Every day, in areas all over the world, small businesses are disrupted by emergencies and disasters. Regardless of how safe you feel, no one can predict the future with one-hundred-percent certainty. If your business does not already have an emergency plan in place, you should make that a priority on your to-do list. Do it now, today. I mean it: As soon as you are done reading this article.
Chances are high that at some point in the life of your business, you will encounter an emergency, and if you have a plan, you can prevent panic and major turmoil in your life and the lives of your employees.
Our current news cycle is dedicated to the coronavirus COVID-19 outbreak, and employers and employees alike have anxiety about what might happen should the virus spread. The impact has the potential to be severe and businesses everywhere are bracing for disruption. It is not unwise or irrational to develop a plan for your company, even in this early stage. Worries of a global pandemic are already impacting consumer/employee/business choices.
In our house, I am the resident emergency preparedness expert. I was a resident of Japan during the 2003 SARS pandemic, and after an ill-advised trip through Asia at the height of the spread, I was quarantined for 10 days while I self-monitored for symptoms. That event, combined with my experience writing a fictional exploration of a viral pandemic, has led me to become more pro-active about emergency planning.
Right now, you should be addressing employee and customer concerns about the COVID-19 virus outbreak. Should pandemic levels rise within your community, you need an informed plan and emergency procedures in place. It may feel overwhelming, but it doesn’t have to be.
How will this affect me?
What could this look like long term?
What should I do to prepare?
If you don’t know where to start, that’s okay. Wash your hands, take a deep breath (not too deep if people around you are coughing), and follow me as I take you into my world: You are now a small business owner during a global viral outbreak and you have a plan.
Outbreak, Epidemic, Pandemic: What’s The Difference?
First things first. There are key differences between an outbreak, an epidemic, and a pandemic, and each impact your business differently.
Outbreak:Â According to the World Health Organization, an outbreak occurs any time a disease spreads more often than statistically normal in a specific geographic area.
Epidemic:Â An epidemic is the wide-spread outbreak of disease across multiple communities in a short period of time.
Pandemic:Â The next level is a pandemic, which is a a global outbreak that impacts communities world-wide. (Pan, from your Greek roots studying days, means “everyone”.)
At the moment, COVID-19 is in the outbreak category and people with the virus are confined into specific geographic areas.
Even if your small business is not directly affected by sick employees/sick customers/school closures, your supply line might be slowed or halted depending on what happens throughout the world. If you live close to an outbreak area, expect an economic impact (for better or worse, depending on the services you offer).
The best thing to do right now is to keep yourself informed from reputable sources, and do your best to stay healthy — not just for your sake, but for the most vulnerable in our communities who depend on our health for their health.
Short-Term Strategies You Can Implement Right Now
It’s important to plan and prepare for a potential pandemic, but adopting best practices right now in our personal and professional lives may be able to prevent a pandemic, and that — at this moment– is the aim. Your business decisions should be informed with current and accurate knowledge and not driven from a place of blind panic. Panic helps no one. So, don’t panic, and do these things:
Open Lines Of Communication & Be Transparent
Worry breeds gossip, and gossip, rumors, and conjectures are never helpful, especially in a crisis. The best way to prevent gossip is to open up the lines of communication and be fully transparent. If you don’t have an emergency plan, yet, be upfront about it. Point your employees and contractors to reputable sources of information and do what you can to mitigate panic. Talk to HR about developing a streamlined source of communication for worried employees. Be honest. Be empathetic (people are worried). Be proactive, not reactive.
Develop An Emergency Plan
No matter what the emergency, your business needs a plan. For the COVID-19 outbreak, create contingency plans for what happens if:
You or your employees become ill
Work events are canceled
You cannot receive supplies because of closed borders.
Already, conferences and summits are shuttering across the globe, and there will be a widespread economic impact if the virus continues to spread. Prepare for it, but not with worry: Prepare with methodical readiness.
Use this time to address your company-wide emergency preparedness for any emergency. If you have a brick and mortar store and the lights go out, do you have flashlights for your employees? Where are your fire routes posted? Is your business insurance updated? If you don’t have insurance, look into the options you have for protecting your business in a disaster or emergency. Business Interruption Insurance might cover your losses in the event of a pandemic; check with your insurance company.
Where should employees receive communication about business developments? Who should employees talk to if they are worried about their health plan or sick leave?
Your emergency plan is a living document, plan to revisit it often.
Do Your Part To Limit Community Spread
Community health is important. The COVID-19 virus is seemingly caused by close contact with an infected person who may or may not be symptomatic. Symptomatic employees should stay home and self-isolate. If you are able, allow your employees to work remotely, conduct business meetings in GoogleHangouts or via Skype, and embrace people’s choices regarding their own health. (I’m looking at you, guy who wanted to shake my hand and got all awkward when I stumbled away mumbling about not knowing you.)
This is a complicated and nuanced topic, but at the moment we need to exercise caution and allow the flexibility for workers to stay home without penalty if they are sick or need to care for someone who is sick.
Another thing to consider regarding community spread is to rethink what you ask customers to touch/engage with. While at the mall yesterday, my child played with an iPad on display, and ten-seconds after he vacated the device, an employee was there to clean the screen. (I also had my own child wash his hands, too.) I asked about the policy: They had a pretty strict cleaning policy in place prior to COVID-19 and wiping down touched surfaces happens regularly and quickly–screens are germy places. How often and how deeply are you cleaning community areas? Make a plan.
What If My City Is Quarantined?
Quarantine can be an emotionally challenging experience: I speak from my own past. In my situation, I was under house-quarantine with instructions to monitor my health. Every day, someone from my place of employment brought me treats, groceries, or get-well notes, but the boredom took a toll. The first few days were fun and I watched marathons of the X-Files. But by the time I arrived at day 10, I was desperate for human connection and freedom.
