LinkedIn  Twitter  YouTube  Facebook

Small Business Owners Trim Gifting Budgets

Employee gifting takes a hit as customer gift budgets remain steady

Small business owners are cutting back on their gifting, particularly to their employees, according to the American Express OPEN Small Business Holiday Monitor. The study found that 57 percent of entrepreneurs had changed their holiday gift-giving behavior, and while 47 percent planning to give gifts to customers (down from 52 percent in 2008), only 35 percent will be giving to employees—dropping from 46 percent in 2008.

Drawing on the responses of 516 small business owners, the study found that 42 percent of entrepreneurs plan to give fewer or less expensive gifts to both customers and employees. But those who are giving gifts to customers, the budgets remain steady compared to last year’s, with an average gift budget of $455, compared to $457 in 2008. The bigger hits were seen in spending on employee gifts.

"Really not much has changed in gift giving to customers, but employees are the big losers this year,” said Alice Bredin, small business advisor to American Express OPEN. “Business owners are still feeling economic pain, and the reason we're seeing the commitment to customer gifts over employee giving is just because business owners realize if they don't give to customers, it could affect sales and marketing."

The cutbacks seem rooted in ongoing concerns about the economy, with a full 69 percent of respondents saying that they do not believe the worst of the U.S. economic woes are over. Some respondents are taking measures to save money, while still being able to give, with 28 percent using reward points or bartering to avoid laying out hard cash for gifts.

The most popular gifts for customers will be cards and calendars. Entrepreneurs also mentioned gift cards for retail and restaurant, food baskets, wine, flowers and dedicated donations to a charity as possible gifts. In spite of the economic challenges, there are some who are actually increasing their spending.

"It's a year of creativity, a year of doing things without spending money," said Bredin. "It's a hard thing for small business owners because they work so closely with employees and totally understand the contribution of employees, but there are tough decisions to be made. The key is to say thank you even if there is no gift, some kind of marking of the holiday season where the business owners can show they genuinely appreciate their employees."