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RALEIGH-- This holiday season could be make it or break it time for some small businesses.

Greg Thompson, the state director of the National Federation of Independent Business, said the increase in unemployment combined with a drop in consumer confidence could mean slow sales for stores.

"The holidays will be kind of tell-tale as far as what consumers are going to do," he said.

Although it's still fall, Cynthia Dice is already preparing her jewelry and do-it-yourself craft shop for the upcoming holiday season. She said this season is especially crucial for her shop.

"Since the economy has been down the past few years, every month is make it or break it," said Dice, who owns Ornamentea in downtown Raleigh.

North Carolina's unemployment rate climbed to 10.1 percent in July. Thompson said that means unemployed workers won't shop like they normally would. According to NFIB, high gas prices will also leave shoppers with less money to spend on gifts.

"There's concern about, again, spending, customers, consumer confidence," said Thompson.

A National Retail Federation study shows shoppers spend far more on winter holidays than any other time of year. In 2010, shoppers spent $462 billion during the holidays. If stores do well, NFIB said they'll make it through the winter months.

"It's hard. You have to be on your toes, you have to pay attention to your business, you have to know your customer and you have to make it inviting and fun for them to shop," explained Lu Harris, owner of Certain Things in Cameron Village.

Small store owners like Dice hope consumers will shop at independent stores and forego the major retailers.

"You're always a little bit nervous,” she reflected. “It's like throwing a big party and you hope people will come."

Depending on sales, NFIB said some stores around the state could close their doors after the holidays.