A city-wide quarantine could happen if a COVID-19 outbreak needs containment, and that decision would certainly alter any attempts to continue “business as usual.” Currently, the quarantine for COVID-19 is a mandatory 14 days in isolation. This might be one of your worst-case scenario events to plan or prepare for. Could your business still operate during a quarantine? Better yet, is there a way your small business could help during a quarantine? What does that look like? (Small businesses that can deliver goods and services might see a business increase, for example.)
We don’t know what is going to happen at the moment, so the only thing you can do is prepare and have a plan in place for quarantine. Expect losses and disruptions, prepare for them, and communicate wholly with your staff.
Why Pandemic Planning Is Important For Your Business
One hot summer day, when my kids were very little, I packed us up for a long walk to a local park. Inside our stroller, I packed a giant first aid kit and some snacks. It wasn’t until we were about halfway to our destination and my youngest said he was thirsty that I realized I didn’t bring water. We didn’t need the 100 bandaids. We needed water.
If you haven’t planned effectively for the emergencies or disasters that might occur at your business, you could be left adrift in the middle of a crisis without the right tools. Pandemic planning is important because, well, here we are! This is the current fear and it’s a statistically relevant concern.
However, any type of emergency planning is necessary for your small business. Explore business insurance, look for ways to reduce potential community spread, have answers for worried employees, and be honest about the impacts an emergency might have on the business.
Think about your geographic area and prepare for the emergency/disaster that might occur and ramp up your plans. Whether it’s an earthquake, flood, tornado, hurricane, man-caused disaster, or pandemic, your business should have a plan. You must communicate that plan and ease the worries of those you employ, serve, and meet in the community. In an emergency, we often learn that we are all in this together.
The post Small Business Outbreak & Pandemic Guide: Coronavirus Edition appeared first on Merchant Maverick.
It’s not easy for business travelers to spend time away from home. Between the tedium of waiting around at airports and the discomfort of sleeping in new beds, business travel can be a grueling grind. One way you can help to ease the grind a bit is by deciding on a primary hotel rewards program.
Also known as loyalty programs, these programs can help you rack up points while taking advantage of extra perks. It’s honestly hard to see why a frequent business traveler would pass on signing up for a hotel rewards program — you’ll get free nights, access to free Wi-Fi, and more. And best of all, these rewards programs are free to join.
So which program might be best for you? Keep on reading for the low-down on what’s out there!
Hotel Rewards Programs: The Basics
Hotel rewards programs offer you the chance to save money while traveling. Every time you book a room at a hotel, you’ll receive a set number of points (usually around 10 points for every dollar spent). Once you’ve earned enough rewards, you can cash them in for free nights, room upgrades, and more. Additionally, by joining a loyalty program, you’ll be set to receive perks like free Wi-Fi- or late check-out — no points required.
In some cases, you may be able to earn even more rewards by signing up for a credit card that a particular hotel brand offers. These cards will usually shoot you to the highest level of points earning within that particular brand’s rewards scheme. These cards are of the personal variety in most cases, but there are a few business-specific cards floating around too.
On the flip side, however, these rewards programs can tie you down to a set of hotel brands. This means you might ultimately spend more money instead of just searching for the best deal. Plus, if you’re set on earning points from one set of brands, you may find yourself needing to be less flexible when it comes to hotel location.
All that said, smart usage of hotel rewards programs can indeed help business travelers save a bit of cash when used smartly. As such, those who require frequent travel may want to focus on joining a hotel rewards program to eke out that extra cash where possible.
Popular Hotel Rewards Programs For Business Travelers
Your favorite hotel brand probably offers its own set of rewards or is part of a rewards network alongside other hospitality brands. Here’s a look at a few of the most popular hotel loyalty programs and how they might stack up for business use:
IHG Rewards Club
InterContinental Hotels Group’s Rewards Club covers over 5,000 hotels throughout 100-plus countries. Its network of hotels includes Holiday Inn, InterContinental, Crowne Plaza, Regent, and Hualuxe.
Points are generally obtained at the rate of 10 points per dollar spent on hotels within the IHG network. Those who reach IHG Reward Club’s top bracket (achieved by booking 75 nights or earning 75,000 points) can earn 20 points per dollar. Miles can also be earned for an array of airline partners. Booking a table via OpenTable or ordering from Grubhub through IHG can also pick up points for you. Points can additionally be bought with cold hard cash, which may make sense if IHG is running a sale on points.
Savvy travelers might also be able to save more with the IHG Rewards Club Premier Credit Card through Chase. While this is a personal card, business users can still take advantage of the card’s 25x points rate. It’s also worth noting that IHG is a transfer partner with Chase — this means that if you have a Chase Ultimate Rewards-eligible card, you can transfer points to your IHG Rewards Club account on a 1:1 basis.
Once you have points in hand, they can be redeemed for hotel stays and airfare with over 40 airlines. Free nights start at 10,000 points and go up from there depending on the brand and location. You can also use your points for items from a variety of brands. Note, however, that if you fail you stay at an IHG network hotel over the course of 12 months, your points will expire.
Choice Privileges is a global rewards programs for hotels under the umbrella of Choice Hotels. Its network of budget brands includes Cambria Hotels, Comfort Inn & Suites, Econo Lodge, Sleep Inn, and Quality Inn. This network reaches 7,000 locations worldwide, with hotels in over 40 countries throughout North and South America, Asia, Australia, the Caribbean, and Europe.
You’ll start off earning a base 10 points for every dollar you spend at eligible properties. After 40 nights at Choice properties, you can qualify for the program’s top rewards bracket, Diamond, and earn 15 points for every dollar spent. Points can additionally be earned for golf purchases, travel bookings through Bluegreen Vacations, and car rentals through Avis and Budget.
The Choice Privileges Signature Visa Card (offered in conjunction with Barclays) can stretch your savings even further. Signing up for the card will automatically boost your earning rate to Diamond status and there are various bonuses to earn even more. However, note that Choice Privileges only offers a personal credit card and not a business-specific one.
