Red into Black

It seems anymore that Thanksgiving is now secondary to Black Friday, the biggest shopping day of the year.  The days of stores opening at 5 a.m. have started even earlier – 3 a.m., Midnight, Thanksgiving Day – in efforts to attract shoppers.  Do you know why it’s called Black Friday?  If you think the reason is because shoppers get up in the wee hours and it’s still dark out, think again. 

I struggled with accounting classes in college – I never really understand the whole debit and credit stuff, but I did learn the difference between being in the red and the black, which in the accounting world, black is good and red means you are in the hole.  If you have a business and don’t know where the point on your balance sheet that you go from ‘red’ to ‘black’, you might want to brush up on your financial statements. 

If  Black Friday is historically the day that companies go from being in the hole to turning a profit, does that mean they operate almost ten months in a deficit?  I remember talking with an entrepreneur this summer and asked how business was.  He stated that he was finally in the month where he earned a salary, so things were looking good!  He also knew precisely where he was at dollar-wise to be at his break even point.  One trait of effective managers/owners/CEO’s is that they know every aspect of where their company is fiscally – revenues, expenses, salaries, projections, etc. 

Keep this in mind if you have a business or are looking to start one – you can’t just rely on your accountant or bookkeeper – you need to keep a close eye on your budget for the economic health of your company.  There are free resources for you if you need help or aren’t sure where to start.  Give me a call, contact your local SCORE chapter for a free counseling session, or set up a time to meet with the Small Business Development Center.