MADISON, CT – Saturday November 26th is an important day for independent local businesses in Madison.
It’s Small Business Saturday, the prelude to “Shopping Small” events that highlight the power of dollars spent in local communities.
Small Business Saturday falls between the big shopping holiday, Black Friday, which tends to favor national brands, and Cyber Monday, an online shopping event taking place on November 28 this year.
Why Small Business Saturday is important
For many without the scale of established national chains to navigate the disruptions of the COVID-19 pandemic, fourth-quarter sales could mean the difference between staying in business or closing.
Last year, small business Saturday sales exceeded $23 billion. Since the inaugural Small Business Saturday in 2010, consumers have spent an estimated $163 billion, according to American Express, the event’s longtime sponsor.
By most estimates, two-thirds of every dollar spent in a local business stays in the community. According to the American Independent Business Alliance, there’s something more to what’s called the “local multiplier effect.”
A study by this group found that an average of 48 percent of every purchase from a local independent business is recycled locally, compared to less than 14 percent of chain store purchases.
Small businesses are typically defined by the federal government as companies with 500 to 1,500 employees, depending on the industry. They have been responsible for two out of every three jobs over the past 25 years, according to the Department of Labor. Even a partial collapse of small businesses could weaken the US economy as a whole.
Americans seem to understand the stakes for small business.
According to a new survey of 1,000 adults conducted by Teneo on behalf of Kabbage by American Express, nearly four in five (79 percent) said small business is essential in their communities.
The past few years have been tough as business owners twisted their business models to deal with the pandemic, but many are now wondering if they can continue.
Almost a quarter (24 percent) of businesses surveyed in the Kabbage by American Express survey said holiday sales volume will determine their survival into 2023.
Another measure of concern among traders: Members of the National Federation of Independent Business posted their lowest-ever economic expectations in a June poll.
Their worries are fueling hot inflation, which they fear will keep customers away, and supply chain challenges that could make it difficult to stock the items that are sold, according to the latest MetLife and US Chamber of Commerce Small Business Index consumers want.
As for the specific results:
50 percent of small businesses say inflation is a top challenge, up 31 percentage points from Q3 2021;
71 percent of small businesses think the worst is yet to come in terms of inflation and price increases;
31 percent of small business owners say their local economy is in good shape, down 6 percentage points this quarter.
Small businesses are adopting new strategies from inventory management to investing in marketing and payments tools, but are also increasingly relying on credit, according to American Express’ Kabbage survey.
About 21 percent of small business owners were planning to take out a small business loan this holiday season. Nearly a third (32 percent) planned to use the loan to cover expenses to support their business, from inventory bills to common cash outages.
Among the new strategies small businesses are adopting is meeting their customers on social media and moving beyond Facebook, Instagram and others to TikTok, a platform of choice for Gen Z. This year, American Express and TikTok have merged to give eligible small business owners a chance to earn $100 in TikTok advertising credits and expand their reach to new generations of local business supporters.
A recent Shop Small Impact study found that about two-thirds of Gen Z TikTok users (people born between 1997 and 2012) made a purchase from a small business advertised on the platform.
Americans generally seem to understand just how high the stakes are for independent companies this year.
More than half of the 2022 holiday shoppers surveyed (53 percent) said they plan to shop or dine at an independent business or restaurant this year.
That’s up from 42 percent of shoppers over the past year.