Points obtained through Choice Privileges can be cashed in for free nights, resort bookings, vacation rentals, gift cards, and trips with various travel partners. Choice Privileges’ list of travel partners includes Alaska Airlines, Southwest Airlines, United Airlines, and Amtrak. Points can further be used for purchasing golf gear or booking cruises. Free nights at eligible Choice hotels start at 8,000 points. You’ll want to keep in mind that Choice Privilege points expire after 18 months of account inactivity.
With over 7,000 hotels to choose from across the U.S., Canada, Asia, and Europe, Marriott Bonvoy is a solid rewards program with fairly strong coverage. The program includes the 30 different hospitality brands owned by Marriott International, including The Ritz-Carlton, Marriott Hotels & Resorts, Renaissance Hotels, and Courtyard.
Marriott Bonvoy users will be able to enjoy 10 points per dollar spent at eligible hotels. The highest two tiers (Titanium Elite and Ambassador Elite) both earn an extra 75% on points. Besides staying at hotels, points also can be picked up through air travel or by booking travel “activities” through Marriott’s own portal.
Business travelers who frequent Marriott properties may want to look into the Marriott Bonvoy Business American Express Card. This credit card will dole out 6 points per dollar on Marriott purchases (plus 4 on restaurants and 2 everywhere else). You can also take advantage of employee cards and one free night award every account anniversary.
After you’ve banked up points, you can use them on free nights, for partially paying for a stay, for booking travel with over 250 airlines and rental car companies, or for snagging travel packages. You can book free nights at eligible Marriott International properties for as little as 5,000 a night — plus there are no blackout dates on when you can book. Marriott Bonvoy points do expire, but not until after two years of account inactivity.
World of Hyatt
While World of Hyatt packs a punch with an excellent rewards program, it lacks the coverage other brands might have. There are fewer than 1,000 properties worldwide under the Hyatt umbrella. However, most U.S. travelers shouldn’t find difficulty — many of Hyatt’s hotels are located in the country’s biggest cities. Brands included in the Hyatt network include Grand Hyatt, Hyatt Regency, Joie de Vivre, Andaz, and Alila Hotels and Resorts.
World of Hyatt dishes out 5 points per dollar spent on eligible purchases at Hyatt hotels. The highest membership tier, Globalist, collects an extra 30% on top of those 5 points. You can obtain Globalist status by spending 60 nights in Hyatt hotels, earning 100,000 points, or attending 20 qualifying meetings/events at Hyatt properties.
There is no business credit card for World Hyatt, but there is the World of Hyatt Credit Card. This card, co-offered with Chase, delivers 4 bonus points for every dollar spent at all Hyatt hotels (plus 2 points per dollar on dining, airfare, local transit, and gym memberships). Every cardholder will receive one free night annually, plus the opportunity to earn a second free night by spending $15,000 on the card in an anniversary year.
World of Hyatt has one of the most valuable points redemption rates around — some estimate that a point in this program is worth almost 2 cents a pop. You can use your World of Hyatt points on free nights, dining/spa experiences, fitness classes, trips, air travel, and car rentals. Free nights start at 5,000 points. Your points will expire after account inactivity of two years.
Its 9,000 properties worldwide mean that Wyndham Rewards is one of the furthest-reaching rewards programs on the planet. Available locations cover the U.S., Mexico, the Caribbean, Europe, Africa, and Asia. Among Wyndham Rewards’ brands are Wyndham Grand, Dolce Hotels and Resorts, La Quinta, Ramada, and Days Inn.
With Wyndham Rewards, you’ll net 10 points per dollar or 1,000 points per stay — whichever is higher. The top membership level, Diamond, nets 20% more rewards (you can reach that status after 40 stays at Wyndham properties). Wyndham enables other rewards-earning methods, such as shopping, gas from Marathon Gas stations, tours/activities, DoorDash purchases, and car rentals through Avis and Budget. You can also purchase points in increments of 1,000.
For credit cards, you can apply for either of the Wyndham Rewards Signature Visa cards. Offered in conjunction with Barclays, these two cards grant 5 points (for the annual fee version) or 3 points (for the no annual fee version) per dollar spent at Wyndham properties. These cards also feature welcome offers that will dish out enough points for free nights. Note that both these cards are of the personal variety; Wyndham offers no business credit card.
Points earned for Wyndham Rewards can be redeemed for free nights (starting at 7,500 points), shopping, tours/activities, gas, gift cards, and charitable donations. You can also transfer points to one of Wyndham’s travel partners (including American Airlines AAdvantage Miles, United MileagePlus Miles, Frontier Miles, and Amtrak Guest Rewards Points) or to Caesars Rewards to take advantage of casino-focused rewards. Those who own Wyndham vacation properties can also transfer points to pay for maintenance and exchange fees. Wyndham Rewards points have a long shelf life — they won’t expire until four years after they are posted to your account.
Other Hotel Rewards Programs
There are a few other programs worth mentioning, but just didn’t make the cut the above:
Best Western Rewards: With a decent rewards rate and points that won’t ever expire, Best Western Rewards is a solid loyalty program. There are also a couple of Best Western co-branded (non-business) credit cards on offer, too.
Hilton Honors: Hilton is one of the largest hotel chains in the world, with over 4,000 locations globally. However, the Honors program has one of the lowest points values around; by some estimates, Hilton Honors points equal less than 0.5 cents per point. Hilton Honors does have a business credit card that can help stretch your rewards value further, however.
Radisson Rewards: With over 1,000 properties eligible, Radisson Rewards might be an excellent option. As their hotels are primarily located in the U.S. and Europe, those who frequently hop across the pond for business may find Radisson to be their best option.
Choosing The Best Hotel Rewards Program For Business Travel
Ultimately, there’s no one way to pick a rewards program. The program that works best for you will depend on where you travel to, which brands best suit your price point, and whether or not you can take advantage of credit card perks. But by utilizing a hotel rewards program smartly, you’ll be well on your way to softening the business travel grind.
