- Welcome to "American Black Journal."

I'm your host, Stephen Henderson.

Tariffs, rising costs, and supply chain disruptions are some of the challenges that face small business owners this year.

The current economic climate has entrepreneurs really concerned about their futures.

It is especially worrisome for African American business owners who have less access to capital and thinner profit margins than many of their white counterparts.

Joining me now with more insight on the economic fallout is marketing consultant Mark Lee, who is president and CEO of the Lee Group.

Always great to see you, Mark.

- Good to see you.

Thanks for having me.

- Well, so I mean, you know, I hear constantly from business owners whether they be white or Black, about the effect that tariffs are having.

And in some cases, it's the surprising, I guess, or unexpected effect of tariffs.

I think we all knew that would make things hard.

It is making things harder than many people believed.

But let's start by talking about the special effects of things like tariffs and supply chain disruption on businesses in our community, which already have it harder than other businesses.

- You know, right now, quite frankly, it's a challenge.

And I think over the last six months or thereabouts, the challenge have continued to increase.

And for example, what we're seeing is, particularly amongst our businesses and businesses at large, costs have increased 10 to 12%.

10 to 12% in terms of raw material costs have gone up as a direct result of the tariffs.

And when you think about that, if you're a small business owner, you have very limited access to resources or dollars compared to a large business.

So a large business can absorb that cost.

A small business cannot.

A survey was recently done where 60% of small businesses have also mentioned that their profit margins continue to be squeezed.

So those some significant challenges that are confronting small businesses.

- So if you're a small business, what are your options?

What are the things that you can do to make sure that you don't go outta business while this is going on?

- I recommend several things.

One is make sure they evaluate your costs.

Not weekly.

Heck, daily.

You know, make sure you evaluate your costs on an ongoing basis.

Number two is continue to negotiate with your suppliers.

So make sure that you can, if they're supplying you with product, try to see if you can get a better price with them.

It's gonna be a challenge right now, but at least it's worth the negotiations.

Number three is be totally transparent with your customers.

Make sure you're not trying to hide anything from them.

Explain to them exactly what's going on.

And number four, you have to consider whether or not you need to either, you, the business owner, absorb the cost or do you pass that cost onto the customer.

Now that's the tough conundrum.

Because I've had a relationship with you.

I wanna maintain that relationship with you.

Now I gotta come back to you and say, "Hey, I might have to pass this cost onto you."

- Yeah.

Access to capital is always an issue for African American businesses.

Look different than it does for other businesses.

How does that get worse or does it change even, while things like costs are going up?

- Access to capital will always be a challenge irrespective of the economy.

Let's be quite honest about it.

And when we think about access to capital, it's gonna be even more of a challenge right now because financial institutions are gonna continue to increase the scrutiny.

And so if you don't have your financials in order, if you don't have your cost structure in order, if you were to go in and consider getting a loan or some type of loan at this point, it's gonna be a challenge.

- It's harder.

- It's more difficult.

But the option, there is an option here, is to look at grants.

The difference is a loan you have to pay back within certain terms.

A grant, you don't have to pay back.

So what we can do with the grant is, is you just need to explain how you're gonna use the money, demonstrate how it's gonna be... Give a return, so to speak.

But you do not have to pay the grant back.

- Yeah.

Where are some of the sources for those grants?

I mean, I think that's a pipeline that a lot of people aren't terribly familiar with.

- There are many nonprofit organizations out there offering grants.

A lot of times we think of financial institutions, the traditional banks, for example, for loans.

But there are many organizations where, so I don't, you know, show favoritism, but there are some organizations that will offer micro loans and micro grants up to $50,000.

And those, that is an organization that's focuses specifically on women-owned businesses.

There are Black-owned organizations that will supply you with grants as well.

The best way to answer that question is Google it.

Simply Google grant opportunities here in the city of Detroit to support a small business.

- Yeah.

Is the strategy, while this all goes on in Washington and gets hashed out, to kind of hunker down and kind of pull things in, in other words, temper your expectations and plan for slower growth or just kind of stasis while it happens?

Is that a realistic way to think about it?

'Cause the truth is, you don't know how long this will go on.

Is it that you have to have a more fundamental change in the way you think about your business?

Or do you just adjust to the current climate?

- You know, I've had this conversation before and the bottom line is to go back and look at your foundation.

Hunker down.

