60% of small businesses launch cash flow tools before the holidays

By Brett Sussman.

Many US small businesses are preparing for the 2022 holiday season by prioritizing their holiday cash flow, developing strategies to foster employee and customer retention, anticipating economic hurdles, and prioritizing social media sales.

American Express small business lender Kabbage recently surveyed business leaders for its launch Small business holiday reporthighlighting key US small business trends heading into the holiday season.

Holiday cash flow prioritization

The survey data highlights the importance of the holiday for small businesses – especially this year. Almost one in four (24%) of the companies surveyed said their upcoming holiday sales will determine whether their business can survive into next year. Aware of the gravity of this time, companies are prioritizing their health and growth while closely examining their cash flow.

60% of small businesses surveyed are focused on investing in new tools as they consider their cash flow management and rising costs. The top tools were marketing tools (23%) and payment systems (e.g. line of credit, business current account and new payment providers) (20%). Similarly, respondents indicated that overall company cash flow is their number one concern during the holiday season (32%), followed by budgeting (25%) and inventory management (25%).

Data shows that small businesses are taking steps to overcome these cash flow concerns. Twenty-one percent of respondents plan to take out a small business loan this holiday season, and 32% plan to use the loan to cover expenses to support their business, from inventory bills to common cash gaps.

Keep an eye on employee retention and customer retention

To make the most of the upcoming holiday season, 64% of small businesses plan to increase marketing to attract customers. The top two strategies were sending out seasonal email campaigns (26%) and offering bundles of holiday products (26%). Likewise, 25% of the small companies plan to offer holiday customer campaigns and incentives.

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

anticipating economic hurdles

The data shows that small businesses are predicting the impact of economic hurdles such as supply chain challenges and rising inflation during the holiday season and strategizing to deal with them.

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

Working to address these future challenges, 27% of small businesses are managing customer expectations and sharing realistic shipping dates to protect against potential supply chain issues. Given their cash flow, 30% of respondents expect to use small business loan funds to purchase additional inventory.

use of social media

In an increasingly digital world, 46% of respondents indicated that at least 20% to 30% of their vacation sales come from online channels.

Almost half (47%) of respondents indicated that at least 10% to 20% of their Christmas sales come from social media channels. Facebook remains a key marketing and customer acquisition channel, with 53% citing Facebook as the top social media platform with the most revenue, followed by Instagram, YouTube, LinkedIn, Twitter and TikTok. This corresponds to our latest Small Business Recovery Report who found that small businesses are increasingly benefiting from social media advertising; 47% say it has the greatest impact on customer acquisition. Of these, Facebook was also reported as the top advertising platform, almost double that of the second choice, Instagram.

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

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