The post Save Money On Travel Expenses By Finding The Best Hotel Rewards Program For Business Travelers appeared first on Merchant Maverick.
Here at Merchant Maverick, weâre constantly advising you to read your contract before you sign up with a merchant account provider. Why? Because this is the most important step in the process of negotiating an agreement with a provider. No matter how much time youâve spent obtaining quotes from multiple providers, researching each company, and negotiating with an agent for the company youâve chosen, none of it will matter if the legally binding documents that define every aspect of your relationship with your merchant account provider donât match up with what you were promised by the companyâs sales agent. Failing to read contract documents and understand what youâre really agreeing to can be an extremely frustrating and expensive mistake. In fact, a poor understanding of the terms of a processing agreement is the most common cause of issues that arise between merchants and their providers.
Reading your contract safeguards you in three major ways:
It protects you from unscrupulous sales agents who fail to disclose important contract terms, or even lie about the costs or obligations contained in a contract.
It gives you a clear understanding of almost every possible cost that you will or could be responsible for as long as you maintain your account.
Most importantly, it gives you your last and best chance tocall the whole thing off and back out of the deal before youâve signed up if you find that the actual terms of your contract are simply unacceptable to you.
In this article, weâll explain what merchant agreements are, how theyâre structured, and how to identify and interpret the most important clauses youâll find in them. Weâll show you examples of common verbiage that describe the length of your contract, how to cancel your agreement, and any penalties that might apply for doing so. Weâll identify common red flags that indicate that your sales agent isnât being honest with you, and give you some strategies for dealing with this all-too-common problem. Finally, weâll show you how to get out of a bad deal if youâve already signed up for an account, and things just arenât working out between you and your provider.
What Is A Merchant Agreement?
A merchant agreement is simply a document (or, more likely, a collection of documents) that establishes a contract between you, the merchant, and your merchant services provider. A contract, in turn, is an agreement between two parties that establishes the expectations and rules of behavior governing the relationship between them. Thatâs actually the simple definition â contracts have been around for hundreds of years and there is an entire branch of the law devoted to them. Despite what you may have heard, verbal contracts can be legally valid, although theyâre extremely difficult to enforce if a dispute arises between the parties. Today, most contracts are written, and they govern practically every aspect of modern life. From obvious examples such as automobile loans to those End User License Agreements (EULAs) that pop up whenever you install a new app on your phone, contracts are everywhere.
Unfortunately, weâve become so inundated with contracts that we rarely take the time to sit down and read them. Now, you might be able to get away with this when installing the latest trendy social media app (assuming you donât mind letting the company sell your personal data to advertisers, of course), but itâs a really, really bad idea when it comes to merchant services. Why? Because the sales agents that are tasked with selling merchant accounts have learned over the years that itâs much easier to convince you to sign up for an account if they conveniently forget to mention or explain certain terms — terms you might not be comfortable with if they were brought to your attention. These terms include (among other things) early termination fees that penalize you for closing your account, liquidated damages clauses that make it even more expensive to get out of your contract, automatic renewal clauses that keep you obligated to your provider indefinitely, and the fact that your equipment lease (if you have one) is completely and utterly noncancelable. Plus, thereâs a host of âhiddenâ fees that your sales agent might have neglected to tell you about but that are spelled out â often in very, very fine print â somewhere in your contract.
Before we dive into the nuts and bolts of understanding your contract, letâs begin by explaining that every merchant services provider will have a contract that governs your relationship with them. This includes popular payment service providers (PSPs) such as Square (see our review). So, if you see a provider claiming that they have âno contractsâ on their website, be aware that what they really mean is that you wonât have a long-term contract that commits you to keeping your account open for years at a time.
Depending on which provider you sign up with, your âcontractâ may actually include agreements with more than one party. Obviously, there will be an agreement between you and your provider. However, you might also have an agreement that applies to the relationship between you and the backend processor that will be processing your transactions. If you make the mistake of signing up for an equipment lease, there will usually be a separate (and even more draconian) agreement that only covers your leased processing equipment. The leasing of credit card machines has earned such a poor reputation in the business community that most large processors have spun off subsidiaries (wholly owned by the main company, of course) to handle these leases. Lastly, your contract might also include separate agreements with third-party service providers, such as payment gateway providers, etc.
Can You Negotiate A Merchant Services Agreement?
If youâve read this far and are starting to wonder whether itâs really worth it to open a merchant account at all, we have some good news. Unlike many other vendors or service providers you deal with in your everyday life, most merchant services providers will allow you some leeway to negotiate the exact terms of your contract. In other words, you wonât necessarily have to accept the first offer you receive from a prospective provider. In fact, many providers assume that you will try to negotiate a better deal, and set their prices higher than what theyâre really willing to accept. In this case, failing to negotiate for lower rates and more favorable terms can be an expensive mistake.
Hereâs what Jeff Marcous, the Chief Evolutionary Officer of Dharma Merchant Services (see our review) had to say about merchant services agreements:
The merchant agreement issue is definitely complex and is pretty much dictated by the acquiring banks of the MSP/ISO. For our part, we have to go along with the boilerplate terms set down by either Wells Fargo or Synovus Bank, but we do have authority to delete certain clauses â like termination fees, etc. It’s kind of like clicking on the terms of agreement for an iPhone update â if you or I actually read (and understood it), we would probably gasp at what is being agreed upon, but of course, you could not continue to use their services even if you pushed back on something.
That said, probably the most important thing is for an agreement to explicitly offer the ability for the merchant to cancel at any time without penalty. Even then, the processor has the right to keep an account “open” for a period of time in order to process any chargebacks or malicious activity on the account.
