Wow, what a wild ride so far! Since President Trump’s surprise victory in November, stock markets have risen (and now flattened off), industry deregulation is on the horizon (as much as 75% according to Mr. Trump), lower tax rates for US companies could become a reality, potential rise of import tariffs into the US could result and potential artificial cooling of the US Dollar may be on the way and the list goes on.
During President Trump’s inauguration speech he said “buy American and hire American”. The world has changed considerably virtually overnight.
Now, depending on where your business is located, where you or your suppliers manufacture (if you manufacture), which markets you sell into and other business model attributes, these changes can be of major benefit or concern to you. Will the new administration be able to implement these new policies and if so when? How do you model and more importantly have plans and contingency plans in place to manage your P & L in real-time?
Will your cost structure change materially? How will US customers be impacted if you need to bake new import duties into your prices? Will you have new competitors that “play ball” with the new administration and open facilities in the US? Will you have diluted US earnings when repatriated to you home country? Will deregulation lower your costs but also lower barriers to entry into your industry and thus squeeze margins? A lot to think about and plan for.
You already have enough to deal with as the world becomes more digital, online sales grow and consumer demographics change what customers want, where they want it and how.
The time is now to be proactive.
Firms need to map out their current value chain and model it based on potential events listed above (and others that are industry specific). Are there additional markets outside of the US that you need to consider? Where else can you bolster sales to mitigate the risk of the US market? What does your supply chain look like and what could it look like? Are you procuring product or services in the most efficient method possible and do you have contingencies negotiated into purchase agreements and service level agreements? How can you take cost out of your eco-system now, so you have some cost or margin buffer to burn off for unexpected changes in business conditions brought on by the Trump administration?
Are you ready?
Tony Whitehouse & Bruce Winder
Co-Founders & Partners, Retail Advisors Network™
Retail Advisors Network™ Consulting Division serves retailers and vendors with business challenges and opportunities. We can be found at: http://www.retailadvisorsnetwork.ca/ . See our new Contingency Cost Savings Model at: http://www.retailadvisorsnetwork.ca/contingency_model