In an economy where small to medium enterprises (SMEs) contribute at least 40% to the GDP, it seems only reasonable that SMEs are able to take advantage of the potential benefits of Black Friday trading.
While even large and established companies, who have historically dominated the Black Friday market, need to carefully assess the risks involved in Black Friday sales, SMEs who have assessed the risk as a viable opportunity to grow and scale their business should not be thwarted because of a lack of capital.
A strategically planned festive season campaign can be a huge benefit to SMEs who want to make the most of this seasonal opportunity and boost sales while also establishing a foundation for long-term financial health. While it can be challenging to compete directly with larger companies’ budgets, SMEs that focus on considered, targeted and sustainable growth strategies can build a strong foundation for the next year without overspending unnecessarily.
Black Friday weekend (traditionally the last weekend of November) has come to signify the start of festive trading.
Companies typically offer significant discounts on sought-after items and while some companies even make use of the opportunity to get rid of old stock at reduced rates, consumers have the chance to purchase more costly items at a perceived bargain.
With more consumers waiting for Black Friday offers before spending, SMEs have the chance to maximise profits; attract new customers; nurture loyalty with existing customers; and ensure cash flow over the transition into the new year if they can capitalise on Black Friday weekend.
Large companies seem to have unlimited budgets to purchase extra stock; limit their profit margins to encourage sales; and pay for marketing around Black Friday. On the other hand, SME owners may worry about the risk of overspending on promotions, underestimating demand, or failing to turn new customers into returning customers. The competition is fierce and the process of managing promotions around Black Friday is highly demanding and overwhelming.
In order to emerge from the season without risking financial stability and ready for future growth, SMEs should consider:
- preparing early on by analysing the demand and popularity of various products;
- developing effective and efficient marketing strategies and communication with new and existing customers;
- optimising both in-store and online experiences ranging from ordering, payment, delivery and security;
- planning effectively for acquiring and storing necessary inventory;
- setting competitive prices; and
- securing the cash flow and capital needed to achieve their goals.
Lula said it understands the challenges SMEs face during peak seasons, and while they can provide some practical advice on leveraging the festive season strategically.
Lula said it is passionate about helping SMEs acquire the necessary capital to make opportunities like Black Friday a success for the business on all fronts.
“We love helping small businesses turn seasonal opportunities into sustainable growth, without endangering their financial resilience,” Chief Risk Officer and Head of Credit at Lula, Garth Rossiter said.
Making use of Black Friday trading is a smart way to scale and grow within a relatively short period of time.
Although SMEs have different spending power from large corporations, there is no reason they cannot responsibly leverage smart strategies and calculated risks to boost profits and make the festive season rewarding for both themselves and their customers.
BUSINESS REPORT