Now, before you start salivating at the prospect of customizing your entire contract to your liking, you need to be aware that your ability to change the terms of your contract is quite limited. In fact, roughly 90% of the terms of your contract consist of standard boilerplate terminology that will be the same for every merchant, regardless of which provider youâre using. For example, you canât change the rules set forth by the credit card associations (e.g., Visa or Mastercard) that are restated in your contract. Likewise, youâre extremely unlikely to get a waiver on arbitration clauses or clauses that specify a choice of jurisdiction for disputes. However, many of the most critical aspects of your contract are, in fact, negotiable. These include the following items:
Early Termination Fee (ETF) Or Liquidated Damages Clauses:Â These clauses are the most common terms in a merchant services contract to be waived through negotiation. No one wants to be hit with a penalty for closing their account, and providers are often eager enough to get your business that theyâll waive the ETF as an inducement for you to sign up with them. A word of warning is in order, though. Never rely on a verbal waiver promised to you by your sales agent. Always get a written waiver, and keep a copy of it for your records. Weâve heard far too many complaints from merchants who were promised a waiver, but then had the ETF automatically taken out of their bank accounts later on because the sales agent never passed the waiver information along to anyone else at the company.
Contract Length:Â Although theyâre falling out of favor, the standard merchant account agreement today still usually requires an initial commitment of three years. However, you can often have this term waived if you ask for a month-to-month arrangement instead. Be aware that having a waiver to the early termination fee does not mean that your three-year term is automatically waived also. These two terms are often contained in separate clauses to your contract, and youâll want written waivers to both of them to protect against being automatically charged recurring fees after youâve closed your account early.
Processing Rate Plan:Â Although we consider tiered pricing to be the worst possible processing rate plan for merchants, itâs still the most commonly used type of pricing in the industry. Why? Because most merchants donât know the difference between tiered pricing and interchange-plus pricing, which is both more transparent and more affordable. Many merchant services providers will try to set you up with tiered pricing, even though they also offer interchange-plus plans. Donât fall for it! Always ask for an interchange-plus pricing quote, and be prepared to find a different provider if it isnât offered to you. Note that if your provider of choice offers flat-rate or subscription-based pricing, or uses a standardized interchange-plus rate based on your monthly processing volume, you might not be able to negotiate a custom pricing quote unless your processing volume is extremely high.
Some Fees:Â Donât get too excited here. Merchant account providers charge a host of recurring and incidental fees, all of which should be disclosed somewhere in your contract. While some of these fees can be reduced or eliminated through negotiation, many others cannot. For example, you can always count on having to pay chargeback fees, monthly account fees (although you can sometimes lower the amount), and any fees that your provider has to pass on to issuing banks or credit card associations (e.g., Visa FANF fees). Fees that can be waived or reduced include application fees, account setup fees, statement fees, and your monthly minimum.
Your ability to change the terms of your merchant services agreement will depend primarily on both the size of your business and your negotiating skills. Providers make more money and are exposed to less risk by working with larger businesses that have established processing histories, and so theyâre more likely to adjust their offer to get one to sign up. Small or newly-established businesses, on the other hand, donât have these advantages and often have to take what they can get. However, you can still improve your negotiating skills and use them to your advantage, regardless of the size of your business. Check out our article on negotiating your credit card processing deal for some helpful tips.
What About Square & Other Payment Service Providers (PSPs)? Do They Have A Contract?
Square (see our review) and other PSPs are very popular with small business owners because they allow you to set up an account through their website without having to submit a small mountain of information about your business and wait for an underwriting department to go through it all before approving (or denying) your account. Approval is quick and, in most cases, nearly automatic.
But do they have a contract? As weâve emphasized above, thereâs always a contract. In this case, Square has conveniently posted their standard Terms of Service right on their website. Unlike most merchant services agreements, itâs relatively short and written in plain English. We highly encourage you to read it before you decide to sign up with Square. The only downside to this approach is that you canât negotiate the terms of a one-size-fits-all contract like this. However, since Square already offers month-to-month billing, no monthly fees, and fully disclosed flat-rate pricing, there really isnât much to negotiate anyway.
The Most Important Parts Of A Merchant Agreement (For A Merchant)
As weâve mentioned above, most of the content in a merchant agreement will be nearly the same from one provider to the next. However, this wonât make the job of deciphering your contract any easier. No two merchant agreements are identical. Every provider has their own way of organizing their contract documents, and some providers even have multiple versions of their contracts, depending on which backend processor is underwriting your account.
Merchant agreements can run anywhere from as few as four pages to over 60 pages, depending on how theyâre organized and how many additional agreements are included with them. At a minimum, you can expect your agreement to include two distinct parts: a Merchant Application and a set of Terms and Conditions. You might also have one or more Third-Party Agreements as well, either incorporated into the main document or published separately. Hereâs a breakdown of what to look for in each part of your agreement:
Before you can open a credit card processing account, youâll need to fill out a Merchant Application. This document, often only one or two pages in length, collects information about you and your business. Besides obvious facts such as what industry youâre in and whether you operate out of a retail location or sell online, youâll also have to provide reasonable estimates for what percentage of your sales are in cash, by credit or debit card, or via another payment method. You might also need to provide enough financial information for the provider to run a check on your personal credit.
One word of caution is in order here: providers often ask for information about your business bank account, including account and routing numbers. While they legitimately need this information to deposit funds from your credit card sales into your account, they can also take money out as well. Unscrupulous providers can sign you up for a merchant account without your knowledge and begin extracting any number of fees immediately, even if you donât process any credit card sales. We recommend that you wait to provide this information until youâve read your contract thoroughly and are certain that you want to open an account with your chosen provider.
Merchant applications also provide a space to lay out all the information that will be unique to your account in one location. This will include all applicable processing rates and recurring fees that vary from one merchant to the next. Incidental fees, which are typically the same for everyone, will usually be found somewhere in the Terms and Conditions portion of your contract. Hereâs a sample Merchant Application from CardConnect to give you an idea of what to expect.
