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The Employee Retention Credit (ERC) was launched by the federal government to provide financial relief to small businesses that kept employees on the payroll throughout the pandemic. The credit is available for the 2020 and 2021 tax years, and eligible businesses may retroactively apply using IRS Form 941-X.

Key takeaways

• The deadline for all 2020 filings is April 15, 2024. On average, 2020 quarters make up a total of 20% of the eligible credit dollars available to small businesses and 30% of the ERC credit amount small businesses qualify for.

• Applying and filing for the ERC takes time. If you are applying for ERC and you want to beat the deadline we recommend you apply by February 15, 2024, to allow ample processing time. (While we can often get your credit processed much quicker than this, some accounts require extra due diligence and back and forth).

• To reserve your spot in line with the IRS your business must have all revised payroll tax forms for 2020 quarters postmarked and in the mail to the IRS prior to April 15, 2024.

• The filing deadline for all 2021 filings is April 15, 2025.

Employee Retention Credit deadlines.

The ERC is not available for tax years 2024 and beyond, but you can retroactively apply if you haven't yet taken advantage of this credit. Businesses could receive a credit of up to $5,000 per employee in 2020 and $7,000 per employee per quarter in 2021. So it's definitely worth paying close attention to the deadlines to make sure you don't miss out on this opportunity to significantly lower your tax bill.

Each tax year has its specific deadline. This gives you time to focus on one application at a time since each tax year requires its own form to support the different eligibility requirements. 

ERC deadline for the 2020 tax year.

The Employee Retention Credit deadline for the 2020 tax year is April 15, 2024. This applies to all three eligible quarters: Q2, Q3, and Q4. The first quarter doesn't count since COVID-19 mandates didn't begin in the U.S. until the end of the first quarter. 

ERC deadline for the 2021 tax year.

The ERC deadline for Q1, Q2 and Q3 for the 2021 tax year is April 15, 2025. This gives you time to gather documentation for a robust application. But it's still smart to apply as soon as possible, especially since the IRS is reporting a backlog in reviewing applications. In other words, the sooner you apply, the sooner you're likely to get approved and receive your credit funds (or have them applied to an outstanding tax bill).

Overview of ERC eligibility.

Before applying for the Employee Retention Credit, make sure your business qualifies for 2020, 2021, or both. The basic eligibility criteria vary from year to year.

For the 2020 tax year:

• No more than 100 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 50% of 2019 gross receipts

For the 2021 tax year:

• Fewer than 500 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 80% of 2019 gross receipts

Newer businesses may also qualify for the ERC as a recovery startup business. In order to qualify, your business must meet the following requirements:

• Began after February 15, 2020
• Annual gross receipts under $1 million
• One or more W2 employees 

How to apply for the ERC.

Lendio is here to assist small businesses with their ERC applications. We can help you quickly streamline your application with a step-by-step guided form that removes all the guesswork from the process. In fact, to date, our tax partners have helped Lendio clients collect over $300 million from the ERC program.

One luxury of being an employee is that you don’t have to worry much about tax planning. 

You can sit back as your employer withholds money from your paycheck to cover your liabilities, then use the details from your W-2 to file your tax return come tax time.

As a self-employed individual, you don’t have that privilege, and your tax situation becomes a lot more complex. Fortunately, that complexity has a silver lining. You gain a wide range of tax deductions that can significantly reduce your personal income tax.

In fact, you can deduct all ordinary and necessary business expenses. If you’re not sure what those look like, here are some of the most popular tax write-offs for self-employed people.

Top tax write-offs for the self-employed.

1. Self-employment taxes

2. Retirement plan contributions

3. Qualified business income

4. Home office expenses

5. Business rent

6. Office supplies

7. Depreciation

8. Internet and phone bills

9. Health insurance deduction

10. Business insurance premiums

11. Business meals

12. Business travel

13. Business vehicle expenses

14. Interest on business debts

15. Advertising expenses

16. Professional services

17. Continuing education costs

18. Professional dues

18 Tax Write-Offs

1. Self-employment taxes

Let’s start with a tax break you can take advantage of regardless of your business model: self-employment taxes.

The self-employment tax refers to the Social Security and Medicare taxes you have to pay on 92.35% of your net earnings from your business. These are separate from the federal and state taxes everyone has to pay on their income.

When you’re an employee, you get to split Social Security and Medicare taxes with your employer. For the year 2021, each party pays 7.65%.

Unfortunately, self-employed taxpayers are responsible for both the employer and employee portions. As a result, they owe a combined 15.3% tax, of which 12.4% is for the Social Security tax, and 2.9% goes to Medicare.

To lessen that blow, the Internal Revenue Service (IRS) lets you deduct the employer portion from your income when you calculate your federal and state income tax liabilities.

For example, imagine you generate $100,000 in net earnings as a sole proprietor. 92.35% of your net earnings multiplied by 15.3% equals $14,130 in self-employment taxes.

However, you’d get to deduct half of that expense, $7,065, for income tax purposes. In other words, you’d pay federal and state income taxes on $92,935 of net earnings rather than $100,000.

2. Retirement plan contributions

Whatever your employment status, contributing to retirement plans is one of the best ways to pay less in taxes. Not only does it directly reduce your adjusted gross income in the current tax year, but it also defers taxes on all your earnings within the account.

That said, self-employed people can access some uniquely powerful retirement accounts that employees can’t. For example, if you’re an independent contractor with no employees, you can open up and contribute to a Solo 401(k).

Solo 401(k)s are similar to their employer-sponsored counterparts, but the contribution limits are significantly higher. Here’s how they work:

• Employees: You can contribute up to $19,500 in 2021 and $20,500 in 2022. If you’re over 50, you can also make a catch-up contribution of $6,500. Your employer can put more in the account, but you have no control over that.
• Self-employed: In addition to the standard employee contribution, you can put in 25% of your net self-employment income up to a whopping $38,500 in 2021 and $40,500 in 2022 as your “employer” contribution.

Because retirement contributions are discretionary, you can dial them up and down as necessary to manipulate your taxable income. That’s a huge advantage, especially when your earnings fluctuate from year to year.

3. Qualified business income

The qualified business income (QBI) deduction is one of the newer tax write-offs for self-employed people. If you think you might be eligible, it’s definitely a good idea to consult a CPA for guidance.

In simple terms, the QBI deduction lets you write off 20% of the income you generate from your business operations. To be eligible, you must meet the following requirements:

Legal entity structure: Only people with pass-through income are eligible for QBI. That refers to sole proprietorships, partnerships, limited liability companies, and S-Corporations. C-Corporations can’t claim the deduction.

Income limitations: For single filers, your taxable income must be less than $164,900 in 2021 and $170,050 in 2022.

Business model: If your income is above the threshold, the type of business you run determines how much you can deduct. If you’re a “specified service trade or business”, the deduction phases out the more you earn.

Once again, claiming the QBI deduction is a complex process. There are many nuanced rules and lengthy calculations involved, so don’t try to tackle it without the help of a tax expert.

4. Home office expenses

If you do business out of your personal residence instead of a separate office, you may be eligible to deduct some of the expenses you incur to maintain your home. That includes costs like rent, mortgage interest, utilities, and maintenance.

