Tariffs and Their Impact on Small Business

Price increases.
Delayed shipments.
Complicated paperwork.
Uncertainty in vendor relationships.
Welcome to life in the age of heightened tariffs.

 

When the Trump administration announced new tariffs with China in August of 2018, I was optimistic that this was a short-term problem that would resolve itself in short order before many of my clients felt any significant impact. Regrettably, we’ve had no such luck. The administration seems to be digging in its heels, announcing successive waves of new tariffs that have expanded both the scope of goods affected and the degree to which they’re affected.

 

Cargo Ships On The Sea With Mountain On Background

 

Small businesses are beginning to feel the crunch, so I’m diving in to help decode the impact these new tariffs are having on our community.

 

WHAT IS A TARIFF?

Tariffs are a kind of tax leveraged on a particular category of imported goods. The amount of the tax depends on many factors, including the type of products you (or your suppliers) are importing and the country in which those goods originated. These charges are collected by U.S. Custom and Border Protection agents at all U.S. ports of entry, and the funds are deposited into the U.S. Treasury.

 

Tariffs aren’t some new taxation scheme. They were first introduced by the U.S. government in 1779, but 2018 saw a flurry of new tariffs assigned to Chinese goods in an attempt to “level the playing field” while renegotiating international trade agreements.

 

tarrif+blog+post+4a

 

That might sound good in theory, but tariffs aren’t generally welcome news within the small business community, and economists have been putting in some serious overtime to analyze the current situation and fact-check the administration. No matter where you fall on the political spectrum as a voter, these tariffs are likely coming home to roost for you, too. I surveyed my community this week and discovered that 46% of my clients have already felt the squeeze.

 

WHICH PRODUCTS ARE AFFECTED BY TARIFFS?

There have been several waves of new tariffs enacted by the administration, with the most recent taking effect on January 1, 2019. Many basic supplies used by artisans were included in recent tariff expansions, including:

  • Leathers
  • Wool
  • Yarn
  • Silk
  • Cotton Fabrics
  • Buttons
  • Glass containers
  • Metal containers
  • Citric acid + many common personal care ingredients
  • Pigments, dyes, inks, paints
  • Plywood
  • Film
  • Paper
  • Glass beads

 

(more…)

#LBCWantsToKnow >> July 2018: Pricing

LuckyBreak-LBCWantsToKnow-Pricing

LuckyBreak-LBCWantsToKnow-Pricing

 

Each month, I ask my Instagram community to join me in a focused, crowd-sourced discussion of a specific subject.  For the month of July, we dove head-first into pricing… one of my favorite topics. Often worried about, but seldom discussed, I welcomed an opportunity to roll up my sleeves and see how I could help.

 

When was the last time you implemented a price increase? How did you roll it out? How was it received?

 

THE LUCKY BREAK COMMUNITY SAID…

 

lillabarnclothing: Ah! I need to do this now. I’m going to up prices by 10%. Rolling it out next week after my summer sale.

 

stellachroma: At my rebrand a year ago. Just did it. No one batted an eyelash. Granted, it was at a rebrand. 🙂

 

yukonsoaps: A year and half ago. I just did it. No questions asked! And sales increased!

 

cocosabon: I increased on two products last year. I informed my customers prior to the increase and explained why it was necessary. No problems at all. 👍🏼

 

MY THOUGHTS: I recommended that my clients carefully monitor their costs and review them at least once per annum. If a nominal (3-7%) price increase is needed, it’s better to roll those out once a year as opposed to “saving them up” for years and then hitting your buyers with a large jump in pricing every few years. Anything less than 10% is typically received well by buyers, provided that the rollout is properly framed. Price adjustments on the order of 10%+ require more of a brand re-positioning (connecting with a new audience) and are decidedly more complicated, but totally possible.

 

I find that the very subject of price increases unnerves many makers + product designers, but this doesn’t have to be an anxiety-inducing affair. There’s definitely an art to framing the announcement, but we’re usually far more worked up about it than our wholesale partners and retail customers. Need some help in this arena? My instantly-downloaded price increase workshop can build confidence and guide you through the process of designing an elegant announcement. And Price-O-Matic, my product pricing software, can help you keep an sharp eye on costs and profitability, too.

 

Do you feel like you’re currently charging what your products are worth? If not, what’s holding you back?

 

THE LUCKY BREAK COMMUNITY SAID: 

 

westcoastleslie: I’m not mostly because I feel like it will hold me back from making sales. And I know you’ll say “those people aren’t your customers” which is true to an extent. But tell me who is going to buy a $200 scarf?🤷🏻 Honestly, point me in their direction!

 

idigyourhair: No, but I want to. I feel unknown and feel I need to grow my brand in order to do that. I have made them slightly higher online.