Merchant applications arenât as chock full of legalese as the Terms and Conditions section of your contract, but itâs still critical to review them very carefully. One particularly important thing to look for is the presence of mid-qualified and non-qualified processing rates. This is a sure sign that your sales agent has signed you up for an expensive tiered pricing rate plan. Sales agents have a bad habit of only verbally disclosing the qualified rate for your plan, without mentioning the mid-qualified or non-qualified rates. These rates are much higher, and today most of your credit card transactions will fall into one of these two types of rates instead of the lower qualified rates.
Terms & Conditions
Just as the Merchant Application contains all the information that applies specifically to your account, the Terms and Conditions section of your contract includes all the stuff that applies equally to every merchant account maintained by the provider. And itâs a lot of stuff. Terms and Conditions sections invariably run for many pages and include a tremendous number of rules and policies that govern how you use your account, all spelled out in exacting legalese that can be painfully difficult to read. Some providers have started to call this section a Program Guide, perhaps in an effort to make it sound a little less daunting. Most of the information contained here is industry-standard, with very little real variation from one provider to another. However, there are also some really important policies buried in here that can have a serious impact on your relationship with your provider. The most important things to look for in the Terms and Conditions are going to be clauses that define the length of your contract term, the automatic renewal clause (which will usually be included), early termination policies, and instructions for properly closing your account. You should also familiarize yourself with clauses that require you to submit to mandatory arbitration or specify a choice of jurisdiction in the event that you find yourself in a legal dispute with your provider.
Contract Length Clauses
How long is your contract? Your sales agent should answer this question for you in detail before you sign up, but itâs not unusual for them to conveniently âforgetâ to do so. The typical, industry-standard merchant agreement has an initial term of three years, or 36 months to align with your accountâs monthly billing cycle. While a three-year initial term is the most common, weâve seen contracts where this term is as short as one year, and occasionally as long as four (or even five) years. Automatic renewal clauses extend the term of your contract, typically for an additional twelve months at a time. Again, thereâs some variation among providers, with subsequent terms ranging from six months to two years at a time. Note that Canadian law limits contract extensions to no more than six months at a time.
Long-term contracts have always been unpopular with merchants, as they make it very difficult to get out of your contract if you want to switch providers. The trend within the industry now favors month-to-month billing, which is much more flexible. Be aware, however, that you are still under a commitment even with month-to-month contracts. Look for verbiage in your Terms and Conditions that specifies an initial term of 30 days, with automatic renewal periods of an additional 30 days at a time thereafter. With no early termination fee imposed, month-to-month contracts allow you the freedom to close your account at practically any time without penalty. At most, you might have to pay recurring fees for one additional billing cycle.
Early Termination Policies
One of the worst aspects of merchant agreements is when providers impose an expensive penalty for closing your account before the end of the current term. The most common practice is to charge a fixed early termination fee (usually between $295 and $495), regardless of how much time is remaining on your current contract term. Some providers will offer proration based on the number of years left on your contract, which lowers (but doesnât eliminate) the penalty if you stay with them for over a year or two. In some cases, providers will use a liquidated damages clause instead of a fixed fee. Liquidated damages are based on a combination of your average monthly processing volume and the length of time remaining on your contract. A liquidated damages clause can potentially be very expensive, particularly if you have a high monthly processing volume and close your account within the first few months of opening it.
When you read the early termination provisions of your contract, one aspect that will probably upset you the most is the dramatically unequal way in which early termination applies between you and your provider. While you, the merchant, are contractually obligated to keep your account open for years at a time and pay a host of recurring fees, whether you use the account or not, your provider can close your account unilaterally at any time for practically any reason. While theyâre highly unlikely to do so as long as theyâre making money off of your business, a sudden closure could leave you without the ability to accept credit or debit cards until you can line up a new provider.
Account Closure Instructions
While lengthy contract terms and automatic renewal clauses are designed to keep you on the hook indefinitely, it is possible to close your account without penalty. Every merchant agreement contains specific instructions for closing your account. Providers donât make it easy, but if you follow the directions in your contract very carefully, you can terminate your contract at the end of the current term without being charged an early termination fee or liquidated damages. Almost all providers require written notice of your intent not to renew your contract, provided within a specified number of days before the end of your current term. Unfortunately, providers often make it difficult to find out the exact date of your contract renewal, so youâll want to pin this down and send in your notice well in advance of the minimum required period. Providers typically require 30 daysâ notice, although weâve seen some contracts where the required notice period was as long as 90 days prior to termination. You should also beware of providers that require that the notice be submitted on a special written form, which they jealously guard and will only provide to you upon request.
Hereâs an extract from an old Sage Payment Solutions (now Paya) contract that includes examples of all the clauses and terms weâve discussed above:
Â Clauses Affecting Legal Disputes
Although they donât happen nearly as often as you might expect, legal disputes between merchants and their providers are always a possibility, and providers will attempt to protect themselves by including language in their contracts that makes it more difficult for you to pursue this kind of remedy. Usually located near the very end of your Terms and Conditions, youâll almost always find a few provisions that cover any type of legal action you might wish to pursue.
Mandatory arbitration clauses are the most common kind of limitation youâll find, and theyâre a standard feature of almost all merchant services agreements today. These clauses simply require you to submit to mandatory arbitration in lieu of filing a lawsuit. In most cases, courts will send you to arbitration prior to hearing your case anyway, so these clauses donât have much impact on your ability to pursue a legal remedy.
Choice of jurisdiction clauses are also included in every merchant services contract today. In almost all cases, the provider will limit jurisdiction to courts in the state where their headquarters is located. While this doesnât prevent you from pursuing legal action against them, it can throw up a significant roadblock if you donât live in the same state. Youâll be responsible for any costs you incur traveling to court appearances, depositions, etc. While we donât recommend that you choose a provider based solely on geographic proximity to your place of business, you should be aware of the impact this kind of contractual limitation can have if you end up trying to sue your provider.
If your merchant account includes a product or service provided by a third party, youâll have a separate agreement with that party included as part of your contract documents. Payment gateways and equipment leases (which you should avoid) are the most common examples of these additional agreements.
