Black Friday or Red Monday? Sage Advice to Keep Your Small Business in the Black
In yesterday's post, I briefly mentioned the people I saw camped out in front of the local Best Buy. Well here's the rest of the story...
So on my way into the store I noticed several tents pitched out front, but I didn't see anyone (maybe they were all asleep inside, who knows). But when I came out, I encountered several people sitting in lawn chairs, sipping hot beverages, just chatting away.
At this point, it's around nine o'clock at night and about fifty degrees outside with a forty percent chance of rain. As I walk by the first tent, my curiosity gets the best of me (since I've never camped at Best Buy), so I launch into a full press Q & A session with a few of the Best Buy residents. Very quickly I learn that they've been camped out since the Sunday before (about three days now) and plan to buy discounted flat screen TV's, blu ray players, and a few other choice electronics.
Now to be perfectly clear, I'm no different than anyone else when it comes to getting a good bargain and I understand the value of saving a few bucks. A dollar saved is a dollar earned, right? Well, maybe!
On the other hand, the last time I camped outside (other than at a campground) was to see the Rose Parade almost twenty years ago, and I've not been back since (I'm fine watching the parade (or not) on my 65" big screen that I paid full boat for by the way...the irony).
Okay, so what does this have to do with your business? And how can I quickly turn this blog post into a compelling story worthy of another few minutes of your precious time?
It's simple, Black Friday (and sales in general) make a lot of reasonably intelligent people buy a lot of dumb things they don't need, just to save a few bucks. Now couple that with the allure of business credit, which entices business owners to spend OPM (Other People's Money) on things that do absolutely nothing to build their business or grow market share. So Black Friday plus a Black Card may equal a balance sheet covered in Red Ink!
Alright, now it's time to whip out the aforementioned "compelling story" that should really hit home (for me at least). See, I was one of those reasonably intelligent folks that made a few dumb purchases with business credit that I'm not very proud of. About fifteen years ago, when I established my first corporation, one of the first things I purchased with my new business credit was, you guessed it, a 55" inch projection TV (this was well before the flat screen era).
Not only was it a poor business decision but a horrible life decision as well (although it did make the Lakers games much more fun to watch). This huge TV would barely fit in the living room of my tiny twelve hundred square foot apartment, not to mention the evil looks and interrogation I got from my new wife (yes honey, you're still right fifteen years later).
So to avoid the pain I went through early on, here are three (3) solid tips that will keep your business in the black this holiday season:
Tip # 1 - Don't leave your home or office with your business debit/ credit cards. Store them in a safe place and only take them out when you need them. The temptation to swipe your card at the local Best Buy or ice cream parlor while you're out with the kids is more than most can handle.
Tip # 2 - Plan your business credit purchases. Make a firm decision not to make impulse buys or purchase anything for your business without taking 48-72 hours to make a conscious business decision. This will give you enough time for the emotion of the moment to wain. It will also eliminate the miscellaneous costs that don’t promote the growth of your business.
Tip # 3 - Be vigilant about these three little letters (R.O.I.). Don’t allow yourself to make irrational buying decisions without looking at the numbers first. Many business owners often convince themselves they "need" something for the business to justify an emotional decision to make a foolish purchase. Sit down and calculate the ROI (Return on Investment) in USD (US Dollars), and not based on the amount of endorphins that will be released when you swipe your card.
So there you have it, I've come full circle from Best Buy and overpriced big screen projection TV's to sage advice on how to protect the growth of your company this season. I hope you take these tips into consideration the next time you see the next shiny, new thingamajig. Stay tuned for my next rant that may just help you keep your shirt and protect your assets...until next time!
About the Author Kylon J. Trower is 20+ year serial entrepreneur with a background in residential and commercial lending, business credit development and financing. Most recently, he's built a national network of financial professionals dedicated to preserving the lifeblood of our economy, the American small business sector.
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