In 2018, the US imported machinery worth over $185 billion and exported $141 billion. These figures have only increased since then, representing nearly a quarter of all US imports.
You can be in on that profit by starting your own trading company. From motors and generators to farm and garden equipment, to centrifugal pumps — machines keep the world moving. You can build a thriving machinery and equipment business that facilitates trade around the world. But starting is far from easy and you’ll need to research in-depth the potential market, buyers and sellers you are thinking about working with.
Types of import/export businesses
There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that most interests you.
Export management company
An export management company (EMC) helps a company in the US export its machines and equipment. It manages the details of hiring distributors, developing marketing materials and preparing shipping logistics.
Export trading company
An export trading company (ETC) researches the needs of foreign buyers and finds domestic companies to meet those needs.
Import/export merchant (or free agent)
Import/export merchants buy merchandise from a manufacturer — foreign or domestic — then resells that merchandise around the world. Although there’s heavier risk involved in being a free agent, you can potentially earn higher profits when you cut out the middlemen.
You can start your own import/export business with little upfront costs.
At a minimum, you need a phone and a reliable Internet connection. You’ll also want to invest in business cards, a website and a fax machine. And it doesn’t hurt to hire somebody for your branding, including a unique business logo.
In reality though you’ll need a lot more than this to get going. A lot of companies that enter the import/export business in the US are already operating elsewhere, so crucial skills and resources include:
In-depth knowledge or connections with companies in the United States looking to buy goods from abroad.
In-depth knowledge or connections with companies abroad that are looking to export their goods to the US.
Start-up capital to travel to businesses, manufacturers and potential clients to discuss deals and products.
Narrowing your market focus and target customer
Once you’ve decided the type of machinery and equipment import/export business you want to run, and you’ve figured out the startup costs, it’s time to narrow your market focus. By niching down, you can concentrate on a market you can serve best.
As you spend time researching profitable niches, think about:
The customers you want to serve.
Areas of the world you’ll target.
Types of machinery and equipment you’ll offer.
Your target customer will be someone who wants to trade globally by either selling or buying machines overseas or from international sources.
Looking into Machinery and Equipment Industry Associations and publications is a fantastic place to start because it will give you an idea on market trends and ‘who’s who’ in the industry.
Association of Equipment Manufacturers (AEM)
Association for Manufacturing Technology (AMT)
National Electrical Manufacturers Association (NEMA)
Association for Suppliers of Printers, Publishing and Converting Technologies (NPES)
Association for Packaging and Processing Technologies (PMMI)
Industrial Truck Association (ITA)
National Restaurant Association (NRA)
Engine Manufacturers Association (EMA)
National Association of Manufacturers (NAM)
Agricultural Equipment Outlook
Cutting Tool Engineering Magazine
Food Engineering Magazine
Metal Forming Magazine
Power Transmission Engineering Magazine
Plastics Technology Magazine and Blog
Types of machines and equipment
To meet the needs of your target customer, you need to choose the type of machinery you’ll offer. Choose something that you have the most experience with. For instance, do you know about semiconductors or compressors? Have you worked with metal-cutting machine tools? Do you know about agriculture, commercial appliances or the transportation sector?
Existing experience with your target area is a plus, but having passion for it widens your advantage. You’ll understand the jargon of your niche and you may already have contacts.
The machinery and equipment market
Commercial and household appliances. Air-conditioning equipment, ovens, refrigerators.
Industrial machinery. Packaging and labeling equipment, food processing equipment, manufacturing and textiles equipment.
Machine tools. Equipment for cutting, boring, grinding and shearing.
Construction equipment. Earth-moving machinery, plumbing and heating parts, mixing and paving equipment.
Farm and garden machinery. Tractors, cream separators, animal feeders and lawnmowers.
Electric motors and generators. Steam- and gas-powered turbines, wind turbines, electrical-generating sets.
Narrowing down target countries
Identify the countries you want to do business with by thinking about your competitive advantages:
Do you speak a foreign language?
Do you have connections abroad?
Have you lived overseas before?
Have you traveled extensively to a particular country?
Do you love the culture of a certain country and know a lot about it?
