Without trade finance, there wouldn’t be Indian spices, clothes, or jewelry in the United States. Or Apple’s iPhones in China, much less any other international product at any respectable distance from its origin.
In fact, according to Investopedia, the World Trade Organization (WTO) estimates that international world trade has expanded 80%-90% thanks to trade finance.
For this to continue, companies need to include trade finance in their business development strategies.
How do you do that? Learn how you can incorporate trade finance into your business development strategy.
Incorporate Inland Trade Finance in Market Penetration and Market Development
Market penetration and market development are key parts of a business development strategy. Market development involves selling more of your service or product to repeat customers.
While market penetration is about expanding your product or service to other cities and provinces, it can involve inland trade finance. As you may have to renegotiate local and provincial trade deals.
For instance, let’s say you sell jewelry. A business from a neighboring city may purchase your jewelry and sell it to its customers.
You have a long history with this client. And know that your product is selling quickly in your customers’ shop. In which case, you could propose selling the client more jewelry for a bulk price.
After negotiating, the client agrees. However, despite the long, positive history you’ve had with the client, the client may not feel comfortable paying you before you export the jewelry.
This is where a trade financier or banking institution comes in, providing a letter of credit promising that you will export the jewelry upon payment.
Consider the Internet and Brick-and-Mortar Stores
If you’re already selling more of your product or service to clients, perhaps it’s time to branch out to another channel such as the Internet?
If you run a successful e-commerce store, maybe it’s time to start a brick-and-mortar store as well?
That way, your customers have more options where to buy your products.
Especially when it comes to brick-and-mortar stores, trade finance can help you secure new import and export trade deals-especially when there are multiple currencies involved.
Creating a New Product or Service for Repeat and New Customers
With repeat customers, you’re doubling the number of products the repeat client is importing.
And, with new clients, your new product or service will expand your client base. It’s important that you first create new products for your repeat customers before jumping to new customers, as it involves more risk.
Again, trade finance can help cultivate more trust during this period of growth. Since trade financiers or banking institutions can create letters of credit, laying out the terms the importer and exporters must follow.
Final Thoughts About Your Business Development Strategy
Know that growth doesn’t happen in a day; it’s harder for businesses to jump from market penetration to supplying new products to new clients.
This is why we recommend that you approach growth slowly. However, know that trade finance may help increase the number of clients you trade with, no matter where they are.
What’s your take on trade finance? How has it helped your business? Share your thoughts, comments and responses with us.
Practical Tips on How to Trade Cryptocurrencies
October 9, 2018
Finance
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For some time now, I have been closely observing the performance of cryptocurrencies to get a feel of where the market is headed. The routine my elementary school teacher taught me-where you wake up, pray, brush your teeth and take your breakfast has shifted a little to waking up, praying and then hitting the web (starting with coinmarketcap) just to know which crypto assets are in the red.
The beginning of 2018 wasn’t a lovely one for altcoins and relatable assets. Their performance was crippled by the frequent opinions from bankers that the crypto bubble was about to burst. Nevertheless, ardent cryptocurrency followers are still “HODLing” on and truth be told, they are reaping big.
Recently, Bitcoin retraced to almost $5000; Bitcoin Cash came close to $500 while Ethereum found peace at $300. Virtually every coin got hit-apart from newcomers that were still in excitement stage. As of this writing, Bitcoin is back on track and its selling at $8900. Many other cryptos have doubled since the upward trend started and the market cap is resting at $400 billion from the recent crest of $250 billion.
If you are slowly warming up to cryptocurrencies and wish to become a successful trader, the tips below will help you out.
Practical tips on how to trade cryptocurrencies
• Start modestly
You’ve already heard that cryptocurrency prices are skyrocketing. You’ve also probably received the news that this upward trend may not last long. Some naysayers, mostly esteemed bankers and economists usually go ahead to term them as get-rich-quick schemes with no stable foundation.
Such news can make you invest in a hurry and fail to apply moderation. A little analysis of the market trends and cause-worthy currencies to invest in can guarantee you good returns. Whatever you do, do not invest all your hard-earned money into these assets.
• Understand how exchanges work
Recently, I saw a friend of mine post a Facebook feed about one of his friends who went on to trade on an exchange he had zero ideas on how it runs. This is a dangerous move. Always review the site you intend to use before signing up, or at least before you start trading. If they provide a dummy account to play around with, then take that opportunity to learn how the dashboard looks.
• Don’t insist on trading everything
There are over 1400 cryptocurrencies to trade, but it’s impossible to deal with all of them. Spreading your portfolio to a huge number of cryptos than you can effectively manage will minimize your profits. Just select a few of them, read more about them, and how to get their trade signals.
• Stay sober
Cryptocurrencies are volatile. This is both their bane and boon. As a trader, you have to understand that wild price swings are unavoidable. Uncertainty over when to make a move makes one an ineffective trader. Leverage hard data and other research methods to be sure when to execute a trade.
Successful traders belong to various online forums where cryptocurrency discussions regarding market trends and signals are discussed. Sure, your knowledge may be sufficient, but you need to rely on other traders for more relevant data.
• Diversify meaningfully
Virtually everyone will tell you to expand your portfolio, but no one will remind you to deal with currencies with real-world uses. There are a few crappy coins that you can deal with for quick bucks, but the best cryptos to deal with are those that solve existing problems. Coins with real-world uses tend to be less volatile.
Don’t diversify too early or too late. And before you make a move to buy any crypto-asset, ensure you know its market cap, price changes, and daily trading volumes. Keeping a healthy portfolio is the way to reaping big from these digital assets.