In general, you can write off the portion of your housing expenses that corresponds with the part of your home that you use regularly and exclusively for your business. You don’t qualify for the deduction if you fail to meet either of those requirements.

In other words, you must have a dedicated home office space where you do most of your business. If you spend more time working at coffee shops than your home office, or if it doubles as a dining room table, you can’t take the write-off.

If you’re eligible, there are two ways to calculate your home office deduction:

Standard: This method involves tracking all of your home expenses and multiplying them by the percentage of your residence dedicated to your home office.

Simplified: If you don’t want to take the time to track all your housing expenses, you can multiply the square footage of your home office (up to 300 square feet) by $5 and deduct that.

Whenever there are two methods to determine the size of a deduction, it’s a good idea to calculate both and take the larger of the two. That said, the standard method often leads to higher tax deductions in this case.

5. Business rent

Renting an office or storefront is one of the most significant business expenses you’re likely to incur. Fortunately, if it’s reasonable that someone in your line of work would need the space, you can write off the cost of the lease.

For example, if you work from a computer, it’s logical that you’d need office space. Likewise, if you own a fitness gym, it makes sense that you’d need a location for people to exercise. In both scenarios, your rent would be deductible.

You can also deduct any rent you pay for equipment that’s necessary for your business operations. For example, if you run a home repair business, you could write off any rent you pay for the tools you use to complete a job.

6. Office supplies

Office supplies are a relatively standard deduction for self-employed people. It includes the minor materials you need to keep your business going. For example, you can write off items like paper, staplers, pens, and printer ink if your company uses them.

7. Depreciation

When you buy property or equipment for your business, the IRS might not let you deduct the expense all at once. Instead, you often need to depreciate these assets over their useful lives, which can be anywhere from a few years to several decades.

Depreciation represents the steady decrease in the value of an asset over time. For example, say you’re a real estate investor. When you buy an apartment complex, you take depreciation as the paint erodes, the floors degrade, and the roof deteriorates.

In general, you’ll need to depreciate assets worth more than $2,500. An IRS safe harbor rule means they won’t call you out if you write off something immediately when you pay less than $2,500, assuming it’s a legitimate business expense.

The rules for deducting depreciation can get surprisingly complicated. There are multiple ways to calculate the amount. If you’re eligible, it’s a good idea to consult a CPA for assistance.

8. Internet and phone bills

You can generally write off the portion of your internet and phone costs that correspond with your business use. If you have a separate business office with its own wifi and telephone, everything you pay for these services is deductible. 

However, if you operate out of a home office, calculating the write-off becomes a lot more complicated. The concept is similar to the home office deduction. You’ll need to determine which portion of your usage is for business and personal purposes.

9. Health insurance deduction

The cost of health insurance in the United States is staggering, so health insurance premiums are another hugely beneficial tax write-off for self-employed people. It can help make up for your lack of an employer to subsidize your medical expenses.

As long as you’re not eligible for coverage through a spouse’s employer, you can generally deduct all of the premiums you pay for your and your family’s health, dental, and long-term care insurance.

10. Business insurance premiums

Depending on your business model, you may want or need to purchase some form of business insurance. Fortunately, the premiums you pay for these policies are tax-deductible, as long as there’s a need for them in your line of work.

For example, medical service providers must maintain malpractice insurance, a form of professional liability insurance that protects them against lawsuits over mistakes that harm their patients.

Some other popular forms of business insurance that may be tax-deductible include general liability insurance, commercial property insurance, business income insurance, and workers’ compensation insurance.

11. Business meals

Though you have to tread a fine line, business meals can be tax-deductible in some circumstances. However, the rules are a bit tricky, and you can bet that the IRS watches these deductions closely. It may be worth consulting a CPA for help with this write-off.

In general, you can only deduct 50% of the cost of business-related food and drink from your taxes. For example, that includes:

• Meals while traveling for business
• Catering during meetings with employees
• Meals while discussing business with prospective clients

Unfortunately, lunch at the office by yourself doesn’t qualify. You must actively pursue or discuss business matters with others during the meal. It’s a good idea to keep detailed records of these matters.

There are two ways to calculate a meals deduction. First, you can deduct half the actual cost, in which case a reasonableness test applies. Alternatively, you can take a standard allowance, which the General Services Administration sets.

For tax years 2021 and 2022, the 50% limitation has been temporarily lifted. You can deduct 100% of eligible business meals as long as they come from a restaurant. The change is an attempt to stimulate the restaurant industry after COVID-19.

12. Business travel

If your business requires that you travel, you can deduct the costs you incur to get you to your destination and for lodging while you’re away from home. Maybe you need to tour a potential rental property or meet with a client out of state.

Unfortunately, taking a deduction for business travel can be tricky. As you might expect, there’s a lot of opportunity for abuse with travel write-offs. The IRS won’t be happy if you try to deduct the cost of your family vacation to Orlando. 

Even if you go to Orlando for legitimate business reasons, they’re also savvy enough to know that you might stick around for a few extra days for personal reasons.

However, like every other expense, travel is only deductible when it’s ordinary and necessary for your business. That means the extra night you spent in a hotel to see the Magic Kingdom is not tax-deductible.

13. Business vehicle expenses

If a vehicle is necessary for some aspect of your operation, you can write off the expenses associated with your business usage. For example, a real estate agent could deduct the use of their vehicle to meet clients at potential properties.

Unfortunately, you can’t take a deduction for commuting to your primary place of work. For example, you can’t consider the trip from your house to your office space a business expense.

If you’re going to take this deduction, there are two ways to calculate the amount:

Actual expense method: Keep detailed records of all your car expenses, including auto insurance, gas, and maintenance, then multiply that amount by the percentage of your driving that was business-related.

Standard mileage method: Keep track of the total number of miles you drove for business purposes, then multiply it by the IRS standard mileage rate. It’s $0.56 in 2021 and $0.585 per mile in 2022.

Unfortunately, you can’t bounce back and forth between the two. If you start with the standard method, you can decide to switch to the actual expense method, but you won’t be able to go back until you get a new business vehicle.

14. Interest on business debts

The interest you pay for your business debts can be another significant deduction for self-employed people. Whether you take out installment or revolving debt accounts, you can write off any interest that accrues on the balances for business expenses.

For example, if you finance the purchase of business equipment, the interest portion of your monthly payments is tax-deductible. Similarly, if you use a business credit card to buy supplies and carry a balance over, you can deduct the interest when you pay it off.

In theory, it’s possible to split funds from a credit account between business and personal use. In that case, only the interest on the business portion is tax-deductible.

15. Advertising expenses

When you’re self-employed, you have to get your business in front of potential clients. Fortunately, you can take a tax deduction for the various expenses you incur to promote yourself. That means you can write off the cost of things like the following:

• Social media ads on sites like Facebook and Instagram
• Pay-per-click campaigns on search engines
• Local billboards and print media materials

In addition, while not strictly an advertising expense, you can deduct the cost of maintaining a website for your business. For example, that might include the price of the domain and the fees you pay to a copywriter or web designer.

