either you can rent out a factory space or purchase one. While choosing the factory location, ensure that there is sufficient space to install machines and accommodate the office staff and other workers.
9. Manpower planning
Estimating the workforce required for the operations is an integral part of the export business. Take into consideration several factors such as the number of workers to be hired for the production floor, managers required for supervision, office staff for performing functions such as accounting, etc. Apps such as OkStaff allow you to manage your employees’ payments, attendance, and more.
10. Export pricing
There is intense competition among small and medium-sized businesses in the international export market. As per the report by export.gov, almost 98% of the exporters in the United States consist of small and medium-sized businesses. In this scenario, export pricing acts as an important tool for promoting sales and beating the competition. Hence fix your export pricing, taking into consideration all the export benefits and expenses. Some of the important factors involved in export pricing are the cost of production, the cost involved in distribution, ease of availability of fabric and other accessories, type of the readymade garment, design, level of demand, international taxes, and market information on bilateral agreements.
11. Get export orders for garments
Though you may have many fantastic import and export business ideas, the most challenging part is to get orders for your garments. The first step in this direction is to reach out to international garment traders through emails. Introduce yourself, your company, and the various clothes items you are dealing with. The next method is to build a website for your company and include your contact details. List out all your products with high-quality images and a detailed description of each item. In addition to the product catalogue, including the feature of accepting online orders and payments. One more option is to run Facebook ads so that your advertisement grabs the attention of those interested in garment exports.
In addition to the above methods, joining export communities will help you get in touch with like-minded exporters. Also, get listed on online B2B platforms such as Alibaba and Amazon Business.
Many of the budding entrepreneurs lack proper guidance on how to start an import and export business. As discussed earlier, there is cutthroat competition in the readymade clothes export business, and you need to be smart to survive the challenges. The tips discussed above will no doubt help you to a great extent in building a successful readymade clothes export business.
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Q. What is the procedure of export trade?
Ans. The customs department needs to issue a permit to the forwarding agent. Towards this purpose, the forwarding agent will have to furnish the information about the goods to be exported. There are various details such as the nature of the material, number, weight, etc. that needs to be provided to the shipping company. Finally, a shipping bill/order is prepared by the forwarding agent.
Q. Is it mandatory to establish a production unit from scratch for starting an export business as per the law?
Ans. It is not necessary. Now you can start your export business along with your existing production unit. However, the products you manufacture must meet the global standards and requirements of customers globally.
Q. What is an export checklist?
Ans. The export checklist helps you assess the progress of your exporting business, or it acts as a snapshot. Before exporting your products, you can make the necessary product modifications for the export market in areas such as product adaptation, redesign, labelling, or packaging.
Q. What is BRC in export?
Ans. BRC stands for Bank Realisation Certificate. It is a certificate issued by the banks based on the realisation of payment for exports. It is mandatory to provide a valid Bank Realisation Certificate if an export firm wants to apply for benefits under Foreign Trade Policy. This document acts as proof of the realisation of payment against the exports made by the firm.