The message has been loud and clear. After a brief amnesty in December 2018, President Trump’s tariff war with the Chinese has continued. By its nature, the situation can change from week to week. However, there’s things you can do as a small business owner to minimise the impact of this tariff war on your business. So, let’s take a look at what we’ve got.
- Be cautious trading
When the market is as uncertain and reactive as it is, stock prices can fluctuate. Depending on your sector, you may be compelled to take advantage of low value stocks that are seen to have potential.
However, this current climate won’t follow any kind of predictable trade pattern. With that in mind, exercise restraint and don’t be tempted to snag up “opportunities” that may be dead in the water within the next few months.
- Review your supply chain
Both China and the USA have publicly stated that they reserve the right to demand American and Chinese companies extradite themselves and return to home soil if they are based in the other’s turf.
Simply put, this means that US owned corporations that have based themselves in China to take advantage of a more favourable tax environments will be required to up sticks and leave.
As a small business owner, it may be prudent to review if any of your products or services are facilitated by a company likely to be affected by this – changes along the supply chain can and will affect the cost of supply.
- Pause plans for expansion
There’s a very real chance of the effects of proposed consumer good tariffs eventually effecting American households. So far, retailers have absorbed the brunt of the tariff changes. However, households are predicted to lose between 1,500 and 2,000 USD annually should the conflict continue.
Even outside of the retail industry, circumstances like this make it clear – this is not a good time to expand. Review any plans to grow your roster of staff and put a blocker on opening any further outlets.
Even if you have yet to see any real effects of the trade war on your business, there’s no guarantee that this will continue. Consolidate your business and monitor your outgoings.
Normally, business plans are created around your annual projections. How the business performed in prior years is a reasonable foundation to assume your future performance. However, with the situation being so uncertain, it may make sense to account for the worst.
Make use of the professional advice you have to hand. Consult your accountant for what a “bad year” could reasonably look like. Be clear and transparent with stakeholders that you’re taking a conservative approach this financial year. Start creating priority lists of what assets or staff you could stand to lose.
It’s likely the end result will not require anything like the preparations you’ve made. However, knowing you’ve a plan should the worst happen will make navigating the next few months far less stressful both personally and professionally.
- Avoid further investors
With uncertainty in the air, it can be tempting to consider seeking further sources of investment to safeguard against the financial instability. However, not only is the current climate not a fertile environment for investment, it’s also not an advantageous to put yourself in.
The next financial year could see some real fallout from the trade war, which exerts more pressure on you and your business to perform for the sake of your stakeholders. So, for the sake of a little extra fiscal comfort right now, it exerts additional pressure on your bottom line for the foreseeable and the effects of this tariff war could be felt for some time.
Kyle Cairns is a Junior Film Producer at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.