Back To The Basics: How SMBs Can Navigate Tariffs And Uncertainty

Forbes

30-07-2025

Sam Sidhu is the CEO of Customers Bank.
Amid a shifting tariff landscape, executives of many of America's largest corporations are becoming more conservative in providing updates to their management outlook, with some lowering their guidance (registration required) or pulling their guidance altogether. If the big players are challenged to plan for the future, the pressure is even greater on small and mid-sized businesses (SMBs). Every environment harbors some risk and uncertainty, and in today's exceptionally fluid dynamic climate, SMBs are particularly vulnerable.
Anticipating Higher Costs Of Doing Business
The world of SMBs is vast, ranging from sole proprietorships to corporations. Despite the diversity, it's unlikely you'll find an SMB that isn't impacted, directly or indirectly, by trade and tariff policies.
Many manufacturers relying on imported components are bracing for higher material costs, with trade uncertainty and the prospect of rising raw material prices being top concerns (download required) in the industry. In March, PBS reported that construction firms, many of which source lumber from Canada, were facing increased costs not only for building materials but also for appliances and fittings that finish a dwelling, potentially driving up home prices. Similarly, many food service companies are anticipating higher prices for imported ingredients that can't be produced domestically.
Complicating matters, consumer confidence is on a downward trend. The Conference Board reported that its Consumer Confidence Index, Present Situation Index and Expectations Index all dropped in June, showing consumers have a negative perception of future income, business and market conditions. If consumers significantly rein in spending, SMBs could see reduced demand that further challenges their business prospects.
Developing Clarity Through A Near-Term Focus
SMBs have considerable variation in their available resources and their potential courses of action for navigating trade and tariff policy. Now is the time to go back to a business plan, take a close look at balance sheets, identify where the largest risks lie and consider concrete steps to mitigate those risks as much as possible. Crafting a 90-day plan can provide SMBs with a sense of direction for the immediate term.
A 90-day plan will look different for each business. Relatively larger businesses may have greater capacity to build up inventory to carry them through. For instance, early in the year, we worked with a larger food services company, which freed up cash to increase inventory. The company also reviewed its loan agreements to determine when and where cash could be available. Although the business climate remains uncertain, these actions helped the company have some guardrails in place.
Another business we worked with was smaller in size and lacked the capacity to stock up on inventory. It found some stability by exploring its lending options. The goal was to have credit open and available should a need arise. The business was able to assess its creditworthiness and qualifications for Small Business Administration loans, as well as other available loans and lines of credit.
Even smaller companies, those with less than about $10 million in revenue, are perhaps most at risk. These may be retail or low-margin businesses with very little room to absorb new costs. Small businesses may have difficulty adjusting or accessing funding, so owners should approach their banks early to evaluate potential capital scenarios.
Leveraging Resources And Relationships
SMBs are critical elements of the nation's economic engine. Given the magnitude and pace of change, businesses should ensure they're working with their banker to advise on financing options tailored to their unique situation.
While it's impossible to manage external forces and know the long-term effects of tariffs, SMBs can control how they approach uncertainty. Businesses should work with their bankers or financial advisors, revisit their goals and develop sound strategies to carry them through ambiguity in the near term.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?