Small Business Challenges Archives

Kellie Abernathy works on a piece of jewelry for her Etsy shop. On marketplaces like Etsy, where women-owned small businesses have flourished, sellers like Abernethy are now grappling with tariffs as high as 50 percent on goods from countries such as India, a major source for jewelry and apparel. (Courtesy of Kellie Abernethy) This story was originally reported by Chabeli Carrazana of The 19th. Meet Chabeli and read more of her reporting on gender, politics and policy. Hunched over her kitchen counter, in the depths of grief, Kellie Abernethy had an idea. It was March 2020, and she and her husband had been trying for a second child, but suffered a miscarriage that had unmoored them. I just need something to hold onto this moment, she thought then. Her eyes lingered on the bouquet of flowers on the counter — a gift from her husband — and the clusters of tiny white blooms poking out among the stems. Baby’s breath — a symbol of everlasting love. She thought perhaps she could keep them, encase them in a necklace to wear in memory. Abernethy, who had never made jewelry before, got to work ordering the parts. After much trial and error, the final product was a delicate rose gold chain with a small round pendant holding the baby’s breath bloom. It occurred to her that other parents may also be looking for something to commemorate the babies they lost, so she listed the photo of her original on Etsy, the marketplace for mom-and-pop (but mostly mom) shops that sell largely handmade items. Some 80 percent of sellers there are women. Before long, Abernethy had a jewelry business called Rest of the Nest. Five years later, it’s her full-time job. The necklace that started it all became her bestseller. But now, she’s unsure if she’ll be able to continue making it. President Donald Trump’s aggressive trade policies, which have significantly raised tariffs on most countries, have hit small businesses like hers that source some of their products internationally. The rose gold Abernethy uses in her signature necklace, for example, she can only find in China. She’s facing a 30 percent tariff on those imports, a fee that is likely too high for her business to absorb. In late August, the Trump administration also ended a century-old rule that allowed American sellers to avoid tariffs on small international shipments. Known as the de minimis exemption, the rule allowed importers to avoid tariffs on orders valued at less than $800. Trump has sold his approach to trade as a means to boost domestic production and create jobs, but all those new costs have put Abernethy in a bind: If she raises prices, she risks pricing herself out of the market. If she cuts the necklace entirely, it would mean ending sales of her bestseller, a decision that carries not only financial heft but also emotional significance. “I feel frozen in fear a little bit,” Abernethy said. “I’ve never done this to be rich. I just want to make a decent living doing something I feel deeply passionate about — that's my American dream. It just feels like it’s slipping away.” Women small business owners already face significant hardships in standing up and sustaining their businesses. Women own about 40 percent of U.S. businesses overall, and most of them are very small — about 90 percent have no employees, according to data from the Small Business Administration. Women have also historically struggled with access to capital and loans. They are already much more likely than men to finance their business primarily with debt or help from family and friends. Some 70 percent of men use private capital investment to finance their business, compared with just 30 percent of women, according to a survey by Gusto, a software company that provides payroll and HR management for businesses. On marketplaces like Etsy, where women-owned small businesses have been able to flourish, sellers are now managing tariffs as high as 50 percent on goods from countries like India, a major source market for jewelry and apparel manufacturers. Stress and anxiety are running high. “Everyone is pretty nervous,” Abernethy said. “I get this feeling that we are all collectively holding our breath waiting for the next shoe to drop. It feels very tough to have a small business in this environment.” Sellers are also managing an ever-changing trade landscape. Trump was initially going to raise tariffs in April, then ping-ponged for months until implementing the bulk of the new tariffs in August. Then, a federal appeals court ruled August 29 that Trump’s most punishing tariffs, including those imposed on China, Canada and Mexico, were illegal. The court’s decision won’t be implemented until mid-October, however, and the Trump administration has asked the Supreme Court to hear the case, so it’s unclear where it all will end. All of it means sellers are unsure what affects them or will affect them, which makes it next to impossible to plan, said Carley Zuercher, an Etsy seller who also does coaching and consulting for small business owners. Many of her clients are moms who opened small businesses on Etsy because it afforded them the flexibility they were missing in the American labor market. All of that now hangs in the balance, Zuercher said. “It’s incredibly overwhelming for small businesses and for women who are doing a lot of other things. We’re moms who never get to turn off,” she said from Wichita, Kansas, where she was taking a call from a reporter and shuttling her 16-month-old around the zoo. Simply sourcing items in the United States may not be possible for everyone, she said. Most materials are more expensive to buy in the United States, and most women-owned small businesses don’t have the capital to take on the increased cost. If they are able to source items, it’s likely those products will be slightly different than their international counterparts. That means time spent taking new product photos, updating marketing and listings, communicating with clients about the change — and that’s assuming the product is good quality. “Just because it’s made in America it doesn't mean it meets your quality standards,” Zuercher noted. The list of “what ifs” is endless, she said. The few businesses that have been able to plan somewhat by buying items in bulk this summer ahead of the tariff increases will have to manage the physical and mental load of that decision, Zuercher added. “From an inventory standpoint a lot of them work from their homes and kitchens. Where are they going to put their products?” she said. “They're sitting on it. Having physical products sitting in your space can get really stressful. They have to sell it because they see it every day.” The tariff increases are already also impacting American buyers, too, who are being shut out from purchasing items from small businesses overseas. In the United Kingdom, where a 10 percent tariff rate is now in effect, sellers who rely on American customers are overwhelmed trying to manage the changes, said Lauren Keating, a Manchester-based Etsy seller and coach who works with other Etsy businesses. “The tariffs came in so fast that as sellers we weren’t sure who pays them, how to collect them, how much they’d be, or how to build it into prices,” Keating said. Some sellers she works with rely on U.S. customers for half of their orders. They are contending not only with higher prices, but with a logistical and customer service headache. There are worries of delays at customs and longer shipping times, unexpected bills for U.S. customers and possibly negative reviews from frustrated customers that could impact the reputation of their shops. “For lots of small businesses,” Keating said, “the risk feels too high, so they’re choosing to stop selling to the U.S. altogether.” Bigger companies may be better positioned to manage all of that, but “Etsy isn’t made up of people shipping generic products from big warehouses,” she said. “It’s made up predominantly of women who at some point wanted to follow their creative passions, built something special from their dining room table or spare room — and end up totally disheartened when they realize they’re spending 80 percent of their time figuring out how to navigate headaches like this.” All of it could have downstream effects on the market of handmade goods that women have come to dominate, said Nicole Arnett Sanders, an expert in marketing and consumer behavior who is a former Etsy seller and now also coaches sellers. “Consumers love the handmade, but they don't want to pay those prices when they go up,” she said. “These policy changes, they are forcing the sellers to choose between absorbing unsustainable costs or losing customers to cheaper, mass-produced alternatives. It's really undermining a whole sector of women-owned businesses and creatives.” For Abernethy, small business ownership was a pathway to a life that gave her the flexibility to “pursue my passion and be a present mom to our kids.” After her miscarriage in early 2020, she had a second miscarriage before becoming pregnant with a daughter. Her kids are now 4 and 6. Tariffs may have been put in place to bolster American companies, she said, but “at the core of it, it feels like small business owners are getting lost in the shuffle.”

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