How To Manage Tariffs | Small Business Impact | Ep 9

🔍 Tariffs Are Impacting Small Businesses—Here’s How to Respond | Full Send CFO

🔔 Subscribe for weekly CFO insights & financial strategy tips

📢 New tariffs are here—and they’re crushing small business profit margins. Whether you’re importing from China, Vietnam, or the EU, the costs have skyrocketed—some up over 1,200% overnight. In this episode, we break down what you need to know and how to respond without panic.

✔️ Understand how tariffs affect your pricing and cash flow
✔️ Learn 5 practical strategies to adapt fast
✔️ Hear real-world case studies from businesses already adjusting
✔️ Avoid the most common mistakes that cost businesses big time

⸻

⏱️ Chapters

00:00 – Intro: Why Tariffs Are Suddenly a CFO Problem
00:30 – How Tariffs Are Squeezing Small Business Profit Margins
01:25 – Real Example: $26K in Tariffs Jumping to $346K Overnight
01:58 – Quick Overview of Current Tariff Rates (as of April 2025)
02:30 – Immediate Effects on Cash Flow, Inventory, & Demand
03:00 – Case Study #1: Harkla’s Tariff Strategy in Sensory Toys
03:30 – Case Study #2: 3sixteen and Apparel Price Increases
04:17 – Projected Industry-Wide Price Impacts: Apparel, Electronics, Auto
04:30 – Strategy #1: Should You Diversify Your Supply Chain?
05:45 – Strategy #2: How to Renegotiate with Overseas Suppliers
06:45 – Strategy #3: Operational Efficiency
07:40 – Strategy #4: Smart, Targeted Price Increases
08:30 – Strategy #5: Tariff Exemptions & Trade Group Support
09:00 – Why 65% of Businesses Are Now Rethinking Supply Chains
09:30 – What Not To Do: Delayed Reactions and Supplier Over-Reliance
10:00 – Don’t Blindly Raise Prices—Communicate with Customers
10:45 – Lessons from Ford, Jeep & Transparent Pricing Messaging
11:00 – Final Steps: Audit, Communicate, Monitor, Collaborate
12:00 – How to Adjust Vendor Spend Without Sacrificing Strategy
12:20 – Final Thoughts: Navigate This Together

⸻

✅ Key Takeaways:

✔️ Tariffs are drastically impacting import costs—up to 100%+ in some cases.
✔️ Don’t rush into reshoring—negotiate first with suppliers.
✔️ Cutting marketing or strategy partners too soon can stunt growth.
✔️ Small price increases, strategically communicated, can maintain customer trust.
✔️ Monitor policy changes closely—tariff landscapes are evolving daily.

⸻

🔔 Like, subscribe & turn on notifications for real-world CFO strategies in real time.

#CFO #Tariffs #SmallBusiness

Thanks for listening! Come Say Hi!

Full Send | Accounting & Data

LinkedIn: Roman Villard, CPA
X: @FullSendCPA
YouTube: Full Send - Accounting & Data
Data Podcast: Data Fuel

Transcript

[00:00:00] Today we are going to dive in the topic of tariffs and tariffs in a small business. How do you think about the new tariffs that are squeezing small businesses as A CFO? They're increasing costs, they're squeezing profit margins. So we want to walk through how do we understand the impact of new tariffs on small businesses?

[00:00:18] How do we have proactive strategies to mitigate some of these tariff related expenses? And then what are some examples, some real life examples happening today, this very moment of businesses that are adapting to the tariff landscape. We wanna [00:00:30] walk through practical steps to help safeguard your business and your business's financial health as we, we navigate this, this new world of trade policy shifts and, and things happening every single day that are impacting your business as we speak.

[00:00:44] I. So today, as we think about how tariffs have shifted overnight, completely skyrocketed, leaving small business owners trying to grapple with, with these unforeseen expenses, we're, we're gonna try to walk through how do we, how do we manage this in a way that ultimately [00:01:00] helps us to continue to build a thriving and profitable business?

[00:01:03] If you can just imagine you're importing costs jumping from $26,000 to $346,000 instantly, like that is the reality for some of the entrepreneurs today that are walking through this new tariff world that we live in. We're gonna walk through actionable strategies to help navigate some of the new tariff landscape without compromising your business viability.

[00:01:25] So let's walk through an overview of recent tariff changes. Uh, you know, today is [00:01:30] April 9th, 2025, so things will change on April 10th, 2025. But we've got a baseline, 10% tariff on most imports with specific countries that are facing higher rates. China now at about 104%, Vietnam at 46%, and there are targeted sectors including apparel, electronics, and raw materials.

