More than half of Australian small businesses plan to take part in Black Friday and Cyber Monday sales this year, according to Xero research, which also found many expect AI shopping agents to influence festive sales.
Xero surveyed 500 small business owners and senior decision-makers. It found 53% would definitely participate in the sales period, up from 43% a year earlier. The data points to stronger take-up among smaller retailers, even as many remain under pressure from margins, stock and borrowing costs.
The research suggests the sales period is becoming more important to annual performance. Some 54% of respondents said Black Friday and Cyber Monday would make a material difference to whether they hit their annual profit target, while 70% felt pressure to compete with larger businesses.
Many are funding that effort through borrowing or delayed payments. Among businesses that had taken part before, 55% said they had used credit or deferred payments to cover extra stock and staffing.
That included 29% using a business credit card, 25% relying on supplier payment terms or buy now, pay later arrangements, and 22% using an overdraft or business loan. Another 12% said they had delayed paying other bills or suppliers.
Charlie Sheppeard, executive general manager of strategy and operations ANZ at Xero, said higher participation did not remove the financial risk for small operators.
"Black Friday can be a real opportunity for Australian small businesses to bring in new customers and give their cash flow a boost heading into the end of the year. But it's also a big investment, and many are taking on extra stock, staff and even debt before they know whether the sales will come. With the Reserve Bank lifting the cash rate again this week, the cost of that borrowing continues to rise just as small businesses head into their busiest trading weeks," Sheppeard said.
Mixed returns
Past participants reported mixed outcomes. More than half, or 54%, said their results were better than expected, while 67% said they achieved the sales needed to make discounting worthwhile.
Even so, 23% said their profit margins had shrunk. A further 31% either failed to reach the sales they needed or had not set a sales target at all.
Performance also differed by business size. Fewer than half, or 43%, of businesses with two to 10 staff said they hit the sales needed, compared with 75% of those with 11 to 20 employees.
Among businesses that have never taken part and remain undecided or plan to stay out, 28% said they did not have enough stock, 27% said they could not afford to discount, and 20% viewed the event as mainly for bigger businesses.
Planning gap
Xero's figures indicate confidence on pricing is not always matched by formal planning. The average highest planned discount is 34%, close to the 35% offered previously, and 35% of businesses with a discount plan said they would offer more than 40% off.
At the time of the survey, 27% had yet to decide their discounts. Among those taking part or considering it, 81% said they were confident they knew the maximum discount they could offer while staying profitable.
Yet only 30% of all businesses said they used real-time profit or margin data to set discounts. Instead, 43% relied on experience and judgement, 23% on gut feel, and 13% on an accountant or bookkeeper.
Planning more broadly was also limited. Just 21% said they had a documented sales plan for the next year that they reviewed regularly, while 22% planned month to month and 10% said they had no plan and did not intend to create one.
"Businesses give themselves the best chance when they can see their numbers clearly and go in with a plan," Sheppeard said. "That means knowing how much you can afford to discount, what you need to sell to make it worthwhile, and exactly when your costs will land. When you have real-time visibility of your cash flow, Black Friday becomes a calculated decision rather than a leap of faith. Most small businesses already have an expert in their corner. An accountant or bookkeeper can help them see the full picture before the sales start."
AI shoppers
The survey also pointed to a shift in how small businesses think consumers may shop over the festive period. Nearly two in five, or 38%, said they expected AI shopping agents to increase their holiday sales, and 22% anticipated a rise of more than 10%.
Preparation for that change appears limited. More than half, or 54%, said they had not taken practical steps to make their business easier for AI shopping tools to find, while only 19% said they had added structured product information that AI systems could read.
The findings also suggested weaker readiness among sole traders and very small firms, which may leave them less visible if more shoppers use automated tools to search for products, compare prices or complete purchases.
"Whether shoppers are searching themselves or asking an AI assistant, small businesses need to be easy to find this festive season. And for shoppers, supporting small doesn't have to mean chasing the biggest discount. Small businesses offer things bigger players often can't, like a personal touch, connection to community, locally made products and experiences," Sheppeard said.