Whether you are an online seller, the owner of a traditional retail store or someone who makes a living supplying retail locations, you know the importance of holiday sales.
The holiday shopping season kicks off shortly before Black Friday and lasts through December, and that key month is a make-or-break time for businesses of all sizes. If holiday sales are important for your business, it is never too early to prepare. Follow this list to get started planning for your holiday season sales today.
1. Estimate holiday sales.
Start your early holiday season preparation by estimating your holiday sales. If you have been in business for a while, you can draw on prior year results to create a better-informed estimate. If you are new to running your business, base your holiday projections on your recent trends with a significant bump up in sales in December if your products are holiday gift-worthy.
Depending on where you sell online, you might even have resources available to help you estimate. For example, the Etsy Seller Handbook has an entire article dedicated to forecasting holiday sales that can be really helpful. (And if you want to get your products onto Etsy before the holiday season, here’s a piece we wrote on how to set up your Etsy shop fast.)
2. Save up for a bigger inventory.
Now that you have an idea of how much you are going to sell, it’s time to figure out how to pay for the inventory. I have a close friend who is an Amazon Marketplace seller using FBA — industry lingo for Fulfillment By Amazon — to sell his products. The last two years, he ran out of inventory during the holidays.
This cost him some serious sales opportunities. It is impossible to know exactly how many sales he lost, but you can learn from his lesson and avoid the problem all together thanks to great forecasting. Odds are ordering enough extra inventory to cover you for the holidays will cost more than you spend on typical merchandise orders, even if you can get a better price per item based on higher volume.
Start saving today for that extra order or, if you know you’ll need a business loan in order to stock up, now’s the time to start preparing your books and checking your credit to make sure you can get the loan you need in the timeframe you’ll need it. Some loans and lines of credit take a few days or weeks to get approved, while others can take months (here’s a quick chart on how those business financing options and their timelines can vary.) You can check your business credit profile for free on Nav to see where you stand and what get more information about how your business credit could impact your lending options.
3. Bulk up your orders and inventory in the fall.
Depending on your product, you might have lead times of a few days all the way up to a few months when ordering and stocking product. Thanks to the savings and loan options we just discussed, you should have enough cash on hand for a large order to get you through the holidays.
Reach out to your vendors and suppliers this month to start planning. It is important you have the ability to pay for the order, but if your suppliers can’t fulfill the large order, you could find yourself with eager customers and no products to sell. If you have a strong relationship, you might even get better credit terms for your bigger order. It doesn’t hurt to ask and negotiate!
4. Plan for more sales.
Why did my friend run out of stock two years in a row? He didn’t plan for more sales than his projections. He did learn his lesson year one when he had customers viewing his pages on Amazon that said, “out of stock,” so he ordered even more for the 2016 season.
What he didn’t count on was his product getting even more popular this year. Unless creating scarcity is part of your marketing strategy, this is a big mistake. Plan for at least 5% to 10% more sales than your initial projection to ensure you don’t run out of stock.
5. Build in a contingency for missed projections.
When reading this advice about stocking up, you may have a lingering concern about what happens if you make a big extra order and it doesn’t sell as expected. This is a risk in any business that has to carry inventory. Here are a few potential contingencies if you end up hugely overstocked:
- Wait it out until the products sell. If you have the financial ability to wait it out, the products may sell over time eventually. If you have been selling your products successfully outside of the holidays, there is no reason to expect that to stop now.
- Post-holiday sale. As an expert business owner, you make pricing decisions based on data and know your exact margins. As long as your sales are still profitable, you can have a post-holiday sale to liquidate the extra inventory.
- Inventory returns. Some vendors allow you to return product you didn’t sell. That depends on the product, customization and other factors.
- Use inventory for secured financing. In the worst-case scenario where you are stuck with inventory that isn’t flying off the shelf, you could use the inventory for secured financing to spend on more advertising or customer acquisition that could help you sell your inventory faster, re-invest in your business, etc.
6. Get your advertising in order.
Now that you have a plan in place for your inventory and pricing, it is time to ensure you get all of those sales. Consumers have a plethora of options for holiday gifts and are pelted by zillions of ads during the holidays. Doing your own advertising can help you stand out from the crowd.
You may not have your own advertising agency, but you can still advertise on social media like Facebook, Pinterest and Twitter. Online ads can drive a lot of business for you, particularly if your business is primarily online. Don’t discount the power of promotion!
The Holidays Will Be Here Before You Know It
Summer is a great time to get started planning for holiday sales. No matter what you sell, the holiday season can be a major boom for your business. Prepare yourself, your business, your inventory and your finances for Black Friday and beyond to ensure you don’t miss out on valuable sales or end the holiday season with business regrets.