December 8, 2022 By Suzanne Robertson

The holiday shopping season is often the most important time of year for small retailers. In a typical year, up to a quarter of an average retailer’s annual sales come from this time period. To maximize profits, most brick-and-mortar and online retail business owners invest quite a bit of money preparing for the anticipated surge of shoppers between Thanksgiving and New Year’s Day. With economic uncertainty floating through the air like snowflakes in 2022, more retailers are turning to a smart financial tool to protect themselves.

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The business line of credit may be the secret seasonal weapon of small retailers

Resourceful business owners are increasingly turning to business lines of credit to take some of the risk out of their seasonal spending. This fast and flexible funding type is becoming popular with retail businesses who want the peace of mind of having capital on hand, but don’t want to pay interest on money they aren’t using.

Running a retail establishment during the holiday season isn’t for the meek. From Black Friday through January 1st, it’s a marathon and a sprint all at once.

Retailers are expected to predict the future, prepare for every potential problem, exude joy from every social media post, get peak productivity from overwhelmed employees without channeling Ebenezer Scrooge, and keep a jolly smile on their face. That’s true enough for any ordinary year, but the 2022 holiday retail season is anything but ordinary.

2022 is the holiday retail season we still can’t predict, even as it’s happening

For every article proclaiming an uncertain economy will keep shoppers holding tight to their wallets, there’s another forecasting a shopping surge. Americans are embracing getting out of the house after back-to-back pandemic seasons and opening their wallets for online purchases.

As business owners navigate supply chain issues, labor shortages, and historic inflation, planning for the holiday season - typically done earlier in the year - is stretching into the season itself. And with so much of the potential profit on the line, more and more entrepreneurs are in search of a way to offset the expenses of being holiday-ready when the shoppers arrive in-store or checkout online.

With the business line of credit offered by SmartBiz, business owners get full access to funds immediately, then they get to decide when and how to use them. They only pay interest on the money they end up using, keeping monthly payments low. For retailers who still don’t know if this season will bring a surge in profits or a pile of debt, the certainty of having funds on standby is likely understandably appealing.

For retailers, the holiday season isn’t cheap

Just consider the common expenses of a typical retail holiday season for both brick-and-mortar stores and online shopping sites. To be prepared for the season, business owners might consider:

Increasing inventory

Small retailers often have to ramp up inventory to keep ahead of anticipated demand in order to avoid running out.

Offering discounts

The holiday “doorbuster” deal is as American as apple pie, and even in a season of record inflation, consumers will likely still expect some kind of discount.

Staffing up

Preparing for a surge in shoppers often requires extra staff. For retailers, that typically looks like hiring more hands in the warehouse, in their delivery ranks, and on the sales floor to handle additional customers and extended hours. For online businesses, staffing your customer service department may be critical and extra employees may also be needed to pack and ship.

Investing in marketing

Paid social media ads, sponsorship of local community events, and hosting in-store events to draw in customers are all typical budget items for the holiday season. For online retailers, a website refresh, online advertising, affiliate promotion, and more may be needed to get your store's offerings to stand out in the crowded online space.

Putting on a good display

Seasonal displays and merchandising are often expected for brick and mortar shops to instill holiday cheer and build an environment that encourages more spending. Online retailers who use direct mail or email marketing might need a holiday redesign and copy update to stand out to consumers.

For many small retailers, these costs are generally the minimum investment to position for success during the high season. But there’s no guarantee the shoppers will come. Business lines of credit can soak up some of that uncertainty. If the season is a success, a line of credit can be invested in something else down the line without any need to pay interest until you draw funds. But if the season comes up short, that line of credit could become a lifeline.

If there’s one thing business owners have learned over the past few years, it’s that there’s no such thing as “certain.” Business owners have learned how to be even more scrappy, more creative, and more agile in the wake of a long pandemic and volatile economy. That grit and resilience is on display this holiday season, as retailers build their own safety nets and make their way into a brand new year.

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