Survival Mode
Holly Eve uses contract manufacturers in the U.S., but even they have demanded fee hikes of 60 to 200 percent: “This just seems like a problem too large to solve.”
Good Morning!
Here are today’s highlights:
Ami Kassar says bad things can happen when your business outgrows its bookkeeping.
Retailers are thriving by buying the building and by selling experiences.
Can you build a business by wrangling the dogs at the weddings of pet owners who marry?
Stephen Starr, who has invested $20 million in his latest restaurant, concedes that he prefers the thrill of creating over the slog of managing.
THE TRADE WARS
For a lot of small businesses, it’s survival mode: “Just over six months into Mr. Trump’s campaign to rebalance global trade, some American small businesses are already on the brink. Others have chosen to throw in the towel. Last week, the United States and China agreed to extend, by another 90 days, a pause on tariffs that would have soared to a catastrophic 145 percent, averting a worst-case scenario — a complete halt of trade between the world’s two largest economies. But the pause has done nothing for many American small-business owners paying the tariffs it left in place, such as a minimum 30 percent duty for goods from China or a 50-percent import tax on products made from foreign steel and aluminum.”
“Holly Eve, 38, is starting to face the reality that she may have to shut her California-based company, Madame Lemy, a producer of all-natural powder deodorant and shampoo. She started the business nine years ago, after struggling to find an effective, natural alternative to conventional deodorants. At the outset, she made the products in her kitchen. The business experienced rapid growth during the pandemic, as online shoppers flocked to her products, depleting her inventory. Mrs. Eve took out a small-business loan to expand, but her company hit a lull when online advertisements became more expensive and less effective. Her optimism heading into this year eroded quickly when the tariffs hit.”
“Her American contract manufacturers told her that they would have to charge her 60 to 200 percent more, depending on the item, because they procure the necessary components to assemble her products from abroad. In addition, the tariff on importing boxes and other packaging she buys from China has also risen sharply. She said she was struggling to cover her loan payments. ‘This just seems like a problem too large to solve,’ Mrs. Eve said. ‘It has completely wrecked my mental health.’”
“She said she had found comfort in the support of her family. Her father, Stephen R. Landfield, who voted for President Trump, wrote a letter to the White House on her behalf explaining that her business will not survive the tariffs. ‘Small businesses are the backbone of our country, yet these tariffs unfairly target them. Many will have no choice but to close their doors,’ Mr. Landfield wrote. ‘I urge you to reconsider this policy so that American entrepreneurs and small-business owners like my daughter can continue contributing to our economy without being crushed by costs beyond their control.’” READ MORE
