6 Tips For Small Businesses To Navigate A Tough Holiday Season

by Jacques Sprenger on 2008-11-0920

It is already quite clear that consumers will spend less this coming holiday season: “Evidence of a recession piled ever higher Friday, with new figures showing Americans are spending less..” according to a recent Yahoo Finance page. What should small businesses do to avoid becoming extinct? Here are a few thoughts I had on this matter:

Tips For Small Businesses To Weather A Slow Holiday Season

1. Bank enough savings.

It may seem fairly obvious, but just like regular consumers, businesses should keep enough savings to help tide them over slow periods. If the company has been in business for more than 5 years — the typical cut-off point that determines whether it will survive — it should not have to worry too much, unless it belongs to a niche that is heavily dependent on retail shopping holidays, where it may receive more than 50% of total annual revenues through holiday sales. A savvy business owner will have made provisions for a rainy day and will have sufficient reserves to weather the recession storm (usually 1 to 2 years at the most). Of course, certain expenses will have to be cut to avoid falling into the red zone.

2. Emphasize good customer service.

” With economists predicting one of the weakest Decembers since 1991, merchants must put their best foot forward for top customers.” ~~BusinessWeek, Sept 2008

Any business should capitalize on their strengths and advantages. In the case of small businesses, it’s their ability to attend to their customers in more personal ways or to have the flexibility to provide special treatment to their clientele.

For small businesses, it is necessary — no, imperative — to exploit the only advantage they have over big chains: a personal relationship with their customers. Many repeating clients want that close contact, just like the barfly uses the bartender as surrogate shrink. At local shopping areas, customers have a chance to socialize at the same time they shop for the family.

small business, holiday season
Photo by mollypop

3. Strategize on attracting the deeper pockets?

“With shoppers squeezed, the National Retail Federation expects year-over-year sales to rise just 2.2% for November and December, half the average rate of the last decade.” ~~BusinessWeek

As you can see from recent economic and retail forecasts, business experts are predicting (often, inaccurately) an increase in sales over last year. But I personally foresee a flat spending season for my family. With many other consumers thinking the same way I do, it could be spell bad news for business owners. Thus, independent retailers must be prepared, as most low-middle class shoppers will certainly focus on price more than on quality. The inescapable conclusion for them is to attract wealthier clients who don’t seem affected by the recession.

4. Look to web and online opportunities.

If at all possible, consider opening a “store” online to accompany your brick-and-mortar business. You may garner a few more customers that way who will be attracted by your well presented website. In any case, it will give you some cheap publicity that will encourage more visitors to your physical facility. With more customers, don’t forget to emphasize friendliness and personal attention, something big stores may be less inclined to match (see #2).

5. Watch your inventory.

Large stock inventories mean large amounts of cash wasted. Try to find providers that deliver their products within a few days, so you can plan your orders with enough time to avoid stockpiling mountains of unsold items. Large retailers have the clout to reduce their inventory to near zero, through an automatic reorder process to the factory. So see if you can find a way to come close to that ideal process.

6. Try out affordable advertising and beef up promotions.

When things are slow, businesses usually cut their marketing budgets accordingly. But this is precisely when you can easily get a leg up over your competitors by simply focusing on a better advertising strategy. Give out pamphlets to high school students if that’s your market. Try to ally yourself with complementary businesses (you sell tools, they sell lumber) to advertise together and share the costs. Trim your workforce and make use of cheap labor (college students or interns) during the holidays. With a slower economy, you may be able to secure lower fees and rates for the services you need. There’s no better time to be creative and aggressive: sitting behind the counter won’t bring any customers.

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 17 comments… read them below or add one }

Matt Hanson November 9, 2008 at 12:40 pm

Good writing. Keep up the good work. I just added your RSS feed my Google News Reader..

Matt Hanson

Eric J. Nisall November 9, 2008 at 2:59 pm

I agree with this post, but I strongly empahsize the customer service promotions.

Superior customer service is the key to any lasting business relationship whether it is a service or product being offered. Most people will ermain loyal clients/customers even in rough times if they can expect to receive all the attention they require and need at all times. Unfortunately, this seems to be the one area that gets cut first from budgets in most cost-savings plans. People always complain about poor customer service, and that is one time when the saying “any publicity is good publicity” is horribly wrong. I’m actually working on an article on this topic as I write this.

Regarding advertising and promotion, that is the best way to attract new business and as anyone who has ever run a business knows, expanding a customer/client base is the best way to grow a business. The promotions don’t have to be huge, but ensure that they will benefit customers and draw new ones in. As you say, being proactive is the only way to go. Sitting on one’s hands will accomplish nothing but waste the most valuable of resources–time.

