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.

 

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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

 

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Things That Keep Us Up At Night (Part 3): The Battle Between Business and Creative Tasks + Small Business Finances

BusinessAndCreative

Each year, I invite my clients to participate in the Lucky Break client survey. I ask you all sorts of things: about your business, small business finances, where you turn for advice, how confident you feel in various aspects of your business, and what’s keeping you awake at night.

 

Several hundred people rose to the occasion this year (thank you!) and I’ve been sharing some of the most common responses. I sifted through hundreds of survey answers to discover that the vast majority of replies fell under one of five main umbrellas. In part one of this blog series, I talked about entrepreneur anxiety and the deep-seated fears of failure that many of us harbor. In part two, I dug deep into the daily entrepreneur overwhelm and our difficulty connecting with ideal customers.

 

Small Business Finances | Balancing Creative and Business Tasks

 

But those aren’t the only things rumbling across our brain waves at 1am. We have a few other things that lay heavy on our minds… the information that appears as bulleted items below represents verbatim responses from the Lucky Break community. In the final installment of this blog series, I’m talking about the worries around small business finances and the constant battle between the left + ride sides of our brains.

 

THE CONSTANT BATTLE BETWEEN OUR BUSINESS + CREATIVE TO DO LISTS

  • Keeping on top of the minutia of running a business while also focusing on the tree top-level creativity and visioning of being a CEO.
  • Balancing production work and creativity.
  • Finding a way to step away from production so that I can grow the business side of things, and design more.
  • Wondering how to pull myself into a more hands-off role as designer so I can do more of what I truly love, which has nothing to do with my business.

 

I think it’s fair to say that 95% of my clients are more drawn to the “creative” side of their business. Things like new product development, production, and packaging design light them up.  But the bookkeeping, taxes, marketing, HR side of the business? Most don’t feel even the tiniest spark of inspiration when servicing those aspects of their company.  Sound familiar?  But the creative brands that have staying power pay as much (if not more) attention to the “business” side of the business. Those that don’t either struggle silently for years- working more than they ever imagined for far less profit than they imagined- or they close up shop in years 2-4 after giving the business a good romp.

 

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The less “sexy” side of the business? The one you’re less excited by and less comfortable with? That’s the area where we need to throw most of our muscle. That’s what self-development is all about… challenging yourself. Getting to the root of what makes you uncomfortable. Learning new skill sets. Reframing your perspective. That’s not just some self-help “woo woo”… that’s the heart of entrepreneurship.

 

By year four of my product-based brand, I had transitioned out of all day-to-day tasks: production, scheduling, material ordering, bookkeeping, customer service. My very first hire was a very part-time assistant to package products. My second? A full-time production manager who I taught to make all of our products.  My third? A full-time office manager to answer emails, man the phone, and package shipments while I focused on new product development, marketing, wholesale outreach, and cultivating key relationships.

 

By year six, I had eight employees, including a wholesale account specialist, production assistants, a shipping helper, and someone who worked full-time washing dishes, mopping floors, breaking down boxes, and checking in incoming materials. I started that company as a single mom on food stamps with less a $500 investment. And by year four, we were grinding out more than a million in revenue.  But I knew early on that I’d never get there if I was primarily focused on product creation. No way, no how. Getting yourself out of the daily grind is a must! Eventually, the role I assumed was creative director with some strategic vision thrown in for good measure… it was everything that I’d wanted, but it took a hell of a lot of hustle to get there.

 

My advice? Outsource first, delegate second, hire third. You have three solid options when it comes to nudging things off your plate…

1. Explore the possibility of hiring service-based businesses who are experts in their field. Think: attorneys to register and police your intellectual property. Graphic designers to create your packaging and marketing materials. Professional photographers to help your up-level your product presentation. Bookkeepers to keep your finances in order.  True experts are mind-blowingly efficient and you have no ongoing commitment to these pros.

 

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Why Shopping Small is so Important

ShopSmall

Shop small is more than merely a catch phrase.

 

When you choose to spend your holiday dollars with a small business, you empower people, families, and communities in ways that Amazon or Target can’t touch. Here’s how…

 

ShopSmall

 

SIX REASONS TO SHOP SMALL THIS HOLIDAY

 

 

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  • You foster a more sustainable economy. According to the SBA, big businesses have eliminated 4 million jobs since 1990, while small businesses added 8 million jobs within that same time period. Small businesses are more likely to be people-oriented, more likely to be community-oriented, and more likely to support local causes.

