Wednesday, June 19, 2024

Small retailers face many holiday obstacles

by BIZ. Staff

Many locally-owned small retailers earn 25 percent or more of their total annual sales during the critical holiday shopping period between Thanksgiving and Christmas. The business decisions made during this important period can directly impact cash flow for the following year.

Small retailers generally do not have the sales volume or financial resources to compete with the huge discounts offered by big national chains. Small business profit margins tend to be thinner than the big players, giving them less wiggle room on discounts.  The SBA compiled the following list of obstacles small retailers face during the holiday shopping season, and ways to avoid them in the future.

  1. Lack of inventory control. Inventory control is crucial for all small retailers, especially during the busy holiday season. Inventory equals profits, and knowing how much product to order, when to order it, and what items to order can make the difference between having cash in the bank, or aging inventory on the shelves.
  2. Hiring the wrong employees for critical positions. There’s a cost to hiring the wrong people for key positions. Small firms tend to have less layers of management between the owner and employees. Consequently, new hires must be able to perform with less direct supervision, and be motivated to get the job done right the first time. Avoid this issue by writing a detailed job description, and training new employees on how you want them to represent your business.
  3. Undercapitalization is a lump of coal no business wants or needs. Cash flow is the life blood of all small businesses. Cash flow allows a business to make payroll, pay suppliers and keep its doors open. Business owners can immediately increase cash flow by collecting accounts receivable in a timely manner; not keeping too much cash tied up in unnecessary inventory; and eliminating unprofitable account relationships.
  4. Not embracing online sales and social media. Recent U.S. Census Bureau reports show that more than $115 billion in e-commerce sales were made during the third quarter of 2017 — a 3.6 percent increase over the previous quarter.  As more consumers make holiday purchases online, it’s imperative that small retailers establish a retail web presence. Leverage Twitter, Instagram, and Facebook to promote one-day sales or plug special product lines and high inventoried merchandise.
  5. Not delaying the employee office party and social events. It’s sales crunch time from Black Friday until Christmas Eve. Office parties can cause distractions at a time when the business needs to be especially productive.  Too much food and drink can not only cause a nasty hangover, but also sidetrack employee and management focus. Consider moving the company party until after New Year’s Day and call it the annual thank-you event.
  6. Innovation and creativity lost. Historically, locally-owned small retailers beat their big box competitors by providing outstanding individualized customer service.  Black Friday and Cyber Monday creep has pushed large retailers into flooding the market with lost leader pricing on a wide array of holiday products.  Small retailers should take the offensive by selling creative and innovative products that can’t be found at the local mega mall. Create a unique customer experience that will draw shoppers to travel outside of their comfort zone and discover that out-of-the-ordinary shopping district with 10 trendy stores, not 100 traditional chain stores.

For more information on ways the SBA can assist your small business this holiday season, visit

Michael Ricks is SBA’s Louisiana District Director

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