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Since the Trump administration took office on January 20, immense changes have overwhelmed business owners of all sizes. Perhaps most impactful are the tariff policies President Trump was touting before election and is now enactingtheoretically to prioritize American business, but possibly upending businesses of all sizes. As the founder and CEO of Percent, a private credit investment platform that has facilitated over $1 billion in financings for small businesses, I’ve had a front-row seat to how policy changes directly impact financing needs and capital access for small businesses across the country. Slated to go into effect before being postponed twiceand recently implemented on steel and aluminum imports, with more threats by the daythis back and forth has only added to the uncertainty facing business owners trying to plan ahead. The ongoing ambiguity is itself a major burden, leaving many businesses in a lurch as they wait to see whether to adjust pricing, inventory, and supply chain strategies. Trump has sought to throw 25% tariffs on all Canadian and Mexican imports, and double the tariffs on Chinese goods to 20%. Such action would heavily impact all goods shipped into the U.S. from these countrieswhich accounted for 40% of all imports in 2024mainly including oil and petroleum products from Canada, and electronics from China. The idea behind these heightened costs on imports is to push American consumers to buy goods made in the U.S. and encourage companies to establish their headquarters and operations in the country rather than outsource overseas. Trump has also said that these three countries havent done enough to stop the flow of fentanyl into the U.S., and these tariffs are a repercussion. Unsurprisingly Canada, Mexico and China are already retaliating with their own tariffs on U.S. goods, including a 15% border tax on coal and liquefied natural gas products imported from the U.S. Other direct responses include a 10% tariff imposed by China on American crude oil, and 25% tariffs from Canada on $30 billion of American goods including poultry and produce. Disruptions in the Near-Term Immediately, if the rest of these tariffs do go into effect, small businesses relying on imported materials from these three countries will see costs rise across the board. The U.S. sources nearly half of its foreign fuel from Canada, which will have a ripple effect for all businesses and consumers using any type of fuel. (Hint: Its almost all of them.) Pricing strategies take time to adjust and as a result, businesses will have to face cash flow challenges stemming from these higher costs, creating a strain on consumers with higher prices to help offset impacts. Small businesses will be hit the hardest, as they often lack the market power to fully pass any sort of price increase onto consumers without economies of scale. Inventory management will get complicated as businesses big and small have to decide how and when to allocate capital. Should they stockpile inventory before more increases down the line? Or minimize inventory to preserve cash? With the way things are shaking out, and big changes happening every day, theres no steadfast right or wrong answerespecially as the administration vacillates back and forth between implementing or rescinding the tariffs. Competition between businesses is also going to grow between larger companies (who can better absorb these tariff costs or negotiate alternative supply arrangements) and those who cant. These kinds of sweeping changes to operations take time, resources, and administrative skill to navigate, but this is all happening at the drop of a hat. Small business owners will need to navigate sourcing new suppliers, deal with increased paperwork and compliance costs, and decide how and when to use cash reserves to navigate these new regulations. Effects Down the Road These international tariff policies arent just going to have short-term effects on the global economy. If they stick around, its going to transform business models, market dynamics, and innovation across the globe. President Trump has offered a counter argument that tariffs are designed to help domestic industries as it pushes consumers to buy from U.S. brands but that has largely been proven to be incorrect. Historically tariffs have led to higher domestic prices across the board as imports become more expensive, thereby reducing competition, and subsequently causing prices to increase again as U.S. companies will be able to charge more. Were going to see forced supply chain disruption away from previously reliable partners, product reformulation to use different inputs unaffected by tariffs, and strategic repositioning in the market based on new cost structures. Requirements for investment will have to adapt to the new normal of trade flow. Market sectors may consolidate or close completely based on who can adapt or get acquired. Building relationships with domestic suppliers is going to become crucial, and barriers to entry for small businesses are only going to increase with higher initial capital requirements. Uncertainty will also dole out an economic toll, as investments stall while waiting to hear whats next. For small businesses in particular, this “wait and see” environment is more than an annoyanceit drains time, resources, and momentum. Each postponement forces owners to revisit plans, weigh supply chain shifts, and hold off on investments. The