Running a business always involves uncertainty. But when tariffs, trade rules, and cross-border costs change, that uncertainty can become much harder to manage.
For businesses in communities such as Windsor and Detroit, where suppliers, customers, and employees may have connections on both sides of the border, trade changes can be felt quickly. Manufacturers may see material costs rise. Retailers may pay more for products. Farmers and food businesses may face new challenges getting products to market. And eventually, many of those costs find their way to the consumer.
As a business owner, you cannot control trade policy.
But you can control how prepared your business is to respond.
Know Where You Are Vulnerable
Start by understanding exactly where changes in trade could affect your business.
Which products or materials come from outside your country? Which suppliers depend on cross-border shipments? How much of your revenue comes from customers in another country?
Many business owners know their major suppliers, but they don’t always know where their suppliers’ suppliers are located.
A little investigation can reveal risks you may not have considered.
Give Yourself More Than One Option
Dependence creates risk.
If one supplier, one customer or one market represents a large portion of your business, look for alternatives before you desperately need them.
That doesn’t necessarily mean replacing a trusted supplier or abandoning a good customer. It simply means having another option available.
Ask yourself:
- Could we buy this product somewhere else?
- Could we source something locally?
- Could another supplier provide a similar product?
- Could we develop customers in another market?
The best time to build a backup plan is before you need one.
Watch Your Margins Carefully
When costs change quickly, yesterday’s pricing may no longer work today.
Review your gross margins regularly. Look beyond the price of the product itself and consider transportation, currency fluctuations, duties, brokerage fees and other costs associated with getting that product into your hands.
A small cost increase can become a big problem across hundreds or thousands of transactions.
Business owners sometimes hesitate to adjust prices because they are worried about upsetting customers. But continually absorbing higher costs isn’t a strategy either.
Know your numbers and make pricing decisions based on facts.
Protect Your Cash
Uncertainty makes cash flow even more important.
Keeping additional cash available can give you time to respond to unexpected increases in inventory costs, slower customer payments or disruptions in your supply chain.
This may also be a good time to take a close look at inventory. Too little inventory can leave you unable to serve customers. Too much can tie up valuable cash.
Finding the right balance becomes even more important as conditions change.
Communicate With Customers and Suppliers
Don’t operate in a vacuum.
Talk to your suppliers. Ask what they are seeing and whether they anticipate changes in pricing, availability or delivery times.
Do the same with important customers.
Good communication gives everyone more time to plan.
Customers are also generally more understanding of a price change or delay when they understand what is happening and hear about it before it becomes a surprise.
Keep Improving the Parts You Can Control
Periods of uncertainty can easily consume a business owner’s attention.
Try not to let outside events become your entire business strategy.
Continue improving your systems. Train your employees. Strengthen customer relationships. Review expenses. Improve productivity. Look for new markets. Develop better financial reporting.
Those improvements make your business stronger regardless of what happens with trade.
There will always be things outside your control: trade disputes, interest rates, currencies, competitors and economic cycles, among them.
The objective isn’t to predict every change: It is to build a business capable of adapting when change arrives.
At The Business Therapist®, we often encourage owners to concentrate less on hoping for calmer waters and more on building a business that can navigate rough ones.
Because uncertainty may be unavoidable, but being unprepared isn’t. Please reach out if we can help. paul@thebusinesstherapist.com
