Uncertain times expose your business to risks that could threaten its viability.  Enhance your business planning particularly regarding developing a number of operating scenarios (worst case, likely case, best case) – may not be best to identify and continue on a single fixed course.  Develop appropriate risk management strategies to address the following issues:

• relying too heavily on a small number of large customers
• relying too heavily on one supplier
• relying too heavily on one type or source of finance
• selling on credit without appropriate checks and not following up late payments
• fraud.

The great challenge of managing amid uncertainty is that the potential outcomes are much more numerous than is typically expected. That means that leaders need to be as clear about what they will not do as they are about the initiatives they will pursue.  When identifying and assessing alternative opportunities the 80/20 rule (Pareto Principle) is worth considering.

Left to their own devices, leaders reflexively reduce investment, freeze hiring, slash marketing and brand investments, avoid entering new markets, and sometimes stop making decisions altogether. Such defensive moves are entirely understandable. And in previous periods of uncertainty, they may have been necessary for survival. But they can be counterproductive in the short term, and even more so in the long term. 

Have a clear idea as to what makes your business competitive (not products and services) and work on this – stick to what you know rather than the next ‘bright, new, shiny thing’ – don’t ‘throw the baby out with the bath water’.

Diversify Your Supply Chain

The tariffs imposed by the Trump administration create uncertainty, especially in industries relying on imports from the U.S. or China. To minimize risk, Australian businesses should look to diversify their supply chains. Sourcing products and raw materials from a range of countries can help mitigate the impact of tariffs and prevent disruptions from affecting production.

Uncertainty of supply may be manifested in the:

• Availability of materials
• Cost of materials
• Quality of materials
• Availability of alternative supply sources
• Supply lead time and unforeseen delays
• Supplier relationship

Diversify you Customer Base

• Expand your offerings
• Bundle existing offerings
• Focus on customer success
• Explore new markets
• Strategic partnerships
• Leverage digital marketing:
• Focus on customer experience

Demand uncertainties may appear in the form of:

• Demand forecast errors
• Changes in customer orders
• Variations in product specifications of orders
• Competitor actions regarding your marketing promotions
• Fast-changing markets
• Customer demands

Focus on Cost Efficiency
In an environment where costs are rising due to tariffs, business owners must focus on efficiency. Cutting unnecessary overheads, improving productivity, and streamlining operations can help maintain profit margins despite increased expenses. Small adjustments to reduce waste and improve processes can go a long way in making a business more competitive.  Businesses must operate efficiently and effectively to be successful.  

Here are some ways to improve productivity:

• collect business performance data and compare it to previous performance, industry benchmarks and the strategic goals of your business
• identify key drivers of your business and set goals for these drivers
• regularly evaluate performance of key drivers against your goals and identify areas for improvement, risk and trends. Clear presentation, such as dashboard reporting, helps to understand this data.
• implement strategies to monitor the effectiveness and adjust the strategy when necessary.

Uncertainty of process is related to the:

• Availability and quality of machinery
• Processing times
• Disruptions of internal operations
• Labour changes and issues
• Personnel qualifications
• IT problems
• Customer service

Adapt Your Pricing Strategy
To stay competitive, Australian businesses may need to adjust their pricing strategies in response to tariff-related price hikes. This might involve adjusting product prices, offering more value, or bundling goods and services in ways that still provide customers with perceived value while compensating for increased costs. Clear communication with customers about why prices are rising can also build trust.

Capitalise on Local Demand
With global supply chains under pressure, there is an opportunity for businesses to focus on local demand and domestic production. By sourcing locally or developing products with local materials, businesses can avoid tariff-induced price increases and help support Australian industries. Emphasizing Australian-made products can also appeal to patriotic customers who want to support local businesses.

Innovation and Product Development
In times of uncertainty, innovation is a key driver of business longevity. Businesses should focus on improving their products or creating new ones that better meet market demands. This can help differentiate their offerings and reduce reliance on industries or products affected by tariffs. Keeping an eye on evolving consumer preferences and trends can help guide innovation in the right direction.

Strengthen Digital Presence
The rise of e-commerce and digital platforms has opened up new growth channels for businesses. By strengthening their online presence, businesses can reduce reliance on traditional trade routes and avoid being caught off guard by tariffs. A robust digital marketing strategy, e-commerce platform, and customer outreach through social media can drive sales even during turbulent times.

Leverage Government Support
The Australian government has various programs aimed at helping businesses weather external shocks like tariffs. From grants and incentives to assistance with innovation and export strategies, businesses can take advantage of these resources to reduce the financial burden of tariffs. Staying informed about these opportunities is crucial for businesses looking to stay competitive.

Maintain Financial Resilience
Building financial resilience is critical for withstanding economic disruptions. Businesses should focus on strengthening cash flow management, reducing debt, and creating financial buffers to weather uncertain times. By keeping expenses in check and preparing for potential disruptions, businesses can avoid making drastic cuts during a downturn and continue to invest in their long-term growth.

These activities can help improve cash flow:

• follow up on late and outstanding payments from your clients and customers
• prepare regular cash flow forecasts
• prioritise your marketing to focus on products and services that can be turned into cash quickly
• make full use of your suppliers' payment terms, but do not pay late
• reduce stock levels by replacing slow-moving or obsolete stock with high turnover stock
• sell any unnecessary assets.

Conclusion

Trump’s tariffs pose a challenge to Australian businesses, but they also offer an opportunity to reassess operations and adopt strategies that ensure long-term success. By diversifying supply chains, focusing on local markets, fostering innovation, and leveraging digital tools, Australian businesses can emerge stronger and more resilient in the face of external trade shocks. With these principles in place, businesses can not only survive but thrive despite the shifting global economic landscape.