repeated reversals create policy whiplash, compounding inefficiencies and heightening the risk of missed opportunities. At the same time, we will likely see a faster adoption of automation and utilization of AI to offset input costs, and domestic alternatives to imported materials. This will create new business opportunities and potential market segmentation shifts as price pints change. These price point changes will have lasting financial implications, especially for small businesses. When tariffs increase costs for a small business that cant absorb the financial hike, the structure fundamentally changes. Typically this means increased capital requirements due to fronting inventory costs that they cant always expect their customers to cover with higher prices. Supply chain disruptions also cause larger inventory buffers, tying up more capital. These lengthened cash conversion cycles will affect not just businesses, but the institutions providing the capital, as well. Further Evolution of Banking Relationships Even further into the future, were going to see a shift in banking and investments from these tariff increasesand retaliatory effectswith Canada, China, and Mexico. There will likely be a shift from transactional to strategic partnerships; credit structure changes; alternative financing and risk management; and capital structure reconsideration (where businesses will have to reassess their balance between debt, equity, and internal funding to better weather prolonged trade disruptions) as the global economy adjusts. For small businesses, banking will need to be with institutions that understand their industrys specific tariff impacts. What this means for banks is that being familiar with international trade dynamics becomes a valuable competitive edge, and more trust-based, consultative relationships will become necessary with increased complexity. Many businesses, not just smaller ones, will also need to shift from short-term revolving credit to longer-term financing solutions to manage the extended period of adjustment these tariffs will bring. In fact, financing sources all together will change, and businesses might turn to alternate sources such as community development financial institutions (CDFIs) that offer specialized programming for trade policy complications. New approaches to financial risk, the increased need for documentation and compliance, and rethinking debt-to-equity ratiosthe entirety of approaching finances in businesses will be affected, potentially negatively. The one predictable thing over the course of this administration will be unpredictabilityand unfortunately it will likely be small businesses that will have to bear the brunt of this uncertainty.
Category:
E-Commerce
Like clockwork, when my daughter turned 9, she started to show interest in nail polish, lip balm, and haircare. Mommy, I think I need shampoo for my specific hair type, she told me. I knew the day would come when my daughter would be lured in by beauty products, but I still found myself unprepared to respond. I feel a responsibility to help her navigate what will be a lifelong relationship with the beauty industrial complex. This means helping her decide what products are safe and appropriate to use. More importantly, though, it means helping her see beauty as a tool of self-care, rather than an external standard she must achieve. [Photo: Evereden] This is becoming an increasingly complex task for today’s parents. For one thing, the beauty industry is bigger than ever, with new products and brands popping up daily. Many contain active ingredients that aren’t appropriate for young skin, but that hasn’t stopped tweens from flocking to Sephora to buy them. All of these brandsfrom Sol de Janeiro to Drunk Elephantare marketed to adults, with models who are much older than the brand’s youngest customers. The good news is that there’s a new wave of startups emerging that cater specifically to younger consumers, including Starface and Bubble. One of the most successful brands in this category is Evereden, which began as a baby brand in 2018 but has grown alongside its customers by creating skincare products for kids and now tweens. It’s currently making its biggest play for the tween set by launching fragrances designed to compete directly with the Sol de Janeiro mists that are highly coveted by middle schoolers. In many ways, Evereden is filling an important gap in the market for age-appropriate beauty products for young girls. It’s a void left behind by Bonne Bell, the iconic cosmetics brand that catered to generations of American tweens but shuttered a decade ago after years of declining sales. Evereden’s approach offers a glimpse into what today’s tweens care about, and what it takes to win them over. Growing With The Customer Parents who slathered Evereden’s creams on their preschoolers in 2018 are now living with preteens. Evereden is prepared for them. Two years ago, it launched a $22 lip oil that comes with a charm attached that feels like an upscale version of Lip Smackers. (Everden’s formula is certified by the Environmental Working Group to be free of toxic chemicals; meanwhile, EWG says Lip Smackers contains ingredients that could cause allergies, reproductive toxicity, and cancer.) [Photo: Evereden] This week, Evereden is launching a $69 three-piece set of fragrance mists that come in fun, colorful bottles. And when I tested them, they seemed to capture the bright, sugary essence of girlhood. This isn’t