Small and medium-sized businesses (SMBs) are no stranger to running smart operations. These businesses run on slim margins, with small teams and are competing against Big Box stores that have economies of scale on their side. Strategy is imperative when you’re trying to make every cent count. But the first quarter of 2025 has brought more change and stronger market headwinds – for consumers, large businesses in almost every sector and small businesses around the world.
The Trump administration’s aggressive tariff policy has created volatile market and economic conditions with real-world impact.. And the macroeconomic environment is still changing as tariffs evolve. Businesses are pivoting their strategies and operations, and consumers are thinking about what items they need to purchase before supply chains get jammed or dry out. A recent report from the National Retail Federation (NRF) forecasted that while retail has shown momentum in 2025, policy uncertainty is heavily impacting consumer and business confidence. The NRF also predicted gross domestic product (GDP) growth to decline below 2 percent, which is below what we’ve seen in recent years.
Navigating the peaks and valleys will be challenging for all businesses, but small businesses are likely to feel the brunt of the impact. However, there are several strategics that SMBs can adopt now to navigate uncertainty and fickle consumer demand.
The secret lies with inventory management
Businesses are trying out different strategies, like overstocking, to attempt to mitigate near term price hikes. For example, Apple imported more than 1.5 million iPhones to the United States just days before tariffs went into effect in an effort to build up inventory.
Some small businesses are also betting on building an inventory buffer, such as those who sell sporting goods, to make sure that they are able to accommodate high sales orders volumes during peak seasons. In fact, according to Katana Cloud Inventory, small businesses began overstocking well before tariffs took effect with data showing a 50 percent increase in median stock value and a 20 percent increase in the average number of stock keeping units (SKUs) the week after the Trump administration was elected to office. It’s a risky bet, especially for small businesses, who need to sell those products in order to recoup the costs.
With inventory at the heart of retail, it’s critically important that business owners look for inventory management platforms that allow them to get real-time inventory insights on all items and optimize inventory levels based on demand. For SMBs, there are cloud-based software systems that are tailored to small business needs, so there’s no need to use a system where only half of the features are applicable to your business. Look for a platform with features, such as planning and forecasting and sales order management, and seamless integrations, such as Shopify and Intuit Quickbooks, that can help you do business your way.
Integrated operations for smarter workflows
Keeping your business connected with an inventory management platform is a key component of navigating market volatility. However, workflows can be further simplified by having end-to-end visibility with an integrated tech stack – both consumer-facing and back-end applications – which can ensure real-time data across all platforms.
Visibility allows for informed decision making, which is critical when adapting to consumer demand and increasing costs needs to happen simultaneously. For example, across more than 500 U.S.-based SMBs using Katana, who collectively spend over $300 million each month on procurement, the average unit price has increased by 30 percent in 2025 as compared to 2024. Technology that allows for holistic oversight is essential.
Relying on technology to navigate uncertainty
Businesses around the world are raising alarm bells about the impact that tariffs could have on their bottom lines. Value-conscious consumers are closely watching which goods are most exposed to price shocks, such as apparel and shoes. On both sides of the aisle, it’s challenging to navigate uncertain markets. But for SMBs, there is hope. Implementing integrated technology can help business owners manage inventory and operations from storefront to suppliers. Applying real-time tariff costs across products quickly and accurately can keep margins in check. And real-time data can help with planning and forecasting demand – even when consumer demand feels ever-changing. At the end of the day, this technology offers you an overarching view of your business performance which can help you protect your profits.
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