How do the holidays affect businesses?
  • Category:
    Small Business Energy Savings
  • Published:
    October 28, 2021

How Do the Holidays Affect Businesses?

The holiday season brings excitement and changes in buying behavior. How the holidays affect small businesses varies by industry. Some businesses see transactions skyrocket while others experience a slowdown. In either case, understanding how the holidays affect businesses–yours in particular–will help you be ready and keep your operations resilient through the season.

3 ways the holidays can affect your small business

Spending patterns change during the holidays as people break their normal routines. Understanding how these changes will affect you is important as you plan running a business during the holidays.

1. Changes in revenue

Businesses in some industries see more revenue in November and December than the other months combined. And for others, these months are a revenue low point. Handling the sudden surge in business or decline can be challenging. You might have to quickly staff or stock up–or do the opposite.

2. New marketing needs

Ramping up marketing activities is a good way to take advantage of the holiday season and maximize sales during this peak. You might wonder: Why is holiday marketing important to a business? Seasonal messages can drive choice in a high demand time. For other companies, marketing won’t make a difference during a seasonal downturn, so dialing down efforts makes sense.

Companies that are in a holiday lull, however, might use clever marketing to pre-sell goods and services for future consumption. You could try marketing gift cards and reaching your customers digitally.

3. Increased competition

If business is booming for you during the holidays, chances are that it will also be booming for your competitors. That said, one important factor to consider as you prepare for the holiday rush is what your competitors are doing. With everyone jostling for a bigger share of the holiday profits, competition can be fierce. You will want to look for ways to stand out and get an edge.

Which types of businesses benefit most from the holiday season?

If you are running a business during the holidays in one of these industries, you will likely enjoy a seasonal boom.

  • Retail stores. Whether it is shopping for gifts or decor, holiday shoppers do hit the stores. While online shopping has quickly grabbed market share, many people still enjoy going to physical stores.
  • Food and beverage stores. Hosting family dinners and parties with friends are at the heart of celebrating the season. Food and beverages also make for welcome gifts, further driving business volume.
  • Non-profit organizations. Giving to good causes increases during the holidays. Beyond being in a generous spirit, people are often eager to rack up a tax deduction before the end of the year. Making a gift in someone’s name is also a nice gift idea.
  • Services. During the busy holiday season, people often look for help, whether it is cleaning, delivering packages, or caring for pets. Service businesses often thrive during the rush.
  • Beauty and hair salons. People want to look their best for the festivities of the season, driving demand for these services.

How much do sales usually increase?

Sales increases during the holiday vary. In the last ten years, we saw a gain of 5.2% in 2017 and 2.1% in 2018. In 2020, the holiday bump was somewhere in the middle at 3.6%. How much will your business sales increase this holiday? It depends on your industry, the effectiveness of your marketing, what your competitors do, and, of course, the health of the overall economy.

Sales increase 3.6% for small businesses during the holidays

5 tips to prepare your small business for a holiday rush

If yours is a business that experiences a surge in sales, it pays to think about how to prepare for the holiday rush. Running a business during the holidays can be stressful. This might be a good time to start using smart assistants at work to help you keep track of everything. These small business planning tips can reduce that stress and help you make the best use of your resources.

1. Account for increased operating expenses

While sales and profits might be booming over the holidays, so can your operating expenses. You won’t just be competing for customers. You might also find yourself competing for staff and stock.

Prices can climb for just about everything during this high demand period. Should the weather turn wintery cold, small business energy consumption can go up. As you plan, make sure that you leave room in your pricing and promotions for enough margin to cover these increased operating expenses.

2. Determine your holiday marketing plan

Planning how you will market your business over the holidays will help your business stand out and help you get the most from your marketing dollars. Media prices go up during the holiday season, but you might be able to get a discount if you commit in advance. Creative resources might have plenty of time to develop your advertising and social media posts during a slow month like August, but might be swamped if you wait until October to get started.

Getting your marketing plans and resources in place ahead of time ensures your business doesn’t get lost in the crush. Promoting gift items, decorating your store for the holiday, and offering limited time deals can attract attention and close a sale.

3. Come up with deals and special offers

Holiday shoppers have come to expect special deals during the holidays. Black Friday, once an obscure accounting term for the day retailers start turning a profit in the year, has become a massive consumer promotional event.

Small Business Saturday promotions have also emerged as a way to draw holiday shopper attention to local stores. Buy-one-get-one free offers, gift with purchase, sampling events, and loyalty program kick-offs are some examples of promotions that can boost your revenue.

4. Set your employees’ schedules ahead of time

You can win the competition for good holiday help by offering employees the ability to plan ahead. In addition to offering a competitive wage, you can attract and keep good workers by working with them to set their schedules around their holiday obligations and needs. You will help them juggle their time commitments as you ensure you have enough staff to handle your holiday business.

5. Share your business’s holiday hours with customers

Your customers are likely to be extra busy during the holiday season. You can help them out–and create more revenue opportunities–by opening early and staying open late. Be sure to let customers know you are changing your business hours to accommodate them so that they can plan their shopping.

How the holidays affect small businesses varies by industry and your individual business. When you prepare for the holiday rush with plenty of advance thinking, you can have all the pieces in place to make the most of the season and keep your business resilient.

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