Yes, Buying Gift Cards Helps Small Businesses

4 min read • Jul 07, 2021 • Grant Olsen

Gift cards have a bit of a bad reputation in some quarters. They make impersonal gifts, some folks say. Others gripe because they’re sometimes inconvenient to use. But the fact remains that gift cards are a proven way to boost local businesses. And in this new world of pandemic-related uncertainty, these boosts have never been more important.

“Small businesses are waiting for emergency loans from the state and federal government,” says a small business report from NPR.org. “But in the meantime, customers have realized that there is already a way to hand out a loan—buying a gift card. It is a very generous 0% loan, which normally is the worst thing about gift cards but right now is the thing that makes them particularly useful.”

Gift cards can reach across lockdowns, distancing requirements, and the pivot from brick-and-mortar to digital platforms. As long as a business sells gift cards, they’re providing a way for their supporters to live up to their name and provide crucial financial backing.

The biggest benefit to gift cards is that they deliver immediate cash to small businesses. While other types of purchases might require manufacturing processes, warehouse management, and other complications, a gift card is easy to produce and delivers a rapid jolt of energy to a business’s cash flow.

Your community likely already stands behind you during these difficult times. So promote your gift cards on social media or through display ads—this way, your fans will know how to participate. Some businesses sit and wonder why nobody’s buying their gift cards, but the inaction is usually the result of poor communication on the owner’s part. 

Make it clear and easy to purchase a gift card, and everyone can participate in the joy of using them. You might even be surprised by some of the customers who step up to make a purchase. Perhaps it’ll be a neighbor who you haven’t spoken to since you borrowed his lawnmower last summer and broke it. Or a former flame. Or even a competitor. Regardless of the specifics, the resulting emotion feels like a big hug.

“You know, it didn’t feel like the warm, fuzzy, thousand-dollar in-store purchase,” recalls small business owner Sofi Madison of the experience of having customers buy gift cards. “It felt like, you know, here’s a hug. Let’s hunker down. Here’s some seed money. It was a real love and support gesture.”

While the sale of a gift card provides an unmistakable boost to your finances, you might be wondering what happens down the road. Are customers going to show up in a few weeks to spend the entire gift card on an item that you have on sale? Because if that happens and you already sold the gift card at a discounted rate, you might not see much of a lasting benefit from the initial sale of the card.

Don’t worry about that happening. Consumers rarely use a gift card as strategically as they would a comparable amount of cash. There’s something impersonal and distancing about a piece of plastic that makes it feel less like a conduit to your bank account. So it’s not uncommon for consumers to spend a portion of a card and never finish the rest. And a surprising number of cards are never used at all.

“Even before COVID-19 wreaked havoc on the economy, Americans were sitting on roughly $21 billion in unredeemed gift cards or store credits, letting much of those funds go to waste,” reports CNBC.com.

Given the large number of cards that aren’t fully utilized, it’s helpful to note that multiple options are available to those who have gift cards they don’t wish to utilize themselves. For starters, you can spread the love by donating your cards to a service such as Gift Card Donor. Once your cards are received, they’ll be sold—and all of the proceeds are sent on to a charitable organization.

Even if you don’t want to donate your unused gift cards, you might want to consider making them into the very thing their name suggests: a gift. A completely unused card makes an excellent present for a friend or loved one. The biggest draw is the autonomy they afford, as they can be used anytime the recipient chooses.

As a small business owner, you’ve likely experienced both sides of the coin. You’ve probably purchased or been gifted a gift card from a local business, and you’ve also seen the positive impact they can have on your bottom line. By clearly communicating your gift card options to customers and helping to make the purchase process as streamlined as possible, you’ll increase sales. It’s the type of symbiotic relationship where everyone benefits—the essence of how a small business should operate within its community.

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.