Man in front of a background of Liverpool Christmas markets

5 months ago

How Does Christmas Impact Small Businesses?

Updated for Christmas 2023

It's getting cold, dazzling lights adorn trees, and there's glitter and tinsel everywhere. It can only mean one thing; Christmas is nearly here. For many small businesses, the Christmas period has a significant impact on annual profits. It can result in record sales and lots of cheer or a few silent nights. In this article, we explore how Christmas impacts UK small businesses, including what you can do to ensure that your business gets to enjoy a very Merry Christmas.

Christmas Expectations by Numbers

We all have our own connotations of what Christmas means to UK small businesses, however, there is data that more accurately demonstrates how businesses are affected by the festive period.

QuickBooks conducted a study in which they asked 800 UK businesses if the holiday season is more important to them. 82% said that it was more important, 16% said they expected no change, and 2% said it was less important. In the same study, QuickBooks spoke with 2,500 adults in the UK, and 66% said that they plan to buy fewer gifts due to inflation. From this study alone, it's clear that there's increased pressure on small businesses to stand out against the competition during the festive season.

Manchester Christmas marketsOn the positive side of the spectrum, MDH previously reported that small businesses are gearing up for a bumper Christmas. They said that compared with 2021, 75% of small businesses are expecting increased activity in the 2022 festive period. This equates to an estimated revenue of £460,000 per small business between November and January, accounting for two-thirds of their total annual revenue on average.

Although this report focuses on 2022, it shows how small businesses enter the Christmas period with mixed expectations. But whether you agree with the positive message from these studies or not, it's clear that UK small businesses need to act to capitalise on the festive season.

Get on the Revenue 'Nice List'

It's no surprise that retail sales increase around Christmas, from people buying gifts to purchasing new clothes and supplies for parties. Christmas is also a time of year when people who don't work in industries that get busier at Christmas have more time to spare, often taking the time to make purchases they may not have had time to make before.

If you work in an industry that experiences an increase in sales at this time of year, it's important to be prepared. Cash is becoming less commonplace, making it vital to ensure that your payment solutions are effective and reliable. Whether you need a better online payment gateway or you want to take payments in person, it's beneficial to compare what's available to find the best payment solution for your business.

Become an Online Christmas Elf

As the cost of living crisis tightens its grip, Britons are anticipated to scale back their Christmas shopping, particularly online. Despite an overall increase in total spending by 3.4% to nearly £110 billion during the last quarter of 2023, as projected by retail analysts at GlobalData, consumers are expected to seek cost-effective options and reduce the number of gifts purchased, given the persistently high inflation rate.

Retail analyst Nick Gladding said: “Sharply higher prices mean shoppers will spend less in real terms than last year, choosing either to trade down or trim the number of presents they buy. Last year's sales growth was supported by shoppers spending savings built up during the lockdown. But with those savings now depleted by cost of living increases and mortgage rate hikes, consumers are likely to shop more cautiously and more savvily.”

It's also clear that SMEs have begun the shift to offering their products and services to an online model. This shift means that if your business isn't providing some form of online offering, you may miss out on revenue this Christmas.

Getting your business online isn't as daunting as it seems. There are plenty of tools to help you build a website and it's never been easier to start a social media profile. If you can shift your business model online, you should look into a payment gateway. An online payment gateway allows you to take a variety of payment methods through an online portal. Depending on what products or services you offer, you may also be able to integrate your payment gateway with an inventory or booking system to meet your business's requirements.

Whether your business is considering going online or you're already online, it's vital that you have a fast and dependable internet connection. It's even better if you get the gift of a great broadband deal. By comparing business broadband deals, you can ensure that your business has the connectivity it needs at the best price. Whether you need standard business broadband or a super fast Leased Line, don't forget that fast business broadband isn't just for Christmas.

It's Christmas Party Time

A People Management poll on LinkedIn, surveying over 1,500 respondents, discovered that 53% of employees won't attend a work Christmas party this year. In contrast, the remaining 47% expressed their intention to participate in a workplace festive event.

Group of women clinking champagne flutesA survey conducted by WorkNest, involving 127 employers revealed that 50% of businesses planning a Christmas or end-of-year party were worried about employees not affording attendance. Within this group, 47% decided not to host a party at all, with 20% of those celebrating expressing concerns about employees consuming alcohol in the presence of non-drinkers.

WorkNest's findings also revealed that 67% of businesses lack a policy or guidance regarding expected behaviour at work events. Chambers stressed the importance of creating and communicating such guidelines in advance to mitigate potential issues with significant consequences for companies.

WorkNest indicated that 31% of businesses would consider organising alcohol-free events, with 5% already doing so. However, 63% expressed a preference for keeping alcohol as an option, despite 16% having concerns about staff drinking around non-drinking colleagues.

A separate Ipsos poll commissioned by GlobalGiving UK found that half of workers with office celebrations (49%) favoured allocating some funds to charity. Younger workers, especially those aged 16-34, expressed stronger support for charitable contributions compared to their older counterparts.

If you're one of the companies that aren't proceeding with a Christmas party for budgetary reasons, there are ways to temporary boost your cash flow. You could consider a business loan. However, if your business relies on invoicing, an invoice finance solution may be your best option.

Through invoice finance, you sell your invoices to an invoice financing company for a fee. Once that company has paid for your unpaid invoices, they handle recovering the locked-away revenue. This service allows you to improve your cash flow and take the strain off your business to chase unpaid invoices.

Give Yourself the Gift of More Time

Whether you're expecting your business to be snowed under with extra work this Christmas, or if you expect to be busier in 2023, wouldn't it be nice to receive the gift of some extra time? At BusinessComparison, we can help you compare everything your business needs to be a success. From Business Bank Accounts to Insurance and everything in between, save your business money and gift yourself some extra time by comparing with us today.

From all of us at BusinessComparison, we wish you a very merry Christmas and a prosperous New Year!

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Sam White