The “official” kickoff to the holiday shopping season—Black Friday—is less than 50 days away. For consumers, that means it’s time to look yourself in the mirror and figure out whether you’re going to max out your credit limit online or in the flesh.
But for small business owners, it’s a different story. Imagine the onslaught that ensues each holiday season when wallets and pocket books open with frequency—and urgency—you haven’t seen all year. Or many years: According to a recent Deloitte forecast, spending during the coming holiday season is expected to increase by as much as 4.5%, buoyed by an improving economy and rising consumer sentiment. These are circumstances that usually require additional staff, equipment, inventory, etc.
But that, of course, requires money. Money that banks are not always looking to lend to small businesses. So increasingly, small businesses are turning to alternative lenders to get the cash they need. So we talked to David Gilbert, CEO of National Funding, a San Diego-based alternative lender that will do $200 million in loans and equipment leases to small businesses this year. He shared with us what Westchester businesses should be doing to prepare for the uptick in demand and how you can finance it.
Hire Additional Staff
Gilbert recommends reviewing projected sales for each of the holiday months and plan out whether you will need additional staff. Higher-than-usual sales around the holidays can make it a short-term necessity.
Lease Equipment in the Short Term
Determine what, if any, equipment you will need to accommodate the increased holiday sales. Often, businesses need to rent additional cash registers, point-of-sale systems, and mobile credit card readers to cut down on checkout lines.
Stock Up on Inventory
Understanding your product or service demands during the holiday season is critical. As a small business, Gilbert says, the last thing you want is to run out of the season’s hottest gift. Plan strategically when stocking your holiday inventory and stock up as much as possible.
Know Your [Lending] Options
While applying for bank loans can be time-intensive and complex, alternative lenders provide easy, quick turnaround for all of the above small business needs. Gilbert advises small business owners to have a plan to secure financing in place at least one month before Thanksgiving.
“The majority of the marketplace is made up of small, mom-and-pop businesses, and that entire sector usually doesn’t have the strong balance sheet or financial statements that banks are looking for,” explains Gilbert. Gilbert says alternative lenders are a good option for small businesses because they are more concerned with a business’s cash flow, the time of year, and the industry in which you’re operating than the traditional creditworthiness indicators a bank would rely on (which tend to be weaker for small businesses).