[00:01:50] And this information is coming from Business Insider New York Post, so you, you can find links to that. Uh, searching tariff impacts. You can find a lot of information online, [00:02:00] but the immediate effect on small business is that we've got massive increased costs on imported goods and materials. If you've got less than one month of inventory on hand, your price structure will be changing.

[00:02:12] Within the next 30 days, and you have to be prepared for that. So there will be pressure to raise prices, potentially reducing customer demand depending on where in the market your product sits. If you are in the higher end premium luxury market, I suspect you're already seeing weaker demand based on macro economic [00:02:30] factors.

[00:02:30] So what does this mean? We've got a strain on cash flow. We've got a strain on profit margins. If we look at the average tariff increases by country China over a hundred percent, Vietnam, 46, the eu, about 20% today. So the real world examples that we're seeing today from small businesses having to confront these challenges we see in the New York Post, uh, a, a company called Harkla.

[00:02:53] Uh, they specialize in sensory toys for children with special needs. Their tariff costs have gone up from [00:03:00] $26,000 to $346,000b. So what are they doing in response? they're looking to explore domestic manufacturing even though they know that they're going to face higher production costs.

[00:03:12] I'll link to the article of the New York Post on this, here in the show notes. case study number two. We've got a business called 3sixteen, a New York based fashion brand that sources most of its materials from Japan and Canada. They're anticipating retail price increases of up to $50 per item.

[00:03:29] [00:03:30] So how are they gonna be managing retaining demand while increasing costs of their, their products? So drastically they're planning on simply just communicating transparently with customers saying, Hey, listen, we, we don't want to adjust these prices upwards. However, the, the way in which. Our cost structure is predicated, is changing drastically.

[00:03:51] We want to continue providing value to you through high quality products, but we, we can't continue to do that without raising prices. [00:04:00] You know, it, it's gonna be a really tough communication point, but it's something that they're gonna try to navigate with their clients. Right now we're projecting about 20% increases across the industry of apparel, 10 to 15% for electronics, and about 15 to 25% increases for automotive parts.

[00:04:17] So we've got context around tariffs are increasing. There's a major shift in the landscape right now, no matter where you are sourcing your raw materials across the globe. So what are some strategies to help mitigate some of these [00:04:30] tariff impacts? One, A lot of businesses are starting to move towards diversifying their supply chain, so they're identifying alternative suppliers in countries with lower or no tariffs.

[00:04:41] They're considering nearshoring or reshoring to reduce dependencies upon foreign imports. Here's some challenges with diversifying your supply chain, is that it takes a lot of time, effort, money. To be able to do that, you're gonna have to reorient your quality control, reorient, the education of the suppliers that you [00:05:00] have to manufacture at the same quality that you have today.

[00:05:03] And so you don't wanna rashly make a decision to diversify your supply chain, knowing that over the course of the next few months, there will be negotiations happening with the countries that you're currently supplied in. So. I would take a look at this as an option if you can, and have the ability to stand something up very quickly, but you don't want to sacrifice the quality of your product in order to diversify your supply chain because of a tariff.

[00:05:27] A better strategy, I think, [00:05:30] is to negotiate with your existing suppliers. So you wanna talk about the tariff cost with your suppliers and re renegotiate terms to alleviate some of the financial pressure. Listen. Your suppliers, your manufacturers that let's say are in China today, they don't wanna lose business either.

[00:05:46] So if you're taking business away from them and moving it to Vietnam or moving it to another country, they're incentivized to retain your business. And so they, there could be some degree of tariff splitting with some of these suppliers. So let's [00:06:00] start there. Let's start with negotiating before we start displacing supply chain to other countries.

[00:06:06] If we could start to optimize our operational efficiency and, and try to identify if there are areas of waste and or, uh, opportunities for lower production costs Based on investing in technology, you know, there's a lot of ways to look at your entire supply chain, identify where redundancies exist, identify where maybe there are some sticky points in how you're manufacturing today.

[00:06:27] Maybe you can consolidate some of that actually to [00:06:30] one supplier in which you've already renegotiated your rates with. And so think about how to, to optimize your operational efficiency through negotiating with your existing partners. Like many businesses are doing, you can adjust your pricing strategy.

[00:06:43] I would move slowly into this. You know, we've got some, Some businesses in the market today are looking at their competitors and saying, well, are they raising prices? 'cause we don't wanna raise them if they don't raise them, 'cause they don't wanna lose market share to their competitors. And so if you can walk through a market analysis to determine [00:07:00] what products you have that have some elasticity and pricing, you, you could start to, to cherry pick those items that you can start raising prices on.

