Black Friday may happen in November, but many of the decisions that determine whether it is profitable need to be made months earlier.

For smaller retailers and ecommerce businesses, the main challenge is not always generating demand. It is paying for the stock, marketing, staff and fulfilment required to meet that demand before the resulting sales income reaches the bank.

A supplier may require a deposit in August or September. The remaining balance and freight costs might follow in October. Marketing expenditure may then increase throughout November – but the business may not recover that money until customers begin buying towards the end of the month.

That timing gap can place considerable pressure on an otherwise healthy business.

Preparing early gives SMEs more opportunity to negotiate, forecast accurately and decide whether Black Friday is genuinely worth pursuing.

Start by deciding whether Black Friday is right for your business

Black Friday can create significant sales, but higher revenue does not automatically mean higher profit.

Before committing to discounts or additional stock, consider:

• Did your customers respond to Black Friday last year?
• Which products sold – and which were left over?
• Did promotional orders lead to repeat customers?
• How much did you spend on advertising, delivery and temporary support?
• Did returns or abandoned orders affect the result?
• What was the actual profit after every cost was included?

Some businesses benefit more from offering a smaller discount on selected products, creating bundles or rewarding existing customers than from reducing prices across their entire range.

Others may decide that Black Friday does not suit their margins, positioning or customer behaviour at all.

The aim should not be to participate simply because competitors are doing it. The aim should be to identify a commercially sensible opportunity for your business.

Work backwards from the date you need the stock

Start with the date your products must be available to customers – not the date Black Friday begins.

Then work backwards through every stage:

1. Stock needs to be received, checked and entered into your system.
2. International orders need time to clear customs and reach your premises.
3. Suppliers need time to manufacture or prepare the goods.
4. Final balances may need paying before dispatch.
5. Deposits and purchase orders must be placed first.

This process reveals your real deadline.

If stock needs six weeks to manufacture and another four weeks to reach you, a November promotion may require a confirmed order and supplier payment during August or September.

Planning around the sales date alone can leave a business ordering too late, paying more for freight or launching with insufficient stock.

Calculate the complete margin – not just the discount

A Black Friday offer should be tested against the full cost of making the sale.

Include:

• The purchase price of the stock
• Import duties and freight
• Packaging and delivery
• Payment-processing fees
• Advertising expenditure
• Temporary staff or outsourced fulfilment
• Expected returns and refunds
• Any finance costs
• The customer discount

Example case:

Consider an illustrative product normally priced at £75.

A 20% Black Friday discount reduces the selling price to £60. If the complete cost of supplying the product is £40, the gross profit is £20.

If ordering earlier allows the business to reduce the landed cost to £36, the gross profit increases to £24 – even though the customer sees exactly the same offer.

That is £4 more profit per item, or a 20% increase in gross profit compared with ordering at the higher cost.

Early-order discounts are never guaranteed, but speaking to suppliers sooner may provide more room to discuss pricing, quantities, payment terms and delivery dates.

Forecast the cash-flow gap

Once the stock and campaign costs are understood, map when the money will leave and return to the business.

A simple weekly forecast should include:

• Supplier deposits
• Final supplier payments
• Freight and import costs
• Marketing expenditure
• Website or software costs
• Temporary wages
• Packaging and delivery
• Expected sales income
• Payment-provider settlement times
• Returns and refunds
• Tax and other normal operating expenses

Use actual figures from previous years where possible. Avoid basing the forecast entirely on your best sales period.

It is also worth modelling three outcomes:

• Expected: Sales perform broadly in line with your realistic forecast.
• Better than expected: Demand is stronger and additional stock or staff may be required.
• Worse than expected: Sales are slower, leaving the business with more stock and less available cash.

The third scenario is particularly important. A plan should remain manageable even when the campaign does not perform as hoped.

Speak to suppliers before the seasonal rush

Earlier conversations may give SMEs more choice.

Ask suppliers about:

• Discounts for larger or earlier orders
• Minimum order quantities
• Deposit requirements
• Staged payment arrangements
• Production deadlines
• Alternative products with shorter lead times
• Delivery and freight options
• What happens if production is delayed

A lower unit cost can make a meaningful difference when the product will later be discounted. However, buying additional stock only makes sense when there is credible demand and the business can manage the downside if it does not sell.

A bulk discount is not a saving if the goods remain in storage for the following year.

Prepare the customer journey early

Stock is only one part of Black Friday preparation.