Third-party agreements may be separate documents, or they may be included within the body of your Terms and Conditions. For example, if you need a payment gateway and your provider uses Authorize.Net (see our review) exclusively, youâll have an agreement that applies between you and Authorize.Net.
With equipment leases, many providers will use a separate company to provide the equipment and administer the lease. In most cases, this âcompanyâ is actually a wholly-owned subsidiary of the provider, often located at the same physical address. Be aware that the length of your equipment lease is separate from the initial term of your merchant account agreement. In fact, itâs often longer â keeping you on the hook for monthly lease payments even if you close your merchant account at the end of the initial term.
Standard Credit Card Processing Fees: What To Look For & Where To Find Them In Your Contract
As weâve discussed above, your merchant agreement will define the type of processing rate plan you have and identify the rates that apply to your account. Rate plans can be flat-rate, tiered, interchange-plus, or subscription-based. Unfortunately, most providers donât spell out exactly which type of rate plan youâre on in their contracts (particularly if youâre on an expensive tiered plan). You will almost always find this information in the Merchant Application section of your agreement. Make sure that your agent fills this section of the agreement out completely before you sign anything. Processing rate information can get complex very quickly, with separate rates for credit cards, debit cards, ACH payments, American Express cards, etc. Youâll want to know which rates apply to your account and the circumstances under which each rate will apply to a given transaction. For help in identifying your processing rate plan type, see our article on identifying your pricing model on your processing statement.
Be aware that interchange fees will not be disclosed on your merchant agreement, even if youâre on an interchange-plus pricing plan. These fees are set by Visa, Mastercard, and other card brands, and are usually updated twice a year. See our article on interchange fees for more information.
Your Merchant Services Agreement Could Contain Hidden Fees
In addition to processing rates, your merchant account will be subject to a bewildering number of recurring and incidental fees. Rest assured that these fees are all spelled out somewhere in your contract. Finding them, however, can be a challenge. Most fee information will be filled out in the Merchant Application section of your contract documents. The Terms and Conditions section, on the other hand, rarely discloses fee information unless that amount charged is identical for all merchants using that provider. Chargeback fees, for example, are often disclosed and discussed here. Be aware that some providers will include clauses in their agreements that allow them to change or modify other fees not disclosed in the contract, at their discretion. For an in-depth discussion on merchant account fees, see our post on credit card processing rates and fees.
Seven Red Flags That A Sales Rep Is Pressuring You Into A Merchant Agreement Scam
Nowhere is the credit card processing industry sleazier and more dishonest than in the sales practices it employs to sign merchants up for accounts. Many providers lower their costs by relying on independent sales agents, who often work on a commission-only basis, and need to sell accounts to put food on the table. While there certainly are honest, experienced people working as independent sales agents, the truth is that youâre more likely to encounter an agent whoâs more than willing to take some ethical shortcuts in order to close the deal and sign you up for an account. Hereâs a rundown of the most important âred flagsâ that can help you to identify and steer clear of a dishonest agent whoâs basically scamming you:
The agent fails to disclose that the contract contains an early termination fee. This is the most common complaint from merchants whoâve had a bad sales experience. Agents know that you donât want to have to pay an ETF if you later decide to close your account, so they simply âforgetâ to mention it unless you directly ask them about it. In extreme cases, agents will outright lie, claiming that the contract doesnât include an ETF, when itâs clearly spelled out in the Terms and Conditions.
The agent offers a verbal waiver of the early termination fee, but doesnât provide it in writing. Never rely on the verbal assurances of a sales agent! Agents are quick to promise you a waiver just to get you to sign up, but unless you have written proof to back it up, you could still be liable for paying the ETF down the road. In fact, some providers explicitly state that verbal agreements are not part of your contract. While this provision is meant to protect them from false claims by merchants, it also gives sales agents complete freedom to lie to you.
The agent fails to disclose the terms of the leasing contract. Few, if any, merchants would ever agree to a lease if they understood the noncancelable nature of the leasing contract and the true cost of the lease relative to the value of the equipment provided. Our best advice is never to lease your equipment. If you find yourself short on cash and tempted by the apparently low monthly lease payments, read your leasing contract before signing up. That should be sufficient to change your mind about entering into a lease.
The agent pressures you to sign the agreement before youâve had an opportunity to review it. This is a very common tactic in the processing industry. Agents know that you might back out of the deal or attempt to renegotiate the terms if you actually read the fine print, so they apply tremendous pressure to get you to sign up right away. The latest trick weâve heard about is agents physically coming into retail locations with iPads and other tablets to collect digital signatures from merchants without giving them an opportunity to review the documents. Donât fall for it!
The agent pressures you to sign the Merchant Application without telling you that doing so can actually bind you to a contract. Because the Merchant Application is used to collect information about your business, itâs easy to fool merchants into thinking that itâs just an application. Itâs not. The Terms and Conditions section of the contract does not require a signature, so an agent can submit your signed Application to underwriting without you ever seeing the Terms and Conditions. If itâs approved (and it usually will be), youâre now stuck in a long-term contract.
The agent fails to provide a physical or digital copy of contract documents. This is becoming more of a problem as providers migrate toward using web-based signup processes and digital signatures. Often, an agent will promise to send a merchant a physical copy after the account is approved, but then fail to do so. Do not let this happen to you! As a minimum, you should keep digital copies of all your contract documents. If the agent has written anything onto a paper copy of the contract (such as crossing out the early termination clause), keep a physical copy as well.
The agent forges your signature onto your contract documents and submits them to underwriting without your knowledge or consent. Yes, this actually happens â even though itâs a violation of criminal law and the agent could end up with a felony conviction and a prison sentence if he or she gets caught. Unfortunately, these incidents are rarely reported to the proper authorities for investigation. What usually happens is that the agent gets fired, and the provider quickly releases the merchant from their contract.
