Tuesday, January 12, 2010

When is your Black Friday?
With it is the being of a New Year, it signals new opportunity to have learned from last year’s pain or be forced to repeat it. During December, I spoke to several contractors who were not profitable for the year; one said he said he was waiting for his Black Friday.
The concept of Black Friday in the retail business has not been around for a long time. According to Wiki it was originally coined in Philadelphia in 1966 and had to more with traffic in the central area of the city the days after Thanksgiving till Christmas. About 15 years later was morphed into representing the day on an annual basis that a retail organization went from an operating loss to a profit. The truth is that most retailers make a profit every quarter.
Are you making a profit every quarter, month, week or every day? All businesses even seasonal ones should have a goal to be profitable all the time. The thinking that at a given date in a year, you have covered your expenses and the subsequence revenues are all profits is a head in sand approach that could lead to disaster and failure. If you are looking in terms of a year for your horizon, you will miss the chances to preserve the hard fought wins while accepting what falls into and/or off your lap.
With the advent of (1)accounting software like QuickBooks, Peachtree and MYOB to name a few, the ability to manage your business is a mouse click away. Industry specific add-ins makes these tools even more effective. Twenty years ago it took a programmer to generate a report with limited flexibility, now you can make your own report in matter of minutes.
To keep the reports accurate you need the information to be current. It is no longer acceptable to batch items and wait on a schedule. Here is where (2) “Lean Accounting Processes” and (3) “Single/One Piece Flow” pay large dividends. You get an invoice, to put it in the system, you get new order you put it in the system, you finish and ship product/service you invoice immediately. At the end of day a person’s desk is clear and is waiting for the new work of the next day. In essence whether you large or small you can have a reasonable snap shot of the day’s performance, and at the end of the week you should be reviewing the KPIs(Key Performance Indicators) AND THEIR TRENDS. KPI’s will differ for each company, but reflect the elements that most important in the life of that entity. Some standards, Cash, Days of AR, AP, WIP, GM, Projected Net Profit and a 13 week cash flow projection.
Back to the original question when is your Black Friday? My answer to you is; Every Friday should be your Black Friday. Because if it is not Black then you have something to be working on to correct that next week, not next year or even next month. This information should be shared with the managers along with the expectations for performance and goals. In a perfect situation the managers will react to correct the issue before the owner or superior has to motivate them. This is a goal for your organization to obtain.

1 http://accounting-software-review.toptenreviews.com/
2 http://en.wikipedia.org/wiki/Lean_accounting
3 One Piece Flow refers to the concept of moving one workpiece at a time between operations within a workcell. At the opposite extreme, we might process an entire batch or lot at each operation before moving it to the next operation. 
This idea has many benefits. It keeps WIP at the lowest possible level. It encourages work balance, better quality and a host of internal improvements.  http://www.strategosinc.com/onepieceflow.htm

Matthew R Prazenka

Abacus Business Leaders, LLC
Driving Shareholder Value through Hands-on Leadership
500 Lake Cook Rd. Suite 350. Deerfield, IL 60015
877.412.2228 x1030
mprazenka@abacusbl.com www.abacusbl.com

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