Is It Important for Small Businesses to Participate in Black Friday?
Post sponsored by Xero
This promises to be a strong holiday season for small businesses. The National Retail Federation (NRF) forecasts holiday retail sales will increase between 2.5% and 3.5% from 2023, totaling between $979.5 billion and $989 billion. This is up from $955.6 billion spent in 2023. Most of the sales growth is propelled by an expected 8 to 9% increase in online sales, reaching between $295.1 billion and $297.9 billion, up from 2023’s $273.3 billion.
This retail growth is despite a shorter (by five days) shopping period between Thanksgiving and Christmas, making the Thanksgiving weekend (from Thanksgiving through Cyber Monday) shopping period even more important. The ICSC’s Thanksgiving Weekend Intentions Survey reveals that 88% of consumers plan to shop in-store that weekend, spending about $125 billion. And four in five plan to shop on Black Friday and Cyber Monday, underscoring the opportunity for small businesses to make money.
So, I was surprised to see a recent Xero survey of business owners revealing that many don’t plan to participate in Black Friday. To gain some insights, I talked to Ben Richmond, Managing Director, North America at Xero.
Should small businesses participate in Black Friday?
Rieva Lesonsky: Black Friday is only a few days away. Your recent survey showed over 40% of small business owners surveyed don’t plan to participate in Black Friday. Do you think this puts these businesses at a disadvantage since consumers will likely shop (online and in-store) at places offering sales and promotions?
Ben Richmond: Black Friday is one of the busiest shopping days of the year, and while it might seem like not participating puts businesses at a disadvantage, that’s not always the case. As you noted, in Xero’s recent survey, while more than 40% of small business owners don’t plan to take part, 29% of them are confident their customers will shop with them regardless.
However, Black Friday offers a unique opportunity to engage with customers who you know are already in the shopping mindset. Small businesses opting out might miss out on attracting new customers during this critical revenue-driving period, but participating doesn’t mean competing on discounts alone. Small businesses can look for outside-the-box ways to stand out that offer value in non-traditional ways. For example, exclusive bundles, personalized shopping experiences, and rewards for loyal customers can create compelling reasons for customers to engage with a business.
It’s also worth considering that skipping Black Friday entirely may be a strategic decision for some. Our survey showed that 38% of small business owners cited pressure to compete, 36% noted inventory management concerns and 36% mentioned the strain of increased traffic as the top challenges of participating in the sales event. Addressing these challenges—whether by participating in smaller ways, strategically planning for the event earlier in the year or focusing on alternative strategies (like Small Business Saturday)—to bring in customers can help businesses navigate this season successfully without stretching themselves too thin.
Lesonsky: Also, 19% of the businesses not participating in Black Friday say they promote at other times of the year. Do you think it’s important for these small businesses to participate in Black Friday, too?
Richmond: Black Friday is a pivotal moment for small businesses to shine in an incredibly crowded marketplace, as it offers increased visibility and customer attention compared to other times of the year. With many shoppers looking for deals to check things off their holiday shopping lists, this is a prime opportunity for small businesses to attract new customers, grow brand awareness, and align with the largest shopping moment of the year.
For businesses looking to expand their reach, participating—even in a small, strategic way—can provide benefits. Participation doesn’t just help drive sales but also creates a touchpoint for new customers who could become loyal supporters year-round.
How can small businesses invest in a Thanksgiving weekend sales strategy?
Lesonsky: Specifically, 18% of the businesses not taking part in Black Friday plan to participate in Small Business Saturday and Cyber Monday. Instead, should small businesses invest in a Thanksgiving weekend sales strategy—appealing to consumers Thanksgiving through Cyber Monday?
Richmond: For small businesses planning to participate in Black Friday, extending efforts throughout the Thanksgiving weekend can help to amplify results. The weekend offers a variety of opportunities, with Black Friday providing a high-visibility platform for deals, Small Business Saturday fostering local community connections, and Cyber Monday catering to online shoppers seeking exclusive deals. While there is overlap across these days, the best approach depends on the business’s products or services—each day presents different ways for businesses to engage with their audience and maximize impact. Tailoring the strategy to what the business offers can help them stand out and make the most of this busy shopping period.
By leaning into offering sales throughout the full weekend, small businesses can diversify their promotional efforts, appeal to a broader audience, and maximize sales across multiple touchpoints. It’s crucial to prepare in advance—ensuring inventory, marketing efforts, and customer service are ready to handle increased demand—while setting clear objectives for the weekend to make the most of the opportunity. Leaning into software like Xero Inventory Plus can make it easier for small businesses to manage inventory across multiple platforms and sales channels.
