How Not Accepting Credit Cards Will Cost You

There’s a lot of talk among some small business owners about the way credit cards have impacted our bottom lines. Every time a customer hands over that little piece of plastic, the bank has to take their cut. Some small businesses have gone cash-only, while others have chosen to tempt fate and require minimum purchases for credit – in defiance of their merchant agreements.

 

Yet, what some small business owners don’t realize is that accepting credit cards isn’t a burden on a business; it’s a boon. Accepting credit cards improves your bottom line in a number of ways.

 

One of the most interesting ways that accepting credit cards actually helps your business is in the items that you sell. Some recent research conducted by Professors Promothesh Chatterjee from the University of Kansas and Professor Randall L. Rose from the University of South Carolina shows that credit card customers are more concerned about benefits, whereas cash customers are more concerned about costs. 

 

Greater recall, faster response

  

In the study, some subjects were primed for credit card use while others were primed for cash use. They were then shown products, as well as a list of benefits and cost-related information.

 

What the researchers discovered wasn’t surprising, but it does help to show just how accepting credit cards can benefit a business. Those consumers who were primed for credit use had a faster response to and greater recall of benefit-related ideas. Those customers primed for cash had a faster response to and greater recall of cost-related ideas. 

 

In short, payment method is an important factor in determining which product a consumer is going to buy.

 

Among the other findings:

 

• Consumers primed for credit were more likely to make extravagant purchases. They were more likely to buy things that were high-profile, in spite of a higher cost.

 

• Credit card customers made more recall errors when it came to costs. They were less likely to remember cost information, because they weren’t focused on it.

 

• Cash customers, more than credit card customers, were concerned with everything cost-related. They were more concerned with things like delivery costs, setup charges, warranty fees, and even the time that installation would take. Credit customers weren’t as concerned about these kinds of factors. 

 

• If a consumer were to enter a store without a payment method in mind, they could be primed for credit – even if they ultimately chose to use cash. Having credit card signs or credit offers in the store help to prime customers to use credit, and therefore make buying decisions on the basis of benefits rather than costs.

 

There are other ways, of course, that accepting credit cards will actually bring in more business, but this research is compelling. Your customers are likely to spend more simply by the fact that you accept credit cards in your store. Your average purchase amount will be higher, and you’ll likely have more volume. You’ll sell more high-profile products, as opposed to those value products with lower purchase price (and lower margins).

 

David Rodwell is a seasoned writer in business and personal finance who takes a particular interest in payment processing technology. You can find more of his articles located at CreditCardProcessing.net.

Keeping Your Passion: A Small Business' Lifeblood

It’s not always sunshine and rainbows when you are running a business. It can be disappointing, expensive and lonely when you are trying to get your ideas off the ground. Not to mention the sea of nay-sayers that are trying to rain on your parade because they don’t have one of their own. 

 

Mondays are good for a few things. They are good for setting the tone for the week, planning, nailing down loose ends, and for reaffirming why you do the things you do. I really like Mondays. I like them most because of the opportunity to really reflect on why it’s worth it to keep plugging along. What I’m getting at is more than just getting re-acquainted with your mission but really getting down to what you are passionate about. From their stems all kinds of good stuff like sense of self worth, self-beliefs, values, and even confidence to squeeze every ounce of awesome out of that week. For every Monday Warrior out there I have a few tips to help you get yourself in the zone - and keep you dry for the times that people try to rain all over what you are trying to accomplish. 

 

1. Think about the solution you provide. At one point it was probably something you were struggling with or just something you loved. Is it the people you help, the product your produce, or some combination of the two? Whether you are grossing $1M or are still in the red with your small business think about why you decided to share what you are with the world. I know it’s not always easy to tune out negativity or skepticism - especially when it’s coming from those closest to you. Make sure that every time you sit down with the conscious intent on moving your idea or business forward it’s going in a direction you still want it to be. Use times like this to take an internal inventory. You will not only burn yourself out but lose your momentum if you aren’t excited about the overall goal of what you are doing.

