As we approach November, businesses and customers are preparing for the holiday shopping season. Events like Black Friday, Small Business Saturday, and Cyber Monday are great opportunities for companies to get more transactions.
In 2020, the Thanksgiving weekend attracted more than 186 million shoppers. Most of these customers were encouraged by various deals and discounts. However, setting a budget plan for the Black Friday shopping season can be confusing for some business owners – you still have to earn something while offering big discounts.
In this article, we will share 10 tips on managing your capital and optimizing the opportunities to gain more income during Black Friday.
Specifying your holiday budget before Black Friday can help you understand how much you can spend to save money during the upcoming holiday season. The process of holiday budgeting for a business is not too different from your personal budgeting, although it tends to be on a larger scale.
Make a list of expected expenses like marketing, inventory, and decoration for your store. If you notice that your capital doesn’t match the financial forecast, you might want to consider getting a loan. Just make sure that your decision is backed by substantial data on the market’s demand for your products or services.
Depending on your type of business and the market’s condition, you might not be able to attract customers only with discounts and other deals during Black Friday. However, you won’t miss out on the advantages if you know how to prioritize your spending.
Black Friday is a great time to enhance your business’s capabilities. Nowadays, online markets can be considered the best place to run a venture. So, why not use this opportunity to invest in tools like a business website to establish your online presence?
Many hosting providers offer discounts and deals during Black Friday, making building a website more affordable. Look for Black Friday web hosting deals, discounts for domain names, or half-priced premium plugins to enhance your site’s capabilities.
The holiday season is usually followed by a significant increase in demand, which means you need to make some elaborate preparations. In 2019, Thanksgiving and Black Friday raked in around $11.9 billion in online sales, a 20% increase over 2018.
However, the pandemic has changed the global buyer’s behavior. Since last year, investing in hiring Black Friday staff or improving the store infrastructure are no longer priorities for most businesses. It was estimated that in-store spending in 2020 decreased by around 30% from 2019.
In 2020, from October 1 to November, there was an increase in online shopping spending by 59%. Thus, consider shifting your focus to your eCommerce website.
It is also important to analyze the demand for your product to avoid overspending. Some industries that saw a significant rise in transactions during last year’s holiday season include beauty and personal care, multi-brand retail, and furniture.
Before deciding how much you want to spend for the Back Friday period, identify your business’s fixed costs. They include all of your recurring expenses, such as rent, payroll, taxes, and utilities.
These expenses are what allows your business to keep running normally. Therefore, fixed costs should always be your top priority. Furthermore, paying attention to them can give you a good picture of the ideal budget for the holiday shopping season.
Once you figure out your fixed expenses, subtract them from your capital to get a general forecast of the financial resources available for Black Friday.
Ensure you have the right amount of product inventory to fulfill the demand during this holiday shopping season. Running out of stock at the peak trading season means you are missing out on plenty of potential transactions.
Take a look at your previous sales data to understand which products you need to prioritize and how much inventory you need. Depending on your products, you may also want to consider preparing stocks for upcoming holidays like Christmas and New Year’s Eve.
However, keep in mind that overstocking may cost you in the long run. If you don’t have enough data to back up your decision to increase product inventory, it might be better to play it safe and stock regularly.
Since most of the holiday sales this year will most likely happen online, don’t forget to optimize your inventory for shipping.
Social media marketing is essential for most businesses since around 76% of customers purchase a product after seeing it in a brand’s social media post. Thus, these platforms can be effective in engaging audiences and influencing their buying intent.
Therefore, investing in social media marketing can be a good idea to increase your sales during this Black Friday weekend. Utilize a content calendar to prepare various engaging content to raise awareness of your Black Friday deals.
Besides, impressions for social media advertisements increase by 20% year over year. Thus, it might be helpful to create some social media ad campaigns to broaden your reach if you have enough budget.
In 2019, Black Friday’s global cart abandonment rates reached nearly 75%. This high number means that many eCommerce businesses lost a large percentage of their potential transactions because customers leave their online shopping cart before finishing the check-out process.
Some of the top reasons why people abandon their shopping carts are related to the checkout process. In fact, around 28% of respondents think that some eCommerce sites have an overly-complicated checkout process.
Therefore, a more straightforward and convenient checkout process can encourage customers to finish their purchases. Most importantly, make sure that the final phase of the transaction is as easy as possible.
Consider adding more payment methods to give customers more flexibility. Make sure that you use a secure and trustworthy payment gateway to maintain clients’ confidence in doing transactions on your website.
Preparing an emergency plan is a big part of running a business. Even after thorough research,
it is difficult to predict what will happen during this holiday season, especially with the current situation.
COVID-19 has made many aspects of the commercial industry unpredictable. Since the pandemic doesn’t seem to end anytime soon, it is in your best interest to prepare for various unforeseeable scenarios.
Prepare a contingency fund for your business that can cover most of your core expenses. If you have a limited budget with little room for savings, consider using a business credit card for emergencies.
The entire Black Friday weekend can be hectic, and it is easy to lose track of various important aspects of your business. Keeping track of your financial situation throughout the holiday shopping season is crucial so you would have data for future reference.
Take notes of your expenses starting from the preparation process for Black Friday. How much do you spend on marketing campaigns? Are the discounts and deals actually increasing your profit? These answers have to be based on your financial data.
If you notice overspending this Black Friday, consider toning down your Black Friday sales or shifting your effort to different products.
Offering generous discounts for your products can attract many customers and drive more sales. But without strategic pricing, you might end up risking your profit margin and decreasing the value of your products.
Determine your main objective for this holiday shopping season. What are your revenue, sales and profit goals? Are there any specific products you want to sell off? Once you answer these questions, try to find the most strategic pricing structure for your products.
Some effective ways to promote your products during Black Friday include offering product bundles or quantity discounts, giving special discounts to loyal customers, and providing huge discounts on old inventory that needs to be moved.
Regardless of what you expect from Black Friday, the best practice is to do thorough financial planning to make the most of the opportunities. However, many factors such as COVID-19 might significantly impact your result.
But if you plan accordingly, you can keep your business running smoothly in most of the cases.
In this article, we have looked at 10 tips on how to manage your budget during Black Friday and increase your potential to gain more income:
- Set holiday budgets
- Prioritize your expense
- Anticipate buyers’ behavior
- Plan all fixed costs
- Check your product inventory
- Plan social media budget
- Optimize checkout process
- Prepare for unpredictable scenarios
- Keep track of your finance
- Use sustainable pricing strategies
Now that you know how to set a financial plan for your business during the Black Friday period, get ready to receive an increase in demand for the holiday season. Good luck!