Why Seek Financing for Black Friday Cyber Monday?
In 2023 alone, Black Friday reached $9.8 billion in online sales in the U.S., while Cyber Monday hit an even more impressive $12 billion, making it the biggest online shopping day in U.S. history. On a global scale, digital sales during the BFCM period surged to an eye-popping $298 billion, marking a 6% year-over-year growth. (Yes, we also had to read those stats twice over.)
It’s an understatement to say that businesses should prepare adequately for this shopping bonanza! One of the most effective ways to ensure success during BFCM is by securing financing. Here's why it matters.
01. Inventory Management
Without sufficient inventory, businesses risk missing out on the huge surge in demand. Stockouts can severely impact revenue, especially when consumers are ready to spend big. In 2022, an estimated 32% of shoppers abandoned their purchases due to stockouts, highlighting the importance of well-managed inventory. Financing provides the capital needed to stock up on best-selling products and expand your product offerings.
Moreover, trends fluctuate quickly. In 2023, categories like personal care items saw a significant boost, with sales in that sector increasing by 20% during the holiday season. Diversifying your inventory requires capital, and financing helps you stay ahead of these trends by ensuring you have the right products on hand.
02. Marketing and Advertising
The competition for consumer attention during BFCM is fierce: businesses ramp up their marketing efforts the most during this time of year. According to the National Retail Federation (NRF), small businesses increase their marketing budgets by 30-50% during the holiday season. Securing financing allows you to invest in paid advertising, social media campaigns, and influencer partnerships, all of which are crucial to driving traffic and sales.
Statistics show that businesses who actively invest in digital advertising see an average return of $5 for every $1 spent. However, this requires an upfront investment, and financing can cover these costs until your sales start rolling in.
03. Operational Costs
Operational efficiency is key during the busy holiday season. The U.S. Bureau of Labor Statistics reported that retail employment typically rises by 30% during Q4, as businesses hire additional staff to manage customer inquiries and fulfill orders. Hiring temporary staff, upgrading technology to handle higher website traffic, and investing in cybersecurity measures are essential to ensuring smooth operations.
For example, in 2023, website downtime and cybersecurity threats resulted in an estimated $1.7 billion in lost sales during the BFCM weekend. Financing can be used to upgrade your infrastructure, ensuring your business is well-prepared for the influx of traffic.
04. Cash Flow Management
The time lag between making sales and receiving payments can create significant cash flow gaps, particularly when immediate expenses like payroll, vendor payments, and shipping costs need to be covered. A 2022 survey found that 44% of small businesses experience cash flow issues during the holiday season. Financing helps bridge these gaps, allowing you to manage your cash flow smoothly and avoid any operational disruptions.
It's essential to secure financing at the right time. According to the Small Business Administration (SBA), there is typically a 20-30% increase in loan applications during the holiday season. Additionally, demand for alternative financing options, like merchant cash advances and lines of credit, increases by 15-25% during the same period.
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