Problems with the supply chain have been all over the news recently, and for small business owners, these problems have been all over the daily life of business management. According to a recent survey by the U.S. Census Bureau, the number of businesses reporting supplier delays has increased by over 70 percent since the beginning of 2021.
Supply-chain survival woes are the dark side of what businesses had hoped would be a promising period, as economies around the world began reopening after the COVID-19 pandemic-induced lockdowns.
Consider that in Great Britain, large numbers of Kentucky Fried Chicken outlets had to close because their supply chains failed to deliver… you guessed it, chicken.
Or the auto industry, which has suffered because of the lack of computer chips necessary to make its cars. Lower production of cars means increased prices, per the classic economic laws of supply and demand.
All of which is to say nothing of the powerful visual images of ships being unable to dock in California. Somewhere in the United States, there’s a business facing a supply chain problem because of products that can’t get to port. And like most problems, it’s the small and midsize businesses that are most vulnerable to the storm.
Problems caused by supply-chain disruption
The biggest issue caused by the supply-chain problems is the lack of raw materials. A business can’t sell what it doesn’t have, and it can’t produce a product with materials that are sitting somewhere in a ship off the California coast.
Furthermore, businesses that can get their raw materials and products end up paying more to do so. A supply chain crunch places a higher economic value on what can be delivered, which leads to higher prices for freight.
These 2 problems constitute an existential threat to small-business survival. But the current uncertainty also makes forecasting difficult. A business that can’t rely on its inventory is unable to make reliable projections about revenue growth for the future.
Reliable projections are what drive investment. In the big picture, this means the supply-chain problems are a drag on economic growth. At the micro-level, this means that, at best, an entrepreneur’s long-term goals are on hold. At worst, it means that supply-chain issues could start a slump that can’t be reversed.
What to do about it
Nobody became an entrepreneur because they wanted to just sit back and accept whatever adverse conditions arose. There are concrete actions that business owners can take during this crisis, and it starts with recognizing where small businesses have an advantage.
Smaller organizations are always faster to adjust to change than larger ones. The big corporations have resources, but they don’t have the ability to adapt quickly to changing circumstances. The small-business owner does. So, take advantage of that edge and make decisions quickly.
One of those decisions can be to reach out to your customer base. Another edge small businesses have is that they often have a deeper personal relationship with their customers that can transcend any short-term problems.
Candidly tell your customers what you’re faced with. If they’re willing to work with you, then figure out what you can deliver now and how you can make it better over time.
But before you make that call to customers, review your contracts. Know what you are obligated to provide, and be prepared to play hardball. If a customer isn’t willing to cooperate with you in the midst of a national crisis, they might not be the best long-term client for your business. Simply deliver what they are entitled to by law, and then refocus your efforts on the customers who want to be with you on the far side of this supply-chain crisis.