Holiday gifting

Only 47% of small business owners plan to give gifts to customers this year, down from the 52% in 2008, according to the American Express OPEN Small Business Holiday Monitor.

American Express conducted 516 interviews with small business owners and managers of companies with fewer than 100 employees.

The average customer gift budget for 2009 is $455, flat with the $457 average budget in 2008.

However, only 35% of the small business owners surveyed are giving employee gifts, down from the 46% in the 2008 survey. Also, 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).

“Entrepreneurs understand the importance of showing appreciation for customers’ business especially during tough economic times,” Alice Bredin, American Express OPEN business advisor, said in a statement. “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.”

OTHER SURVEY FINDINGS
• 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.

• 41% say they’re more stressed by the economy than they are the holidays.

• 28% are avoiding laying out cash for gifts by using reward points, bartering, or using their own company’s products/services.

• 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: To say thank you (82%); To celebrate the season (38%); and To stand out from the competition (25%).

• 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.

• 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%).

• 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).