16. Professional services

As a small business owner, you often have to wear many hats. In your early years, you may find yourself handling administrative, bookkeeping, marketing, tax planning, and customer service duties on top of your day-to-day business operations.

However, once you have more traction, you can afford to outsource those functions. Fortunately, you can take a tax write-off for the fees you pay to the various professional service providers who handle them for you.

For example, if you’re tired of doing your own accounting, you can hire an independent specialist to maintain your books, build your financial statements, and file your taxes. Whatever they charge for their services will be a tax write-off.

17. Continuing education costs

Continuing education costs are an often underutilized tax write-off for the self-employed. In general, you can take a deduction whenever you pay to improve the skills necessary for your current business. That might include the cost of:

• A course written by a fellow professional in your field
• Required education to maintain a professional license in your trade
• A series of lectures on modern marketing strategies for small businesses

It’s important to emphasize that you can’t take a tax deduction for educational costs that don’t relate to the business you’re already operating. For instance, a freelance writer couldn’t take a deduction for a seminar on wedding photography.

18. Professional dues

Last but not least, you can take a tax deduction for the dues you pay to maintain a professional license or membership in a professional organization. This is a popular write-off for technical service providers, such as accountants, lawyers, and doctors.

However, you can’t deduct any old organizational or licensing fees. They have to be relevant to your profession. For example, a lawyer could deduct their annual membership dues paid to their State Bar.

Unfortunately, the deduction doesn’t let you claim dues to any club with a social purpose, even if you do business there. For example, you can never write off country club dues, even if you consider it a place to network. 

You've invested years of training, built a solid book of loyal clients, and created a foolproof business plan. Now, you’re ready to start your independent beauty salon. But just like any savvy business owner, you must understand your overhead costs to run a beauty salon if you want to ensure business success.

How much money do you need to open a salon?

There's no one-size-fits-all answer to this question as the cost to start a salon can vary greatly, depending on a variety of factors. These include the size and location of the salon, the types of services offered, the quality of fixtures and equipment, and the cost of initial inventory. Nonetheless, a rough estimate for a small-to-medium sized salon might range from $60,000 to $90,000. This estimate includes leasehold improvements, furniture, and salon equipment, initial inventory, licenses and permits, initial marketing, and operating capital for the first few months. However, keep in mind that your actual costs might be higher or lower. Therefore, it's essential to conduct a thorough analysis of your specific situation and develop a detailed budget before you start.

Beauty salon costs to consider.

As you navigate through the process of opening your beauty salon, certain costs will surface that need your immediate attention. From the rental costs of your physical salon space to the ongoing expenses for utilities, supplies, and staff salaries, we'll break down each element so that you can strategically plan your budget and avoid any unexpected financial surprises.

Here are some of the most common beauty salon costs to consider.

1. Rent

Paying for a space to run your beauty salon will be one of your most significant monthly expenses. Additionally, you’ll need to consider that your space will probably undergo renovations. For example, it may need new flooring or proper plumbing. Rent ranges widely depending on the space you’re seeking. Renting a salon booth costs an average of $400 per month, but can range from $250 to $1,200. Normal salon spaces will cost you anywhere from $1,500 to $4,000 a month.

2. Salon equipment

With the right equipment, your salon should operate without a hitch. You can choose to either purchase your equipment up front or lease it. You may be able to lower equipment costs by purchasing used equipment from other beauty salon owners. However, most find leasing new equipment to be a better option.

3. Licenses and permits

Before opening your salon, do your due diligence. Each state requires different licensing and permits. If you fail to get proper licensing, you’ll potentially pay a hefty fee. At the minimum, you should have a business and cosmetology license. But if you plan on adding services such as facials or nail care, you’ll also need the respective health permits. You may also want to consider obtaining a resale permit if you plan on selling products in your salon. Licenses charge annual or bi-annual fees to renew. On average, business licenses and permits can cost anywhere from $50 to $1500 per year.

4. Supplies

When it comes to beauty, keeping up with the latest trends is a must. Having a variety of color dyes, stylizing products, and miscellaneous items in stock will allow you to accommodate last-minute client changes. Unfortunately, beauty supplies aren’t cheap—they can add up quickly and cost up to $20,000 to start.

5. Insurance

What happens if a fire breaks out? Or what if a client injures themself on your premises? In these situations, you can’t forgo renters insurance. Renters insurance will help mitigate the costs of any unexpected events, like property loss from a natural disaster or medical bills from an accident. The price of insurance depends on the number of policies and coverage you select. When thinking about how much insurance you need, consider the total value of your property and any potential lawsuits that may occur at your salon. Insurance for beauty salons costs from $500 to $2,200 annually.

6. Payroll

If you plan on having a few stylists, payroll will be a substantial expense on your operating budget. On top of paying their salaries, taxes, and benefits, the real cost of an employee is typically 1.25 times their base salaries. According to a study by JP Morgan, 62% of business owners struggle to consistently make payroll on time. So if you can’t make payroll consistently, you risk losing your best stylists. Almost half of Americans say that if they experience payroll delays twice, they’ll start looking for a new job.

7. Utilities

Electric, water, gas—running a beauty salon means plenty of utility bills. Larger salons tend to incur more expenses because of how much energy they consume. Your bills will also increase if your salon comes with extravagant lighting or televisions to keep clients entertained. Salon utility costs range from a few hundred to a couple thousand dollars.

8. Credit card processing fees

Most people use their debit or credit card to pay for services, which can eat up a sizable portion of your profits. Each time a client decides to pay with their credit card, you’re responsible for paying processing and transaction fees. Payment processing fees alone can cost you anywhere from 1.5% to 3.5% per transaction. For example, if you charge $50 for a haircut and your credit card processor charges you 2.7%, you’ll pay $1.35 in processing fees. While this may not seem like a lot of money initially, over time, it does add up.

9. Marketing

As a salon owner, it’s up to you to bring in new clients. Even if you have loyal customers, you’ll need more than word of mouth to make people come through the door. That’s why creating marketing campaigns is an effective way to pick up new customers. However, marketing your business frequently can be expensive. Although social media and email marketing can generate leads at minimal cost, Facebook ad campaigns can set you back a few hundred dollars.

10. Salon software

In today's digital age, implementing salon software can streamline your administrative tasks and enhance the overall customer experience. This software aids in appointment scheduling, inventory management, payroll, and even marketing efforts. Many platforms also offer features like online booking and automated reminders, contributing to client convenience and retention. Although the cost of salon software varies depending on the features and number of users, it's seen as a valuable investment for efficient salon management. Expect to pay anywhere from $25 to $50 a month per software, with premium features coming at an additional cost.

12. Staff salaries

Payroll is more than just the basic salaries you pay your staff. It involves managing commissions, bonuses, and possible overtime. Salon employees might be paid an hourly wage, a fixed salary, or commission-based earnings, depending on their job role and responsibilities. Hair stylists, for instance, can earn between $20,000 to $50,000 a year on average, while salon managers may earn an average salary in the range of $30,000 to $70,000. To attract and retain talented staff, you might also need to factor in the costs of additional benefits such as health insurance, paid vacation, and professional development opportunities. These added expenses should be carefully considered when calculating your overall payroll costs. Remember that a well-compensated, satisfied team can be one of the most valuable assets to your salon business.

