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Reality Check: Is Small Business Saturday Actually Working?

The day celebrating small business has plenty of support (and has amassed criticism). So, three years after its inception, what's it really done to help out the little guy?
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Nearly three years ago, Michael Bloomberg, the mayor of New York City, and Kenneth Chenault, the CEO of American Express, stood together at a press conference in Manhattan to inaugurate the first Small Business Saturday, a nationwide initiative that urges customers to open their wallets during the holiday season to the small and local businesses in their communities.

"This year, if you have the opportunity to shop on the Saturday after Thanksgiving, make it a point to visit local small businesses," Bloomberg pleaded back in 2010. "It really can make an enormous difference for merchants in our communities."

Naturally, the day is as much a celebration of small business as it is a marketing ploy for American Express OPEN Forum, the group that organizes the branding and promotion around the event. Qualifying merchants, for instance, can receive free, geotargeted Facebook ads for the day and download marketing materials to display in store windows. (The American Express logo features prominently in the collateral.)

Consumers, on the other hand, can receive a $25 statement credit for patronizing a small business on Saturday.  The goal, according to American Express, is perhaps a noble one: amidst the stampedes of Black Friday and the frantic website reloading of Cyber Monday, Small Business Saturday is "dedicated to supporting small businesses nationwide."

So, the obvious question: Has it worked?

American Express has gone to great lengths to prove that yes, indeed, it is working. Last year, it even hired its own independent market-research firm, Echo Research, to comb through reams of social data to figure out just how many people shopped at small businesses because of the promotion.

In 2011, about 2.7 million users liked the campaign on Facebook, while 230 organizations and 75 corporations publicly supported the day, the firm found. About 15,000 businesses signed up for free Facebook advertising. In total, the researchers estimate that 103 million Americans shopped at "independently owned businesses" during last year's Small Business Saturday--including President Obama, who took his daughters to an independent bookstore a few blocks from the White House.

It's tough to estimate just how much additional revenue the day injected into the economy (American Express does not release those statistics) but anecdotally, entrepreneurs and small-business owners seem willing to try out the promotion. After all, there's little downside of free visibility, even if the business is piggybacking on another brand's promotion.

"We have participated in Small Business Saturday in the past, and we find it helps our business build awareness in the local community," says Deborah Sweeney, the CEO of MyCorporation.com, a 40-person company in Calabasas, California, that assists small businesses through the incorporation process. "We've found that many small businesses chose that day to get information for incorporating or forming an LLC."

Another entrepreneur, Shahzad Paul, the CEO of BeBodySmart.com, says he made 900 new customers because of the promotion last year.

"That was--and has been--our best sales day so far," he says.

Despite the general enthusiasm, there's been some backlash to the event from independent store owners who say American Express charges high credit fees (they're about 2.5%) and will cut lines of credit when they need them most.

Cindy Baxter, a retail consultant and a prominent voice among independent business owners, was initially tapped to help launch Small Business Saturday but then defected to her own local retail initiative, the 3/50 Project, which "promotes stronger local economies through support of independent retailers."

Last year, she told The Wall Street Journal that for American Express, the promoting of Small Business Saturday is "a monetary boon if they can get more people to use the card…But there's been no reciprocal kindness back to the merchants."

Others are more hopeful. The National Federation of Independent Business released a survey this week showing that 67% of consumers plan to "shop small" on Small Business Saturday--an increase from 44% in 2011.

"Small Business Saturday gives us a chance to show our appreciation and to help America's job creators in a very real way, by patronizing small shops, restaurants, and service providers," NFIB CEO Dan Danner said in a statement. "Anything that helps with sales is certainly appreciated by small-business owners, many of whom have struggled to stay afloat in a rough and uncertain economy."

 

 

Last updated: Nov 21, 2012




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