What the TikTok Ban Means for Small Businesses

April 17, 2024

TikTok has quickly become the go-to social media platform for many users, fueled by its focus on quick-consumption short-form video content. However, the China-based company has also become a political lightning rod, resulting in attempts to restrict the app in the U.S. The most serious of these has passed one house of Congress, raising the specter of a ban.

This opposition to TikTok has sparked concerns among small-business owners who heavily rely on it for marketing and revenue generation. In pushing back on the movement to restrict the platform, entrepreneurs emphasize the value TikTok provides. These arguments spotlight the pivotal role the app performs in boosting sales and securing income through brand deals and digital courses.

Understand what this debate means for your small business. This blog will outline the recent legislation making its way through Congress. You’ll also learn more about TikTok’s potential benefits for small business and what you can do in the face of the controversy.

What is the recent proposal passed by the House?

In mid-March, the U.S. House of Representatives passed a bill that would ban TikTok in the U.S. unless it sells itself. The legislation has several hurdles to clear before it becomes law, requiring both passage in the Senate and a signature from the president. In the past, the Senate has shown skepticism in passing such a measure, while the White House has signaled a willingness to consider it.

Although the TikTok ban is far from a done deal, it represents a major shift in lawmakers’ stance towards social media. The proposed law is the first bill ever to pass one of the houses of the national legislature that would ban a social media platform.

While there has been pushback on the proposed law on free-speech grounds, censorship isn’t the main impetus behind the push. Rather, U.S. lawmakers have cited security. TikTok is owned by a Chinese company called ByteDance, a fact that has raised concerns about data-gathering by a foreign government. The House action is also part of a broader movement against TikTok, which has included restrictions already passed in many states.

These security concerns set TikTok apart from much of the rest of the social media landscape. U.S.-based competitors like Facebook, Instagram, and X (formerly Twitter) would not be impacted by the current proposal. However, even if the restrictions remain focused on TikTok alone, rather than spreading to other platforms, they still present a major issue for small businesses if the ban moves ahead.

What has been the response from small business owners?

As noted, much of the rhetoric against a TikTok ban has focused on issues outside the world of business. For instance, a change.org petition opposing the measure cites "bipartisan overreach that ignores our freedom of speech." At the same time, experts have predicted a potential court fight related to the First Amendment if a ban is eventually put in place.

However, there are practical concerns beyond the free speech worries. Many small businesses have come to rely on TikTok. This financial component makes the ban a threat to many startups.

Many small businesses have come to rely on TikTok [for revenue growth]. This financial component makes the ban a threat to many startups.

To put a specific number on it, TikTok itself reports that nearly 5 million businesses have accounts. Typically, these entrepreneurs use the platform to connect with potential customers. Through this process, their companies can build a brand and spark revenue generation.

With a potential ban looming, many of these small business owners have pushed back. As just one example, CNBC profiled the operator of a boutique photography business who expanded the company's profile through the use of TikTok videos. The article also noted her fear that the platform would be outlawed. "I really hope that doesn’t happen, because I’ll be screwed," she told the business news website.

For this reason, content creators and business leaders have made their voices heard. A group of dozens of these concerned entrepreneurs congregated in front of the U.S. Capital in Washington, DC, in mid-March to protest the efforts to ban TikTok. Meanwhile, the petition from change.org, meant to signal general opposition to the TikTok ban, has gathered more than 108,000 signatures.

Why has TikTok been so beneficial for small businesses?

In a very short period of time, TikTok has become a phenomenon in the social media world. It has exploded in popularity, quickly becoming a force in the industry, making itself essential to an expanding group of small business owners.

Here are some stats that demonstrate the way TikTok has established itself as a major player in recent years:

TikTok separates itself from other social media platforms by its focus (consisting of small video uploads by users) and its ethos (extremely DIY). The fast-paced nature of its presentation (users quickly scrolling through the videos) perfectly fits the consumption pattern of the contemporary audience and has made the platform popular with a younger demographic.

Here are some of the factors that have fueled TikTok's relationship with small businesses:

  • Broad usage: A quickly growing, engaged audience creates a target-rich environment for expanding businesses.

  • Easy content creation: The type of content favored by TikTok can be created easily — a good imagination and a cell phone are sufficient ingredients.

  • Cost-effective marketing: Because of the DIY nature of TikTok content, viral posts can come at very little cost.

  • Opportunity for high engagement: The right content can easily find an audience among TikTok users.

  • Connection with younger consumers: As noted, TikTok's audience skews younger, opening a new set of consumers for small businesses.

What does this all mean for my small business?

As we've stated before, much of the discussion surrounding a potential TikTok ban has dealt with big issues and big businesses. In politics, there have been concerns about free speech and the role of government in media oversight. On the financial front, conversation has focused on the social media industry as a whole — how Facebook or Google’s YouTube might be impacted.

However, the trickle-down impact on small business should not be ignored. Looking at things from an entrepreneurial perspective, TikTok provides a significant opportunity to grow your customer base. However, given the controversy, you should be ready for any outcome.

On the one hand, be prepared to take advantage of the opportunity that exists today. On the other hand, you need to be flexible in the face of a changing regulatory environment. Make sure you can survive whatever happens in the corridors of power.

With that in mind, here are a few tips on how to respond to a TikTok ban:

Don't panic

If you already have a presence on TikTok, don't feel pressure to wind up those operations. Passing the ban is far from a sure thing. Meanwhile, there is room for compromise (such as TikTok selling itself or transforming into a U.S.-based business). Stay informed and make contingency plans. However, don't overreact to every headline.

Diversify your marketing

An overreliance on any one source of customers is a bad strategy in the long term. If a TikTok ban would cripple your ability to drive revenue growth, that might be a sign that diversification is needed, whether the proposed restrictions pass or not. Review your options and see if other opportunities exist elsewhere.

If a TikTok ban would cripple your ability to drive revenue growth, that might be a sign that diversification [in your social media strategy] is needed, whether the proposed restrictions pass or not.

Make your opinion heard

As a small business leader, you don't have the clout to halt a bill in its course. However, you aren't devoid of a voice either. We've seen elsewhere in this blog that other entrepreneurs have already spoken out against the ban. You should do the same.

Here are some steps you can take:

  • Partner with organizations that oppose the ban

  • Contact the lawmakers who represent you and let them know your opinion

  • Speak out on social media to energize your audience

How small businesses can confront the proposed TikTok ban

Stakeholders have made a strong argument in response to the proposed TikTok ban. Experts have highlighted the platform's positive economic impact, with substantial contributions to small-business revenue, GDP, and job creation. Meanwhile, they have also cautioned against the longer-term impact a ban could have, noting that it could potentially stifle entrepreneurship and innovation.

Those opposed to the ban have asked policymakers to carefully consider the broader economic implications before implementing such drastic measures. But what should you do about the looming ban? This blog offers a starting point, outlining how TikTok can help your business and how you can protect yourself from the possibility of increased restrictions.