How to Start a Small Trading Business

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You can become a trader of just about any product that sells.
You can become a trader of just about any product that sells. (Image: world trading image by Eray Haciosmanoglu from Fotolia.com)

Trading is a process where you match the buyers and sellers. You will need to perform the functions of a middleman. You can trade at the local, national and international level. You will earn a profit margin equal to the difference between the buying and selling price. Because of its potential and low startup investment, this business has attracted the attention of a number of individuals. However, success depends upon your skills and the way you use them to handle your business operations.

Research the basics of the structure of the trading industry. Learn the tools to manage your business. Look into your immediate competitors and try to analyze how they handle their business. If possible, work under one of them to get a clear view of the industry you wish to enter. By doing so, you can also identify new strategies to manage issues.

List the possible products or product lines that you wish to trade. There are products with higher profit margins and some with lower margins that sell in large quantities. Another factor is to identify your passion and choose products accordingly. Since trading involves dedication and a strong foundation to succeed, if you trade a product that you are interested in and have knowledge of, you can anticipate and handle situations that may arise when trading that product. It is better to start with a single product and extend to other product lines as you make profits.

Write a business plan. Include a business overview, market research of the business climate in the trading industry in your locality and details of your competitors. Also include a marketing plan, background information regarding you and your partners, financial projections and contracts. You can obtain funding from your local banks and credit unions with the help of your business plan.

Learn all the details about the market of the product. List notable insights in the future of the industry such as the current trends, the current profit margin earned by your peers and any issues trading the product. Analyze and work the data to your need.

List the top suppliers of the product and evaluate them according to delivery timings, quality, cost, brand and experience. Choose a few suppliers and contact them to draw agreements.

Gather names and contact information for potential clients who will be willing to buy your product. Approach them individually and learn about their expectations. Match each of their expectations to the products you’re supplying and choose your client base.

Register your business structure and name. Apply for the necessary business licenses and permits based on your chosen products and your location. You will need to register your business with your Secretary of State, and obtain a Employer identification Number (EIN) if you have any employees. You can get an EIN from the IRS website at IRS.gov.

Join the Chamber of Commerce and associations related to your product. Enhance your network and place advertisements to reach and attract your target market.

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