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Eyrarodda 26
Flateyri, Nunavut 425
467 2889 *******
Last week I visited my friend Brian who runs a small patio furniture boutique out of his garage. While I was there I observed a couple walking hand in hand past the patio sets out on display. They stopped abruptly in front of a particularly handsome bamboo set to admire it. They discussed it for awhile. Finally the lady pulled out her Visa card with a triumphant smile and approached Brian. Unfortunately Brian does not accept credit cards. He claims that setting up a merchant account is too complicated and too costly for a small business like his.
He told the lady that he only accepted cash and directed her to a bank machine at the end of his street. The lady's face fell as she put her card away. She agreed to go to the machine to get the cash and promised to come back... but she never did. Brian lost a $600 sale.
Brian's story is not unique. Most home based entrepreneurs (including myself) are very cautious about keeping their costs down and rightly so. It's tough to survive in the business world. However, at what point does penny pinching become a hindrance rather than a virtue? Sometimes you must spend a little money in order to make a little money.
There are a lot of smaller merchants who still accept only cash or check from their customers because they think it helps to keep their costs down. I would like to offer a different perspective on this practice and point out some good reasons FOR setting up a merchant account for your home based business.
1. Missing out on impulse buyers = losing money:
As in Brian's story, quite often folks who were not planning on making any purchases at all happen to come across something that really grabs their interest. They have not planned to do any shopping so it is doubtful that they would have cash, especially if it's more than $20 or $30 dollars. So, out comes the credit card. If a merchant does not accept credit, he/she must send the customer off to an instant teller to get the money. That allows enough time for potential customer to review the purchase idea and start questioning if they really need it... buyer's remorse sets in and the customer does not return.
2. Convenience:
People today lead very busy lives and appreciate the convenience of being able to pay by credit or debit. It saves time and energy. The vast majority carries a credit/ debit card these days as opposed to cash. These folks may not use your service or best cvv shop at your business if they know they must stop to get cash first. I've heard it said that "Convenience IS personal service". Having to write checks or go withdraw cash is inconvenient for many.
Home based websites that accept credit cards are flourishing all over the net... compared to those who require people to bring payment in person or mail a check.
3. Growth:
The secret to any successful business is in the continued growth of your client base. When people find out that your business accepts payment by credit or debit more people may be tempted to check it out. In a credit card research study a few years ago statistics noted that businesses grew by between 20% to 30 % per year after commencing to accept credit / debit payments.
4. Security = No more bounced checks:
Even home based businesses in small rural towns, where everyone knows everyone, have had to deal with the expense and hassle of bounced checks. It just happens. One friend, who runs a catering company out of her home, ended up with a real bank account nightmare when a deposit check for a wedding bounced. At the time she had some other unexpected expenses going through her account. As a result of the first bounced check... everything else bounced too, including monthly bills and utilities. It cost her fortune in NSF fees and late payment fees.
5. More Professional Image:
Credit card transactions are governed by regulations which protect consumers. A home based business that accepts credit card payments appears more trustworthy and professional than a business that only accepts cash or cheque.
So, in summary there are many positive aspects to setting up credit/debit processing for your home based business. The positive impact in most cases makes up for the small investment necessary in order to acquire a merchant account. The fact is that providing this type of payment flexibility to your customers actually shows you care about their needs, all the while giving your business an opportunity to grow and attract even more clients.