How Small Businesses are Preparing for the 2022 Holiday Season

As small businesses head into the holiday season, which many rely on for significant sales, small-business owners are doing whatever they can to help ensure a profitable year-end. This is reflected in the Kabbage from American Express inaugural Small Business Holiday Report.

Highlighting the major trends among U.S. small businesses preparing for holiday sales, the report polled 550 small-business leaders across a variety of industries from late September though early October 2022. Results from the poll show how small-business owners are harnessing a variety of tactics to help promote brisk year-end sales.

“Small businesses understand the criticality of successfully navigating this time of year,” says Brett Sussman, vice president head of sales and marketing, Kabbage from American Express. “As we approach this holiday season, they’re making the necessary preparations and adjustments to win the holidays.”

Holiday Sales Predict Next Year’s Business

For many small businesses, this year’s holiday sales are an indication of how the company will fare in the coming year. The report found that nearly one in four (24%) of businesses surveyed revealed that upcoming holiday sales will determine if their company can survive into next year.

“My team and I have had many conversations about the significance of our holiday season sales,” says Beth Geddio, founder of State of Being Co., which offers multi-sensory experience products focused on helping people live more positive, purposeful lives. “Currently, we’re investing all our time and energy into our holiday strategies, including our first holiday pop-up shop. Our efforts will lay the foundation for how we strategically move forward in 2023.”

The small businesses polled are using the following methods for boosting holiday sales.

Anticipating Inventory and Shipping Delays

According to the Small Business Holiday Report, “while 64% of respondents plan to prepare their business in some way for the upcoming season, the top way they are doing so is by stocking up on inventory (30%).” The report also found that “27% of small businesses are managing customer expectations by sharing realistic shipping dates to protect themselves from potential supply chain issues.”

At online jewelry retailer Lucy Nash, the company has lowered inventory levels and are operating with expected shipping delays of up to seven days, according to the company’s co-founder Hannah Nash. “We've developed predictive tools that help our customers plan for potential delays,” she says. “Usually this takes the shape of custom shipping options and/or a tailored email outreach. We have found that both tactics are helpful in dealing with shipping delays and managing customer expectations.”

For the custom shipping options, Nash says they changed their default to five days for more popular items. “We have predictive algorithms for trending/popular items, so we can adjust shipping options dynamically,” she says.

The company also reaches out to customers through email regarding popular items with an offer to reward them if they agree to additional days for delivery.

“We will typically say: ‘Thanks for your order. Your item is incredibly popular. We want to make sure everyone gets their product when needed. Your item is in stock, but if you are willing to wait an additional four days, we will add a free pair of earrings to your order. Let us know if you are interested.’”

Prioritizing Holiday Cash Flow

The Small Business Holiday Report found that “60% of small businesses surveyed are focused on investing in new tools as they consider their cash-flow management and increasing costs this holiday season.” Fifty-three percent of businesses also plan to proactively adjust their budgets in preparation for additional holiday costs.

Nash’s company invested in Boardroom for financial reporting, which has helped with cash-flow management. “The platform helps us see our profit and loss statement, balance sheet and cash-flow statement in real time so that we can make fast and informed decisions about our business,” says Nash. “It also integrates with Xero, the cloud-based accounting software we use, so that we can quickly see how our business is performing financially.”

Using these platforms also allows Nash to take note of daily changes in revenue and expenses with the advertising costs built in. “This data helps us adjust our ad spend and expenses on a regular basis to optimize more efficiently,” she says.

Increasing Marketing Efforts

Not surprisingly, the report data shows that to fully capitalize on the upcoming holiday season, 64% of small businesses polled plan to increase marketing to attract customers. Such is the case at the Chocolate Pizza Company, which creates gourmet chocolate gifts.

“These are challenging economic times, so going into the 2022 holiday season we have invested more in marketing to attract and retain customers,” says the company’s owner, Ryan Novak.

“We've diversified our marketing strategy to include online, radio, and outdoor marketing channels,” says Novak. “Facebook, Instagram, and Google ads have been particularly effective, as we can target demographics and regions that give us the best reach. For example, with Facebook ads we tend to target the northeast, mid-Atlantic and Midwest regions since shipping costs for those areas are less expensive from our Syracuse, New York location, making customers more willing to finish the sale.”

For outdoor advertising, Novak has found that the visual nature of his products makes for particularly effective billboards that drive quite a bit of traffic to his brick-and-mortar store. “Radio is also a very cost-effective marketing channel for us to engage local consumers by promoting our store and online options,” he says.

Ben Kuhl, CEO of Shelf Expression, which makes custom, handmade shelves, has also increased marketing efforts for the holiday season in hopes of securing a larger market share.

“For us, Q4 is traditionally when we either experience stagnation and get lost in the noise or push for growth. This year, we've greatly increased our marketing spend by 300 percent in the fourth quarter leading up to the holiday season. This increase has mainly been tied to two marketing campaigns: Google and Bing pay-per-click ads (PPC) and social media marketing, the latter of which we use to raise brand awareness.”

Kuhl’s PPC campaigns target mid-conversion funnel visitors who have searched for keywords. “Our increased marketing budget for PPC has gone towards increasing our daily spend, as well as increasing our max bids for keywords that lead to sales more frequently than others,” he says, noting they are seeing a return on their ad spend.

Like 21% of poll respondents, Kuhl borrowed money this holiday period to cover operational costs. “We decided to take out a small-business loan to invest in our Q4 drive,” he says. “The loan has primarily been earmarked for marketing spend, as well as equipment purchases that will help streamline production and handle the forecasted increased demand.”

These are challenging economic times, so going into the 2022 holiday season we have invested more in marketing to attract and retain customers.

—Ryan Novak, owner, Chocolate Pizza Company

Capitalizing on Social Media

Data from the Small Business Holiday Report found that “almost half (47%) of respondents reported that at least 10 to 20% of their holiday sales will come from social media channels.” Fifty-three percent point to Facebook as the top social media platform to make them the most revenue, followed by Instagram, YouTube, LinkedIn, Twitter, and TikTok.

“We have heavily prioritized sales through our social media, as a large percentage of our leads come from Facebook,” says Sharie Wilson, co-founder with Tonya Thompson of DreamGirls salon and hair care brand. “We have also implemented product tags in all our posts, along with IG Shops.”

State of Being Co. founder Geddio is also putting a great deal of time and energy into social media for the holiday season. “We recently invested in copy, scripting, and filming for ads that were pushed through on social channels,” she says.

“We've sent countless products to social media influencers to generate excitement in new circles and gain exposure with a broader audience," says Geddio. "We have a teammate focused on getting to know our customers and community in order to bolster relationships. We are also working with a PR firm to help us gain coverage on social channels with business features and gift guide inclusion.”

Promoting Employee Retention

Realizing that nothing is possible without dedicated employees, many small-business owners are facing the holidays with an eye to retaining staff. The report showed that 32% of small businesses surveyed are giving holiday bonuses to current and new employees.

“We’ve found that a Christmas bonus shows employees we appreciate their contributions and value them as members of our team,” says Nash of Lucy Nash jewelry, who also offers greater holiday pay and makes voluntary overtime more accessible.

Flexible scheduling also helps with employee retention, believes Jessica Benhaim, founder and owner of Lumos Yoga & Barre, a Philadelphia boutique fitness studio.

“I scheduled a 15-minute chat with each of my employees to go over their schedules for next year and see if anyone needs to make any adjustments,” she says. “I think everyone appreciated the chance to discuss their schedules, even if just to let me know they're satisfied.”