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, 2024 is likely to be a big year for Black Friday and Cyber Monday (or BFCM). A record 200.4 million Americans turned out in 2023 to shop the deals during the five-day period from Thanksgiving to Cyber Monday. This surpassed the previous year's record of 196.7 million and beat out the National Retail Federation's initial projections of 182 million shoppers.
In 2023, consumers spent a record $9.8 billion in online sales on Black Friday alone, up 7.5% from 2022 according to data from Adobe Analytics.
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
- Help them to prepare for multiple scenarios
- Let them 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 2024, with strategies and considerations for your financial and operational planning—plus free Excel templates to help things run more smoothly.
Demand and Revenue Planning Strategies for Black Friday and Cyber Monday
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, going into peak sales season in 2022, 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.
Unfortunately, too many retailers are late to the game when it comes to Black Friday and Cyber Monday planning, with 33% of brands beginning their inventory preparations as late as September according to data from the supply chain platform Anvyl.
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:
Pulling in Operational Data for Better Demand Planning
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. […] [Vena is] 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.”
Preparing for Multiple Scenarios
Despite inflation cooling, consumers are still feeling stretched this year, making them more likely to wait for the right discount and generally more discerning with where they spend their dollars. In response, many retailers have taken to offering their discounts earlier than the typical Black Friday Cyber Monday window.
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 metrics such as revenue, expenses and profit.
This year, with there being five fewer days than usual between Thanksgiving and Christmas, retailers must especially balance their inventory decisions around BFCM as they'll have fewer days to move any overstock before the new year.
What's more, there are plenty of factors that are outside of retailers' control—like supply chain disruptions. Despite only lasting three days, the recent dockworker strike created shipping backlogs.
"It’s not enough to effectively manage your inventory," writes Vena Co-Founder and Chief Solutions Architect Rishi Grover for Retail Touchpoints. "It’s about building resilience in case one part of the system is suddenly shut down."
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 in as real time as possible 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.
5 Tips for Preparing Your Business for Black Friday and Cyber Monday
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:
1. Project Your Revenue
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.
2. Create a Detailed Expenses Budget for Marketing
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.
3. Plan for Increased Staffing Costs
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.
4. Prepare for Multiple Outcomes
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.
5. Flexibly Update Budgets Based on the Latest Actuals
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.
The Biggest Retail Event of the Year Is Nearly Here
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.