13. Training and continued education

Continuous learning is essential in the beauty industry to stay updated with the latest styles, trends, and techniques. As a salon owner, it's your responsibility to ensure that your stylists are well-versed in the latest methodologies and possess advanced skills. This might mean investing in masterclasses, seminars, certification programs, or online courses for your employees. You may also need to participate in business management or customer service courses to enhance your managerial skills. The cost of training and education varies widely, so it's important to include this in your budget planning.

How to finance a salon.

Starting a salon involves several upfront costs which may require considerable investment. While personal savings and loans from family and friends can serve as a financial base, there are various other financing options available that can help you fund your salon business.

1. Business loans

Many banks and financial institutions offer business loans designed to help entrepreneurs start or expand their business. These loans often come with reasonable interest rates and repayment terms, but be prepared to present a solid business plan to demonstrate your salon's potential profitability.

2. Small Business Administration (SBA) loans

The SBA provides loans to small businesses that may not qualify for traditional bank loans. The SBA guarantees a portion of the loan, reducing the risk for lenders and making it easier for businesses to secure financing.

3. Equipment financing

This involves getting a loan specifically for purchasing salon equipment. The equipment serves as collateral for the loan, which can make it easier to qualify even if you don't have an extensive credit history.

4. Personal loans

If you have a strong personal credit score, you may consider securing a personal loan to finance your salon. However, keep in mind that a personal loan ties your personal finances to your business, so ensure you have a solid repayment plan in place.

5. Investors

Securing investment from venture capitalists or angel investors is another viable option. This option typically involves selling a portion of your business equity in exchange for capital.

6. Crowdfunding

Platforms such as Kickstarter and GoFundMe allow you to raise small amounts of money from a large number of people, usually in exchange for some kind of reward. This can be a creative way to raise funds, particularly if you can create compelling rewards related to your salon business.

Remember, every financing option comes with its own set of advantages and disadvantages. It's crucial to thoroughly research each option, and consider seeking advice from a financial advisor or experienced mentor to determine the best course of action for your salon business.

Financial challenges for salon owners.

The financial journey of starting and operating a salon can be complex, filled with various costs and financial decisions at every turn. From initial setup expenses to ongoing operational costs, it's essential to have a clear understanding of where your money is going and how you can manage your finances effectively. Additionally, exploring various financing options can provide the necessary funds to kickstart or grow your salon business. While the financial challenges can be significant, with careful planning, budgeting, and a keen eye on industry trends, your salon business can thrive and grow. As a salon owner, your commitment to financial health is as important as your commitment to beauty and style.

The cost to lease gym equipment will depend on how much equipment you plan to lease, the brand of equipment, and the type of machines. It might also be impacted by personal factors, such as your credit score and borrowing history.

Depending on the size of your gym, you likely need to acquire at least $30,000 worth of new equipment. And while the final numbers will depend on your credit score, you could be able to lease $30,000 worth of equipment for roughly $1,000 to $2,000 per month—perhaps even less.

Details of cost.

According to gym equipment manufacturer Primo Fitness, the average commercial gym ranges from about 3,000 to 4,000 square feet. As noted above, filling this space with gym equipment will cost a budding gym owner roughly $30,000 to $50,000.

More modestly, Primo Fitness estimates that it would cost about $10,000 to fill a small 1,500-square-foot personal training studio—this includes about four treadmills, a pair of ellipticals, several strength machines, and dumbbells. 

Here’s a breakdown of potential lease prices based on current equipment prices and a 6% lease rate. Note that other fees may increase the monthly cost depending on the lease’s structure.

Benefits of leasing gym equipment.

Leasing gym equipment can be a smart play for your small business because it doesn't require nearly as much upfront capital as it does to buy equipment—and lease terms are typically less restrictive than financing terms. Also, when a lease is done, you can often choose to lease brand-new equipment, so you can keep your gym up-to-date from year to year.

Gym equipment leasing vs. buying.

While the obvious benefit to buying gym equipment at the outset is owning the equipment, leasing doesn't require a large infusion of startup capital—a key advantage. Additionally, gym equipment can become obsolete fairly quickly, but when you finish repaying a lease, you often get the option to lease new equipment.

Pros and cons of leasing vs. buying.

Equipment leasing vs. equipment financing.

Financing and leasing of equipment share many similarities, but there are some key differences to be aware of. In both cases, you will be required to make a monthly payment over a set period of time. However, equipment financing takes the form of a loan with interest and includes the option to prepay the loan.

By financing, you will gain ownership of the equipment. On the other hand, equipment leasing often means that the lessor (i.e. the person or company providing the equipment) retains the title of the equipment, event though you are using it.

Learn more about your options for gym equipment financing.

Are you a small business owner looking for financing options? A business loan broker might be able to help. In this article, we'll explain what a business loan broker is, the types of brokers available, and how they can help you find the financing you need to grow your business.

What is a small business loan broker?

A business loan broker—sometimes called a commercial loan broker—is an individual, company, or service that helps small businesses apply for small business loans or other financing.

Importantly, the broker does not approve or deny loan applications or service loans themselves: instead, the broker connects businesses with financing. A quality broker will help you research which business financing options make sense for your needs and help you set up your application for approval. In return, the broker receives a fee based on the size of the loan, either paid by the borrower or financier.

Types of business loan brokers.

Because many different types of small business financing exist, some business loan brokers specialize in various niches. However, some brokers have experience with connecting small businesses with a wider range of funding options.

SBA loan brokers help businesses navigate the application process for SBA loans.

Commercial loan brokers specialize in commercial real estate loans and mortgages.

Franchise loan brokers understand the franchising process and can help find loan options for opening a franchise.

Equipment financing brokers help businesses find equipment financing.

Small business loan brokers help businesses understand the variety of small business financing options available.

Some small business loan brokers do it all.

Some brokers and broker services, like Lendio, specialize in all or most of the above categories at once. By working with a wide range of financiers, these comprehensive brokers can help you compare options ranging from term loans to alternatives like accounts receivable financing. With some, you can even look at options like business credit cards.

The cost of using a business loan broker.

Understanding the cost of using a business loan broker is an important aspect of your financial planning. Generally, brokers charge a fee that is a percentage of the loan amount. However, this can vary based on the complexity of your loan application and the loan amount.

Remember, brokers bring expertise, experience, and potentially better loan options to the table, thus saving your time and potentially getting you better terms. However, before you engage a broker, ensure you understand the fee structure clearly. Some brokers' fees are paid by the lenders, while in other cases, the borrower is responsible. It's crucial to weigh the cost of a broker against the potential benefits to determine if it's the right path for your small business financing needs.

When to use a business loan broker.

There are several key scenarios when utilizing the services of a business loan broker can be highly beneficial:

When you are unsure of the right financing option: If you're confused by the plethora of financing options available or unsure which one is the right fit for your business needs, a business loan broker can offer invaluable guidance. They bring their expertise to the table, helping you navigate through various loan types, and aligning them with your unique requirements.