Once you’ve narrowed your list of target countries, investigate each country’s requirements for conducting business — such as tariffs, registration and other documents.
Educating yourself before making a final decision can affect your competitive edge. Ask questions of your target country’s foreign embassy or consulate, and visit the US Department of Commerce to learn more.
After you submit your registration, the Department of State will email instructions about obtaining a Company Identification Number (CIN). A CIN is used for tax purposes and registration with the US Department of Commerce.
Forming an LLC has specific benefits for importing and exporting, so we’ll discuss it detail. However, the US has four business structures to choose from depending on your needs, use thefinder.com business structure guideto figure out which is best for your import/export business.
You don’t have to incorporate in the United States in order to start an import/export business.
However, incorporating or creating an LLC can provide key benefits, including:
Separation of personal and business assets.
Creating a corporation or a limited liability company (LLC) can help protect your personal assets. For example, you’ll have less personal liability for business debts.
Through a corporation or LLC, you can deduct business expenses before income is forwarded to you.
Clients often prefer working with incorporated businesses, seeing them as more legitimate.
Specific paperwork required
Depending on the specific makeup of the machinery and equipment you’re interested in importing or exporting, you could be required to submit forms to the US Food and Drug Administration, the Federal Communications Commission or other agencies. You may also be required to submit forms in the country you’re importing from or exporting to.
Because regulations and requirements change, also consider seeking the help of an import/export specialist to determine the exact certificates, licenses and other clearance documents for your machines and equipment.
Charging for your services
Import/export businesses typically charge based on commission or retainer.
With a commission structure, you’re paid a percentage of any trade deal you close — usually around 10%. For example, if you sell a manufacturer’s liquid pump for $1,500, you’ll make a $150 commission. On top of your commission, you’ll also want to charge for expenses like packaging and shipping.
On a retainer model, your clients pay you a monthly fee to be on call when they need your services. To find the right amount for your retainer, consider your costs. These may include labor, supplies and overhead.
An alternative model
Beyond a commission or retainer structure, you can simply buy machinery or other equipment and sell them. In this case, your revenue will come from the profit you make from selling merchandise.
Which business model should you choose?
A rule of thumb is to pick a commission model if you think a product will be easy to sell. However, if you think a product will be difficult to sell, price your business based on a retainer.
The thinking is if you’ll sell a lot of product, you want to be paid based on performance. On the other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime.
Finally, if you’re confident in your ability to sell products, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a way to profit from the merchandise.
You can safely and affordably manage your business payments — with lower fees and stronger exchange rates — by comparing the services of a money transfer specialist. Money transfers to the US: What to know
Compare international money transfer options for machinery and equipment
Our table lets you compare the services you can use to send money abroad. Compare services on transfer speeds and fees, then click Go to site when you're ready to send.
You’ll be sending and receiving goods from other countries, so you’ll need to arrange shipping details.
First, contact a freight forwarder, a company that helps you transport machinery and other goods safely and efficiently. They will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo insurance.
Find a freight forwarder by looking in state-specific business directories.
Needless to say, your success hinges on whether you can ship goods safely and efficiently. If you’re exporting machines and equipment, for example, you’re responsible for ensuring they leave your local port and arrive at the correct destination on time.
You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying organized and partnering with a reputable freight forwarder will help you ship goods without a hitch.
Not knowing enough about the machinery and equipment market
It’s a good idea to thoroughly research the market before entering this business, though even that may not be enough.
Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.
Running into problems at the border
Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting machines and equipment. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.
The machinery and equipment import/export business is for people who love building relationships in other countries, and success requires an organized mind that can handle logistics. When dealing with machinery and similar goods, a willingness to thoroughly comply to relevant regulations is a must.
If you have these qualities, take the plunge into creating a thriving machines and equipment import/export business.
Frequently asked questions
Yes. Reputable services include LegalZoom, Incorporate and Rocket Lawyer.
The website USA.gov has an import/export page that is filled with the information you’ll need to get started.
Start with the free government service offered by USA Trade Online. It’s full of import and export data, including by industry, that can help you perform market research. For more general information on international trade matters, you can take free interactive online courses through the World Trade Organization.
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