 

  • You support the creation of greater diversity. When you spend money with local, independent businesses, those businesses tend to hire people who represent the demographics of the surrounding community, including historically underserved populations. And it’s not just diversity of people, but a diversity of product, too. Local shops are more likely to carry a varied selection, and local artisans create goods that represent their culture.

 

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  • You build a stronger community. A series of studies by the research firm Civic Economics found that 48 percent of purchases at local independent businesses go right back into the community, compared to less than 14 percent of sales made at chain stores. Supporting small businesses means that the community you call home receives the tax benefits, providing a deeper well of funds for spending on public services like education, libraries, fire protection, road and park improvements.

 

  • You enjoy better customer service. Small businesses deliver more personable, hands-on, and memorable customer service. They take pride in serving their people and deeply desire to connect with you.

 

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Things That Keep Us Up At Night (Part 2): Connecting with Ideal Customers + Small Business Overwhelm

ConnectingWithIdealCust (1)

Each year, I invite my clients to participate in the Lucky Break client survey. I ask you all sorts of things: about your business, about where you turn for advice, about how confident you feel in various aspects of your business, and about what’s keeping you awake at night.

 

ConnectingWithIdealCust (1)

 

Several hundred people rose to the occasion this year (thank you!) and I’ve been sharing some of the most common responses. I sifted through hundreds of survey answers to discover that the vast majority of replies fell under one of five main “umbrellas.” In part one of this blog series, I talked about the entrepreneur anxiety that many of us harbor. But that’s not the only thing rumbling across our brain waves at 1am. We have a few other things that lay heavy on our minds… the information that appears as bulleted items below represent verbatim responses from the Lucky Break community.

 

THE DAILY OVERWHELM OF RUNNING A SMALL BUSINESS

  • A “to do” list that’s longer than the time I have in the day.
  • Struggling to manage all the facets of my business at the moment… knowing that I’m not able to do it all as well as I need to.
  • How to grow my business and not having enough time in the day as a one- person show.
  • Making the most of my time.
  • I have so many ideas and not enough time to implement them all. If I’m being honest, it’s because I’m trying to do too much myself instead of figuring out how to outsource it.
  • I need more bodies, but yikes that costs serious money! So here I sit trying to do it all myself.
  • Doing too many things and not finishing them until months later.

 

Raise your hand if you’ve felt like you’re treading quicksand with your business at some point in the last week? See friend? You’re in good company. I think we all feel that way… and fairly often.

 

But delegation is the BFF of the the entrepreneur. I understand that it can be terribly difficult, but the good news is that delegation gets easier the more you do it. I have to lock my Inner Control Freak (ICF) in her cage each and every day, but I’ve realized that focus is my friend, and I look terrible in bodysuits + red patent leather boots. I’m no Wonder Woman and I learned long ago to surrender the ideal that I could do it all.

 

Lost your password to the Lucky Break Virtual Classroom? I won’t be the one replying when you send Team Lucky Break an SOS for a password reset. Looking for a transcript after a Wholesale Matchmaker call? My Operations Manager passes the baton to a third party firm that does it faster and cheaper than we ever could. I outsource the payroll and tax preparation for this business. The graphic design. The coding of my website. I delegate the management of my schedule and the coordination of my speaking engagements.

 

Why? Because I can’t outsource the curriculum creation or the client calls. Those need me, but not much else at Lucky Break does. By bringing on a team of independent contractors, third-party services, and employees, I can focus on what I do best, what generates the most income, and what delivers the most joy. But delegating that first task can be brutal.

 

  • Play to your strengths.  Take out a blank sheet of paper and physically list everything that you do for your company, then rate each task on a scale of 1 to 5 for two factors: How competent do you feel in your abilities? (1 being least + 5 being most competent.) How happy does this task make you? (1 being utterly miserable + 5 being most rapturous joy.) Add those two numbers together and you’ll have a score of 2-10 for each line item.