an accident. While many adult perfumes are complex and subtle, tweens tend to have simpler sensibilities. That’s what Evereden found when it did a focus group with 200 tweens and teens, asking them to choose among 70 scents. The final fragrances are fresh, floral, and sweet. Over the past five years, the fragrance industry has exploded, and tweens have contributed to this growth. Sol de Janeiro became Sephora’s best-selling brand partly because of the success of its fragrance mists, which are extremely popular among middle schoolers. But Evereden cofounder and CEO Kimberley Ho points out that many of the fragrances that tweens are buying from Sephora aren’t designed for kids. Sol de Janeiros advertising, for example, features voluptuous women in bikinis on Brazilian beaches. Mists were the most requested product last year, Ho says. Many parents told me they weren’t comfortable with their child using Sol de Janeiro. The brand’s campaigns are sexual, because they’re meant for adults. [Photo: Evereden] Ho was careful to market Evereden’s new mists in an age-appropriate way. The boxed set comes with a quizreminiscent of something you might find in retro magazines like Girls’ Life or Tiger Beatthat helps you decide which mist to wear on a given day. Are you feeling girly? Darling, with its undertones of strawberry and rose, is for you. Are you feeling a little sassy and independent? Supernova, with its pear and bamboo notes, is the right pick. We use the same model for all the fragrances, because the message is that we are all multidimensional, Ho says. Tweens are at an age when they ae trying to figure out who they are. We’re trying to say that you can be many things at once. The Rise and Fall of Bonne Bell In many ways, Evereden is using the playbook of Bonne Bell, which defined tween beauty for generations of Americans. The brand was founded in 1937, at a time when the concept of the teenager was first emerging in U.S. culture. The company realized it had an opportunity to tailor products to girls who were curious about their mothers makeup and skincare, but weren’t ready to take on an adult beauty regimen. The brand launched a range of teen-focused drugstore products that girls could afford to buy with their babysitting money. It was famous for its three-step acne-fighting regimen called Ten-O-Six. In 1973, it launched Lip Smackers, lip balms that came in flavors like cherry and Tootsie Roll. Two years after that, Bonne Bell launched perfumes. A vintage Lip Smackers ad [Photo: twitchery/Flickr] The branding of these products was distinct from beauty products targeted at adults; Bonne Bell featured younger models with more natural makeup in scenarios that were more about having fun than being sexy. As a result, many parents felt comfortable with their daughters filling their vanity with these products. In the 2000s, Bonne Bell began a slow decline. Competitors like Wet n Wild and L’Oréal started going after the tween and teen market with similar products. And retailers like Bath & Body Works tapped into the tween market by creating fun, limited-edition body sprays and washes that middle schoolers loved to collect. But this was also the dawn of e-commerce and social media, which led to an explosion of new beauty brands in the marketplace. Many tweens were drawn to these other brands, which resulted in Bonne Bell losing market share. In 2015, the company announced it was shuttering its operations. Lip Smackers products have reemerged under a new owner but have nowhere near the same market share they once had. [Photo: Evereden] Bonne Bell for Gen Alpha While the market is now overflowing with beauty brands, there are very few that focus exclusively on the tween consumer. This makes business sense. Brands stand to generate far more revenue by reaching a wider demographicparticularly if tweens are among them. But Ho believes it’s worth creating tween-specific products. For one thing, thanks to the clean beauty movement, many parents are very conscious about what they are putting on their children’s bodies. As their toddlers turn into tweens, they want to be careful about potential toxins or hormone disruptors in beauty products. From the start, Evereden has been focused on clean formulations that are also effective. Ho brought on three chief scientific officers who are professors of dermatology at Harvard and Stanford. Together, they’ve developed products free of 2,000 ingredients known to cause harm. The new fragrance mists are made without any preservatives such as butylated hydroxytoluene, which is commonly used in perfumes in the U.S. but has been banned in other countries because it is carcinogenic. [Photo: Evereden] And parents arent the only ones who are eager for age-appropriate products. Based on her focus groups, Ho has concluded that most tweens aren’t interested in plunging fully into the world of adulthood and the beauty rituals that go along with it. They’re just curious and want to dip their toe in the water. Until now, there haven’t been many options for them to explore, so they’ve embraced brands meant for older consumers. I see this in my own daughter. She’s intrigued by my perfume and makeup. But she also seems to understand that girlhood is precious and worth holding on to. When Evereden’s perfume mists arrived, she took the quiz with all the seriousness of a school math test. She decided to wear the Supernova scent, because she was feeling spunky. But who knows which one she’ll choose tomorrow?
