Before long, the air will be cooler, evergreen and twinkling lights will deck homes and storefronts, and holiday music will begin to play – albeit earlier than seems necessary. Though the holiday season begins as soon as Jack-o-Lanterns end their month-long reign, when it comes to planning and sales most small businesses focus on what many consider to be the biggest shopping day of the year – Black Friday.
Business owners and managers alike plan meticulously for the big day, with efforts covering everything from staffing and business hour updates to marketing and sales initiatives. However, as you likely already know, when it comes to Black Friday, inventory is often the make-or-break factor.
So, how do you have a wildly successful Black Friday? Take these inventory tips into consideration as you plan for the biggest shopping day of the year.
Take a Deep Dive into Your Inventory Reports
There are two specific ways you’ll want to analyze your inventory. The first is a trip to the holiday past, which will clue you in on products and brands that were a big hit last year, both in general and specific to Black Friday. Keep an eye out for trends that show demand, but it’s also important to lackluster items (is there anything you shouldn’t invest in?) and product margins as you plan your strategy.
The second inventory analysis considers your current sales patterns. What are customers currently attracted to? Do you have any new hot product flying off the shelf? It’s a good idea to keep an eye on product inventory over the last few months while keeping seasonality in mind – some products may be more popular during the summer months and therefore not relevant to your holiday planning; however, don’t underestimate the power of your year-round favorites when it comes to getting shoppers through the doors.
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Examine Your Sales & Marketing Strategy
Your marketing strategy will play a huge role in your inventory, and thus any attempt to have a successful Black Friday should also account for any promotions you plan on running. Are you offering doorbusters, which will bring customers into the store but don’t necessarily require a surplus of inventory? Do you offer and plan to advertise a specific product that other local stores don’t sell, which means that more customers will be turning to your store for that particular item?
Account for Any Online Sales Efforts
If you’re a small business that only sells products at a brick and mortar store, then you can skip ahead to the next tip, but if you sell your product at multiple stores or have an online presence, then you’ll need to account for this when you factor in your total need. That means including a review of your site traffic, conversion rates, and potential online competition. You’ll also want to verify that your site is ready to handle the traffic, which means putting finishing touches on holiday messaging (e.g., shipping info, promos, etc.) and verifying your cart is up and running as expected.
Have a Substitution Plan Ready
Even the best-laid plans can fail, and in some cases, a truly successful marketing plan may quickly translate to an inventory issue – particularly if you run out of a pivotal item. If you sell out of a hot Black Friday item quickly, then you may be forced to consider an alternative way to keep customers coming into the store and, even more importantly, ending up at the register (or the cart page). For this reason, it may be beneficial to come up with a substitution plan, that enables you to quickly and efficiently shift focus without losing customers.
Estimate Your Inventory Cost & Spending Power
Once you determine what items should grace your holiday shelves– including the cost —it’s time to get down to what is likely the biggest source of holiday planning stress, figuring out how you’re going to pay for it.
If you’ve been budgeting for the holiday, then you may be pleasantly surprised (or not remotely surprised) to find that you’re in good financial standings and can freely purchase products as necessary. If, however, your finances and your inventory needs don’t line up, you will likely need to figure out how to stock shelves and attract Black Friday shoppers without breaking the bank.
This may require you to take out a short-term loan or utilize a business line of credit, both of which can help you finance your Black Friday or other holiday inventory needs. If you do need to take out a loan or line of credit, be sure to factor in the cost of borrowing (e.g., fees, rate, term, etc.) as well as the cost of inventory, accounting for any deep discounts you plan to offer. While your primary goal may be to stock the shelves and keep customers happy, you don’t want to do so in such a way that leaves you unable to quickly repay your holiday debt. If you’re not sure which option is best for your business, you can find out with Nav.
In addition, keep in mind that if you’re going to go through a bank, then it’s a good idea to start the process as soon as you’ve established a need, some lending options, like an SBA loan, may take anywhere from 60 to 90 days.
Don’t Forget About the Other Prime Holiday Sales Days
Black Friday may be the biggest shopping day of the holiday season, but it’s certainly not the only one. And in some cases, based on your business type, it may not be the real money maker. Over the last few years, we’ve seen a plethora of different holiday-themed shopping days, including Small Business Saturday, Cyber Monday, and Green Monday as well as a variety of other “shop local” events around the nation.
Keep those dates in mind as you stock up for the holidays, and if you are planning on including them in your sales and marketing strategy, be sure to account for them when you’re looking at your inventory. That’s particularly true when it comes to Small Business Saturday and Cyber Monday, as they occur consecutively.
An off-the-charts Black Friday requires diligent planning, and small businesses that want to reap the rewards will need to start planning now (if they haven’t already). As you begin to place your orders, always consider past and present product performance as well as how your marketing and sales strategy will impact your efforts. Finally, if you think you may need to finance a portion of your inventory, then it’s important to get the ball rolling now so that you have adequate times and funds to have that wildly successful Black Friday. Let the holiday games begin!
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