Tips for Small Businesses on adapting to today’s economic “new normal”
Tariffs.
It’s a small word raising loud alarms in business communities across the country. And, while many people think only large businesses are impacted by tariffs, small to mid-sized businesses right here in Western New York are and will be affected.
As your local Chamber, we feel it is imperative that our businesses arm themselves with the knowledge on how to adapt to what our local U.S. Small Business Association is callng the economic “new normal.”
Recently, we invited our Chamber Members to attend a round table discussion at the Roycroft Campus with Victoria Reynolds,
District Director of the U.S. Small Business Administration, and Dr. Susan A. McCartney, Director of the Small Business Development Center at Buffalo State University, on how businesses can navigate tariffs and market uncertainty.
The first piece of advice they provided was that businesses should not wait to adapt. It’s not like the pandemic, Reynolds told us. There is no certainty the current economic turbulence will settle. “You cannot put your head in the sand and ignore it. This is not a storm. This is the norm.”
While many small businesses aren’t seeing a tariff impact currently, some of our mid-sized businesses – many of whom are seeing disruptions in their supply chain or/and exorbitant price increases – are feeling the pinch. And it’s worrying.
Reynolds and McCartney gave the following tips on what small businesses should do to ensure they survive:
Revisit your business model.
- Check on your breakeven point. How much price fluctuation can your business sustain and remain viable?
- Reassess your supply chain. Who is the cheapest, who is fastest, who is adapting? Are there other sources and can you negotiate with your suppliers?
- Implement artificial intelligence tools to reduce your fixed costs. “At this point in time,” Reynolds said, “if you don’t use AI you will be ‘AI’d.’”
- Do a competitive analysis. Look at what your competition is doing – are they adjusting prices, are they boosting services, are they doing nothing? “Find out if your special sauce – that competitive advantage – is still special in today’s economic climate?” she said. If not, then it’s time to adapt. And alter your thinking – it may be an opportunity especially if the competition is waiting for things to settle down.
- Evaluate your pricing and your target market. Understand your value proposition and be careful about publicly passing on price increases to your customers. Understand what the “perceived” value of the products/services you provide. Customers have a threshold, according to Reynolds, and small businesses need to know their target market. This means learning the characteristics of your customers and your perceived value.
- Stay close to your finances – past, present, and future (projections). “Your numbers are talking. Your numbers are telling you something. If you aren’t listening to that story, you are missing out on a strong management tool,” Reynolds said.
Expand Your Opportunities.
Look for new customers and new revenue sources. Tariffs aren’t placed on services, so introduce a new service or experience. Pair a product with an experience. Again, know your target market – have your customers’ buying habits changed? Do your customers have a “shadow” – someone who is making the purchases for them such as a parent or spouse?
Collaboration and partnership with other businesses and organizations is a must. Look where you can partner with other businesses to build experiences around your product or service.
And, don’t stop talking to your customers. Constantly communicate your value proposition. Now is not the time to stop your marketing (or your Chamber membership!). Businesses should invest more in marketing and/or spend their marketing dollars smarter.
If you want to learn more about how you can navigate this “new normal,” please reach out to the Chamber. We can send you the slide show provided by the SBA and SBDC as well as put you in touch with experts who can assist you.
You are not alone.