Marcia Hultman

Cabinet Secretary

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South Dakota e-Labor Bulletin

November 2020

Celebrating Small Businesses in South Dakota

Small Business Saturday will soon be upon us, providing us a great opportunity to recognize the important role small businesses play in South Dakota’s economy.

Small Business Saturday follows Thanksgiving on the last Saturday in November each year, falling between Nov. 24 and Nov. 30. This year, it will be Nov. 29. Small Business Saturday has become another tradition in the holiday shopping season kick-off, following the big-box store blowout called Black Friday and preceding Cyber Monday, featuring e-commerce.

Defining small business

What do you think of when you hear the term ‘small business?’ Some people think sole proprietorship. Other people define the term by number of employees. Small businesses can also be classified based on criteria such as annual revenues, shipments, sales, assets or net profits.

Others define small businesses as privately owned corporations, partnerships or sole proprietorships with fewer employees and/or less annual revenue than a regular-sized business or corporation. Small businesses are sometimes eligible for government support and qualify for special tax policies not available to larger businesses; this varies depending on the industry.

Why they’re important to South Dakota

For purposes of this article, we will focus on two small establishment size classes in South Dakota: those with zero to nine employees and those with 10-19 employees. These small businesses are found all over the state and in every rural community, and they play an integral role in the economy.

Almost 90% of all privately owned businesses in South Dakota are categorized in those two groups. Looking at the numbers from another angle, more than 19% of all South Dakota employees in 2019 worked for employers in the smallest size class. An additional 14.4% worked for employers in the next smallest size class (10-19 employees.) More workforce statistics showing small businesses’ importance in South Dakota are available on our website. The data come from the Quarterly Census of Employment and Wages (QCEW) program we conduct in cooperation with the U.S. Bureau of Labor Statistics. The QCEW program is the only source of South Dakota employment and wage data by size of business. Only businesses covered by Reemployment Assistance (unemployment insurance) are included in the QCEW program; many sole proprietors and self-employed individuals are not covered. So small business is even more important in South Dakota than the statistics above indicate.

It is easy to think of retailers when thinking of small businesses. But small businesses are found in wide variety of industries, including not only convenience stores, grocery stores, specialty retail stores, bakeries or delicatessens, but also personal services like beauty salons, restaurants, photographers and internet related businesses such as web design. Some professionals operate as small businesses, such as lawyers, accountants, dentists and medical doctors. Employment and wage data for the two smaller employer categories are available by industry on our website.

Small Business Saturday

Small Business Saturday is appropriately important in South Dakota, as many small businesses consider it the beginning of their holiday season. Running through Christmas, the holiday season is the busiest time of year for many small businesses, greatly impacting their revenues and net profits for the entire year. Small Business Saturday is a prime shopping day, helping small companies ramp up sales while customers may be apt to spend more.

Small Business Saturday encourages holiday shoppers to support, shop and patronize brick and mortar businesses which are small and local. Some small business owners run sales and offer other incentives on Small Business Saturday to boost foot or online traffic, while customers are actively shopping for the holidays.

South Dakota businesses often introduce marketing efforts on Small Business Saturday which they can expand on throughout the year. For example, it gives them an opportunity to gain new customers, which can be more challenging than maintaining current ones. In addition, it’s a way for small business owners to compete with larger chains and online retailers by offering comparable deals and incentives.

Small Business Saturday is a golden opportunity for small businesses, whether new or well established, to build their brand awareness—which is key to gaining customers’ trust. Without brand awareness, customers may not be able to identify with a business.

Beyond Small Business Saturday

Small Business Saturday is just one opportunity South Dakota’s small businesses use to help their businesses thrive. They also capitalize on other events such as holidays like Valentine’s Day and 4th of July, opening weekend of pheasant hunting season and the Sturgis Motorcycle Rally to draw in customers. Some small business owners operate only as an occasional or pop-up shop, with their physical locations open only during special events they host.

South Dakota small businesses can use such events to set their business apart, highlighting their business’s uniqueness and providing a memorable and personalized shopping experience. Suppose you are a customer entering a quilt store in pursuit of a special and unique gift. When you’re greeted warmly and authentically, and within minutes feel connected to the store and its brand, you will likely always associate those positive experiences with the store—and be more likely to patronize it in the future.

Small businesses encourage consumer spending during special events like Small Business Saturday by offering promotions to get customers through their doors. On an ongoing basis, they use a range of creative ideas and incentives to set themselves apart from other shopping experiences. They implement ideas like complimentary food or beverages; drawings for a door prize; buy one, get one free or half off sales; percentage discounts (sometimes with each customer drawing to learn their percentage off); loyalty rewards, like a card punched for the dollar value of purchases, with a discount on a purchase when the card is full of punches; free samples; or exclusive products or services only available during special events.

Small businesses put great effort into building their brand, reputation and relationships with their customers. Some are especially creative in using social media like Facebook to keep their business in the forefront of their customers’ minds. They post photos of new products to create interest and draw consumers to their business, advertise specials or events, and some post relevant videos routinely to keep their followers engaged.

It takes a village

Small companies aren’t the only entities taking part in special events like Small Business Saturday to contribute to their success. You might say it takes a village (or a community) to build an environment where small businesses can flourish. Consumer participation is a must, of course. But community groups, other businesses in the area, and government representatives can and do all get involved. Small businesses (which may even be considered competitors) often work together, offering combined deals. For example, for Mother’s Day, a group of businesses in a community advertised a gift package including popular items from each of their businesses. Other examples include a “boutique hop” or “rural road trip” where small business owners join forces, mapping a suggested route for shoppers to visit all the participating shops on a particular day.

In some instances, groups such as chambers of commerce help organize and support special events like Small Business Saturday, promoting them on community signs, in newsletters and on platforms like social media and blogs. Some groups organize events to help draw more people to the area, realizing the success of small businesses in their area helps the community remain vibrant.

Business entrepreneurs put their heart and soul into setting up their respective small business. While building their business reputation, they show their communities they are in it for the long haul and intend to be a permanent part of the area. Small business owners become active members of their communities. By supporting community events and fundraising efforts of local groups from Kiwanis to youth teams and organizations, they let their communities know their patronage doesn’t go unnoticed. Such type of outreach further develops connections with organizations and members of the community--enhancing consumer loyalty and encouraging the locals to rally around the small businesses.