Running a family-owned lower-mid-market company amidst a trade war presents unique challenges. With issues emerging at every turn, each demanding your attention, it can be overwhelming to distinguish the truly urgent from the merely important. At the forefront of these challenges is the need to balance customer satisfaction against the background of disrupted supply chains caused by tariffs.
Consider the scenario where a loyal customer faces delays due to a tariff-induced supply chain disruption. While it's crucial to keep them informed and express gratitude for their business, it is equally important to address the root of the issue by finding sustainable solutions for supply chain continuity.
One innovative strategy that has gained traction is "friend-shoring." Following recent aggressive tariff implementations by the United States, this approach involves relocating production to friendly jurisdictions with lower trade barriers. While complete tariff avoidance may be unattainable, strategically choosing more favorable trade environments can significantly ease the financial burden.
This period of volatility also presents an opportunity for businesses to re-evaluate their product designs. Collaborate with your team, including those on the production line, to explore how modularity can enhance your product's value and reduce production costs. By examining whether your products can be made up of interchangeable modules or sections, you can minimize the impact of supply chain disruptions.
A modular design offers a significant advantage. Should the supply chain for one module falter, having alternative sources ready can mitigate potential delays. Implementing "just-in-time" sourcing can further safeguard against disruptions, ensuring your customer receives their product without unnecessary hassle.
In conclusion, while trade wars pose formidable challenges, they also provide an impetus for family businesses to innovate and adapt. By leveraging strategies like friend-shoring and modular product design, your business can navigate these turbulent times with resilience and continue delivering exceptional value to your customers.
For further insights on how to implement these strategies in your business, contact us or join our upcoming workshop. Together, let's turn these challenges into opportunities for growth and success.
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Avoiding Becoming Collateral Damage in the Trade War: The Power of Transparency and Team Involvement
In the rapidly evolving landscape of global trade, transparency about the challenges posed by the Trade War is more essential than ever. The complexity it brings can feel a lot like being thrust into a streaming service overhaul—where everything familiar seems altered and unpredictable. Yet, this very change, unsettling as it may be, holds the potential for innovation and growth if approached strategically.
Acknowledging the Impact
The Trade War has disrupted traditional trade patterns and created a cascade of challenges for businesses globally. It's crucial to be upfront about these issues, from tariffs squeezing profit margins to supply chain disruptions. By acknowledging the impacts, you're not just facing reality—you're laying the groundwork for actionable solutions.
The Role of Your Team
The key to navigating the turbulence is to harness the collective power of your team. Involving your team in crafting responses to these challenges not only fosters a sense of ownership and camaraderie but also taps into a diverse pool of insights and solutions.
Strategies for Team Collaboration
1. Open Dialogue: Regularly communicate the realities of the Trade War with your team. Transparency fosters trust, and informed team members can contribute more effectively.
2. Collective Brainstorming: Encourage team brainstorming sessions to generate innovative solutions and identify new opportunities. Diverse perspectives can reveal strategies that might otherwise be overlooked.
3. Empower Decision-Making: Give team members the autonomy to act on ideas and pivot strategies as needed. This empowerment leads to a more agile response to external changes.
4. Continuous Learning: Support professional development to ensure your team stays informed about industry shifts and new technologies. Knowledge equips them to tackle challenges more effectively.
5. Celebrate Wins: Small victories against trade-induced challenges should be celebrated. Recognizing these wins boosts morale and highlights the team’s capability to overcome obstacles.
In summary, while the Trade War presents significant hurdles, it also offers an invaluable opportunity to refocus and innovate. By being transparent about the challenges and engaging your team in problem-solving, you can transform these disruptions into a catalyst for growth.
In the rapidly evolving landscape of global trade, lower-mid-market family-owned manufacturing businesses like yours face unprecedented challenges. hese family-run enterprises are the backbone of innovation and employment in many communities, and rightfully so. Yet, the recent trade war has cast shadows over these operations, making it increasingly difficult to manage supply chains and maintain the competitiveness essential for survival.
Picture this: Components you once sourced at favorable pricing from East Asian suppliers are now cost-prohibitive. As of late January 2025, the cost per unit has skyrocketed to seven times their previous rate. These substantial increases place an unsustainable burden on businesses, severely affecting profitability and, ultimately, the resilience of family-owned manufacturing firms.
In the face of these disruptions, substitution with alternative contract manufacturers has been less than effective. Many companies find themselves caught between a rock and a hard place, with new suppliers either demanding higher pricing, unable to meet necessary production volumes, or failing to deliver components promptly. This trifecta of challenges has many lower-mid-market companies scrambling for viable solutions.
However, all is not lost. Innovative strategies can serve as lifelines, easing the immense pressure on owners and leaders. A promising approach worth exploring is "Friend-Shoring."
What is Friend-Shoring, you ask? At its core, Friend-Shoring involves directing your sourcing efforts towards countries with lower barriers to trade and a compatible manufacturing capacity. It's about forging alliances with nations that share not only geographical proximity but also aligned economic interests and values. By realigning partnerships with friendlier economic climates, you gain access to competitive pricing and a more reliable supply chain.
The implementation of Friend-Shoring requires strategic thinking and a willingness to explore new opportunities firmly rooted in trust and mutual benefit. Here's a step-by-step guide to navigating this complex yet rewarding approach:
1. Identify Partner Countries:
Begin by researching countries that not only offer lower tariffs and fewer trade barriers but also possess a robust industrial capacity. Consider regions with which your country maintains strong diplomatic ties and shared economic interests. Countries in closer geographic proximity may also reduce logistics costs and ensure faster delivery times.
