The busiest shopping season of the year is nearly upon us, yet many small business owners aren’t taking advantage of their greatest resource: their accountant. At first glance, that makes sense. What does an accountant have to do with setting holiday hours, making employee shift schedules, or designing the sales events that will bring in customers off the street?
In a word: everything.
It’s a tough time for business owners. Not only are they competing with other retailers on Black Friday, Small Business Saturday, and Cyber Monday, they’re doing it during one of most family-centric times of the year. A time when everyone wants the long weekend off to hang out with relatives, digest those extra helpings of pumpkin pie, and do their own holiday shopping.
And now, with more and more retailers capitalizing on Thanksgiving Day itself, many business owners are faced with an even stickier situation. When is it most profitable to open over the four-day weekend? Six a.m. Friday? One a.m. Friday? Or just after the button pops on turkey day?
The good news is accountants can help. If you’re a small business owner, here are a few factors your accountant may be able to bring to your attention to keep hidden costs from overwhelming your potential profits.
Which promotions make the most sense?
Black Friday is like Christmas morning for bargain hunters. Why else would anyone roll out of bed before sunrise and wait in line with hundreds of other people in the November chill? But if you’re going to put in the effort of opening early, you should know what kinds of promos work best for your product. Not just which ones are most popular, but which ones also turn the best profit.
“Typically we’ll just do some percentage off for the day,” says Paul Carew, co-owner of Wear Boise, a purely local clothing company that sources everything — including embroidery and print screening — from the surrounding area. “I think last year, we did sort of an incremental discount,” he says. “The discount was heavier in the morning, then reduced to 20 percent, then 10 percent throughout the day.”
It’s a great idea that works well when shoppers are out in droves to find the best deals, but Carew admits he hasn’t yet asked a professional to analyze the results in detail. Having an accountant take a look could help remove some of the stress he faces when determining the kind of sales the store should be running on a high-traffic weekend.
You might be thinking, “That sounds great, but I don’t have the data to say which promotions are most profitable.” If that’s the case, consider checking in with your accountant this month to see if they can recommend a software solution that can collect those kinds of stats.
What’s the best schedule?
You likely already know which day surrounding Thanksgiving is most lucrative. If you’re in a downtown setting like Wear Boise, it’s probably Small Business Saturday. If your inventory is largely online, it’s likely Cyber Monday. But do you know which times of the day are historically your busiest, or how much money is made, on average, in the last hour you’re open?
Knowing the answers to those questions may help guide your business decisions, from knowing when to open or close to determining how many staff members should be in the store at certain times of the day. It may also help you decide whether or not to open on a day you’d normally be closed.
Recently, Paul and Lisa hired a CPA to oversee their financials and taxes on their three separate businesses, but Paul says they’ve not yet gone over any Black Friday plans. When asked if he might chat with his accountant about the best hours to be open, he laughs. “Yes, especially now that you’ve brought it up. Most definitely we will be reviewing that kind of information and data.”
You don’t know what you don’t know
While it could certainly apply to anyone, it’s especially true for business owners going into the busiest weekend of the year: You don’t know what you don’t know. But your accountant may be able to help guide the way.
As your financial specialist, your accountant knows — better than anyone — how essential Thanksgiving weekend is to your year-end success. They should be able to tell you what your most profitable days were in the past, which promotions you were running at that time, and how the hours you were open may have affected your profit and loss statement. And if they can’t, they can certainly help you set up a system for determining that information going forward.
Give it a few years, and some great record-keeping, and you’ll have all the data you need to plan your best holiday shopping season yet. Now that’s something to be thankful for!