Why small businesses are increasingly opting out of Black Friday

It's now the biggest sales event of the year, but nearly 40 per cent of Australian small businesses won't participate in Black Friday.

More than half of small businesses believe Black Friday, a sales event originating in the United States, is now bigger and more important than Boxing Day, but there has been a massive drop in participation in the event this year, according to a survey by Xero.

The number of small businesses participating in Black Friday this year has dropped by 22 per cent - to just 39 per cent - with many believing they are not in the financial position to offer the massive sales seen by larger retailers and businesses.

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While many businesses want to use Black Friday's increasing popularity to draw in new customers, the decision between the risk and reward of such a decision is becoming harder in the current economic climate.

"Black Friday forces a tough decision," Angad Soin from Xero said. 

"Small business owners have to gamble the opportunity of increased sales against the real-world pressures of higher costs and tighter margins."

Even of the small businesses choosing to still participate in Black Friday sales, 40 per cent are concerned as to how severely the discounts will hit the bottom line.

Around 10 per cent of businesses believe they will see a drop in sales in the upcoming Black Friday period compared to last year.

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Some small businesses believe their relationship with their customers is strong enough to be able to avoid resorting to wide-scale discounts.

However, Soin said it still could be a missed opportunity for smaller businesses to advertise themselves to a larger base.

"Black Friday isn't just a big business event anymore; it offers real opportunities for small businesses to connect with new customers and strengthen loyalty," Soin said.

But he warned businesses needed to do their homework before offering any radical discounts.

"To discount or not to discount must be a strategic decision, not reacting to short-term pressure, and instead building a healthy business all year round," he added.

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