There has never been a time where business news has literally become the top stories of the day, week and month. Trump’s administration has enacted wild, aggressive, and somewhat archaic, tariff policies in a bid to shore up domestic production and improve the US’s economic prowess globally. In the digital age, things are measured in the short term and in spite of the rhetoric and promises, Trump’s economic initiatives are clearly hurting small businesses in the US that rely on imported goods and infrastructure. The NFIB publishes its Small Business Optimism Index to gauge the mood of owners in the US and recent numbers are in stark contrast to only 4 months ago. Heading into the election in November, the SBOI clocked in 101.7 and climbed above 105 in December with Trump’s electoral win. Almost immediately, his administration’s economic policies had a negative effect on small business and the index dipped to 102.8 in January and cratered to 97.4 in March when the full brunt of tariffs were unleashed. Business as usual is a death knell for small business and owners and leadership must adapt and strategize to navigate what looks to be a lengthy and drawn out trade war.
Tariffs and Customer Mindset
In the era of the 24 hour news cycle, it is difficult to escape the day’s headlines and these days, tariffs are on the top of consumers’ minds. Handling consumers with ‘tariff on the brain’ can be challenging for customer facing SMBs as defences and skepticism may be peaking in the current economic landscape. The most basic strategy is to maintain transparency between the brand and the customer. Effects such as price increases and inventory allocation should be clearly communicated to customers, using forward thinking statements. Training and offering resources to frontline staff can better prepare them for negative customer interactions regarding tariffs. Depending on the region, providing blanket statements regarding current economic conditions can reassure existing and new customers and may create a level of comfort that positively impacts purchasing decisions. Maintaining a consistent flow of information and updates to customers increases transparency and confidence, positively benefiting the brand and the business.
Strategizing for Uncertainty
There is no argument to the effect that import tariffs have on small businesses that sell goods. And there may be no way around increased costs, at least in the short term, so it is up to small business owners and leadership to strategize and identify potential opportunities that could keep existing business and gain new customers. Some areas to focus when strategizing:
- Fixed costs and resource usage
- Optimizing labor and scheduling to better service customers and operations
- Supplier and vendor opportunities
- Customer service processes and interaction
Short or longer term, the current trade war landscape has negatively impacted consumer mindset and small business owners who look for opportunities will be in a better position to navigate the current trade war.
Getting the Word Out
Decreasing consumer confidence and increasing consumer skepticism has dire effects on SMBs but is an opportunity to increase marketing efforts. Changing the way consumers think can be done through consistent messaging and precise marketing efforts that remind customers of the brand, product and / or service. Increasing engagement on social media networks or through content marketing can keep brand messaging consistent and is another method to increase marketing presence. Increased marketing efforts are meant to increase traffic to the business but planning to maximize each interaction is critical in the face of potentially reduced consumer activity. Reviewing and improving customer service processes will increase brand reputation and can yield benefits through word of mouth marketing and online business reviews. Opening channels for customers to offer input can identify potential opportunities to optimize product and service offerings and increase potential opportunities for the business.
The Bottom Line
For SMBs, the ongoing US trade war does have real effects and working through the current economic landscape will take planning and strategizing. Optimizing operations, even at the smallest level can yield benefits while focusing on maximizing each and every customer interaction can create new and additional opportunities for the business. The size advantage of small and midsize businesses affords them the ability to quickly pivot to rapidly changing consumer mindsets and economic conditions. SMB owners and managers will have to contend with the remainder of Trump’s agenda and should plan and prepare for instability, indecisiveness and ultimately, increases in operational costs. It is hard to ignore the direct impacts Trump’s tariffs will have on small businesses but refocusing and doubling efforts to run and grow the business should be the top priority for owners and managers.
