Smart Moves In Tough Times: What Businesses Can Learn from..

Tariffs, economic shifts, and competition will always be part of the business landscape. Small businesses are often caught in the middle when tariffs are introduced, especially between major trading partners. Tariffs raise costs, whether for imported raw materials, finished products, or components.

What may seem like a simple pricing decision at first is, in reality, a strategic game. This is where game theory, the study of decision-making when multiple players are involved, can help to navigate uncertainty with confidence

Now comes the hard decision:

Do you raise your prices to cover the added cost?
Or do you keep prices the same and take a hit on your profit?

It’s Not Just Your Move—It’s Everyone’s Game

In business, every decision you make and every decision others make together shape the outcome. Instead of viewing your choices in isolation, it’s essential to think a few steps ahead, asking,

“If I take this step, what will others do? And how will that affect me?”

This mindset helps you anticipate reactions, adapt your strategy, and make smarter, more informed decisions.

Two Shops, One Dilemma: A Real-World Scenario

Imagine two small shops in the same town selling similar imported goods. A new tariff raises their costs.

If both raise prices, customers might go elsewhere.
If both absorb the cost by keeping the same price, their profit margins shrink.
If one raises prices and the other doesn’t, the lower-priced shop might win more customers, but at the risk of financial sacrifice.

Tip for business owners: Data assets to find your sweet spot. The right balance, where prices are low enough to keep customers happy, but high enough to stay profitable.

This situation isn’t just about numbers. It’s about strategy, and it’s exactly the kind of challenge game theory helps prepare for.

How to Make Smart Moves as a Small Business

Think long-term, not just about surviving today. Your reputation and relationships matter.
Observe competitors but stay true to your brand and your customers’ needs.
Get creative—try bundles, alternate suppliers, or small changes in product offerings.
Consider cooperation—joint sourcing or shared marketing with local peers can ease pressure.
Stay consistent—customers value trust and stability, especially in uncertain times.

Game theory doesn’t offer a one-size-fits-all solution, but it encourages calm, thoughtful decisions by helping you see the bigger picture.

Takeaway: The smartest move isn’t the loudest—it’s the one made with others in mind. Don’t just react—strategize. Calm thinking wins the game.

Tags: #Small Business Tips, #Business Strategy 2025, #Tariff Impact On Business ,#Game Theory For Entrepreneurs, #How To Handle Price Increases

Nethmi Chethika De Silva | Consultant AI and Data Science at Hatchyard Inc.

https://www.linkedin.com/in/nethmi-chethika-de-silva

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Lifethroughdata16@gmail.com