Calculating Profit and Loss in Exports: Simple Ways to Increase Margins in the Fish Processing Business

kelolalaut.com Is Exporting Always Profitable?
Many fish processing business owners assume that entering the export market guarantees big profits. However, the reality is not that simple. Miscalculating costs or overlooking crucial details can turn expected profits into unexpected losses.

1. Understand All Involved Costs

Exporting isn’t just about selling products abroad. There are numerous costs to consider:

• Packaging: Export standards are usually stricter, requiring durable and eco-friendly materials.
• Logistics: International shipping involves sea/air transport costs and local distribution in the destination country.
• Documentation and Customs: Administrative requirements are often complex and come with additional fees.
• Insurance: Protect shipments from risks of damage or loss.

Tip:
Use a detailed recording system to track all expenses. Don’t forget hidden costs like currency fluctuations and delayed payments from buyers.

2. Analyze Your Profit Margins

Profit margins are the key indicator of your export business's financial health. However, don’t just focus on the selling price. Be sure to include:

• Cost of Goods Sold (COGS): This includes raw materials, labor, and operational costs.
• Competitive Markups: Set a price attractive to buyers without undermining your profitability.
• Potential Discounts: If buyers request bulk discounts, ensure you still maintain an adequate margin.

Simple Calculation Example:
If the total production and export cost per kilogram of fish fillet is $3.30, and you sell it for $5, your margin is $1.70 or 34%. However, unexpected additional costs, like late delivery penalties, can drastically reduce this margin.

3. Improve Operational Efficiency

Enhancing efficiency is one of the most effective ways to increase margins. Focus on:

• Process Automation: Invest in technology to reduce reliance on manual labor.
• Supply Chain Optimization: Choose suppliers offering high-quality raw materials at competitive prices.
• Waste Reduction: Minimize production leftovers to lower costs.

Case Study:
A fish processing company in East Java reduced production costs by 20% after implementing rapid freezing technology. The upfront investment was significant, but it resulted in a substantial margin increase.

4. Build Strong Relationships with Trade Partners

Export profitability also depends on maintaining good relationships with partners.

• Negotiate better payment terms, such as shorter payment periods.
• Choose reliable logistics providers to avoid shipping delays.
• Maintain regular communication with buyers to ensure their loyalty.