[00:07:08] Understand where in the market your pricing structure lives. To be able to very intelligently raise prices and not just slap a 20% increase across all of your products on your website, that may not lead to an effective outcome that you're looking for. Be very intentional about how you were looking at margins across your products in order to then more intentionally raise [00:07:30] prices where it makes the most sense.

[00:07:33] The other thing you could do is start to explore tariff exemptions. Explore Relief programs. Uh, there's some degree of of government programs that are offering relief for exemptions for certain industries. take a look at trade associations. Ask them for guidance and advocacy support. There could be some elements of, you know, uh, power and negotiating numbers if there's a trade association that can help fight and negotiate on your behalf.

[00:07:55] If you're a part of a larger group that has more bargaining power. If we [00:08:00] think about the percentage of small businesses that are considering supply chain diversification today on April 9th, 2025, pre tariffs about 30% post tariffs. 65% of small businesses are considering redi diversifying their supply chain, which is just a, an astronomical amount of businesses that are having to consider this massive change to their business to be able to stay afloat.

[00:08:25] Here's some things that we want to avoid as we navigate this uncertainty in [00:08:30] tariffs. We don't want to have a delayed response. If you procrastinate your response, it can exacerbate your financial strain if your costs continue to go up. So we need to be proactive but measured. We need to be proactive, but not rash in decision making.

[00:08:45] That will be crucial in making sure that you navigate this with poise, that you navigate this with a long-term mindset, even though this is a short-term pain point. We don't wanna necessarily over rely on a single supplier or market. However, [00:09:00] there could be opportunities to maintain relationships within an existing market and negotiate within that market rather than going elsewhere.

[00:09:08] But if you're super reliant upon one supplier, you may want to look at. Options to reduce that vulnerability. You look at Apple in the market, they're heavily reliant upon China today. They're currently exploring India as a diversification strategy for production of their iPhone. The next thing we don't want to do is pass the entire cost [00:09:30] onto customers without communication.

[00:09:32] A sudden price hike without an explanation can lead to some customer attrition. It can lead to lack of trust with your customer base. And so prior to enacting any kind of price change, you want to have a very measured response and communication strategy to your customers to ensure that you can retain some degree of their loyalty.

[00:09:52] Everybody in the market today is aware that. Prices naturally are going to be increasing, but you see companies like Ford and like [00:10:00] Jeep that are saying, Hey, we're actually gonna move a different direction, or we're gonna offer our employee pricing to everybody. Now, their employee pricing may or may not be at par with what it was in the past because of how prices have naturally increased.

[00:10:12] But you see this marketing communication that that elevates the customer, that makes the customer feel special. That is contrarian to what we're seeing around us. That could be a really valuable messaging strategy. So, we've walked through tariffs very, very quickly and its impact on small businesses.[00:10:30] 

[00:10:30] But if you can walk away with a few things, conduct a comprehensive supply chain audit, Identify areas that are susceptible to tariff impacts. Start to explore alternatives. Start to negotiate. Engage in open dialogue with your stakeholders. That could be suppliers, customers, your employees, your other vendors on the challenges and and strategies that you are contemplating to walk through this new uncertain market.

[00:10:55] Stay up to date on what's happening. You need to be monitoring changes to tariffs and [00:11:00] seek professional support when needed. One of the things that we often see is that people are very quick to cut vendor relationships. be very strategic about that. If you cut your marketing department, if you cut your marketing service provider, what's that gonna do to your demand?

[00:11:13] Will it drastically impact the demand that your business has in market today? most people cut, uh, relationships with? CFO partners, do you need this high level strategic advice in a market that is uncertain like today? I would con contemplate that, yes, you do. But there are [00:11:30] alternatives to where maybe you can have a really high caliber accounting partner that's allowing you to have a really good pulse on what's happening financially, and then you take over the analysis of the business.

[00:11:41] That could be one way that you could think about displacing some of your spend today in something that is still highly valuable to you, but you take on a little bit more of the work on interpretation of the output of the service provider. Today, go reach out to other suppliers, reach out to other, similar businesses, your peers [00:12:00] in your community.

[00:12:00] Reach out to trade associations to determine what steps they are taking to see if you can somehow work together to understand how to move forward in a more sustainable manner. I hope that's a helpful overview on what's happening in the tariff market right now. It is super uncertain for everybody, and to the extent that we can all help one another, we will move forward better together.

[00:12:20] Good luck.