  

2. Make/do something. It’s easy to be intimidated by long lists, especially if everything on it is a priority. So pick something and cross it off the list. Best if it something you can see come to fruition as a direct result of your efforts. Even better than best if that something is directly related to why you are passionate about what you do. Passion for your small business can come in a lot of shapes and sizes. It’s more than just pride it’s a real connection. Just imagine how proud you were after that first satisfied customer or as your first instance of being a real resource. When you cross something off of your to-do list it should bring about those feelings. 

 

3. Try to collect on an invoice. It’s no surprise that payment times on invoices extend when economic times are tough. What’s worse is the way that can impact our emotions and focus within our small business. If you fall into this trap a quick way to turn it around, keep you excited, and satisfy some cash flow needs is to shoot for the low hanging fruit. What I mean is not only re-request invoice satisfaction but look for projects or jobs that would yield quicker/instant payments. Sure the invoice might be smaller dollar wise but any positive cash flow will not only help the business but also keep you engaged.

  

4. Work on some collecting some testimonials. Now posting testimonials in marketing materials and on the web is not a new notion. Showing prospective customers and clients what the possible experience they are in for is a great way to communicate. Why this is also important in helping to keep you passionate is because it will give you the opportunity to see how what you do affects others. Testimonials shouldn’t be the result of a favor - they should be the unique experience of a satisfied customer. These are the folks that are walking proudly in your parade, the same one others keep trying to rain on. You have a support system built into your current successes. If you are new business or a young one then try to surround yourself with supportive people. People whose feedback you value and those that will provide honest and constructive feedback.  

 

Hopefully you can take at least one of these tips and use it to make your Monday a little better. I would love to hear about how you keep your passions strong for what you do. Feel free to share in the comments any tips or suggestions you use to beat out the start-up or entrepreneurial blues.

 

Mother's Day Edition

Happy Mother's Day!

I wanted to throw up a quick post because this week I fielded a lot of questions about spending for holidays like today. First of all we should all be cherishing our mothers - they are half the reason you are who you are. Gifting can be kind of tricky, especially on a day like today. Before I even start in on my two cents make sure above all, any gesture is a gesture that will show your appreciation and most of all a little bit of love. 

Now that all the sentiment is out of the way let's talk about efficiency. Any time you are spending for someone I always like to think of it as an opportunity for the gift receiver to make an investment in themselves. While flowers, treats, and stuffed animals are all very sweet are they really an efficient allocation of any amount of funds you are thinking about allocating. Here are three tips to help you through some last minute spending today or for future appreciation type holidays - like Father's Day coming up. 

1. Gift Cards. Some people think that these are a little informal. I like to think of it as a way the reciever can choose what will be most beneficial for them. If your mom is thinking about getting more active this summer then a targeted sports store gift card might provide her with the incentive to get what she needs to get moving. The point of the gift card is to target a need - try to avoid those generic pre-paid visa's etc. Not only might they carry higher fees but you won't be able to guarantee that mom will get the things she's been talking about wanting. As a mom she might use that general pre-paid card on spending for other people, the house, etc - thinking of us, it's what they do :) 

2. Skip the flowers, cards, and candy. Think about the budget for a lot of the novelty that goes into these kind of holidays. After those three you are probably running a bill close to about $30. Think about how you can use even a budget of $30 to provide mom with something that might make her life a little easier. While all those things make the moment seem nice, they really have no return on investment. Just like the gift card - think about what might provide the greatest amount of utility. Plus flowers on holiday's like today will have the highest mark ups. 

3. From the heart. If your mom is as busy as mine is then she rarely has anytime for herself. Something as seemingly easy as a day off from cooking, cleaning, childcare, or any of the other full time responsibilities could mean more than any store bought item. It takes a little scheduling and sneaky planning but find out where you can lighten the load for mom and make it happen. Whether you do it or have someone else hold down the fort so you can spend some quality time together means that she will find a break and an opportunity to recharge. 

