’Tis the season to be jolly, not broke. Many small retailers earn 25 percent or more of annual revenues during the Christmas shopping season. Consequently, stagnant holiday sales can trigger a death spiral in the coming year.
The Small Business Administration has compiled a list of six hurdles small retailers face during the holiday shopping season and ways to avoid them.
Lack of inventory control. Inventory control is crucial for small retailers, especially during the busy holiday selling months. Knowing what products to order, how many and when can make the difference between having cash in the bank or aging inventory on the shelves.
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. New hires must be able to perform with less direct supervision and motivated to get the job done right the first time. Avoid this issue by writing a detailed job description and immediately instilling a sense of extreme customer service in each and every new employee.
Undercapitalization kills the holiday spirit. Cash flow allows a business to make payroll, pay suppliers and keep its doors open. Business owners can increase cash flow by collecting accounts receivables in a timely manner. Don’t keep cash tied up in unnecessary inventory. Eliminate unprofitable account relationships.
Not embracing online sales and social media. By one estimate, more than $1.2 billion in e-commerce sales were made during the first three quarters of 2016 — a 15.7 percent increase over the same period last year. It’s estimated that by the end of 2017, more than 60 percent of all U.S. retail sales will involve the web. Small retailers must develop a retail web presence as well as leverage Twitter and Facebook to promote sales or plug special product lines and high inventoried merchandise.
Not delaying the employee office party and social events. It’s sales crunch time from Black Friday until New Year’s Day. Office parties can cause distractions at a time when a business needs to be especially productive Consider moving the company party until after New Year’s Day and call it the annual thank-you event.
Innovation and creativity lost. Small retailers typically beat big box and online competitors by providing outstanding customer service. Internet sales events have pushed large retailers into flooding the market with lost leader pricing on a wide array of products. Small retailers can take the offensive by selling creative and innovative products that can’t be found elsewhere or online. Offer a unique customer experience that entices shoppers to travel outside their comfort zones and discover shopping districts with trendy stores.