How Deglobalization Impacts American Small to Mid-Size Businesses

Published On: May 19th, 2023Categories: Commercial Collections, International Collections
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Deglobalization is a complex process that could potentially have a significant impact on small to medium-sized businesses (SMBs). It refers to the reduction of interdependence and integration between nations in terms of economic, social, technological, cultural, political, and ecological aspects. Here are some facets and reasons why SMBs could face some challenges within the next 5-10 years.

  • Reduced access to foreign markets and customers; this will cause an increase in trade barriers. Deglobalization can lead to trade barriers, tariffs, sanctions, and boycotts that make it harder for businesses to sell their products and services abroad. This can reduce revenue and growth potential, especially in high-value-added sectors such as technology, healthcare, and education.
  • Increased competition from foreign rivals. This can also stimulate the development of domestic industries and innovation in other countries. This can erode the competitive advantage of businesses in the U.S. within global markets and increase the threat of substitution and imitation. Large corporations have the resources to weather economic downturns and compete on a global scale. Small businesses, on the other hand, may be more vulnerable to economic shocks and competition from larger companies.
  • Disrupted global supply chains and higher costs. Deglobalization can cause fragmentation and instability in global supply chains, affecting the availability, quality, and price of inputs and outputs for SMB’s. This could increase your operational costs and reduce efficiency and flexibility in some scenarios.
  • Shifting consumer preferences. As consumers become more aware of the environmental and social impacts of globalization, they may be more likely to buy goods and services from local businesses. And this can be a win for your local enterprise. Speak to your customers – ask what they like and why, cater to them.
  • Difficulty in attracting and retaining talent. Deglobalization can limit the mobility and diversity of human capital, making it harder for small businesses to recruit and retain skilled workers from different countries and backgrounds. This can affect innovation capacity and productivity, particularly for tech and medical staffing needs.

With these potential challenges in mind, here are a few business models or revenue plans that small businesses might consider pivoting in this changing economy:

  • Build strong relationships with customers. Small businesses can build strong relationships with customers by providing excellent customer service, offering loyalty programs, and participating in community events such donating to local kid sports teams or leagues, and even donating your time. Bring your business banner; let them know you and your business cares about the local community.
  • Diversify your markets and customers. A small business can explore new opportunities in domestic or regional markets that are less affected by deglobalization or have complementary needs and preferences. They can also leverage digital platforms and e-commerce to reach more customers online. Being open-minded and flexible is necessary to pivot and offer a new service or product.
  • Refresh or innovate your products and services. The owner of a small company can differentiate themselves from their competitors by offering unique value propositions that meet the changing needs and expectations of their customers. Business owners can also invest in research and development to create new solutions that solve existing or emerging problems – this is always a must as the company owner.
  • Localize your supply chains and operations. Small businesses can reduce their dependence on global suppliers and partners by sourcing more inputs locally or regionally. They can also adopt more sustainable and resilient practices that minimize their environmental and social impacts. Small businesses can focus on serving local markets by sourcing their goods and services locally, marketing their products and services to local customers, and participating in local events and organizations. Focus on the local movements and start getting creative.
  • Embrace digital technology. Digital technology can help small businesses to reach new customers, improve their efficiency, and reduce their costs. For example, small businesses can use e-commerce platforms to sell their products online, use social media to connect with customers, and use cloud computing to store data and applications. But keep the personalized small business touch for your clients, especially on digital sales.

Collaborate with other local small businesses in your area for the purpose of forming strategic alliances or partnerships with other commercial neighbors and other businesses, organizations, or institutions that share your vision and values. You can even research local permitting in your city or county so you can organize block-parties for the businesses in your block or local area. This can also assist in engaging with future customers, employees, communities, and governments to build trust, loyalty, and spark movement to the local area. Of course, these types of strategies should be tailored to the specific circumstances and strengths of each business or business owner.

In closing, it is also important to remember that while deglobalization presents challenges, it also offers opportunities for businesses to innovate and thrive in new ways.