Scan back through and circle the five tasks with the lowest scores… get those things off your plate ASAP. You’re either not very skilled in them or they’re draining your energy. This is your outsource/delegate list and you can keep picking them off one-by-one as the company grows.  Eventually, you’ll retain just the core tasks that you’re fantastically good at really excited about as your daily “to-do” list!

 

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Meet the Maker – Jason and Cara Hibbs of Oh, Little Rabbit

Meet the Maker: Oh, Little Rabbit

This week in our ongoing Meet the Maker series, we’re getting to know Jason and Cara Hibbs, the passionate, talented team behind Oh, Little Rabbit!

 

Meet the Maker: Oh, Little Rabbit

 

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

Jason and Cara: Cara’s passion to create art in a meaningful way.

 

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

Jason and Cara: At the very beginning, this seemed like it would be more of a hobby!  But as we started selling items on Etsy, it really took off and became a full-time investment.  So while we didn’t really start with a specific vision, we have grown with the business as it has evolved over the past few years.

 

LBC: How would you describe what you create?

Jason and Cara: Unique screen printed home goods and apparel.

 

Meet the Maker: Oh, Little Rabbit

 

LBC: Where can we find your products?

Jason and Cara: You can find our products on the Oh, Little Rabbit website and Etsy shop, as well as in our sister shop, Bourbon Moth ( website and Etsy). Lots of independent shops also carry our products – here, locally, and even as far away as Singapore and Australia!

 

LBC: Walk us through your typical work day.

Jason and Cara: Having our own business spoils us a bit, because we get to set our own schedule. We start most days out in the shop printing Etsy and wholesale orders while listening to folk music and discussing scotch, and then we package everything up as a team to ship out.

 

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

Jason and Cara: We firmly believe in creating something you love and are passionate about, instead of just having the mindset of ‘what product would sell the most?’  Making something meaningful is so much more rewarding!  The people you surround yourself with is also important, and it’s been wonderful creating this business with each other and the support of friends and family.  Lastly, you have to think long term. Sometimes something will be fun to make the first time, but you have to ask yourself if it will still be enjoyable the hundredth or thousandth time.

 

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

Jason and Cara: We are lucky to live about an hour away from the coast, and that’s usually where we go when we need to refocus!

 

Meet the Maker: Oh, Little Rabbit

 

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

Jason and Cara: Deciding to jump in full-time was a very rewarding leap of faith.  We’re so glad we fully committed to Oh, Little Rabbit and invested our time into growing it as a company!  We also hired our first employee this year, and that has been helpful as the business has been growing so quickly.  You realize that you can’t do it all yourself, and that’s fine!

 

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

Jason and Cara: There have been a few times when we’ve thought a new product would be successful, and it would kind of flop.  You just have to let it go and keep trying new things until you find your niche.

 

LBC: Is there a cause or organization that you contribute to that you’re particularly passionate about?

Jason and Cara: We recently adopted our son, Iver, and have a soft spot for other couples going through adoptions.  We have donated to a lot of fundraisers for couples, and charities that provide resources for them.

 

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

Jason and Cara: Our accountant, for sure.  We don’t know what we would do without her.  And time off has been very important, because we come up with some of our best ideas and work while we’re taking a break!  A solid social media presence has also been a very important resource over the years.

 

Meet the Maker: Oh, Little Rabbit

 

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

Jason and Cara: We’re in the middle of expanding our shop right now and we just launched a sister shop, Bourbon Moth, which sells custom reclaimed woodwork.  With all of the new projects, things will be changing a lot in these next few years!  We hope to keep growing and adding new images, and are excited to see where it all takes us.

 

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

Jason and Cara: Jason loves pasta, and Cara would live on fish and chips.

 

LBC: What’s your spirit animal?

Jason and Cara: We weren’t sure, so we took the first online quiz we found… Jason is a tiger and Cara is a wolf.  We’re not going to question it.

 

LBC: If you were given a million dollars, but were not allowed to keep a single penny for yourself, friends or family, how would you spend it or give it away?

Jason and Cara: Putting wells in Africa, or funding other people’s adoptions!

 

Thank you, Jason and Cara, for sharing your talent with us!  We absolutely love your line and we look forward to all the wonderful things ahead for Oh, Little Rabbit and Bourbon Moth! 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!