Tariffs are the center of discussion lately. These import taxes are on the news, social media, and even corporate boardrooms.
U.S. President Donald Trump, in his second term in office, announced a 10% tariff on goods from China in February. He later doubled it to 20% on April 2. Other countries are facing the heat too. This has roiled global markets, making it difficult for businesses to strategize for the future.
Big corporations alone aren’t feeling the heat. Small businesses are also grappling with these economic shifts. These tariffs can mess with small business’ costs and make it tough to keep it profitable.
So, how do you keep your small business healthy and thriving? There are several ways. Here, we’ll share a few of them to help you tackle this challenge and stay in the green.
#1 Revisit Your Pricing Strategy
When tariffs come into play, the cost of bringing in goods from other countries can jump up. If you don’t address this increased cost, it can eat away at your profit margins pretty quickly.
Raising prices to offset higher costs is tempting. But it will scare off loyal customers.
So, before you make a decision, revisit your pricing strategy. It’s not just the sticker price of your inventory you need to consider. Tariffs can also bring unexpected expenses and additional So, before you make a decision, revisit your pricing strategy and take a close look at your current approach. It’s not just the sticker price of your inventory you need to consider. Tariffs can also bring unexpected expenses and additional administrative work. These hidden costs may impact your margins more than anticipated, especially if your supply chain relies on imported goods. Reviewing your pricing structure now can help you stay competitive while protecting your profitability.
Once you have a clear picture of your expenses and how tariffs are influencing them, you can begin to consider whether a price revision is necessary.
Cost-plus pricing is one way you could approach your pricing. It’s a strategy where you calculate all your expenses and then add a small amount to generate profit. Another option is to charge a bit more and highlight the extra value you offer to justify the hike.
Toolmaker Stanley Black & Decker, toy manufacturer Mattel, and many other companies have announced price increases or plans to do so.
#2 Diversify Risks by Expanding into New Markets
Tariffs are messing with your sales in one region, but that doesn’t mean the rest of the world is off-limits. Venturing into international markets can provide access to substantial new revenue streams.
The UK, for example, is considered as one of the best countries for doing business. Non-essential spending is up, and clothing purchases have jumped over 23% recently.
If you’re in fashion, lifestyle, or consumer goods, this is your sign to look across the pond.
The best part is that you don’t need to open a storefront on Oxford Street. Online platforms make international selling easier than ever. With a few tweaks to your website, such as currency options, you can be ready for UK buyers in no time.
Worried about handling overseas customer service or local compliance? That’s where an Employer of Record UK comes in. They help you hire employees or support staff legally without the headache of setting up a UK entity. So, you get the local help you need, without the legal maze.
With an Employer of Record, “you avoid the steep and costly learning curve of navigating HR, benefits, tax, and payroll compliance in multiple countries,” adds Remote, a global HR and payroll platform.
#3 Source From Suppliers in Low or No-Tariff Markets
Where you source your materials and goods is more important now than ever. If tariffs are making your usual sources more expensive, it might be time to explore other options.
There’s a whole world out there beyond your current supplier. Countries not hit with tariffs or those that have free trade agreements might have producers offering similar quality products at lower total landed costs.
Newsweek reported that Belarus, North Korea, Vatican City, Cuba, and Burkina Faso are countries that are not hit by Trump’s reciprocal tariffs.
You’ve got another option: source right at home. Sourcing locally can offer more stable pricing and possibly even faster delivery. Plus, highlighting that your products are ’made in the USA’ or use locally sourced materials can be a selling point for some customers.
Regardless of what you choose, do your homework first. Check the supplier’s reputation, and the quality of their goods, and make sure they can deliver what you need and when you need it. If you’re looking at international suppliers, it’s wise to consider things like the political situation in their country.
So, while these new tariffs might seem like a hurdle, remember that you have options. With a little smart thinking and proactive action, you can ride out the turbulence and keep your small business not just afloat, but thriving.
What’s important to remember is that tough times don’t last but determined entrepreneurs do.
