A Lesson in Money Management for Retailers
Ever wonder why American retailers began referring to the day after Thanksgiving as “Black Friday”? It’s the traditional start of the lucrative Christmas shopping season, when spiking sales push the annual bottom line of many stores into “the black,” reflecting a net gain, compared with “in the red,” where they operate for the rest of the year.
While the numbers for the season are staggering — shoppers spent $658.3 billion during the period in 2016, according to the National Retail Federation — think about how much of the year businesses have to get through while spending more than they make in order to reach profitability.
That so many of them survive, and even thrive, is an object lesson in money management. The successful players are the ones that manage their budgets to ensure sufficient cash flow in the lean periods.