On April 2, 2025, a day referred to as “Liberation Day” by President Trump, we learned details of planned “reciprocal tariffs” to be imposed on almost all of the USA’s trading partners, across a broad spectrum of products. For some, this marks a profound shift in trade policies which have underpinned the American economy for at least the last 50 years; others believe it’s a ripple in the ocean (the fence is available if you want to straddle it).
Not surprisingly, the impacts of the tariffs on the international economy are unclear, although worldwide markets have suffered historic declines. Growth projections have been adjusted downward, while workforce expansion has at least temporarily scaled back. Consumer confidence has weakened. Inflation predictions are now more pessimistic.
The effects could be permanent or transient. We are largely guessing. Some of the guessing is cloaked in the mantle of pundimetric certainty – the reality probably lies somewhere between recession and renaissance. It may take a fair amount of time to sort it all out.
How does this affect private business owners, who run the bedrock enterprises of the American economy and employ more than 46% of its workforce? Make no mistake, this is an unsettling moment. On the other hand, anxiety and uncertainty are a business owner’s daily diet. Tolerance for risk is a prerequisite for entrepreneurship. In our experience, seasoned owners are realists who rarely panic.
Still, it’s difficult to make big decisions when you don’t have clear “line of sight” on what happens next. This is truly a “VUCA” risk environment – volatile, uncertain, complex and ambiguous – and diligent but agile management is required to get through it.
We think there are five questions that will help owners navigate this moment:
- What are the unknowns I can control? There are many unknowns you can’t influence. There are at least twelve you can. Focus on those.
- How quickly can we adjust when things change? Agility is a hallmark of businesses that thrive in volatile environments. Your business must be built for speed and leadership must develop possible change scenarios and determine, in advance, the best course of action for each.
- Who are my best customers and what must I do to keep them? First, figure out what “best” means for your business – it may not be what you think it is. Once you’re clear on who the best customers are, and why, do everything you can to retain them. There is always an extra mile you can travel. You can’t afford to lose even one.
- What scenarios will cause me to run out of cash within six months? Liquidity is your best friend during uncertain times. You must be able to predict future cash flows under every decision scenario you may face. It requires a best-in-class financial model. Do you have one?
- What are the “fatals” we must avoid under these circumstances? No one likes to think about extinction level conditions, but “black swan” events do occur and it’s hard to see them coming. It’s different for every business but face the things you must avoid so they don’t put you out of business.
The businesses that prepare NOW will outperform those that don’t. Join Ready for Next on April 24, at 10 AM CDT for a FREE webinar “Navigating Uncertainty: The 5 Critical Questions to Answer for Business Stability.” Leave the session with actions you can take to address these questions and prepare your business for whatever lays ahead.
