60% of small businesses are adopting cash flow tools before the holidays

By Brett Sussman.

Many small US businesses are preparing for the 2022 holiday season by prioritizing holiday cash flow, devising strategies to drive employee and customer retention, anticipating economic headwinds, and prioritizing sales through social media.

Small business lender Kabbage of American Express recently interviewed business leaders for its grand opening Small Business Holiday Reportwhich highlights the top trends among U.S. small businesses heading into the holidays.

Prioritize holiday cash flow

The survey data illustrates the importance of the holidays for small businesses, especially this year. Nearly one in four (24%) of companies surveyed said their upcoming holiday sales will determine whether their business can survive into the next year. Realizing the severity of this period, companies are prioritizing their health and growth by closely examining their cash flow.

60% of small businesses surveyed focus on investing in new tools as they consider cash flow management and rising costs. The main tools identified were marketing tools (23%) and payment transaction systems (for example, a credit line, a business checking account and a new payment provider) (20%). Similarly, respondents noted that overall business cash flow is the top concern for them heading into the holiday season (32%), followed by budgeting (25%) and inventory management (25%).

Data shows that small businesses are taking action to overcome these cash flow concerns. 21% of respondents plan to take out a small business loan over the holiday season, and 32% plan to use the loan to cover costs to support their business, from inventory bills to common cash flow gaps.

Keeping an eye on employee retention and customer attraction

To take full advantage of the upcoming holiday season, 64% of small businesses plan to increase marketing to attract customers. The top two strategies surveyed were sending seasonally targeted email campaigns (26%) and offering product bundles for the holidays (26%). Similarly, 25% of small businesses budget to offer promotions and incentives to customers during the holidays.

While 53% of small businesses plan to adjust their budget for additional vacation spending, employee retention is also a priority. The primary way small businesses surveyed are preparing their workforce for the holidays is by providing holiday bonuses to current and new employees (32%).

Anticipate economic obstacles

Data shows that small businesses are anticipating the impact of economic headwinds, such as supply chain challenges and rising inflation, during the holiday season and crafting a strategy to address them.

While 64% of respondents plan to prepare their business in some way for the upcoming season, the best way to do so is to stock up on inventory (30%). This supports data that 74% of small businesses are concerned about supply chain issues ahead of the season and 25% are diversifying the number of suppliers they work with.

Working to overcome these future challenges, 27% of small businesses are managing customer expectations and sharing realistic ship dates to protect against potential supply chain issues. Also, when looking at their cash flow, 30% of respondents plan to use the funds received from a small business loan to purchase additional inventory.

Take advantage of social media

In a progressively digital world, 46% of respondents reported that at least 20-30% of holiday sales will come from online channels.

Nearly half (47%) of respondents reported that at least 10% to 20% of holiday sales will come from social media channels. Facebook remains a key channel for marketing and customer acquisition as 53% cite Facebook as the top social media platform for earning the most revenue, followed by Instagram, YouTube, LinkedIn, Twitter and TikTok. This is in line with our last one Small business recovery report who found that small businesses are increasingly capitalizing on social media advertising; 47% report it has the biggest impact on customer acquisition. Of which, Facebook was also reported as the top preferred platform for advertising, nearly double that of the second pick, Instagram.

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Brett Sussman is Vice President Head of Sales & Marketing, Kabbage at American Express

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