 

normalish_: Nope. I don’t feel like I am because I’m stuck in this crazy Facebook bubble of small businesses that all feel like we can only charge so much. Even the customers in this bubble complain/dictate if your prices are higher than the average. I’m desperately trying to work my way outta there.

 

focsimama: I wasn’t but I will be once this new brand launches.

 

scentshomebodybaby: Agree with all these comments!! Just trying to charge enough for people to purchase to make my brand known. It’s so hard.

 

sasaloo.living: There is the never ending question!…. among others, lol.🤦🏻

 

MY THOUGHTS: Pricing is decidedly complex. It brings together many elements (brand presentation, audience awareness, consumer psychology, distribution strategy, tricky math… blech!) and we must take all of those elements together to create a narrative and a presentation that both taps our people and keeps food on our tables. That’s no simple task!

 

Finding the right people, crafting a capable narrative, and increasing your company’s ability to communicate value are all pillars of strong brand development. If you haven’t laid the critical foundation for your brand, then it’s virtually impossible to command the prices you want or need. I echo the sentiments above: we must break out of our bubbles by becoming aware of the larger competitive landscape and staying tethered to the players in that market. As to the $200 scarf question, I ask: Are there $200 scarves on the market? If so, there are $200 scarf people out there!

 

Not everyone can afford a $200 scarf, and not everyone who can afford it wants to spend that sum, but pricing runs along a spectrum. You could buy a new car for $12,000 (Smart cars) or a new car for $260,000 (hello, Ferrari!), and virtually every price point in between. The Ferrari peeps know their audience and they aren’t worried about the Smart car audience. It’s up to each of us to decide where on the pricing spectrum we want to play, and the key is to build value that’s commensurate with the price tag we attach to our work. You can’t sell a Smart car at Ferrari prices, but you can sell a Ferrari at Ferrari prices. And you’ll need to create a Ferrari-worthy experience for buyers at a premium price point.  Think: flashy showroom, attractive salespeople in elegant suits, champagne as you shop, etc.

 

We can all take the reigns on our pricing by doubling-down on our attempts to control costs and create efficiencies. In this case, every penny saved really is a penny earned. I’m often tasked with helping my clients develop more efficient production strategies, seek new suppliers, and offer a “bird’s eye” review of expenses to help trim things down. Once we’ve become as efficient as possible, then the work pivots to cultivating the customers we want, becoming more aware of the market, and sending the right signals to show that we’re creating premium products for a specialty audience.  It’s possible, I promise!

 

If you want to work on becoming more intimately aware of your audience, broadening your view of the marketplace, and upp’ing your brand presentation, then I invite you to explore Brick House Branding, my 9-week brand mentorship. Enrollment for the first live semester of 2019 opens on October 2, and the program is now available in an instantly-available “On Demand” version, too.

 

JOIN THE CONVERSATION

Be sure to stop by the Lucky Break Instagram, where every month we chat about all things business. I’d love to hear your thoughts and hope you’ll lend your voice. Search the #LBCWantstToKnow hashtag to weigh in! In August, we’re chatting all things website.

The Lucky Break Calendar – May 2018

May2018

Am I the only one who had to do a double take when I flipped the calendar and it said May? 2018 is rolling along and it’s already time to begin thinking about holidays for the wholesale market. Time – and the holidays – wait for no one my friend.

 

This month the LBC team is busy attending The HSCG Soap Conference where we can’t wait to give hugs and mingle with our favorite alumni. Will I see you there? Be sure to stop by the booth to say hello to me and the team and pick up some Lucky Break swag while you’re at it.

 

Whatever you’re up to this month, know that I’m cheering you on!May2018

Meet the Maker – Wynne McCormick of Crowns for the People

Meet the Maker - Wynne of Crowns for the People

Meet the Maker - Wynne of Crowns for the People

 

Today in our Meet the Maker series, we’re getting to know the lovely Wynne McCormick, who runs Crowns for the People from her studio apartment in Brooklyn, New York. Welcome, Wynne!

 

LBC: What inspired you to take your leap as an entrepreneur?

Wynne: Turning 40, feeling physical pain going to my corporate job, and receiving some surprise money (yes, that happened) all in the same year. I had been hand-making crowns for girlfriends, turning 40 around that time, and was simply ready to start a grand new experiment.

 

LBC: When you first got started, how did you envision your business would be defined?

Wynne: I originally wanted to make crowns that I myself would want to be given. I love textiles, tailoring, and embroidery, and I thought that I could project different ideas onto a single form – that is, the crown. I thought a business that sold nothing but crowns was a very whimsical and unique idea, albeit niche. Another twist was that the crowns are geared towards adults, acting as a temporary reprieve from adult seriousness and real life.

 

LBC: How would you describe what you create?

Wynne: I create beautifully tactile, emotionally intelligent, and boldly thoughtful, tailored crowns for people who seek meaning, connectedness and fun through their gift-giving. My crowns help make visible all of the moments in life, small and big, that deserve notice and celebration.

