Tuesday, November 22, 2011

A Lesson to Entrepreneurs this Black Friday: Even the Big Guys Wait for Success

As Anne Bjerken noted in her blog post last week, we are rapidly approaching the holiday shopping season and, particularly, Black Friday. While I am, of course, looking forward to a reprieve from work as well as a big plate of stuffing for Thanksgiving, I am also reminded of my pre-lawyer days when I worked for a few years at the corporate headquarters of a large consumer electronics retailer. It was a Fortune 100 company, with thousands of locations and a decades-long history of perseverance and success. In the context of the current economic climate, however, particularly considering the difficulties facing small business and entrepreneurs, I can’t help but reflect on the irony of the fact that, for even big and long-standing businesses, profitability can truly come down to one day of the year. 
I’m certain most people reading this are aware of the explanation behind the name “Black Friday”: the day when retail businesses finally show a profit—and thus black ink, rather than red—on the company books. Despite the fact that this is a long-accepted rationale for the name, it is important to take a step back and think about the significance of this statistic: Most businesses’ fiscal years begin sometime between January and March. That means that even many very successful businesses wait up to 11 months of the year to break even. This thought alone is humbling. But by itself, this acknowledgement doesn’t do justice to a true understanding of how impactful this day is for retail businesses.
During my years in retail merchandising, the anticipation of a Thanksgiving-day meal paled in comparison to the fact that it was followed immediately by Black Friday. We at work had been planning for this day since June of the previous summer. We had held countless strategy meetings, board meetings, staff meetings—you name it—both internally and with vendors, and had prepared spreadsheet after spreadsheet of analytics.  Black Friday wasn’t just the day when we would find out if all of our analysis was correct and if any of our projections would come true.  It was a day that could solidify or take away our team’s ad space for the following year (making millions of dollars of difference), which could actually affect our corporate team’s composition and placement within the structure of the company.  Further, as consumer tastes and desires churn from year to year, Black Friday was a day that could impact the future of the placement of products in our stores across the country, literally making or breaking vendors—most of whom were large companies themselves.
Rather than taking the Friday after Thanksgiving off to travel for the holidays or actually go shopping, most of our team would be in the office, at our desks, watching real time numbers roll in from across the country.  We’d be receiving reports, and updating the executives, vendors, and other teams. After the first hour of the day, we already knew which ads succeeded and which were major failures. We would sheepishly try to explain the miscalculations, proudly applaud the unexpected successes, and frantically begin updating our advertising plans for the remainder of December, hoping to capitalize on our newfound knowledge. It was all sort of magical and mysterious, terrifying and exciting, overhyped and yet realistically important at the same time. While, of course, the entire company would not go down based on the day’s numbers, there was definitely more than just money on the line.
Though I am now much farther removed and less personally involved in Black Friday, I believe there is a lesson in this perspective for small businesses—those that may feel like any day of the year could result in failure. Even big businesses, those that have achieved a level of success most entrepreneurs would dream of, sit on pins and needles on Black Friday. Their success and profitability can truly come down to one day of the year, after millions of dollars in time and resources spent, and 11 months of waiting “in the red.” 
So, whether it’s after 11 months, or 11 years, my message to entrepreneurs is to take heart in the similarities you have with even the biggest companies this Black Friday. The waiting, the work, and the perseverance will never be over, but eventually for many of you (whether it’s with or without the crazy shoppers), those black numbers will materialize too.

A Post by Karen Wenzel, Guest Blogger

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