Maybe you first noticed supply chain issues in 2020. Clothing, cars, furniture, building materials, technology, food, and other products that are typically sold in abundance suddenly felt scarcer. As society grappled with this new reality in the early days of the pandemic, economic vocabulary evolved accordingly. Phrases such as “back order”, “low inventory”, and “discontinued” became more frequent in commerce-related conversations. Consumers are frustrated and producers are scrambling. As is the case with many social issues, these problems create a disproportionate impact on Black people. According to the Harvard Business Review, 53% of Black-owned businesses reported revenue falling by over 50% since the beginning of the pandemic. Black business owners have had to be tenacious, nimble, and scrappy during this time. The supply chain issues are intimidating, but there are ways to reduce the impact.
Tap into Economies of Scale
Small businesses may feel inclined to be a bit restrictive when it comes to purchasing products. There is a valid fear of products collecting dust if purchasing does not align with sales. However, purchasing materials in smaller quantities may not be the most economical option as bigger orders often result in costs per unit. This can ultimately help margins. Ariel Young, the founder of Copper and Brass Paper Goods, has discovered the advantages of placing larger orders for materials. After Ms. Young observed the severity of the supply chain problems, she adjusted the volume of her purchases. For best-selling products, Ms. Young placed orders that were five to ten times larger than typical requests. Similar decisions can ultimately help the bottom line for founders. But this needs to be a methodical pursuit. Purchasing volumes should not necessarily remain heightened. It is key to remain dynamic and ensure that the size of the order aligns with the broader environment.
The supply chain issues have largely thrown timelines into disarray. During the past eighteen months, companies have displayed disclaimers about extended shipping times. In October 2021, economists at the Royal Bank of Canada reported that a staggering 77% of ports around the world have had unusually long delays with the ships that have been coming and going. As a result, there is much ambiguity around delivery times. Business owners need to think ahead to be successful. Placing orders earlier and communicating with clients have both become requisite parts of being an entrepreneur during the past couple of years.
Embrace the Power of Plan B
The pandemic represented an era of prolonged uncertainty. Society has had to reimagine how we engage, work, and communicate with each other. Working as an entrepreneur during COVID has required even more openness to new ideas Asata Evans, CEO and Founder of AxV Beauty, certainly had to be agile when leading her business during the pandemic. Ms. Evans had to push back her company’s launch date and adjust seasonal product offerings as supplies were limited at different points throughout the year. Other founders can benefit from this same flexibility.
Use Your Size to Your Advantage
Small businesses can occasionally feel lost and afloat in a sea of major players. Some large companies may opt to work with chain stores who place high-volume and consistent orders. However, there are positive aspects of running a leaner operation. Adriane Stewart, the CEO of Lotus Scoop Ice Cream, has witnessed the benefits of remaining small. Ms. Stewart has been scrappy and is not overly reliant on specific suppliers. As a manufacturer, her business model fundamentally allows more agency in the creation of their products. The manufacturing component and connections with other people in the business have resulted in favorable outcomes for Lotus Scoop. Other business owners can take a page from the Lotus teams’ playbook and focus on relationships with local businesses who are willing to accept higher prices amidst inflation and market uncertainty.
Seek Advice from your Network
The current macroeconomic environment is difficult; however, its severity is not completely unprecedented. Learning from peers, mentors, and proteges is a worthwhile use of time. There are a variety of groups that facilitate networking between Black entrepreneurs. IFundWomen of Color, Meta Elevate, and Amazon’s Black Business Accelerator all offer resources for Black business owners.
The supply chain problems serve as a harsh reminder that there are many factors that entrepreneurs cannot control. At the same time, this has been a period for reflection and resilience. Navigating the COVID pandemic has been a challenge, but the lessons learned could benefit businesses in the long run.