How Small Businesses Can Weather Trade Turbulence

Trade policies and tariffs can feel like the weather: unpredictable and out of your control, yet capable of dramatically impacting your business. The coming year is likely to see continued fluctuations in trade regulations, shifting tariffs, and supply chain challenges. While large corporations have more resources to weather these storms with ease, smaller businesses are often hit harder and have less margin for error.

The good news? With a proactive mindset and smart strategies, you can ride out turbulence and come out stronger. Here’s how to prepare for and adapt to the potential trade disruptions ahead.

Understand the Landscape.

The first step is knowing what you’re up against. Trade turbulence often comes in the form of new tariffs, export restrictions, or geopolitical tensions that disrupt supply chains. These changes can increase costs, delay deliveries, or make it harder to access key materials or products. Staying informed about trade developments and government policies can help you anticipate challenges and adapt quickly.

To start, follow trade news by subscribing to industry-specific newsletters or trade-focused news outlets. This ensures you are aware of potential developments before they become urgent. Join and follow industry groups, as many trade associations provide members with updates and advocacy efforts that can guide your strategy. Talking with experts such as trade consultants, customs brokers, or legal advisers can also provide clarity on how specific changes could affect your business operations, giving you an edge when preparing contingency plans.

Diversify Your Supply Chain.

One of the biggest risks for small businesses is overreliance on a single supplier or market. If tariffs or trade restrictions disrupt that source, your business could face significant delays and cost increases. Diversifying your supply chain — both in terms of geography and vendor options — is a proven way to mitigate these risks.

For example, sourcing locally when possible reduces dependence on international suppliers and can offer protections from global trade disruptions. Building relationships with multiple suppliers ensures you’re not left stranded if one can’t deliver. Additionally, exploring new markets to expand your reach can reduce your exposure to high-risk regions and create new growth opportunities. Diversification may take time and effort upfront, but it’s an investment in long-term stability that pays off when external conditions shift.

Review Your Pricing and Contracts.

Tariff increases or trade restrictions often lead to higher costs. Passing these costs on to customers without preparation can harm your relationships and sales. Reviewing your pricing strategy and contracts now can help you prepare for unexpected expenses.

Start by assessing how much of a cost increase your business can absorb versus what needs to be passed on to customers. Transparency with your clients is key. If price adjustments are necessary, communicate why and provide as much advance notice as possible.

Additionally, negotiating with suppliers to share the burden of increased costs, such as securing better payment terms or locking in current rates with long-term contracts, can also help ease the pressure. Thoughtful communication and careful adjustments can ensure both your business and your clients remain on solid ground.

Build a Cash Buffer.

Trade turbulence often comes with unexpected costs, from higher shipping fees to delayed inventory. A healthy cash reserve can help your business weather these financial shocks without jeopardizing daily operations.

To build reserves, focus on cutting non-essential expenses and prioritizing high-margin products that generate the most revenue. This not only strengthens your financial position but also ensures your resources are directed toward what matters most. Additionally, securing financing options, such as establishing a line of credit or expanding access to working capital, ensures you have liquidity when you need it most. A well-prepared cash buffer acts as a safety net, giving your business the flexibility to adapt quickly when challenges arise.

Embrace Technology and Innovation.

Technology can help you adapt more quickly to changing conditions. From improving supply chain visibility to optimizing operations, the right tools can give you a competitive edge during turbulent times.

Investing in supply chain management software provides real-time updates, helping you anticipate and address delays. Inventory optimization tools ensure that you don’t overorder or run out of critical items, while data analytics can uncover cost-saving opportunities and predict trends that may impact your business. While adopting new technology requires an upfront investment, the long-term benefits of improved efficiency and resilience make it a worthwhile endeavor.

Collaborate and Advocate.

You’re not alone in facing trade issues. Other business owners are dealing with similar challenges, and working together can yield creative solutions and stronger advocacy efforts. Collaboration can also open doors to joint ventures, shared resources, or bulk purchasing agreements that reduce costs.

Joining industry groups or local business associations can provide resources and networking opportunities. By sharing best practices and exchanging tips with other business owners, you can discover innovative ways to navigate trade challenges. Don’t hesitate to engage with policymakers to advocate for small-business-friendly trade policies — your voice can help shape a better business environment for all. Working together, you can create collective strength in the face of external disruptions.

Turning Challenges into Opportunity.

While trade turbulence poses challenges, it also presents opportunities for innovation, efficiency, and growth. By staying informed, diversifying your supply chain, and leveraging technology, you can not only weather the storm but also emerge stronger and more resilient.

The key is to act now. Prepare for the unexpected, build flexibility into your operations, and focus on long-term sustainability. In doing so, you’ll position your business to thrive no matter what trade policies the future brings. Adaptability, resourcefulness, and collaboration will remain your strongest allies in the year ahead.

Connect with an Old National Small Business Banker for more insights to help your business grow.

This article was written by Benjamin Laker from Inc. and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.