When you lack the time or resources: Applying for business loans can be a time-consuming process. If you're already juggling multiple tasks and can't afford to devote extensive time to research and application processes, a business loan broker can be a lifesaver. They handle the legwork, letting you focus on your core business activities.

When you want to compare multiple loan offers: A business loan broker has access to a wide network of lenders, allowing you to easily compare various loan offers and terms. This access can optimize your chances of securing the best possible loan terms.

When you've been denied a business loan in the past: If you've faced loan application rejections before, a business loan broker might be able to help. They can assist you in improving your application, identifying potential issues that led to previous rejections, and connecting you with lenders that may be more likely to approve your application.

Remember, engaging a business loan broker is an investment, and the value they bring should outweigh their cost. Making this decision requires a careful assessment of your business's specific needs, your financial situation, and the broker's capabilities. Lendio's team of dedicated professionals is always ready to assist, ensuring you find the right financial solution for your business.

Choosing the right business loan broker.

Choosing the right business loan broker can significantly influence your financing outcome. Start by conducting thorough research. Look for brokers with extensive experience, a strong network of lenders, and a good understanding of small business needs and challenges. It's important to check their track record, client testimonials, and their reputation within the industry.

You might want to engage in a consultation to gauge their expertise and understand their process. A good broker will be transparent about their fees, the lenders they work with, and how they can support your loan application. Be wary of brokers who promise guaranteed loan approval or who pressure you into making quick decisions.

Remember, the right broker will prioritize your best interests, provide valuable guidance, and work diligently to help you secure the right loan for your business. At Lendio, we are committed to these principles, ensuring that our clients benefit from a seamless and successful financing process.

Potential red flags.

As with anything involving small business lending, you need to do your due diligence with finding a small business broker. Here are some potential red flags that should raise suspicions:

• The broker has no online reviews.
• The broker has no physical address or phone number available.
• The broker pressures you to apply for a bigger loan than you think you need.
• The broker charges an upfront fee before working with you.

Lendio: Your partner in business financing.

Lendio is a leading online lending platform that helps businesses secure the financing they need. Our platform simplifies the lending process by connecting small business owners with a curated network of lenders. We are committed to providing a seamless experience, guiding businesses through the complex world of financing with clarity and confidence.

Key facts about Lendio's platform include:

Wide range of financing options: Lendio's platform provides access to a variety of loan types, including SBA loans, lines of credit, equipment financing, and more. This ensures businesses can find the right financing solution tailored to their specific needs.

An extensive network of lenders: Lendio works with a broad network of over 75 lenders, which increases the likelihood of securing a loan and allows businesses to compare multiple loan offers efficiently.

Simplified application process: Lendio's user-friendly platform offers a simplified loan application process. With a single application, businesses can apply to multiple lenders, saving time and reducing hassle.

Expert guidance and support: Lendio's team of loan specialists provides expert guidance throughout the loan application process. They help businesses understand their options, navigate the process, and improve their chances of approval.

Positive customer reviews: Lendio has consistently high ratings on review platforms like Trustpilot, demonstrating our commitment to excellent customer service and satisfaction.

At Lendio, we are dedicated to making business financing easier, so you can focus on what truly matters - growing your business.

Conclusion

In conclusion, utilizing a business loan broker can be highly beneficial in finding the right financing solution for your small business. A broker brings expertise, experience, and access to a wide network of lenders, making it easier to compare and secure business loan offers.

Small business loans are one of the most popular ways for entrepreneurs to get the money they need to start a business and keep it running. Yet, despite the importance of accessing capital, some small business owners struggle to qualify for funding. In 2021, just 31% of business applicants received all of the funding they applied for according to a report by the Federal Reserve. 

On a positive note, there are many possibilities to consider where small business financing is concerned, and there’s a good chance you’ll be able to find a lender that’s willing to approve your business for some type of financing solution. 

If you’re wondering how hard it is to get a business loan, the answer depends in large part on the type of business loan you hope to take out. Your business details also play a significant role in the type of financing your company may be eligible to receive. Read on to learn more about business loan approval factors that lenders may consider.  This guide also includes details about approval odds for different types of business loans and how to discover whether a loan offer is an affordable financing solution for your company.

Business loan approval factors.

When you apply for a business loan, a lender may evaluate various factors to determine whether to approve or deny your application. After a loan approval, the factors below may also influence your loan’s interest rate, loan amount, and repayment term. 

Credit score and credit history (business and personal)

Lenders will review your personal and business credit score when evaluating a business loan application. A higher credit score will make it easier to qualify for a loan, especially if you have a consistent credit history. Minimum credit score requirements vary by loan type and lender. Equipment financing minimum requirements start in the 500s with SBA loans starting at 650.

Business revenue

Lenders will want to see a steady stream of revenue, so they know you will have the ability to repay the loan. Just like credit scores, the minimum revenue requirement will vary, but a minimum of $8,000 in monthly revenue is a good rule of thumb.

Time in business

Lenders inherently take on risk when loaning money to a business, so they want to ensure your business will still be around to pay off a loan. For larger, long-term loans, such as an SBA loan, lenders will want to see a minimum time in business of two years. For smaller, short-term loans, such as a business cash advance, funders will want to see a time in business of at least six months.

Collateral

Collateral acts as a guarantee for the lender that if you default on the loan, the lender will be able to recoup their assets by claiming an asset such as equipment or property. 

Industry

Certain industries can be seen as riskier than others depending on the nature of the industry and external factors such as the economy and government restrictions.

More established businesses with good credit, higher revenues, and lower overall risk profiles can typically borrow more money and qualify for better loan terms. Startups and businesses with bad credit—or other types of high-risk borrowing profiles—may face higher interest rates and lower loan amounts and struggle to qualify for certain types of financing.

Approval odds by type of business loan.

Getting approved for a business also depends on the type of loan you need. Below are several popular business financing products, along with your basic odds of getting financed. 

Accounts receivable financing

Sell your outstanding invoices to get cash flowing now. This is a great option for businesses with large accounts receivable.

Time in business

Any

Minimum credit score

N/A

Minimum monthly revenue

$8,333

Collateral requirements

Invoices act as collateral

Equipment financing

Finance your purchase of business equipment, vehicles, and electronics. Pay your loan back in regular monthly payments over a set term plus interest.

Time in business

0-1 Year

Minimum credit score

520

Minimum monthly revenue

$0 – $8,333

Collateral requirements

The equipment acts as collateral for a lease and a portion of collateral for a loan.

Business credit card

A business credit card helps you track expenses, build a strong business credit history, and increase your working capital so you can reap the literal rewards.

Time in business

0-2 Years

Minimum credit score

650

Minimum monthly revenue

Varies

Collateral requirements

None

Business cash advance

Get an advance on your future sales earnings to get fast financing, and pay it back with a fixed daily percentage.

Time in business

6 Months

Minimum credit score

500

Minimum monthly revenue

$8,333

Collateral requirements

None

Business line of credit

Get a revolving amount of funds to borrow from when you need to and pay back later. Great for working capital and regular short-term expenses.

