Outlining your budget for the holiday season is essential in ensuring your small business is able to drive revenue without dramatically increasing expenses. This holiday season will be more important than ever, as small businesses look to rebound from the shutdown. Here we take a look at how to create your small business holiday budget.
Marketing Initiatives
An increase in marketing is essential to cut through the noise of all of the holiday promotions. “Whatever channels historically make you the most money, focus the majority of your marketing budget there. The U.S. Small Business Administration advises that brands should spend about 7 percent of their gross revenue on marketing if they bring in under $5 million annually. While this is the average recommendation, you should determine an amount that your business is comfortable with.”
Gifts And Bonuses
Company culture and employee satisfaction are important factors in the overall success of your small business. “Some small businesses give a bonus that's based on salary such as one or two week's salary, or a percentage of salary. Others give a small flat dollar amount to each employee. That flat amount varies by the industry and profitability of the businesses, but $50 to $100 are common amounts.”
Additional/Seasonal Inventory
“Demand forecasting is the first step in getting your inventory ready for the holiday shopping crowd. You need to look at your historical sales data and any current trends to predict what will sell during the festive season, how much stock you will need and set your sales targets.” Ensuring you don’t leave your stock room full, and also that you don’t run out of popular items, can be tricky. Analyzing sales data from previous years and paying attention to consumer trends can help you check this task off of your holiday wish list.
Increased Staffing
Hiring seasonal workers can be a necessary expense. “However well you prepare, temporary recruitment can be costly. To budget for a big seasonal hiring push, you first need to estimate the number of hires, taking into consideration drop-off and turnover rates from previous years. For short term work, new hires may not see a long term relationship with the company, and the stakes of simply not showing up to work are low.” Making sure your business is properly staffed during the holiday season ensures the quality of your customer service remains high regardless of how busy you are.
Sales And Promotions
Discounting your inventory will have an impact on your bottom line. Here are a few tips to ensure your holiday sales don’t damage your business.
- Focus on Target Markets Less Motivated by Discounts
- Offer Fewer but Bigger Discounts
- Increase the Perceived Value of Your Products
- Instead of Using Sales to Attract New Customers, Focus on Loyalty Discounts for Existing Customers
- Discount Brand Name Products
- Know What to Mark Down
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