The expression “may you live in interesting times” can be interpreted as a blessing or a curse. It certainly reflects uncertainty. We are surely in a period of interesting times. Legacy and social media are reporting doom and gloom, and small businesses are scrambling to adapt to actual and possible changes in the marketplace. Take the time to digest what’s going on so you can take constructive action to help your business.
Tariffs
A tariff is a tax imposed by a government on specified imports. On April 2, 2025, the U.S. imposed a new round of tariffs, purportedly in retaliation for tariffs levied on the U.S. What does this mean for small businesses?
The U.S. Chamber of Commerce (CO) spelled out some of the consequences of these tariffs on small businesses. Obviously, not all factors impact all businesses. It remains to be seen what really happens, but here are some things to think about (adapted from the CO article, but with my own twist):
- When the price of goods sold to customers increases because of tariffs, businesses may or may not be able to pass on the additional cost to customers. Either way, it’s likely that profits will be reduced. And, for businesses that sell abroad, they may lose business to customers unwilling to pay higher prices reflecting tariffs on U.S. goods.
- At least in the near term, tariffs may stifle plans for growth. Small businesses may be averse to spending until certainty is restored to the marketplace.
What to do: Don’t panic. It may take some time for the real impact of tariffs to be felt and understood. Having some perspective allows you to think more clearly about plans for growth.
In the meantime, revisit your supply chain to see if you can obtain your goods at more favorable prices. Suppliers sourcing their items abroad (and subject to tariffs) may be willing to absorb some of the additional cost.
Recession
Technically, a recession means 2 consecutive quarters of negative growth in GDP. As a practical matter, a recession is a period of a few months or more of a significant decline in economic activity. According to J.P. Morgan, the odds of a global recession were recently pegged at 60%. Looking back, there was a brief recession in 2020 due to the pandemic, and there was the Great Recession of 2008-2009, triggered in great part by the subprime mortgage crisis. Since 1945, the average length of a recession has been 10 months. If there’s a recession in 2025 or 2026, what does this mean for small businesses?
A recession for most (but not all) small businesses means decreased sales. Consumers and businesses have less money to spend.
What to do:
- Tightened up on expenses. While it’s always a good idea to closely monitor expenses and eliminate unnecessary costs, during a recession when less revenue is coming into your business it’s essential to conserve your cash. Revise your business.
- Reduce debt. The less you need to devote funds to debt servicing, the more you’ll have to weather the recession.
- Start a recession-proof business. While no industry is fully exempt from recessions, some feel them less. LegalZoom has a list of 10 recession-proof businesses, including those involved in healthcare and childcare.
Technology
While tariffs and recession are currently dominating the conversation, don’t forget about AI and other technology changes. They are happening in rapid succession, making it challenging for small businesses to understand and adapt, or anticipate what comes next. What does this mean for small businesses?
What to do: Take it from someone who ran a business before there were computers, mobile phones, and the internet, you can learn to use new technologies. Embracing AI can help you streamline administrative tasks, enhance marketing and content creation, automate customer support, and more.
Final thought
The uncomfortable topics that small business owners face today means operating in a time of uncertainty. But is there ever a time of certainty?
Physicist and Nobel Laureate Richard Feynman said: “I have approximate answers and possible beliefs in different degrees of certainty about different things, but I’m not absolutely sure of anything.”
Remain optimistic (you already are if you’ve started a business) and do what you can with the information you have.
For more reading on recession and your small business, check out this list of blogs.
