Living your passion and being your own boss are intrinsic parts of the American dream. Unfortunately, 20% of small businesses don’t make it past their first year, and even more struggle to keep things going after that.
Why is this the case? While research reveals myriad reasons why small businesses fold, the second most common one according to a study by CBI Insights was that they simply “ran out of cash.”
Making it past those early years and finding success requires grinding, creativity, and financial savvy. Here are five small business ideas to help you survive, save money, and continue growing into the future, so you can avoid the fiscal fate of other SMB’s and keep the dream going.
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#1: Know The Risks and Rewards of Credit Card Financing
For years, it was common practice: avoid financing your business with credit cards at all costs. However, times are changing, and today credit cards are the third-most frequent source of cash for startups.
There are many advantages to using a credit card to help pay for your business expenses. They include:
- Access to revolving lines of credit, which allow you to cover unexpected expenses and supplement your budget when your cash flow is low
- The opportunity to increase your business credit, and boost your borrowing power
- Spending flexibility for businesses with seasonal or inconsistent financial transactions
- Special business-related bonuses, discounts, and other perks
- Introductory interest rates as low as 0 percent
But as any financial advisor will tell you, you must weigh the rewards with potential risks. When it comes to financing your small business via credit card, be wary of the following:
- Overspending, which can lead to a weaker credit score and heavy debt
- Personal liability for missed payments. Most businesses have commercial liability, but some credit cards require you to also sign what’s known as a personal guarantee, which could put you on the hook for your company’s debt
- Late payments, which can mean mounting fees
#2: Put Technology to Work for You
When it comes to purchases, cash is no longer king. Consider this: a whopping 75 percent of all financial transactions were made via debit or credit card in 2016. This is a trend that’s only expected to continue into the future as well.
And if you run a service-industry or retail business, consider upgrading to the newest point-of-sale (POS) system on the market. A high-end POS system makes life easier for you and your customers.
Some advantages to using a robust point-of-sale system include:
- Creating customer analytical reports, managing loyalty programs, and completing accounting tasks
- Increasing your mobility by allowing you to accept payment via iPad or smartphone anywhere
- Cut costs by increasing efficiency
- Improve the customer experience by making transactions quicker and easier
#3: Don’t Neglect Mobile Payments
Mobile transactions are booming, so be sure to get on board! Consumers want flexibility in how they can pay for products and services, and there isn’t any payment method much more convenient than one conducted via smartphone.
Smartphones are quickly changing the financial transaction landscape. According to a Business Insider report, mobile payments are expected to keep growing for the foreseeable future. The report also indicates:
- There will be as many as 150 million people making mobile payments by 2020
- In-store mobile payments are estimated to top more than $150 billion dollars by 2020
- Consumer confidence in mobile payment processing is on the rise—44 percent of survey respondents said they would likely consider adding their credit card information to their mobile wallets
#4: Cut Costs With ACH Processing
ACH (Automated Clearing House) is a government-regulated way to process customer transactions, set up recurring billing, and pay employees (via direct deposit).
However, ACH helps save small business owners money primarily by reducing transaction fees. The average cost to process a check is more than $1, and processing a credit card swipe can be as much as 3 percent of the total transaction. So, when you consider that an ACH transaction can cost as little as 60 cents, the savings potential becomes quite apparent.
#5: Embrace Ecommerce
A recent study conducted by the U.S. Federal Reserve revealed that 62 percent of shipments made by businesses in the United States were products purchased via ecommerce credit card transactions.
When it comes to small business owners making money, the equation is pretty straight forward: more ways for customers to pay = more payments. Having a web presence complete with an online payment system grants customers a 24/7 opportunity to patronize your business, and immediately makes your product or service available to a larger audience.
However, it’s important to do your research before you select an ecommerce platform for your business. Prior to signing a contract, you should consider:
- Hidden costs and/or fees (and make sure there aren’t any with a little digging)
- The availability of security features to protect the sensitive financial information of you and your customers
- Whether the provider offers a PCI-compliant ecommerce gateway
The key for your small business to succeed now and into the foreseeable future is to embrace the new. Technology is on your side, so be sure to take advantage of it; whether that’s by adopting creative payment processing solutions or incorporating new methods of handling data. Hopefully these five small business ideas will help you get on the right track.
Are you ready to improve your business? Get in touch with Motile’s dedicated team of payment experts and learn how you can save money with a tailored processing solution.