 

Meet the Maker - Wynne of Crowns for the People

 

LBC: Where can we find your products?

Wynne: At my site www.crownsforthepeople.com (all of the crowns ordered directly from my site arrive in a beautiful red shiny box tied with a bow!) Some of my collections can be found at Amazon as well as several retail locations in the U.S. and internationally (I can say that now that I’m selling in England and Mexico as of July 2016!)

 

LBC: Walk us through your typical work day.

Wynne: I am up by 6am most days. I reserve my mornings for my labrador, Drummer. We are out the door by 6:45am and off to the park. And then, the rest of the day is totally dependent on what is pending i.e., a trade show coming up, bills to pay, etc. I try to do most administrative tasks (which are endless) in the morning. Anything creative is done later in the day.

 

LBC: What are 3 things makers should think through when they initially decide to start a business?

Wynne: 1 – Take “the good opinion of others” in stride. Everyone thinks that they know. Everyone. The “shoulds” that will come at you will be breathtaking. For me, this endless exercise of filtering advice, absorbing some and discarding some, strengthened my ability to stay centered in what I was doing. It’s important to be tested and this will test you.

2 – Pay attention to those in the “arena.” These are the folks to watch and learn from. They understand how much work is required and they understand the holy act of putting yourself out there. Those who are not in the arena, don’t have the same understanding and wisdom.

3 – You need some cash. It costs money to make stuff, but it also costs money to sell stuff. It’s good to have some cash flow at the ready because there will be plenty of unexpected costs. You don’t want to have to compromise too much and you don’t want to have to stop too early in your journey due to lack of money.

 

Meet the Maker - Wynne of Crowns for the People

 

LBC: When you’re overwhelmed, what brings you back to focus?

Wynne: Lists and a schedule. I am a planner. I call it my choreography. Just staring at a schedule will make me feel more in control. I schedule deadlines, but I also schedule tasks leading up to the deadlines (very important). It’s as though I need to have my left brain take over, because it tends to be my right brain that gets overwhelmed. Once I have a new version of the latest list and schedule, I can choose to tackle the endless small tasks or I can go deep into a project without fear that I’m taking my eye off the ball.

 

LBC: Tell us about a few of the best business decisions you’ve made to date.

Wynne: 1 – To keep going. It’s been a perilous journey in some ways and I always leave the option of quitting (shame-free!) on the table but the act of persistence and the gifts that show up as a result has been my greatest teacher.

2 – To not rent a studio (yet). Low overhead is everything. I live in a studio apartment with a labrador, and it currently doubles as my office/studio. It has required me to make some compromises – i.e., any extra space is utilized for fabric, inventory, and all other supplies -but it has allowed me to avoid very real rental costs.

 

LBC: Please share one mistake or obstacle from your business experience. How did you bounce back/overcome it?

Wynne: When i first started doing trade shows, my crowns were over-priced for the wholesale market, and yet I did it anyway. I did it anyway because I had hope that there might be some buyers, and that I might get some sense of the market by putting myself out there. Buyers showed me a lot of appreciation, but not a lot of sales. As a newcomer, it was really demoralizing, and I did not expect the shock and horror of buyer sticker shock as they walked by my booth.

By the end of the first day of the second show, I decided to have a new objective for the remaining four days of the show. Instead of sales, my goal would be to educate myself in manufacturing overseas in order to solve my price point issue. I had tons of conversations with fellow sellers (and some buyers) who were well-versed in producing product abroad. By the end of the show, I had a new manufacturer and a new price point.

 

LBC: What are 3 essential resources in your business toolbox that you can’t do without?

Wynne: Evernote – I do everything in Evernote. Everything.

Left brain desk/Right brain desk – I got this idea from Austin Kleon (author of “Steal like an Artist”), I found myself driven to insanity when I had to clear off my work table every time I had accounting and other administrative tasks and needed table space. I finally bought a real desk from West Elm where all business is done, and my work table is now dedicated to design and making. Relief!

A Singer presser – This was a discovery I made while browsing Amazon. I was in desperate need of finding a solution to applying adequate heat to the fusible that I used to line my crowns. An iron simply did not do an adequate job when it came to doing bulk work. The presser was a life changer. Now that I manufacture most of my crowns, I use it to press the crowns before they are sent out via orders.

 

Meet the Maker - Wynne of Crowns for the People

 

LBC: Suppose we had a time machine. If you blasted ourselves forward a few years, where would we see your company?

Wynne: Crowns for the People would be one of the first destinations for people to go to when they are planning to celebrate someone.

 

LBC: What’s one thing you would eat, if you could only eat one thing for the rest of your life?

Wynne: Quinoa with sautéed kale and sweet potato, topped with a fried egg.

