Businesses of all sizes and consumers alike are feeling it—the supply chain has a kink, lots of worldwide kinks, actually. Goods are stuck. There aren’t enough longshoremen unloading ships, truck drivers driving goods from the ports inland, or postal workers keeping packages moving. There aren’t even enough shipping containers or cardboard boxes to keep up with demand. The Biden Administration created a Supply Chain Disruptions Task Force this summer and is working to iron out the kinks. But for now, we are watching a real-life economics lesson play out—when supply decreases and demand increases, prices increase, too.
The supply chain bottleneck affects small businesses, who generally have smaller cash reserves, particularly hard. Plus, lost sales and angry customers pose a greater threat to small businesses who depend on every sale. But take heart. While the powers that be work to untangle the supply chain, small businesses can take action to protect their relationships with customers, followers, and fans.
- Be transparent with customers. Use your website as the electronic billboard it is. Tell your customers how the global supply chain affects your business and your ability to meet the speedy shipping times they’re used to. And you didn’t build your social media presence for nothing. If you communicate with your customers honestly, take responsibility for your part, and ask for patience, customers will respond. If a customer’s order is particularly delayed, an email thanking the customer for her order, recognizing the delay, and maybe offering a future discount code will go a long way. You might also suggest customers get holiday orders in early to alleviate stress and avoid disappointment.
- Pivot, again. Pivot is the business buzz word of 2020 and 2021. Although we may all be tired of talking pivots, being nimble is a huge advantage that small businesses have over large ones. Do you have enough cash and space to stock up on supplies? Can you change your products or packaging so it lines up with materials that are easier to get? Can you find new suppliers, as many as possible? Is it time to consider a price increase so you can pass on increased supply-related costs to customers? Would some of your customers would be willing to wait for delivery in exchange for a future discount or freebee?
- Update your website terms of service. The terms of service on your website tell your customers what to expect when they do business with you. As important, it defines your and your customers’ legal rights and obligations. Don’t let your business be legally obligated to outdated shipping terms—change them. If it’s taking longer to ship orders because you can’t get supplies, if customers should expect orders in 4 weeks, rather than 10 days, and if USPS tracking information is often inaccurate because of problems at USPS, say so. Your business is not responsible for the supply chain’s breakdown. But you are responsible for honoring the promises in your website’s terms of service.
- Update your terms of service on third party sites. If you sell to the public on Etsy or sell wholesale on Faire, for example, update your shop policies (g., shipping time, order prep time, and estimated arrival window) to match the current supply chain reality. Better to be up front about shipping delays than lose the customer because her order inexplicably sat at a Toledo, OH post office for three weeks.
- Force Majeure is not mumbo jumbo. Supply chain issues, the COVID-19 pandemic, and weather (hurricanes, tornados, wildfires) are all acts of god, called force majeure in contracts. Force majeure clauses describe what happens when an act of god keeps you from meeting your obligations. While force majeure clauses might have once been part of the seemingly boilerplate sections at a contract’s last few pages, their importance is front and center now. If your agreements don’t have one or if yours isn’t clear enough or broad enough, fix it.
The global supply chain may be outside of your control, but how you respond is on you. We’re here to help. If you need to modify your website terms of service or add a force majeure clause to any contract, we’ll get it done and for a $500 flat fee. If you don’t have terms of service for your website or a written customer agreement, we offer flat fees for those, too. And if you’re not ready for customized terms of service or other agreements, you’ll find templates in our contract store. We’re interested in learning about your supply chain challenges and suggesting ways to address them. Let’s talk.
Stephanie, owner of Melnick & Melnick, S.C. and self-described law nerd has been practicing law for over 25 years. Stephanie loves taking a deep dive into clients’ businesses to learn what makes them tick. She also relishes a well-written (short and simple) contract and is pleased to draft and negotiate all kinds, including leases, operating agreements, and terms of service.more posts by Stephanie →