ACROSS AMERICA — Saturday, Nov. 26, is an important day for independently owned local businesses in towns Across America. It’s Small Business Saturday, the kickoff to “shop small” events that emphasize the power of dollars spent in local communities.
Small Business Saturday is sandwiched between the major Black Friday retail shopping holiday that tends to favor national brands and Cyber Monday, an online shopping event that this year takes place on Nov. 28.
For many without the scale of established national chains to cruise through COVID-19 pandemic disruptions, fourth-quarter sales could make the difference between hanging on or shuttering their shops.
Last year, Small Business Saturday sales topped $23 billion. Since the first Small Business Saturday in 2010, consumers have spent an estimated $163 billion, according to American Express, the longtime sponsor of the event.
Two-thirds of every dollar spent at a local business remains in the community, according to most estimates. There’s a little more to the so-called “local multiplier effect,” according to the American Independent Business Alliance.
A study from that group found that, on average, 48 percent of every purchase at a local independent business is recirculated locally, compared to less than 14 percent of purchases at chain stores.
Small businesses are typically defined by the federal government as those with 500 to 1,500 employees, depending on the industry. They are responsible for two of every three jobs over the past 25 years, according to the Labor Department. Even a partial collapse of small businesses could weaken the overall US economy.
Americans seem to understand how high the stakes are for small businesses.
Almost four out of five (79 percent) said small businesses are essential in their communities, according to a new survey of 1,000 adults conducted by Teneo on behalf of Kabbage by American Express.
The last couple of years have been tough as business owners bent their business models to navigate the pandemic, but many now question whether they’ll be able to continue.
Nearly one-fourth (24 percent) of businesses surveyed in the Kabbage by American Express survey said holiday sales volume will determine if they survive into 2023.
Another measure of merchants’ worries: National Federation of Independent Business members gave their lowest economic expectations ever in a June survey.
Driving their worries are hot inflation they fear will keep customers away and supply chain challenges that could make it difficult to stock the items consumers want, according to the latest MetLife & US Chamber of Commerce Small Business Index. Among specific findings:
- 50 percent of small businesses say inflation is a top challenge, an increase of 31 percentage points from Q3 2021;
- 71 percent of small businesses think that when it comes to inflation and price increases, the worst is yet to come;
- 31 percent of small business owners say their local economy is in good health, down 6 percentage points this quarter.
Small businesses are employing new strategies from inventory management to investment in marketing and payment transaction tools, but they’re also increasingly relying on credit, according to the Kabbage by American Express survey.
Some 21 percent of small business owners planned to take out a small business loan this holiday season. Almost a third (32 percent) planned to use the loan to cover costs to support their business, from inventory bills to common cash flow gaps.
Among new strategies small businesses are employing is meeting their customers on social media, moving beyond Facebook, Instagram and others to TikTok, a preferred platform for Gen Z. This year, American Express and TikTok have teamed up to give eligible small business owners a chance to earn $100 in TikTok advertising credits, expanding their reach to new generations of local business supporters.
A recent Shop Small Impact Study found that about two-thirds of Gen Z (people born between 1997-2012) TikTok users shopped at a small business they’d seen advertised on the platform.
Americans in general seem to understand how high the stakes are for independent businesses this year.
More than half of 2022 holiday shoppers (53 percent) surveyed said they planned to shop or eat at an independently owned business or restaurant this year.
That’s up from 42 percent of shoppers last year.