Tips to Maximize Holiday Revenue

Consider Bridge Financing

The holiday season is a pivotal period for small businesses. “This is the big push,” Johnston said. The holidays are when many small businesses generate the majority of their annual sales. It’s not the time to cut back on inventory, marketing or customer service. However, this surge in activity can create a “pre-holiday cash crunch,” he said. Bridge financing can serve as a lifeline during this critical period. “Hopefully, you’ve established a relationship with your primary bank and have access to a revolving credit facility that you can draw on,” Johnston noted, “but if you’ve maxed out that facility, then you may want to look at some additional non-bank providers that can provide short-term capital – anywhere from three months of financing to 36 months, depending on the duration of the opportunity.”

Lenders offering revolving lines of credit allow businesses to “borrow, repay, and borrow again as needed,” said Johnston, and that can be a helpful tool for managing seasonal expenses.

Know Your Costs and Margins

Before taking on financing, i understand its impact on your bottom line. “You need to calculate how long you’ll be borrowing and how the borrowing cost will affect the total cost of goods sold,” said Johnston. “Then you have to make sure that you can sell those goods for significantly more than the combined cost of production and financing.” Maintaining positive margins is critical. To succeed, you must stay on top of your unit economics and inventory, he added. “You certainly don’t want to be selling at negative margins.” Black Friday, he said, often marks the turning point when businesses move back into the black and start seeing a return on their holiday investments.

Focus on Turning Holiday Shoppers into Repeat Customers

In a competitive retail environment, fostering strong customer relationships is vital for long-term cash flow health. “Anything you can do to build a connection with a customer and encourage them to return for their next purchase rather than simply bargain-hunting for the lowest price is important,” Johnston noted. Small businesses have a unique advantage in creating engaging, memorable in-store experiences during the holidays. “During the holiday seasons, there’s a tradition of shopping in person, browsing and learning about products by picking them up touching them, something the Amazons of the world can’t necessarily provide,” Johnston explained. A positive shopping experience increases the likelihood of a customer returning. Johnston suggested offering extras that leave a lasting impression, such as:

free gift wrapping, which adds convenience and value for customers during the busy holiday season
hassle-free returns, which build trust and remove barriers to purchase
loyalty programs, which, when designed well well, incentivize customers to come back

“Creating that community feel goes a long way, especially during the holiday season,” Johnston said.

Buy Inventory Now

Johnston highlighted a pressing concern for businesses that rely on imported goods: the potential for rising tariffs under the new Trump administration. “Theres been a lot of talk about increasing tariffs across the board, particularly on goods from China,” Johnston explained. “Tariffs are essentially a direct tax on the importation of goods.” In response, some businesses are placing larger-than-usual orders to stock up before any changes take effect, he said. This can mitigate future price hikes and ensure sufficient inventory for future holiday demand.

However, Johnston warned against overstocking without a clear plan. “You don’t want to tie up too much capital in inventory that might not sell,” he said. To strike the right balance, Johnston recommended analyzing historical sales data to forecast demand accurately and make informed purchasing decisions. Strategic planning is key to navigating uncertainty while maintaining profitability, he added.

Don’t Make Extreme Decisions

“In truth, no one knows exactly what will happen next year,” Johnston said. “If Kamala Harris had won, people would have expected a steadier continuation of current policies. With Trump’s win, there are more questions about what lies ahead.” However, Johnston emphasized that most of these policy discussions will have long-term implications rather than immediate effects on the holiday season or the start of 2025. “We’re talking about potential shifts that could impact the next decade of the economy, but the holiday season and the first quarter of 2025 are unlikely to see significant changes,” he said. The economic environment, he added, is “pretty well baked” until February or March.

With this in mind, Johnston advises small businesses to avoid panic-driven actions.

“There’s no need to slash prices or liquidate inventory prematurely,” he said. Instead, Johnston advised small businesses to stay focused on their current strategy and rely on data-driven decisions instead of reacting to speculation.