The two biggest shopping days of the year—Black Friday and Cyber Monday—are just around the corner.
For consumers, it's a great opportunity to save big—and for businesses, it's a chance to drum up sales and finish the year on a high note.
And if last year’s sales numbers are any indication, 2023 is likely to be a big year for Black Friday and Cyber Monday (or BFCM). Despite inflation putting pressure on discretionary spending, a record 196.7 million Americans shopped online or in stores during Black Friday and Cyber Monday in 2022.
Data from Adobe Analytics also showed that in 2022, online spending on Black Friday alone reached $9.12 billion in the US. This was a bounce back after a dip the previous year (in which Black Friday online spending went from $9.03 billion in 2020 to $8.92 billion in 2021).
But for retailers participating in BFCM, there are tradeoffs to getting in on the sales frenzy—potential inventory management issues, higher marketing costs and more demand on staff.
Finance teams need to balance discounts with potential revenue and ensure the returns justify the costs. To do this, they need FP&A technology that can support them with agile demand planning and allows them to flexibly update budgets based on the latest actuals from the peak season.
We've put together this guide to help you best prepare your business for Black Friday and Cyber Monday 2023, with strategies and considerations for your financial and operational planning—plus free Excel templates to help things run more smoothly.
Accurately predicting your inventory needs is a huge determining factor in whether your business will come out on top after BFCM or suffer a loss. Not enough stock, and you’ll miss out on the potential for massive sales. Too much stock, however, and you’ll be saddled with extra inventory that eats into your bottom line.
For instance, last year going into peak sales season, the toy giant Hasbro reported a 31% hit to its operating profit for its consumer products division, partially due to inventory buildup, Retail Dive reported.
If you work in the finance department at a company that will be participating in Black Friday or Cyber Monday deals, it's important to be able to plan well ahead of time—even as early as May, suggests David Ian Grey, founder of the retail advisory firm DIG360, in a Retail Insider article.
To predict the potential demand you’ll see from customers and model the impact sales discounts will have on your bottom line, here are two important strategies to consider:
One factor that can cause you to overshoot or undershoot planned inventory is a lack of visibility into operational data that's siloed outside of your finance department.
Other departments such as your logistics, e-commerce and field sales teams have critical insight into the current state of your operations and can help assess whether the targets you set for Black Friday and Cyber Monday sales are realistic.
That’s why it’s especially beneficial to carry out your planning with software that integrates and automatically reconciles data from all your source systems covering the scope of both finance and operations.
When UK-based shoe retailer Schuh implemented Vena, not only did they cut their budgeting cycle time by 50%, but they also included their operations teams into more of their financial planning processes, boosting their forecast accuracy as a result.
“We wanted to open up budgeting to wider operational management,” says Mark Raley, Schuh’s Head of Finance. “We have a regional field team who are looking after a number of stores. […] It's [Vena] very flexible and gives them the ownership that they probably felt they didn't have previously. Our old top-down approach to budgeting has been turned on its head the way it should be. They’re owning the store.”
Performing scenario analysis (also referred to as what-if analysis) allows your finance team to model different scenarios so that you can understand the impact of these outcomes on things such as revenue, expenses and profit.
For example, you could model 3 different scenarios:
Each of these scenarios will have a different impact on your bottom line and with scenario analysis tools, you'll be able to project how each scenario will affect your business so that you can make the best possible decision.
Planning your revenue for the next month, quarter and year is a crucial part of just about every FP&A team's job. After all, revenue is a key indicator of an organization's financial health—and understanding your revenue metrics in detail allows you to make decisions around which product lines to feature in holiday campaigns, where to allocate marketing spend and much more.
Tip: To stay agile, be sure to implement rolling forecasts as opposed to the older, more traditional static forecast model.
So how can your finance team help prepare your organization for Black Friday and Cyber Monday? We've put together a list of tips and best practices for FP&A teams—and included free Excel templates to help with your planning:
As was mentioned earlier, it is important for FP&A teams to track, project and report on revenue. Missing revenue targets isn’t good for any business, especially those that are publicly traded where coming short of quarterly or yearly revenue targets likely means a decline in share value and increased scrutiny of the company's leadership team.
FP&A teams need to be able to project revenue with confidence, not just for events such as Black Friday or Cyber Monday, but for every month throughout the year.
To help you, we've created an Excel template for revenue projections that you can download today for free.
From increased marketing spend to additional advertising dollars, your organization is likely planning to spend money on promoting your Black Friday and Cyber Monday deals. To keep track of everything, you're going to want to create a detailed expense budget. Doing so will ensure that you know exactly how much money you're spending and where the money is being allocated. This will help you calculate metrics such as ROAS (return on ad spend) and understand which marketing levers generated the most revenue and best ROI.
Download our free Marketing Campaign Report Template for Excel today to track the performance of all your ad campaigns.
While most retail companies focus on expenses for marketing and advertising for Black Friday and Cyber Monday, they might forget about the increase in staffing costs during these busy shopping periods. Maybe you need to hire additional staff to work your retail stores or hire an additional developer to ensure your website is ready for Black Friday and Cyber Monday. Whatever the case may be, engaging in workforce planning allows you to understand how your labor expenses, among other costs, will affect your business's bottom line.
If you're looking to manage all your labor expenses in one place, download our free Workforce Planning Excel Template today.
Hope for the best, prepare for the worst.
While Black Friday and Cyber Monday can be a huge boom to an organization's revenue, it's also important to prepare for a scenario in which your sales don't quite hit expectations. As discussed earlier, this is where scenario analysis comes in handy. Modeling both best-case and worst-case scenarios helps your business stay agile and prepared for whatever the outcome may be.
Get your free What-If Analysis Template for Excel so that you can forecast your financial future with confidence.
For a lot of retail and e-commerce focused businesses, Black Friday and Cyber Monday are their biggest sales days of the year. That means a lot of the budgeting decisions you make for the rest of the year are dependent on these core milestones.
If your budgeting process is too rigid and cumbersome, then you’ll have a difficult time updating your plans once you get the latest actuals from the peak season (usually the last two months of the year, coinciding with the holiday rush).
That’s where investing in budgeting and planning software that prioritizes flexibility is especially valuable for retailers. Vena, for instance, seamlessly updates your templates with the latest data and allows you to model on the fly with the familiarity and flexibility of the Excel interface.
By incorporating these best practices and taking advantage of our free Excel templates, your FP&A team will be able to prepare the business for the biggest shopping event of the year.
Whether it's projecting revenue and marketing expenses or modeling different scenarios, finance teams should be at the heart of every business's strategy for Black Friday and Cyber Monday.
