… Fewer Plan Bonuses and Raises for Employees, According to the American Express OPEN Small Business Holiday Monitor
Less than half (47%) of small businesses plan to give gifts to customers this holiday season on par with last year (52%), and their total customer gift budgets remain steady versus last year ($455 in 2009 vs. $457 in 2008), according to the American Express OPEN Small Business Holiday Monitor, an annual survey of business owners conducted since 2002.
But in this economic environment, fewer small business owners (35%) are giving employee gifts (vs. 46% in 2008), 31% have plans to give year-end bonuses (vs. 44% in 2008) and 16% will give raises (vs. 30% in 2008). Almost half of business owners (47%) will give employees time off over the holidays, even with last year (47%), although they are less inclined than last year to participate in a volunteer activity with their employees (19% in 2009 vs. 28% in 2008).
Overall, more than two thirds of business owners (69%) do not believe the worst of the U.S. economic woes are over, and nearly six in ten entrepreneurs (57%) say the economic downturn has changed their holiday gift giving behavior.
And with one in ten planning to increase their customer gift giving this year, some business owners are planning to use the downturn as an opportunity to win over more customers.
“Entrepreneurs understand the importance of showing appreciation for customers’ business especially during tough economic times,” says Alice Bredin, American Express OPEN business advisor. “While the gifting emphasis may be on customers, employers recognize the gift of time as a way to give to employees without breaking the bank.”
Among those planning to give gifts, one in four (26%) business owners said they’ll continue to give holiday gifts to customers because they have done it for so long it would seem strange to stop now. The top reasons business owners will give gifts to clients, include:
The most popular way to recognize clients remains sending cards and calendars; followed by gift cards for retail and restaurants; fruit and food baskets and making a donation to a charity on a client/customer’s behalf. More expensive gifts, such as branded or monogrammed items have seen the sharpest decline (7% down significantly from 19% in 2008), while other gifts such as wine/liquor and flowers/plants are holding strong.
Economic Stress Far Outweighs Holiday Stress
Two-thirds of business owners say they are stressed heading into the holidays. Among these business owners:
To ensure they have the ability to give gifts to customers and employees, one third of entrepreneurs (31%) say they are making personal sacrifices such as giving fewer gifts to family, taking less pay or giving up vacation.
Gift Giving During a Tight Economy
Selecting the right holiday gifts can be difficult enough in normal times, but it becomes especially so when the economy is tight. Too lavish of a gift and your clients and customers might wonder about your judgment. Too cheap, and it may not make the right impression. Keep in mind that a gift sends a message about the way you run your business, so choose and plan carefully to ensure that the gifts provide thanks and places your company in a good light.
Bredin Offers These Tips:
Gender Data Key Findings
The American Express OPEN survey found some differences between men and women in holiday plans for clients and employees. The average holiday gift budget for male business owners is 52% higher compared to women ($498 vs. $327), although men and women are equally likely to give their employees year-end bonuses (29% vs. 27%).
At the same time, men are more likely to give raises (20% vs. 11%), and women are more apt to give employees time off (46% vs. 41%) and take part in a volunteer activity as a group (23% vs. 13%). Women are also more likely to make personal sacrifices to give client gifts than their male counterparts (44% vs. 29%).
Survey Results by Region
Entrepreneurs in the West are more likely to plan to give gifts to customers this holiday season (51%) than those in the North East (48%), North Central states (48%) and South (43%). However, business owners in the North Central states have bigger holiday budgets for clients and customers ($566) than those in the North East ($513), West ($446) and South ($356).
Saying thank you is the leading reason to send a client a gift among business owners who are doing so—especially in the North East (90% vs. 82% overall), followed by the West and South (each 82%) and North Central states (73%).
Entrepreneurs in the West are also more likely to plan to give gifts to employees this holiday season (40%) than those in the North East (28%), South (34%) and North Central states (35%).
Employees in the North East are the most likely to receive end of year bonuses (43%) while staff in the North Central and West states will get a holiday party (49% each) and those in the South and West are more likely to get time off (52% each).
Business owners in the West are more stressed out by the economy than the holidays (50%) compared to those in the North Central States (45%), North East (44%) or the South (29%).
One in ten (10%) of entrepreneurs in the North Central States are likely to be stressed out by the holidays versus the South (5%), North East (3%) or the West (less than 1%).
Survey Methodology: American Express OPEN Small Business Monitor
The American Express OPEN Small Business Holiday Monitor released annually was conducted on the telephone among a random sample of small business owners/ managers of companies with fewer than 100 employees. In total, 516 interviews were completed by Echo Research between October 6 and October 14, 2009. The poll has a margin of error of +/- 4.4 percentage points at the 95% level of confidence.
About American Express OPEN®
American Express OPEN is dedicated exclusively to the success of small business owners and their companies. OPEN supports business owners with exceptional service and tailored products and services that deliver purchasing power, flexibility, control and rewards to help customers run their business. Specifically, business customers can leverage an enhanced set of products, tools, services and savings, including charge and credit cards, convenient access to working capital, robust online account management capabilities and savings on business services from an expanded lineup of partners. To obtain more information about OPEN, visit OPEN.com, or call 1-800-NOW-OPEN to apply for a card. Terms and conditions apply.
American Express Company www.americanexpress.com is a leading global payments, network and travel company founded in 1850.