The holidays are fast approaching and many small businesses are adding "record-breaking revenue" to their wish lists.
A recent survey from Accenture revealed more than 40 percent of shoppers plan to spend more this year than they did in 2014. This can signal tremendously prosperous opportunities for retailers given how much money is at stake each holiday season – somewhere around $600 billion according to a 2013 report from the National Retail Federation.
Small businesses looking to lure customers away from big box stores and other larger competitors may have to spend money to make money. Where should these companies invest their cash to really rake in the revenue this December?
"The amount of revenue coming in directly relates to how much can be invested."
1. Cash flow
Every conversation about spending intelligently on a small business should start with cash flow – the amount of revenue coming in directly relates to how much can be invested. Though business owners might dig deeper to get the most out of the holiday season, they should also observe a few important rules.
For those in a service industry, California's Small Business Development Center recommends requiring at least a small down payment on all purchases so owners aren't left footing the bill until point of sale. Additionally, when plotting out expenses to balance against revenue, small businesses should divide recurring operational costs from suppliers and infrequent purchases from others to get a more well-rounded picture of their spending.
2. Inventory management
To provide customers with a wide selection of all available products, all businesses will ramp up their storeroom operations, including small businesses. That said, adding quantity and diversity to an inventory, even temporarily, can upset organization for the whole year and cost a business considerably in lost or damaged items.
Small businesses looking to prevent these problems should first consider hiring temporary workers or at least reallocating a few employees to manage the extended inventory. Moreover, owners must starting thinking toward strategies for how better SKU segmentation can drive sales. For example, if popular products are lumped in with the rest of the stock, it could be difficult for employees to find items in a timely fashion. This can not only send customers to competitors, but also create operational issues in-house.
3. Local Marketing
Small businesses that show a little hometown love this season may end up making out like holiday bandits. A QuickBooks consumer survey found nearly three-quarters of customers were willing to spend more money on products from local small businesses than big name competitors. While many organizations have found a lot of success investing in online advertisements and social media campaigns, putting capital toward attracting customers in the immediate area may have a greater impact come New Year's Eve.
Equipment and business industry piece brought to you by Marlin Equipment Finance, a nationwide provider of commercial lending solutions for small and mid-size businesses. Marlin's equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which include manufacturers, distributors, independent dealers and brokers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.