Time in business

6 Months

Minimum credit score

600

Minimum monthly revenue

$6,000

Collateral requirements

Varies

Business term loan

A term loan provides a lump sum that gets repaid in regular intervals over a set amount of time, also known as the loan term.

Time in business

1 Year

Minimum credit score

600

Minimum monthly revenue

$8,000

Collateral requirements

Usually required

SBA loan

Invest in longer-term small business growth or even refinance existing debt with a loan that is partially government-backed. An SBA loan has stricter requirements and is usually paid back over a longer term with lower rates than other loans.

Time in business

2 Years

Minimum credit score

640

Minimum monthly revenue

$8,000

Collateral requirements

Required for loans greater than $50,000

Are you a skilled mechanic looking to open your own auto repair shop? Or, maybe you're passionate about cars and interested in starting a business in the automotive industry. Whatever your motivation may be, opening an auto repair shop can be both rewarding and challenging.

To help you get started on the right foot, we've put together a comprehensive guide on how to start an auto repair shop. From creating a business plan to hiring mechanics and building your brand, we'll cover all the essential steps you need to take to make your dream of owning an auto repair shop a reality.

1. Choose the type of mechanic shop to open.

Before you delve further into the process, it's imperative to decide on the type of auto repair shop you wish to open. This choice should reflect your personal skills, interests, and the market demand in your area. You could opt for a general mechanic shop that caters to a wide range of vehicle issues or specialize in certain services like engine repair, bodywork, or oil changes. Alternatively, you may want to focus on a specific type of vehicle, such as luxury cars, trucks, or electric vehicles.

Consider the competition in your area and identify any gaps in the market that your shop could fill. For instance, if there aren't many shops offering specialized services for hybrid or electric cars, you might consider tapping into this niche market. Research potential customer needs, review competitor offerings, and then decide on the type of services your shop will provide. This decision will play a key role when you secure financing for your business and determine what equipment you'll need to purchase.

2. Create a business plan.

Like any other business, starting an auto repair shop requires careful planning. A well-structured and detailed business plan will serve as the roadmap for your business and help you make informed decisions along the way. Include the following items in your auto repair shop business plan.

• Target market - Clearly define your target market and provide detailed information about their demographics, needs, and preferences.
• Competition - Analyze your competitors and highlight their strengths and weaknesses. Identify your unique selling points and how you differentiate yourself from the competition.
• Services offered - Describe the range of services you offer and explain how they address the needs of your target market. Highlight any unique features or benefits of your services.
• Marketing strategies - Outline your marketing strategies—including online and offline tactics—to reach and attract your target market. Include details on advertising, social media, content marketing, and any other promotional activities.
• Financial projections - Provide detailed financial projections, including revenue forecasts, expense estimates, and projected profitability. Include any assumptions or factors that may impact your financial projections.
• Location - Choosing a location for your auto repair shop is a crucial step in your business plan. Consider factors like accessibility, visibility, competition in the area, and the proximity to your target market. If possible, choose a location on a heavily trafficked road to increase visibility and attract more customers. The premises should be large enough to accommodate multiple vehicles at a time, have a comfortable waiting area for customers, and space for storage. Ensure the location complies with zoning laws for auto repair businesses. Check the local city or county government's website or office for more information.

If you're not sure where to start with creating a business plan, there are plenty of resources available online to guide you through the process. Additionally, you can seek professional help from business consultants or attend workshops and seminars to gain a better understanding of creating a business plan.

3. Plan for upfront costs.

Starting an auto repair shop comes with significant upfront costs. These costs can be broadly categorized into startup costs, ongoing expenses, and unexpected costs. Understanding these expenses is crucial as it will influence your budgeting decisions, your pricing strategy, and the amount of financing you need to secure.

• Startup costs - These are the one-time costs associated with setting up your auto repair shop. They include the cost of acquiring or leasing a business premises, purchasing necessary equipment and tools, construction or modification costs to make your premises suitable for auto repair work, and initial inventory of parts and supplies. Additionally, you need to factor in costs for business registration, permits, and licenses.
• Ongoing expenses - These are the recurring costs of running your auto repair shop. They include rent or mortgage payments, utilities, salaries of employees, cost of auto parts and supplies, marketing and advertising, insurance, and maintenance costs.
• Unexpected costs - It's crucial to have a buffer for unforeseen expenses. Equipment may break down, there might be unanticipated repair works, or you may face slow business periods. Having a contingency fund can help cover these unexpected costs and keep your business running smoothly.

Some common costs for starting a mechanic shop include:

• Premises - The cost of premises for your auto repair shop can vary widely depending on location and if you decide to purchase, lease, or rent your property. If you choose to rent or lease a property, you can expect to pay between $1,500 and $15,000 per month, depending on the location and size of the property.
• Equipment - The cost of equipment can vary greatly depending on the services you offer. Basic equipment like car lifts, air compressors, wheel balancers, and diagnostic machines can cost between $5,000 to $10,000 each.
• Business registration, permits, and licenses - The fees for business registration, permits, and licenses can range from a few hundred to a few thousand dollars, depending on your location and the specific requirements of your city or state.
• Insurance - The cost of business insurance can range from $1,000 to $3,000 per year, depending on factors such as the size of your business, number of employees, and risk factors.

Keep in mind that these are average costs and actual costs may vary. It's important to do your own research and get quotes based on your specific needs and circumstances.

4. Choose a business structure.

Before officially starting your auto repair shop, you'll need to decide on the business structure that best suits your needs.

Sole proprietorship

This is the simplest and most common form of business ownership. You are the sole owner, responsible for all profits and losses, and personally liable for all debts and legal obligations.

• Advantages - Simplicity, full control, and direct profit.
• Disadvantages - Unlimited personal liability, difficult to raise capital.

Partnership

A partnership is an arrangement in which two or more people own and run a business together.

• Advantages - Shared responsibility, shared profits, potential for diverse skill sets.
• Disadvantages - Joint liability and risk of conflicts among partners.

Corporation

A corporation is a separate legal entity from its owners. It offers limited liability protection to its shareholders, meaning they are not personally liable for the company's debts and obligations.

• Advantages - Limited liability, ability to raise capital through selling stocks, perpetual existence.
• Disadvantages - Complex setup and management, double taxation.

LLC (Limited Liability Company)

An LLC combines the legal protection of a corporation with the flexibility and tax benefits of a partnership. It offers limited liability protection to its owners, known as members.

• Advantages - Limited liability, flexible management structure, pass-through taxation.
• Disadvantages - More paperwork, potential for self-employment taxes.

5. Register your business.

Registering your auto repair business is a crucial step in making your business official, compliant, and legally recognized. The process may differ slightly depending on the business structure you've chosen and the specific regulations of your state.

• Business name - Start by deciding on a name for your auto repair shop. Make sure the name is unique, easy to remember, and resonates with your target market. Check with your state's business registry to ensure the name is not already in use. You may also want to check if the domain name is available if you plan to create a website for your business. Once you've chosen a name, you can register it with your local government or state authorities.
• Employer Identification Number (EIN) - Next, you will need to apply for an Employer Identification Number (EIN) from the IRS. This is a unique nine-digit number that identifies your business for federal tax purposes. You can apply for an EIN online for free on the IRS website.
• State tax ID - In addition to the EIN, you may also need to apply for a state tax ID number, which is used to identify your business for state tax purposes. The process to apply for a state tax ID number varies by state.
• DBA (Doing Business As) - If you plan to operate your business under a different name than the one you registered, you will need to file a DBA (Doing Business As) or assumed name with your state or county. This allows the public to know who is doing business under a particular name.

