Christmas for small businesses: A chance to shine

Christmas is a great time of year for most Brits - a time of family, friends, food and fun. For some, though, the festive season is a little more important. Businesses across the country will have already started working hard to prepare for what is usually the busiest period of the shopping calendar.

It only takes a quick walk down any normal high street to see just how big a deal December is for the retail industry. All of the major stores have their decorations and sale signs up, hoping to draw the crowds. Meanwhile, the pavements are full of people rushing to find the perfect gifts for their nearest and dearest.

For many smaller businesses, Christmas isn't just about capitalising on an opportunity to boost profits - it's an essential part of survival.

The big build-up

Christmas shopping has always been a popular British pastime, and recent figures show how the hunger is growing once again after a tough few years for the economy. According to a report from the Office for National Statistics (ONS), the amount spent in the retail industry during December 2013 was 6.1 per cent higher than in the same month of 2012, and 2.6 per cent higher than in November 2013. To put this into some kind of perspective, shoppers spent, on average, £8.8 billion every week.

The ongoing surge has no doubt been influenced significantly by the burgeoning e-retail sector. A survey from the British Retail Consortium (BRC) found that internet sales increased by a massive 19.2 per cent for December 2013 - the fastest growth seen since 2010. The trade association's data also shows how around 20 per cent of all non-food items bought throughout the month were purchased online.

It's not over yet

While the decorations will come down pretty soon after the big day in most households, the Christmas period doesn't stop so quickly for retail firms. If December is the big and gradual build-up to the peak festive season, January sales are the rapid descent on the other side of it.

Often in their attempts to capitalise on the heightened mood of shoppers and clear stockrooms of excess inventory, most retailers partake in the global 'January sales' phenomenon. This is a period, usually lasting the whole month, when products are discounted en masse - much to the delight of bargain-hungry consumers.

This part of the festive season is also rising in importance for those on both sides of the checkout counter. ONS data from January of this year shows annual growth of 4.4 per cent in the total amount spent. This was no doubt helped by the fact that inflation grew at its slowest rate (0.2 per cent) for more than five years.

Once again, internet sales played a big part in this, with year-on-year growth of 8.9 per cent in the total value of goods purchased online.

A big day, before the big day

Most consumers will be aware of Black Friday by now, and maybe even Cyber Monday. These American-rooted mass sale days, which take place around the end of November/start of December, see some of the world's biggest retailers slash the prices of all kinds of products. The images plastered across the media of people scrapping in the aisles show just how big a deal the events are in the retail world, but it's fair to say that they're dominated by the industry's more famous names.

If anything, the lure of heavily discounted TVs and tablet computers takes even more of the spotlight away from smaller businesses, but efforts are made to counteract this effect. Small Business Saturday, which takes place on the first Saturday of December, was devised as a way of supporting smaller retailers during a period when it's all too easy to get pushed aside and forgotten.

According to data published by American Express, the inaugural event provided a huge boost to the British economy, with shoppers spending more than £450 million on products and services from independent businesses. The same report also found that 48 per cent of consumers were aware of the event, a figure that's only likely to grow in the coming years.

Making the most of Christmas

While Small Business Saturday will no doubt generate a lot of profit for independent retailers this year, relying on that alone would be unwise. Instead, firms must be proactive to capitalise on the opportunities available. Marketing efforts should be stepped up well in advance of December, for example. Social media is a particularly powerful tool here, but it must be used properly if the company is to stand out from its competition.

Inspiration should also be taken from the retailers involved in Black Friday - while lower prices might mean smaller profits at first, massive discounts are great for building brand awareness and for simply drawing shoppers to a website. By using end-of-season stock as well, it's possible to clear space and boost sales without losing too much money.

Christmas is a time when small businesses really do have to be at their best, but those that do get it all right will find themselves reaping the rewards, not only in the end-of-year sales reports, but well into the future.