Kurt November 9, 2008 at 3:57 pm

I agree with the customer service aspect, as poor customer service will prevent me from ever visiting a store or business again. There is a reason Fry’s get’s all my money, and not Best Buy, which is sad, because I spend over $1000 a month at the stores (i’m a computer fixer for my clients) Same thing applies to small businesses, if I have a poor experience, someone else will get my money, no matter what kind of sale there is, or how close they are…

Silicon Valley Blogger November 9, 2008 at 4:21 pm

I absolutely agree. I don’t know why there are businesses out there that don’t get the point with customer service.

Once you alienate a customer, that situation can snowball, such as when that very customer begins to badmouth a business or service to their friends, family and neighbors. Word of mouth can also spread to one’s detriment.

In the online age, it becomes even more important to preserve your reputation among customers. It’s just too easy to get negative reviews through the internet these days, and with more and more people searching the web for information, a complaint or issue logged against you can haunt you and cost you some business.

Curt November 9, 2008 at 10:10 pm

Great post. Small businesses have to focus on their advantages as you suggested.

Cassandra November 9, 2008 at 10:39 pm

Emphasize good customer service and affordable advertising and beef up promotions.

I agree. Mostly, customers are looking for affordable products or services in order to optimize their budget, especially during the holiday season.

Small businesses with many competitors should provide these two qualities in order to get and retain customers.

AmeriGlide November 10, 2008 at 7:56 am

I think that #4 is something most businesses should do, regardless of the economic state. Even if it is just an eBay store or a site that gets people to give you a call or visit your store, I think having some online presence is very important in today’s market.

Botham November 11, 2008 at 5:13 am

I completely agree with you. Tip No. 4 is one of the best ideas for getting visitors to your store or shop. Online activity for a business may be a great idea, especially in this recent market.

Jacques Sprenger November 12, 2008 at 5:02 pm

I want to thank all those who took a little time to comment on my article; but I all I did was to expound the virtues that made this country great when it chose capitalism as an economic system: mom and pop stores used to be the place to chat and buy something for the house. You got credit sometimes without the modern day hassle bank put one through; it was simply trust.

I profoundly dislike to go to Wal-Mart, simply because personal attention is non-existent. Yet I go due to the great prices it offers (OK, my wife drags me there; she handles the budget). Just as we now chat online with anonymous entities, we have also lost the warmth of close contact with human beings. Progress does exact a tremendous price!

Austin Real Estate Broker November 12, 2008 at 6:57 pm

Hi guys and gals,
I agree with the customer service tack on surviving the holiday and any down season. I was in my car wash about a year ago and found a poster on the wall. It read:

Customer Creed
1) The customer is our reason for being here.

2)It takes months to find a customer and seconds to lose one.

3)Always be courteous to the customer.

4)Always do more than expected for the customer.

5)Never promise more than we can deliver.

6)Continually look for ways to improve our value for the customer.

I liked it so much I wrote it down (as you can see from above!) and keep it in my wallet to make sure I always focus on my clients.

Great post,

Jason November 13, 2008 at 11:56 pm

7. Only invest available funds. If you decide to spend money on marketing campaigns you can’t yet afford you may end up broke.

That’s what happened to me at least. Affordable successful marketing ventures is extremely important.


Roger Hamilton November 16, 2008 at 12:05 am

Small businesses have some things which big ones have and they should work on those to maximize their efficency.

Bonnie November 17, 2008 at 11:51 am

Customer service is by far the greatest deciding factor in where I shop. I will happily pay more or drive a little more out of my way to support a local independent business with great customer service, regardless of cost savings elsewhere. One other thing I have learned as I get older is that you do not have to put up with horrendous service. There’s a reason managers are paid more. They need to know when customers are really treated badly, so in extreme situations, I call the business to let them know. I also call and send positive email comments when I receive exceptional service.

Jacques Sprenger November 18, 2008 at 2:51 pm

Bonnie, I congratulate you on your strong values. You are willing to pay more as long as you get better service. Just remember that not everybody can afford to do so. Many families just get by with shrinking finances while the dollar buys less and less. They have to watch every penny.

SILVER CROSS January 2, 2009 at 9:13 pm

The importance of having a strong web presence can not be underestimated. The ideal is a combination local representation with a thorough web statement in the search engines and the social media arena.

Tim Andren April 10, 2009 at 8:07 pm

Sound advice. Social media offers many marketing opportunities for small business owners. It’s important for them to get sound advice such as this article before diving in though.

Bali Villas September 18, 2009 at 9:20 pm

I love point #4 ! now, with the power of facebook and twitter, we can sell our product or promote our product in both social networks I’ve mentioned.

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