Today wasn't really any heavy lifting but I hope it helps give you some perspective. If I was too late today then start thinking about dad, or teachers, or administrative assistant because they all have their special days too. Never ever underestimate the power of a little appreciation - it really goes a long way and helps keep people more productive, believe it or not. 

Confidence and Entrepreneurship

Before you go straight to the video I want to talk about confidence and being overconfident. I have done a lot of consults with businesses and sales teams and one of the fundament skills we asses is confidence. More importantly your confidence in yourself. Your belief in your mission and the value that you provide is the first thing clients and customers will see as you walk through the door. How can you be the ambassador of a brand then if you are not only not confident in your small businesses product or mission but also in your own abilities. Self belief, self worth, and self respect are paramount to your successes. 

What happens when you have a little too much confidence though? Maybe too big an ego? Well, frankly that can be a turn off (for lots of people). Having an over inflated ego might have your perceived as someone who doesn't need new clients or customers. Someone who has and knows it all already. Worst of all someone who has no room left to grow. Sometimes when you are over confident your relationships are impacted - what I mean is that people might question your reliability and trustworthiness. Then there's always coming off as "sales-y". 

Moral of the story is that you have to find a balance. Success comes from those that are invested and advocates for the brands that they represent. They are confident in their ability to provide goods and services to those that are looking to be, feel, do, or even look better - in any number of ways. Your confidence is what makes people feel they can trust in your judgement and your ability to act as their fiduciary and it comes from your self-belief. So after you watch this video and even check out the the Inc.com link think about your confidence levels in what you do (even in your personal finance prowess). Or if you are most of these things maybe it's time for a self-belief check-up. Enjoy! 

Wow! You're a sell out!

Are you a sell out? What is “selling out”? I want to talk about why we do some of the things we do today. Recently I’ve come into contact with a few businesses and individuals that might be fit to wear the sell out mantle. While I am not a flame throwing kind of guy, nor am I one to stop anyone from improving their situation - I am one to believe that successful businesses and people are so because they are value driven, not monetarily driven. 

 

What is a sell out? A sell out is someone or some institution that compromises their integrity, values, mission, or purpose for monetary advancement. What about an institution whose only goal is to make money - are they ever a sell out?  

 

This is a very subjective topic and a very sensitive one to boot. No one likes to be labeled a sell out but money is what makes the world go ‘round. Let’s talk about why people sell out. Selling out can mean that you are joining the mainstream. It can mean that you are now producing goods or services that don’t align with the mission that was in place at the endeavor’s start. It can mean you are going from the red to the black on a balance sheet. What it usually means is that your cash flows have now increased. Increased cash flows are the big goals in personal finance and business so why is it so frowned upon. As brands and businesses evolve there can be a disconnect between the early niche adopters and everyone else. No one said it was wrong to be successful but how you are perceived to reach that success is what your stakeholders pay attention to because it also reflects their values as consumers. 

 

It’s not hard to see the incentives that drive the sell out. Entrepreneurs toil for endless hours over periods of years. All that work happens under the radar and with little success until one day everything clicks and you are the next Instagram. What drives you is your mission and possibly the hope for a positively functioning business model. While the Instagram’s of the world are a one in a billion type of situation there are smaller brands that are making changes to grow their user and fan bases everyday. On the other side does a brand making money really change their identity?  

 

To avoid the negative stigma that comes with being labeled a sell out I think the biggest weapon a brand can employ is transparency and appreciation. You have to appreciate all the support you’ve had along the way because it were those meager beginnings that kept you motivated. It’s also important to constantly communicate they “why’s” of your business. It’s ok to pivot and change directions as long as your mission and values grow and pivot with you. Consumers identify themselves largely by the things they choose to spend their money on. It’s only fair that you keep them informed and always give them the choice to continue their support - not misrepresent and then one day be called out as a sell out. While any press is usually good press, a challenge to your integrity on the big screen might not be very positive. 

 

What are your thoughts on selling out? While there are purely philanthropic businesses out there is it ok for brands to change their values in the pursuit of the almighty dollar? Would you be ok with a sell out as long as the brand kept you informed along the way?