And what we're seeing right now is that people, even larger organizations, are delaying their hiring practices 'cause they're not sure they can afford to bring in new people right now.

So there's an option there of do you 1099 employees, right?

That you delay the hiring to when we think it might be coming down, the care of cost.

So to answer your question, the best strategy right now is go back and look at your foundation.

Again, look at the cost.

Talk to your customers.

Don't make any rash decisions at this point.

Do what you can afford to do.

Don't do what you can't afford to do moving forward.

- Yeah.

What about if you are someone who's thinking about starting a business and you think, "Ah, the 2025, 2026, that's when I want to pull that trigger."

Is this a good time to do that?

Is this a terrible time to do that?

Or is this just like any other time when you're making that decision?

- You know, that's a great question.

I get asked that question a lot.

And the time for you to start a business is when you're most comfortable.

If we had a crystal ball, we could predict the future, we could certainly have that stability.

Including we are in unstable times.

If you have the resources, if you have the plan, if you have the product, if you have the relationships, it's always a good time.

That's counterintuitive.

But it's always a good time to start a business.

The challenge is when you focus on sustainability and growth is, do you understand those other factors out there?

IE tariffs.

And how do you navigate and plan for those?

So it's always a good time if you have the resources and a plan.

The challenge is making sure you stick to that plan and you have the resources moving forward.

- Yeah.

What about businesses that are in trouble?

Businesses that are looking at the bottom line and saying, "Look, we're underwater because of this climate."

When do you throw in the towel, I guess?

And if not, what do you do to get through, if really, literally you are just going out of business?

- Let me tell you, at Black businesses right now, under normal circumstances, the average Black business entrepreneur has less than $10,000 in the bank.

That's enough to get you through two weeks.

That's it.

- [Stephen] That's it.

- So now if you think about the tariffs and you get your bottom line, you gotta make some hard decisions.

Now here in Detroit, we're fortunate, we have a lot of great businesses.

We've still got a lot of businesses opening.

The challenge right now, over the last several weeks, we've had a lot of businesses go out of business.

Restaurants, those in service industry.

So when do you decide?

That's a decision that you have to make for yourself by opening at your financials.

How much money do you have to bank for sustainability and growth?

- What are some of the resources for businesses that are in that position?

In other words, kinda last chance, kind of lifelines that they could reach out to just to get through to the next payroll or to the next year?

- One of the lifelines, I'm looking to the camera right now as I look at you and I'm talking to the audience on the other side of the camera is support small businesses.

Spend local.

Right?

I know we have a lot of big box businesses out there in the world.

Detroit has over 60,000 small businesses.

75% are women- and Black-owned.

Get out there and spend your resources here in the city, across the neighborhoods.

And in terms of also a lifeline is, again, continue to be faithful, be honest, you know, be trustworthy, talk to your customers and just continue to keep moving forward.

Don't throw I the towel just yet.

- Yeah.

You know, that idea of spending in the community, that's gotten us through lots of things in the past is the way in which businesses kind of interact with each other, make sure that they are buying from each other.

And the way that customers patronize those businesses.

It seems like right now is a great time to kind of double down on that and think about your life and your habits and adjust them if you don't feel like you're giving as much support as you could.

- Detroit is a supportive city.

We support each other, and now more than ever, we need to double down on that support.

And a lot of our businesses, I'm talking specifically Black-owned businesses, we don't have the resources as the white-owned businesses, the general businesses, if you will, Caucasian businesses.

So again, we have to double down and help each other because if we don't do that, we're not sure how we're gonna look moving forward.

So right now we're trying to double down, help each other, be supportive, and just make sure that you continue to invest the resources within the community.

- Yeah.

Yeah.

How long do you expect that things will be like this before, you know, I mean the economy goes up, it goes down, it always goes back up.

So are we looking at a short-term problem or do you think it's a long-term issue?

- Personally speaking, as well as professionally, I think it's a long-term situation.

A lot of times when something's eventually absorbed, it becomes part of our culture so to speak, you know, people don't just walk away from it.

And as much as I wanna say this is gonna be over in a month and the rest of the year, I don't believe that.

I think we're looking at '26 and beyond.

- [Stephen] Wow.

- So this could be a long-term supposition or proposition.

That's why it's important to go back and evaluate your plans and make sure that you have alternative plans to help you get through these challenging times.

- Okay, Mark, it's always great to have you here and to give all this great advice to business owners.

- Appreciate it.

Thank you.

- Yeah.