Should Small Businesses Participate in Black Friday?
Firmly cemented in American consumer culture, Black Friday is expected to again be the busiest shopping day of 2019. Mere hours after eating pounds of turkey, stuffing, and pumpkin pie, shoppers venture to the stores to score some of the best deals of the year. They see it as a way to get a jump start on Christmas shopping. Though it’s still mostly large-scale retailers that offer the deepest discounts, more small businesses have joined the game in recent years.
The total amount spent by shoppers on Black Friday in 2018 was $715.5 billion, according to The Balance. What’s even more noteworthy is the average amount spent per shopper, at $1,007.24. This represents an increase of approximately 4.3% over Black Friday 2017 sales. The numbers show that shoppers are ready and willing to spend on Black Friday. So, rather than leaving it to large-scale retailers, if you’re a small business owner, why not consider joining in?
The truth is, you still might be wondering whether the additional time and investment are worth it. Below, we present some pros and cons of participating in Black Friday you may not have considered.
Pro: Increase Awareness and Engagement
One perk of offering Black Friday deals is engaging your customer base to return to your store for major holiday shopping. To get current customers to your store after Turkey Day, you could create a promotional email that specifies some of your biggest ongoing deals. In addition to sparking interest in your current customers, a Black Friday sale can raise awareness and attract new people to your business during your busiest time.
Con: Risk of Running Out of Inventory
There’s no greater buzzkill for eager Black Friday shoppers than sold-out merchandise. Without enough preparation, you could run out of your most sought-after items, sending customers out the door empty-handed. You can turn this con into a non-issue by ensuring well ahead of time that you have enough inventory to turn your shop-goers into happy customers.
Pro: Get Rid of Old Stock
Is there an item that’s been taking up space on your shelves for too long, and you just can’t move it, no matter how hard you’ve tried? With certain products that just don’t seem to be selling, try to intrigue buyers to purchase them with a Black Friday price reduction. Of course, you’ll still want to make a profit on these goods. But the sacrifice of a few dollars’ profit may be worth the extra shelf space, which you can then fill with your best-selling items.
Con: Schedule Extra Staff
Around the holidays, you may need to hire seasonal staff to account for higher volume and traffic. If you decide to run a Black Friday promotion, you’ll need to make sure you have enough staff scheduled to meet the increased demands. With extra employees working on Black Friday, you’ll be expected to pay more upfront costs in hourly wages. So, depending on how tight your purse strings are this season, this may be an issue.
Pro: Show Current Customer Appreciation
You may choose to use Black Friday as an opportunity to reward current customers for their business and their loyalty. Friends and family promotions or customer loyalty incentives work well in recognizing your best customers and creating goodwill going into the holiday season.
Con: Working on a Holiday
Working on Black Friday can be particularly stressful for employees, especially if they don’t know the schedule in advance and don’t have to time to plan. With so many people off the day after Thanksgiving, making your staff work one of the busiest days of the year can create resentment. If you are going to be open on Black Friday, be sure to let employees know well in advance what is expected of them. Maintain morale with positivity and staff incentives and always recognize a job well done.
Pro: Shift Your Focus Online
As consumer focus continues to shift to online shopping for the holidays, the more you can host and offer through your website the better when it comes to Black Friday. That’s not to say that you don’t offer any in-store specials, but perhaps heavily discounted items or items of which you expect to run out of stock can be offered online. It’s also easier to extend out deals online through the weekend and build momentum going into Cyber Monday.
Con: It’s Not “On Brand” to Participate
Depending on the perception of your business and your brand, participation in Black Friday could actually lead to a negative impression and brand erosion if not well thought through. Are your products handmade and one-of-a-kind? Are they considered quality “luxury” items that customers are already willing and able to pay full price for? If so, consider whether participating in Black Friday is worth the potential impression among customers that you’re desperate or your brand is in trouble.
Prepare for Black Friday with a Small Business Loan
If you believe the pros outweigh the cons, you might be ready to take on a Black Friday promotion. When you need fast working capital — to pay your staff, stock up on bestsellers, or create promotions — consider a small business loan. Unlike large-scale funding from banks, a small business loan from an alternative lender features a fast, simple application process and quick approvals. That gives you more time to focus on your Black Friday plan of attack!
Ben Gold is president of QuickBridge, a privately held financial services firm providing small business loans and short-term working capital solutions for businesses nationwide. Based on its growth, QuickBridge has ranked two consecutive years on the Inc. 500 Fastest Growing American Companies list. Ben is a recognized thought leader in the fintech space and a contributing member of the Forbes Finance Council.