The Myth of Black Friday and Other Financial Disinformation

The Myth of Black Friday and Other Financial Disinformation

If you don’t want to read it, you can watch this video.

Today we’re going to talk about a business event that happens every year. It’s called Black Friday. People go crazy. There are all kinds of deals. It’s just a wonderful time of the year for many people in terms of profit and sales.

There’s just so much going on. This year I didn’t participate in Black Friday. I decided it wasn’t really good for my business.

People want big juicy discounts on Black Friday. I was talking to someone and they said, “I notice that you’re not doing any Black Friday sales.”

I answered him and said, “No. I’m not going to do it this year. We’ll put a few things out but not a lot of things because we sell year-round.”

Then this person who doesn’t have a business said, “You know most businesses make most of their profits in the fourth quarter.”

Do you know how many companies would go out of business if they made all their profits in the fourth quarter? Most companies are profitable year-round. There are too many things that can happen if you rely too heavily on one quarter of the year to make money.

I’m in Georgia and summer doesn’t want to leave. It will be cold for three days, then the next day it’s 75 degrees. That impacts a lot of stuff. That impacts commodities. That impacts fuel. It’s the weather and you can’t control it. So, if you’re going to wait until the end of the year to make all of your money, that’s not only foolish; it’s dangerous.

When I had my retail business and my physical business, shipping could be a trip. I had a customer in California. I also had distribution in California. It was cheaper to go to my distributor and say, “Look I know you don’t normally do this, but could you ship this for me this time?” Having the distributor ship it made a difference of $300 profit for me versus me shipping it.

If you are going to be in business in 2017 and you are going to be positioning yourself for Black Friday this year, you have to start early. You have to figure out what products you can sell at a deep discount. That’s what moves the needle for most people. If you don’t do that, you’re not going to win. So, part of this is positioning.

One of the things I’m doing with my company is getting away from discounting and Black Friday promotions. I’m moving toward “if you get to the bakery first, you get the fresh rolls” types of marketing. You have to pick what lane you want to be in.

Do you want to be a discounter? Do you want to be a low-margin seller? What’s that term, fast nickel, slow dime. I think with the competition that is out there that the fast nickel, slow dime method is going to be a very hard business model. It becomes all about how fast you can bring it in and sell it.

I did some research. Amazon has two million third party resellers, right? I’d bet 90% of those folks don’t make $100K gross sales. It’s the 80% rule. I guarantee you that 20% of their third-party resellers are selling 80-90% of the stuff. I am certain it is people with warehouses, teams and employees that are doing that. I will bet you big money on that.

I’m opting out of Black Friday tactics and other things because what you do from a business standpoint is you train your customers only to buy when stuff is on sale. This creates a big problem for most business models. It brings in a different type of customer that isn’t good for long-term profitability.

Now if your business model is predicated on you selling a bunch of low-end, low margin stuff and you have the sales velocity to make that happen, then you can play that game and win. If you are Broke Dick Danny or Penniless Priscilla, and you’re just starting out, you’re going to have to really work on selling and profitability.

This is something that I know to be true. This is something I found out in 2011ish. I put out this video about a coaching program. One of them was $50K, right? I just put it out there. I had a few people take me up on that. If I had not put that out there, I would have not known someone would pay me $50K to work with them.

Was it a bunch of people? No. Two of those a year and that’s a nice year. When you combine that with my other stuff, that’s a good year. I sell books and courses online every day.

A lot of people do Black Friday stuff year-round. There’s always discounts to create buzz and it works. But, the competition problem is becoming so big that playing that game is just treacherous. It’s like dancing on a cliff with ice. As long as you are steady, you’re fine. But one misstep and you’ve going over the side.

My goal for my company is to sell 365 days a year. I like predictable income. I have to work really hard, but I don’t have this big drop off that some people do.

The Black Friday stuff is dangerous if you’re a small company. There’s this thing called buyer’s remorse. There’s this thing called returns. This is common for Christmas sales.

You have to decide what business model works best for your product or service based on your personal goals, then decide whether Black Friday makes sense for your business.

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