Customers will expect to find the offer, understand it and complete their purchase easily – often from a mobile device.

Before campaign traffic arrives, review:

• Website speed on mobile and desktop
• Product descriptions and images
• Stock information
• Promotional codes
• Checkout steps
• Delivery information
• Returns policies
• Payment options
• Abandoned-cart emails
• Customer-service capacity

Test the complete journey yourself, from opening an advert or email to receiving the order confirmation.

It is better to identify a broken promotional code or confusing delivery message during testing than when the campaign is live.

Build the marketing plan around profit

Black Friday marketing becomes crowded, so decide early what you are offering and who it is for.

Rather than showing the same promotion to everyone, consider separate messages for:

• Existing customers
• Previous Black Friday buyers
• Customers who have recently browsed relevant products
• New prospects
• Customers who have not purchased for some time

The most important figure is the return after advertising, discounts, delivery and fulfilment costs have been deducted.

Plan for the operational pressure

A successful promotion can create its own problems if the business is not prepared to fulfil the orders.

Consider whether you will need:

• Additional customer-service cover
• Temporary warehouse or shop staff
• Longer opening hours
• More packaging materials
• Extra collection slots from couriers
• Additional card-payment capacity
• Better broadband or phone support
• More time to process returns

Confirm external support early where possible. Waiting until November may leave fewer options or require more expensive last-minute arrangements.

Could finance help cover the timing gap?

Sometimes the forecast identifies a clear gap between the date an SME must pay for Black Friday preparations and the date customers are expected to buy.

Several finance options may be worth exploring, depending on what needs paying and how the business trades.

Flexible credit

A flexible payment facility may allow an eligible business to pay a supplier upfront and spread the cost over an agreed period.

Through FinCova’s partnership with Funding Circle, eligible businesses can explore FlexiPay for supplier bills, stock and other business expenses.

This may be useful where the cost and repayment period can be aligned with expected sales. The fees, instalments and total amount repayable should be included in the campaign margin before proceeding.

Business loans

A business loan could support a wider, planned investment covering stock, marketing, staffing or other preparation costs.

The repayment term should reflect how and when the investment is expected to generate income. A business should also check the total amount repayable, any security requirements and whether repayments remain affordable if sales are lower than forecast.

Revenue-based finance

For eligible card-taking businesses, revenue-based finance or a merchant cash advance may provide funding based on future sales.

Repayments are typically collected as an agreed percentage of revenue or card takings, allowing them to adjust as trading changes. However, the complete fixed cost and effect on post-Black Friday cash flow must be understood.

Asset finance

If the business needs equipment with a useful life extending beyond the campaign – such as machinery, commercial vehicles or warehouse equipment – asset finance may allow the cost to be spread over time.

Long-term equipment should not automatically be funded using a short-term product simply because it is the quickest option available.

When finance may not be the right answer

Finance should support a credible, profitable plan. It should not be used to make an unprofitable promotion appear workable.

Take extra care if:

• The sales forecast is based mainly on hope
• The stock is highly seasonal or perishable
• The finance cost removes most of the expected profit
• Repayments begin well before sales are expected
• The business has no contingency for returns or delays
• Existing borrowing is already placing pressure on cash flow
• Unsold stock would be difficult to sell later

If the numbers do not work after every cost has been included, reducing the order, changing the offer or deciding not to participate may be the better commercial decision.

Your SME Black Friday checklist

Before confirming your campaign:

1. Review last year’s sales, profit, returns and advertising performance.
2. Decide which products and customers the offer is intended for.
3. Calculate the complete margin after every associated cost.
4. Work backwards from the required delivery date.
5. Confirm supplier prices, deposits and lead times.
6. Produce expected, stronger and weaker cash-flow forecasts.
7. Test the website, checkout and promotional journey.
8. Secure any additional staff, delivery or customer support.
9. Identify the precise cash-flow gap.
10. Compare suitable finance options before supplier deadlines arrive.

Prepare for the opportunity – not just the promotion

The SMEs that manage peak season most effectively are not necessarily those offering the biggest discounts.

They are the businesses that understand their margins, order at the right time, prepare their operations and know exactly how much cash they will need before the sales begin.

If you are planning for Black Friday, Christmas or another seasonal trading period, FinCova can help you explore suitable funding and business services through our trusted partner network.

Speak to FinCova before the supplier deadline and understand the options available to your business.