2. Evaluate Potential Suppliers:
Conduct a thorough assessment of potential suppliers within these partner countries. Evaluate their production capabilities, financial stability, and historical reliability. It's crucial to establish that these suppliers can meet your volume and quality demands while offering competitive pricing.
3. Build Strong Relationships:
Establishing trust and fostering enduring relationships with new suppliers is vital. Engage in open dialogues and negotiate contracts that protect your company's interests while ensuring mutual respect and understanding. Focus on transparent communication and align on business objectives to ensure both parties benefit equally.
4. Leverage Technology:
Adopt state-of-the-art technology to facilitate streamlined communication and real-time updates on production and shipping status. Utilize platforms that offer collaboration and transparency, enabling you to manage and monitor the supply chain efficiently even from a distance.
5. Diversify Your Supplier Base:
Avoid the pitfall of putting all your eggs in a single basket. By diversifying your supplier base across multiple "friend" countries, you reduce dependency and create a buffer against future market fluctuations or geopolitical developments.
6. **Stay Informed and Adaptable:**
Keep abreast of international trade policies, regional developments, and market trends. Maintain agility to swiftly adapt strategies as the global landscape evolves. Friend-Shoring should not be seen as a one-size-fits-all solution but as a flexible strategy that evolves with circumstances.
By embracing Friend-Shoring, lower-mid-market family-owned manufacturing companies can mitigate the impact of trade disruptions and regain a competitive edge. While it requires an initial investment of time and resources, the long-term benefits are substantial — stability, reliability, and cost-effectiveness.
In conclusion, it's crucial to view the current challenges as opportunities for growth and innovation. By exploring alternative avenues such as Friend-Shoring, your business won't merely survive; it will thrive despite adversities.
As , consider how these steps might be tailored to your specific circumstances and strive forward with confidence. Family-owned businesses have a remarkable resilience and an unparalleled passion for their craft. By implementing strategic frameworks like Friend-Shoring, you not only safeguard your legacy but also set a foundation for growth that spans generations.
Reach out to us today, and let's explore together how Friend-Shoring can redefine the future of your business, ensuring that it remains a formidable force in the ever-evolving world of manufacturing.
In the current economic environment, family businesses are facing challenges due to the ongoing Trade War. While the situation is serious, with potential difficulties projected into 2026, there are practical steps you can take to guide your business through these times.
The Seabrook Wessex Approach
We use a process designed to assist leaders of lower-mid-market family-owned businesses in managing the impacts of the Trade War and the threats to the sustainability of your company - and the well-being of your family and the families of your team members. Our approach starts with understanding your situation through direct communication. We then collect essential data and work with your stakeholders to evaluate your business's current health and pinpoint any critical issues.
We then partner with you to develop a strategy that aims to improve your business's direction and help prevent the end of your company’s existence.
Your Strategic Toolkit
Here are the core components often found in a tariff strategies and tactics toolkit:
1. Supply Chain Optimization:
- Look for new suppliers in stable regions to diversify.
- Work on better terms with current suppliers to reduce costs.
- Consider local or regional sourcing for a more stable supply chain.
- Manage inventory strategically to control expenses.
2. Financial & Tax Strategies:
- Review and renegotiate contracts to manage financial pressures.
- Enhance cash flow through detailed analysis and management.
- Explore available financing and support programs.
- Use tax incentives and consult experts for a customized tax strategy.
3. Operations & Pricing:
- Streamline operations to cut costs and increase efficiency.
- Reassess product designs for better cost management.
- Adjust pricing strategies to maintain profitability.
4. Market & Customer Focus:
- Expand into new markets to spread risk.
- Keep your customers informed about your business's value.
- Focus on retaining customers through strong relationships.
5. Family Governance & Communication:
- Coordinate family shareholders to align on strategy.
- Improve governance with the help of councils or boards.
A Call to Action
The seas in the next two years will likely be rough. Many family-owned lower-mid-market companies may not make it past the second quarter of 2026. By employing these strategies, you can fortify your family company against the effects of the Trade War, and give your family, your team members, and their families a fighting chance of not becoming collateral damage in the Trade War.
To learn about Seabrook Wessex Group's Tariff Strategies and Tactics practice -
Let's talk about laying out a strategy to take your company through the Trade War and give your family and the families of your team members a fighting chance -
My business can't run without me. Do you ever find yourself thinking or saying that? We know we have.
You have worked to build a business that you either started or took over from a previous generation. You have done a pretty good job, and there is a great deal of satisfaction in it - maybe even some pride in knowing that you are important to the well-being of your family. You like the feeling of value at being indispensable.
That's too bad.
If your business can't run without you, then you - and your family - are missing out. It can be hard to not to choose staying late at the office over a soccer game or recitals if there is a fire to put out or a looming deadline.
Vacations? If you are taking them, and your business can't run without you, your body is there, but your brain is not fully present. How often do you check with the office, fire up your laptop, or shoot a text while you are at the beach with your spouse and children?
And if your business can't run without you, what happens if you can't run it because you aren't coming into the office - ever? If your disability or death means you are no longer there to run it, then you - or your family - will realize you didn't own a business; you just had a job where your employer was you.
You can change that. We can help you.