 

LBC: Your musical playlist is full of…

Wynne: Jazz.

 

LBC: Share one of your guiltiest pleasures.

Wynne: Podcasts. I’m a podcast maniac.

 

LBC: What’s your favorite quote and who said it?

Wynne: “Kindness is my religion.” – Dalai Lama

 

 

Thank you, Wynne, for sharing your talent with us!  We absolutely love what you’re doing with Crowns for the People, and we look forward to all the wonderful things ahead for you and your company. We’re cheering you on!

 

Want to see your brand featured in our continuing “Meet the Maker” series? Drop us a line: hello AT luckybreakconsulting.com. Please use “MEET THE MAKER” as the subject line and be certain to include your web address. We look forward to hearing from you!

 

It’s time for a “come to Jesus” moment…

Focus Is Your Friend

Focus Is Your Friend

 

Most of the makers that I work with come at their work from a creative perspective rather than from a business perspective. And that can be an intrinsically beautiful thing as you push the edge of your work and continue to innovate.

 

But that approach can simultaneously hamstring a growing brand. The desire to create, create and then create some more often evolves into a product collection that resembles a many-headed-beast with little focus. And- at the end of the day- your product collection must tell a cohesive story that your target audience can understand. Creatives often have an low-level, perpetual tension between their inherently innovative souls and their need to button things up and make decisions that increase efficiency and product a profit.

 

If you’ve been…

 

    • Building volume in order to gain traction on Etsy

 

    • Launching every product your neighbor/ mama/ best friend asks you to create

 

    • Creating a steady stream of new products because you’re smitten with the latest raw material or design trend

 

…then there’s a better-than-even chance that you feel like you’re on a hamster wheel that’s breeding exhaustion while simultaneously evaporating profits. You’re in good company, but man… is that hamster wheel frustrating.

 

The need to edit a product collection to be succinct + cohesive is one of the biggest mindset shifts that must happen when you move from “hobbyist” to “professional maker.” And while I understand that it’s the Achilles heel of intrinsically creative souls, it also very necessary if you want to build a sustainable creative brand.

 

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The more products you create…

 

    • The more raw materials you’ll need to have on hand,

 

    • The more storage + work space you’ll need at your disposal,

 

    • The higher the likelihood that you have to DIY your product packaging (it’s more challenging to professionally print a large variety of labels/ boxes/ tags since printing costs drop as you reach higher numbers of a single design),

 

    • The more divided your marketing efforts + attention span will be,

 

    • The more products you’ll need to photograph (tying up your time + making it more challenging to tag in a pro),

 

    • The more products you’ll need to program into your website (again: tying up your time + making it more challenging to tag in a pro),

 

    • And the higher the likelihood that you’ll need to create everything “to order,” which kills efficiency and drives your costs of production sky-high.

 

More is not more. Say it with me, now: MORE IS NOT MORE.  I propose that we all get that tattooed somewhere on ourselves as a daily reminder that editing is a critical task of successful businesses. Heaven knows that I have needed it on my journey as maker…

 

TIPS FOR EDITING A PRODUCT COLLECTION

 

1. Focus on what you want your brand to “own.” What do you want to be known for? Which of your products are out of alignment with that vision?

 

2. Think about the target audience you want to serve. What story are they telling themselves when they purchase + use your products? Which of your products fall outside that narrative?

 

3. Look at your sales numbers. Which of the products that survived cuts #1 and #2 (above) are eliciting a positive reaction from your audience?

 

4. Review your costs of production. Which of the remaining products that survived cuts #1, #2 and #3 are financially viable?

 

Review the products that are left standing and edit once more for cohesion. If something doesn’t fit, remove it. If there’s a gaping hole, fill it.

 

Remember that seeing beloved products on the cutting room floor will be an emotional experience for you. There’s nothing to say that you can’t continue making  these products (as gifts for those you love or on a specially commissioned basis).  Be gentle with yourself: I can attest that wine + long, hot baths help.

 

And no matter what you ultimately edit out of the collection, someone somewhere is going to be less-than-thrilled. In the ultimate display of irony, several of the brands I work with have made decisions to cull a product from their collection, only to see an almost-immediate surge in the product’s popularity right before the guillotine drops. Don’t be dissuaded! Make the cuts, frame the announcement in a positive light, project confidence, suggest other products you believe will please the devoted fans of whatever is going by the wayside and raise a glass to flexing your entrepreneurial muscle.

 

“Be as close to your singular purpose as you can. Gandhi knew who he was; he was at perfect peace with himself. Nike, for instance, knows what it is; regardless of the product or sport, everything has its clear and common purpose. You get in trouble when you get split against yourself. Like when Microsoft cranked out the Zune, just because it thought it should. Or that kid who comes back from spring break with fake dreadlocks. Or athletes who rap. (Sorry, Shaq.)”   -Marc Ecko