Nov. 9, 2009 (Business Wire) -- Less than half (47%) of small businesses plan to give gifts to customers this holiday season on par with last year (52%), and their total customer gift budgets remain steady versus last year ($455 in 2009 vs. $457 in 2008), according to the American Express OPEN Small Business Holiday Monitor, an annual survey of business owners conducted since 2002.

But in this economic environment, fewer small business owners (35%) are giving employee gifts (vs. 46% in 2008), 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).

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.

• Four in ten are specifically planning to give fewer gifts or less expensive customer or employee gifts (42% each)
• 28% are avoiding laying out cash for gifts by using reward points, bartering, or using their own company’s products/services
• 23% are no longer giving gifts to clients

And with one in ten planning to increase their customer gift giving this year, some business owners are planning to use the downturn as an opportunity to win over more customers.

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

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%)
• 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.