How to attract new customers on Black Friday
Lesonsky: Most of the businesses planning to participate in Black Friday say they’re doing it to reach new customers. When asked about their challenges of participating in Black Friday, 36% cited increasing traffic. What are some effective ways small businesses can attract new customers to their stores and websites?
Richmond: To attract new customers during Black Friday, small businesses can tap into several strategies that target the right audiences and stand out amidst the competition. Since customers will be actively shopping for holiday gifts, businesses should focus on reaching them where they are through avenues such as targeted marketing. Social media ads, Google search campaigns, and paid online advertising are all effective ways to increase visibility and ensure promotions are seen by the right people.
According to Xero’s recent research, 53% of small businesses say social media is their go-to method for attracting customers year-round. Social platforms, in particular, allow businesses to narrow down specific customer segments, ensuring their message reaches the right audience at the right time.
Given the increased competition small businesses face during the holiday shopping season, it’s crucial to differentiate beyond just discounts. Offering exclusive product bundles, limited-time holiday deals, or special discounts for new customers can generate excitement and urgency, driving foot traffic and online visits.
It’s also essential to optimize the online shopping experience. Ensuring smooth website navigation, multiple payment options, and a user-friendly checkout process will keep customers engaged and more willing to return. Additionally, offering flexible return policies or discounted shipping can help build trust with new shoppers, encouraging them to make a purchase. Encouraging loyal customers to leave reviews and share their positive experiences can also help small businesses build credibility and attract new sales. These combined efforts will help drive traffic and reach new customers while creating a lasting impact, encouraging longevity in an oversaturated market.
Planning ahead is key to successful holiday sales
Lesonsky: American consumers have made it clear in the past few years that they’re willing to spend money, but they want value, discounts, and sales. But 34% of the small businesses surveyed say they can’t afford to offer discounts. Thinking ahead to 2025, how can small businesses better budget so offering discounts at key times won’t break the bank?
Richmond: To ensure that offering discounts doesn’t hurt their bottom line, small business owners need to approach pricing and promotions strategically. A crucial first step is analyzing costs, from inventory and shipping to other overhead expenses, and then assessing how discounts will impact overall profitability. Using a cloud accounting platform like Xero can make this process smoother, helping businesses forecast cash flow and calculate the long-term impact of offering discounts. Working with an accountant to align discounts with the business’s financial health is also vital to avoid putting unnecessary strain on resources.
Early planning is key—by identifying key promotional periods and setting marketing budgets in advance, small businesses can spread the costs more evenly throughout the year. Allocating resources early also ensures there’s enough staffing to handle the increased demand during sale periods. Additionally, leveraging technology to track and predict inventory needs can prevent overstocking and reduce unnecessary carrying costs, allowing businesses to be more agile during major sales events like Black Friday.
A comprehensive tech stack that includes tools for managing cash flow, inventory, and staffing can give small businesses real-time insights, making it easier to track expenses and evaluate the effectiveness of discounts. When properly planned, discounts can become a strategic tool that drives sales while maintaining a healthy bottom line.
Small businesses have advantages over large retailers during the holidays
Lesonsky: In their answers to several of the survey questions, some of the small businesses seemed to be intimidated by competing with big businesses, so they chose not to participate. What are some advantages small businesses have over bigger competitors that make them a better place to shop?
Richmond: Small businesses have several unique advantages that allow them to stand out and compete with larger retailers, especially during the holiday season. One of the most significant benefits is the ability to provide personalized, one-on-one customer service—something big businesses simply can’t recreate. These human connections help build lasting relationships and foster customer loyalty, which can help turn first-time shoppers into repeat customers.
Another strength of small businesses is their flexibility. Unlike larger corporations, which often have less flexible systems, small businesses can quickly pivot their product offerings, operations, or promotions in response to consumer demand, allowing them to evolve to the needs of their customer base.
Additionally, small businesses often offer more unique and personalized gifts, which are highly sought after during the holiday season. Whereas big box stores tend to carry the same mass-produced items, small businesses typically carry more unique products that make for more sentimental and thoughtful gifts. Customers love the ability to find something truly different, especially when gift giving, which makes shopping small even more appealing.
In a world where consumers have so many different options when it comes to shopping, the authenticity and uniqueness of small businesses can be a true differentiator around the holidays.
About the Author
Rieva Lesonsky is the owner of SmallBusinessCurrents.com and has been covering small businesses and entrepreneurship for over 30 years. Get more insights about business trends by signing up for her free Currents newsletter.