Remember, it's important to consult with a business attorney or a professional business formation service to ensure you are meeting all legal requirements in your area. Not properly registering your business could lead to fines and legal issues down the line.

6. Secure financing.

Starting an auto repair shop requires a significant amount of capital. From renting or buying a space to purchasing equipment and inventory, you'll need enough funds to cover all the initial expenses. This is where securing financing comes into play.

• Traditional bank loans - A common option for funding your new business. These loans are provided by banks and typically require collateral and a good credit history.
• SBA loans - Small Business Administration loans that are guaranteed by the government. They offer favorable terms and lower interest rates but have stricter eligibility requirements.
• Equipment financing - This type of loan specifically covers the purchase of equipment for your business. The equipment itself serves as collateral for the loan.
• Business credit cards - A revolving line of credit that allows you to make purchases and access funds for your business. It's important to manage credit card usage responsibly to avoid high-interest rates and fees.

If you're not sure which option is right for you, Lendio can help. As the nation's largest small business loan marketplace, Lendio connects entrepreneurs with lenders and provides access to various loan options, including SBA loans, business lines of credit, and equipment financing. Learn more about auto repair business loans.

7. Acquire necessary permits and licenses.

Before opening your auto repair shop, you'll need to obtain the necessary permits and licenses. The requirements may vary depending on your location, so it's essential to research the local regulations and acquire all the necessary documents.

Some common permits and licenses for auto repair shops include:

• Business license - This is a general requirement for all businesses. It allows you to legally operate your business within a specific location.
• Sales tax permit - If you plan on selling products or parts, you'll need to obtain a sales tax permit from your state government.
• Environmental permits - These are required if your auto repair shop will be generating hazardous waste, such as oil and coolant.
• Occupational licenses - These are required for any technicians or mechanics working at your auto repair shop. The requirements may vary from state to state.

• Occupancy permit - This permit certifies that the building or property you're using for your auto repair shop meets the local building and fire codes. It's crucial to ensure the safety of your employees and customers.
• ASE certifications - The National Institute for Automotive Service Excellence (ASE) offers certifications for auto mechanics. While not always legally required, obtaining ASE certifications can greatly enhance your credibility and customer trust. These certifications demonstrate your knowledge and competency in different aspects of automotive repair and service. Consider encouraging your mechanics to get certified or hire those who already have ASE certifications.

Make sure to stay up-to-date on all permit and license renewals to avoid any unnecessary interruptions to your business operations. It's a good idea to consult with a business attorney or your local small business development center to ensure you're covering all your legal bases.

For a more comprehensive list of permits and licenses needed for an auto repair shop, check with your local government or consult with a business attorney.

8. Set up bookkeeping and a business bank account.

Proper bookkeeping is crucial for any business, and an auto repair shop is no exception. Keeping track of your income and expenses will help you make informed decisions and manage cash flow effectively. It's also essential to have a separate bank account for your business transactions to maintain accurate records.

You can choose to do bookkeeping yourself or hire a professional accountant. However, it's recommended to have a basic understanding of bookkeeping to ensure the financial success of your business.

9. Get business insurance.

As with any business, it's important to protect your auto repair shop from potential risks and liabilities. This is where insurance comes into play. Some key types of insurance that an auto repair shop should consider are:

• General liability insurance - Protects against property damage, bodily injury, and advertising injury claims.
• Property insurance - Covers damages to your business property due to theft, fire, or other disasters.
• Business interruption insurance - Provides financial support in case your shop is unable to operate due to a covered event.
• Workers' compensation insurance - Covers employees for work-related injuries or illnesses.
• Garagekeepers liability insurance - This type of insurance is particularly important for auto repair shops. It covers damages to a customer's vehicle while it's in your care, such as during a repair or maintenance service.

It's important to research different insurance options and consult with an insurance agent to determine the best coverage for your auto repair shop.

10. Hire mechanics.

Having a skilled and reliable team of mechanics is crucial for the success of your auto repair shop. When hiring mechanics, it's important to consider their experience, skills, and qualifications. Additionally, conducting background checks and calling references can help you make informed hiring decisions.

You should also have clear job descriptions and expectations for your mechanics, as well as provide ongoing training to keep their skills up-to-date.

11. Build your brand.

As with any business, building a strong brand is essential for attracting customers and standing out in the market. Some key aspects of building your auto repair shop's brand include:

• Creating a professional logo and visual identity - This will help customers recognize and remember your business.
• Establishing an online presence - In today's digital world, having a website and social media presence is crucial for promoting your auto repair shop and reaching potential customers.
• Offering exceptional customer service - Satisfied customers can be the best form of advertising for your business. Provide quality services and prioritize customer satisfaction to build a positive reputation.

Starting an auto repair shop requires careful planning and consideration of various factors. By creating a detailed business plan, choosing the right business structure, securing financing, obtaining necessary permits and licenses, managing bookkeeping and insurance, hiring skilled mechanics, and building your brand, you can set yourself up for success in this competitive industry.

Lendio is here to help you secure the funding you need to turn your dream of owning an auto repair shop into a reality. Apply for a small business loan today.

The holiday season is a golden opportunity for businesses to boost their sales and strengthen customer relationships. A well-planned and executed holiday marketing campaign can make a significant impact in getting your brand noticed and maximizing your revenue potential. This guide will provide insights into effective holiday marketing strategies and ideas to help your business shine brighter this season.

Holiday marketing strategies

1. Lean into local.

According to a survey from Bankrate, 72% of shoppers aim to shop with a small business this holiday season. These shoppers understand the challenges small businesses face and are eager to support their local community. Make it effortless for them to do so.

Shoppers want to feel good about their purchases, the recipients, and the places they buy from. Share your story to let customers know how much you value their patronage. Provide them with all the positive vibes they desire as they enter and exit your online or physical store.

Embrace the local spirit by taking steps to support small businesses in the community:

• Collaborate with neighboring businesses to offer special promotions.
• Whenever possible, work with local suppliers and manufacturers.
• Hire local talent for live events.
• Give back to charities and nonprofits in your community.

2. Nail your online strategy.

In today's digital era, nailing your online strategy is critical for a successful holiday marketing campaign. Customers are increasingly turning towards online shopping, and a well-executed online strategy can significantly boost your holiday sales.

Ensure your website is user-friendly and easy to navigate. Highlight your holiday deals on your homepage and consider creating specific landing pages for your holiday marketing campaigns. An efficient, attractive website design can make a big difference in customer experience and overall sales.

3. Update your holiday hours.

Keeping your customers informed about your operating hours during the holiday season is essential. Customers appreciate knowing when they can visit your store or reach out for customer service. It's crucial to update your holiday hours on both your website and your Google Business profile.