Category:
E-Commerce
Sixteen years ago, I received a phone call that was both unexpected and surprising. On the other end of the line was Lisa (a pseudonym) who had previously been the leading applicant for an open job position at our agency. Lisa had learned about our agency from some of her peers who worked with us and who had encouraged her to apply for a position in the firm. But, halfway through the interview process, Lisa informed us that even though she really wanted to work with us, she had received an offer from a competitor that she just couldnt refuse. At the time, we were a start-up agency that was bootstrapping its way forward. We simply couldnt match the salary that the competitor was offering Lisa. Believe me, if we could have, we would have. Lisas portfolio of work, CV, and recommendations were more than impressive. Although we were disappointed, we thanked Lisa for participating in the interview process and genuinely wished her all the best in her career. This is a scenario that many start-ups find themselves inwanting to attract their industries best and brightest but being unable to compete with the big guys in the area of compensation. But, back to the phone call. In a faint whisper, Lisa asked if the position at our agency was still available. I replied yes, it was, and asked why she was whispering. As it turns out, Lisa was whispering because she was in her new workplace and didnt want her colleagues to overhear the call. I reminded her that we wouldnt be able to match her current salary, to which she replied: Id rather be working with you guys at a lower salary than be working here in a toxic culture. (Lisas peers who worked at our agency had told her about our fun and often quirky culture.) So, we offered the position to Lisa, who immediately quit her job and came to work at our agency, where she excelled in her role. Lisas story should be good news for any company seeking to attract top talent, but especially those that cant afford to compete on the basis of salary. Here are five ways to compete for talent without having a huge budget for salaries. 1. Build a highly engaged company culture A study conducted by Glassdoor, one of the world’s largest recruiting sites, found that 77% of employees consider a companys culture before applying for a job, and that 56% of applicants rank company culture as being more important than salary when it comes to job satisfaction. If you want to attract top talent, prioritize building a highly engaged company culture where employees are excited about the work they do and are committed to helping their organizations succeed. Let your culture act as a magnet to attract top talenteven if you arent exactly hitting the top of your industrys salary scales. 2. Prioritize work/life balance Of respondents in a FlexJobs Career Pulse Survey, 64% stated they would choose better work/life balance over better pay. And no wonder! Workplace stress has been linked to physical, emotional, and mental health challenges, including high blood pressure, cardiovascular disease, anxiety, depression, and substance abuse. If your organization cant compete for top talent on the basis of salary, try competing on work/life balance by offering generous time off opportunities like Half-Day Fridays, flexible working hours, and work-from-home opportunities. 3. Provide opportunities for professional development Ambitious employees often forego higher salaries in favor of professional development that could fast-track their careers in the long run. Thats why a great way to attract top talent is to provide candidates with opportunities for professional development that they would not otherwise find at your competitors. But, what professional development programs would attract the type of employees you would want to apply at your firm? Research conducted by PayScale found that nearly a third of all respondents reported that they would be most interested in management/leadership training. Other coveted training opportunities included professional certifications and technical skills training. 4. Offer non-monetary benefits Cold hard cash isnt the only thing that can motivate an individual to want to work at an organization. In a study conducted by Randstad US, 61% of respondents indicated that they would be willing to accept a lower salary if an organization offered a great benefits package as part of their compensation. And, in a survey by the American Institute of Certified Public Accountants, 80% of respondents reported that they would choose a job with benefits even if an identical job offered 30% more salary but no benefits. If you cant go toe-to-toe with your competitors based on salaries, consider offering benefits like workplace wellness programs, gym membership, health insurance, and access to mental health resources. 5. ‘We grow, you grow’ programs When Lisa left a higher-paying job to come to our agency, we promised her that as the company grew and became more profitable, her salary would likewise growa promise that we were able to keep. Sometimes, all it takes to win over a candidate is to demonstrate that you value their contributions and that as the company grows, they will reap the benefits. If your company simply cant offer top-tier salaries, consider using these strategies. You may be pleasantly surprised to find that you can compete effectively for top talent without having a huge budget for salaries.
Category:
E-Commerce
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