On your website, prominently display your holiday hours on the homepage and the Contact Us page. Make sure it's easily noticeable to avoid any confusion.

Updating your Google Business profile is equally important. Many customers turn to Google to find out if a business is open before they make a trip. To update your hours on Google, sign in to your Google My Business account. From there, click on the "Hours" tab, and then the pencil icon next to "Add special hours." You can add the dates and times your business will have altered hours due to the holiday season.

Remember, accurate information boosts customer trust and satisfaction, contributing to successful holiday marketing campaigns.

4. Prepare your staff.

Long waiting lines are hated by everyone and often result in customers abandoning their plans. So, how can you avoid this? One effective solution is to hire extra staff. This will ensure that your store remains well-staffed, even during peak shopping hours.

Training your staff to provide exceptional customer service and increase sales can also make a significant impact on your holiday marketing campaign's success.

5. Plan your holiday communications.

Now’s the time to overcommunicate rather than undercommunicate. Yes, your customers’ social media feeds and email inboxes will likely flood with messages—but they’d rather get up-to-date notifications on delivery expectations than silence.

Use your website, social media profiles, email program, and more to keep customers in the know:

• What deals can they expect this holiday season?
• Will there be any expected shipping delays?
• What’s the cutoff date for shipping by Christmas?
• Are there any products you anticipate will sell out quickly?
• Where can customers find your deals? Your website, Amazon, retailers?

Don’t leave it up to guesswork—give your customers all the FAQs and answers they need.

6. Brace for impact.

Anticipate demand upfront. Cash flow forecasts will help, but plan for the worst so you’re not caught off guard.

• Website: Make sure your website’s ready to handle a jump in traffic. The last thing you want is a site crash on Black Friday.
• Stock up on inventory: Don’t miss out on sales by understocking products—plan for adequate inventory.
• Hire extra help: Prioritizing online sales doesn’t mean you’ll need less help. There are still customers to serve, orders to fulfill, and sales to make—make sure you’re staffed appropriately.
• Budget for increased marketing: It takes money to make money. If you want more digital sales, plan on more digital spend. If money is tight, consider getting a business line of credit to expand your working capital.
• Upgrade your email account: Avoid unnecessary overages by estimating your email volume in advance. If your email volume (marketing emails, shipping notifications, support, etc.) is set to skyrocket this holiday season, consider upgrading your account in advance.

Promotion ideas

Strategies to boost sales and draw in holiday shoppers.

With the right strategies and creative holiday marketing ideas, your business can effectively attract holiday shoppers and significantly enhance sales, thereby making the most out of this festive season.

Offer gift cards.

Gift cards are often overlooked by small businesses. While they may seem expensive upfront at $1-$2 per card, the stats on gift cards may change your perspective. A whopping 54% of U.S. consumers buy gift cards as holiday gifts. On average, 61% of gift card recipients spend more than the card's value. So, despite the initial investment, your returns are likely to increase. If physical gift cards aren't your preference, consider offering digital ones. This is especially appealing to the younger demographic who prefer keeping gift cards on their phones.

Offer free shipping.

While it's true that not every business can implement this strategy, it remains a powerful method to attract customers. A 2023 Gartner survey found that 45% of holiday shoppers identified free shipping as one of the top drivers for a purchase decision. If it's feasible for your business to join in, it's advisable not to hesitate and seize the opportunity.

Hold a photo contest.

Humans have four fundamental needs: food, water, shelter, and the desire to see photos of themselves on the Internet. Take advantage of this by organizing a delightful holiday photo contest. Ugly sweater pictures are consistently well-received, but the theme options are limitless.

Add coupons to purchases.

During the holiday season, customers have come to expect and appreciate the presence of coupons. If you choose not to offer any, you may miss out on potential business. To reward your loyal customers and attract new ones, consider utilizing the tried-and-true method of offering a good old-fashioned coupon.

Partner with a charity.

Apart from spending money during the holidays, consumers also seek to make a meaningful impact with their purchases. When you support a worthy cause, the positive effects are felt by all.

Provide gift wrapping.

Offering a useful service at a fairly low cost is a great way to endear customers to your business. Whether you have a retail store or operate online, make it clear that you are happy to provide gift wrapping for your customers.

Use a window display.

If you have a physical store, why not borrow a tip from the good old days and create a captivating holiday window display? And if your business operates exclusively online, no worries! You can transform your website into a modern holiday window display that leaves a lasting impression.

Share the sample love.

If product samples are relevant to your business, consider giving them to potential customers during the holiday season. Additionally, try sending some samples to bloggers and product reviewers, as they can help spread the word through gift guides and articles. It's a great way to increase visibility and reach a wider audience.

Stand out from large competitors.

Ways to stand out from large competitors.

In the face of stiff competition from large corporations, small businesses can leverage their unique attributes and creative holiday marketing campaigns to stand out and secure their market share during the festive season.

Fight the fights you can win.

In the online marketplace, competition is fierce. Your local ecosystem may have a few direct and indirect competitors, but in the world of e-commerce, you'll be up against thousands of businesses, both big and small. To succeed during the holiday rush, focus on the battles you can win.

Don't waste your energy on pricing wars or trying to outdo big-box retailers like Target and Wal-Mart on delivery speed. Instead, choose the battles that truly matter and where you have an advantage.

Create connections.

No matter how low the prices at Wal-Mart's floral department, chances are you don't have a personal connection with them. However, when it comes to your local flower shop, it's a different story. The owner probably knows you by name, remembers your arrangement preferences, and even remembers your special someone. When it comes to building personal relationships, your larger competitors just can't compete.

Provide exceptional customer support.

The holidays are wild for everyone—not just your small business. Offer relief from the chaos by taking your customer support to the next level.

If you’ve traditionally relied on phone support, consider expanding your service channels to include social media, chat, video, and email. And if your schedule is jam-packed, consider hiring and training specific customer support help.

Holiday campaign examples

Holiday campaign examples from successful small businesses.

Several small businesses have conducted successful holiday marketing campaigns, setting a benchmark for others. These examples demonstrate creative strategies and effective execution.

1. Death Wish Coffee: This company initiated a "Golden Ticket" campaign during the holiday season. Each order shipped in November included a golden ticket offering a chance to win prizes. This lottery-style campaign not only boosted their sales but also solidified customer loyalty by making shopping a fun and rewarding experience.
2. BarkBox: BarkBox has always been skilled at creating holiday-themed boxes, but their "Home Alone"-themed box was a big hit. The company took the popular holiday movie and turned it into a unique and festive product offering, which drove customer engagement and sales.
3. Erin Condren: Renowned for personalized and custom products, Erin Condren, a stationery company, launched a "Gifts that Give Back" campaign during the holiday season. The company pledged to donate a portion of its holiday sales to a non-profit organization, thereby connecting with customers on an emotional level and promoting social responsibility.

Successful holiday marketing requires strategic planning, creative ideas, and a deep understanding of customer needs. With the right strategies and execution, your small business can navigate the holiday rush and achieve growth. Remember, the holidays are about connecting with customers, sharing the festive spirit, and showing appreciation for their loyalty and support.