What To Do When Your Credit Card Processing Agreement Has Failed
Being stuck in a long-term contract might not seem so bad when your business is humming along, but things can go south very quickly for a number of reasons. Maybe your processor has raised your rates, or youâve had a bad experience with customer service. Maybe youâve found a better provider with lower rates and no long-term contracts. Maybe you just need to close your account because youâre retiring, shutting down your business, or selling it. Whatever the reason, early termination fees and automatic renewal clauses can make it difficult to exit your agreement without paying a substantial penalty. Unfortunately, providers donât like losing customers and are rarely sympathetic to whatever legitimate reasons you might have for leaving.
Unless itâs an emergency situation where you need to get out of your contract immediately, we recommend that you wait until the end of your current contract term and close your account by following the specific instructions contained in your contract. The aim here is to give your provider sufficient notice that you wonât be renewing your contract, so it doesnât auto-renew, and you wonât be assessed an early termination fee. Providers are notorious for making this process as difficult as possible, but as long as you get the ball rolling ahead of time, you should be able to submit the proper documentation and provide the required notice to terminate your contract.
If youâre only a few months into a long-term contract and itâs obvious that things just arenât working out, closing your account without penalty will be more difficult. Providers are usually more willing to work with you in situations where the business is closing or changing hands, but if youâre just trying to switch to a competitor, theyâre not going to help you out. However, the processing industry is so competitive that some providers will offer to pay your early termination fee for you if you switch to them. Just be aware that if you do this, youâre almost certainly going to be trading one long-term contract for another. If youâre going to switch providers, we recommend that you switch to a company that will offer you true month-to-month billing with no long-term commitment at all.
Finally, if youâve had a really bad experience with your provider and they wonât let you out of your contract, you should consider filing a complaint against them with the BBB. Despite all the shady practices commonly found in the processing industry, merchant services providers are just as sensitive about their reputations with the public as any other business. Weâve seen plenty of situations where an aggrieved merchant went public with a BBB complaint, and the provider quickly released them from their contract and refunded their early termination fee.
Your Merchant Agreement Is A Contract, Not A Death Sentence
If youâve read this far, you might be starting to wonder if accepting credit cards and having a merchant account is even worth the effort. For most businesses, the answer is clearly yes. With customers increasingly relying on credit and debit cards for nearly all of their purchases, the additional sales that come with having a merchant account will usually more than make up for the hassle and expense of setting one up. The real trick, of course, is to identify and sign up with the provider that can offer you the best combination of low fees, reasonable contract terms, and high-quality customer service.
Unfortunately, the processing industry is simply not the sort of place where you can expect everyone to be honest and treat you fairly. People in this business can and will take advantage of you â if you let them. Reading your contract before you sign up is your last line of defense against being stuck in a bad deal. With that in mind, here are some practical tips for actually reading your contract without missing anything important:
Pick a time when youâre rested and alert. You should plan to devote at least an hour to this chore, although it might take as many as 3-4 hours if youâve never done it before.
A cup of coffee or tea can help you to maintain your focus while wading through all the legalese. Save any celebratory adult beverages for after youâre finished.
Highlight key sections of your contract and take notes. This advice especially applies to the termination clauses of your contract. If needed, contact your sales agent for clarification of any provisions that you donât understand.
Obtain a digital version of your contract (usually in PDF format), if at all possible. You can magnify the fine print to a size thatâs actually readable and use the search function to find important terms quickly.
Keep a physical copy of your contract if one is provided, especially if it includes changes made by your agent (such a waiver of the early termination fee). This action can protect you in case a dispute arises later regarding the terms of your contract.
First-time business owners should read every word of their contract and make sure they understand it fully. More experienced merchants can carefully skim through the boilerplate provisions and focus on the important clauses that weâve discussed above.
We highly recommend that you read your contract thoroughly regardless of which merchant services provider youâre about to sign up with. Even with the most reputable providers, youâll want to have a clear understanding of the obligations youâre undertaking when you sign your contract. At the same time, itâs important to understand that most of the problems weâve discussed above will not be an issue if you sign up with a top-notch provider. The best providers in the industry fully disclose their pricing and contract terms on their websites, rather than burying this information in the fine print of a contract. They also employ in-house sales teams who arenât under pressure to earn a commission.
Finally, our favorite providers all offer true month-to-month billing with no long-term contracts and no early termination fees. Check out our Merchant Account Comparison Chart for a side-by-side comparison of the best providers in the industry!
The post How To Read, Understand, & Successfully Negotiate A Merchant Agreement For Your Small Business appeared first on Merchant Maverick.
So you want to start a subscription box company. I bet you’ve come here with questions, and if so, you’re in the right spot! We’ve got answers, inspiration, and plenty of resources ready for you to check out. Keep reading to discover how you to find niche subscription box ideas that will turn heads, how to keep your company running like a well-oiled machine, and how to reach more customers and expand your business once you launch. Let’s get going!
Step 1: You Need An Interesting Subscription Box Idea To Succeed
How will you find that amazing idea to dazzle your would-be subscribers? In part, the foundation of a successful subscription box company is that extra something that sets you apart. Interestingly, one of the most successful boxes in the last few years started with a regular old hygiene product we all probably purchase. I’m thinking about what the Dollar Shave Club did with a simple self-care item: the razor. Their campaign used visual textures, packaging, and smart, fun messaging to connect with potential subscribers. While they initially marketed to men, their brand has grown to target both men and women. The idea is that people sign up to save on a razor (something everyone needs anyway) and soon enough they’re adding non-essentials to their box as well. While you might have more of a whimsical idea than just a plain razor, this company shows that anything is possible with the right planning and execution.
There are a lot of exciting possibilities out there, so get a notepad out, grab a refreshing beverage, and let’s explore how to create a very successful subscription box business.
14 Subscription Box Business Ideas To Get You Started
The sky is the limit when it comes to curating a subscription box. It’s true that subscription boxes are becoming a competitive market, but that doesn’t mean you can’t reach a particular group with a new angle. As we saw with the Dollar Shave Club, sometimes it’s the simplest ideas that take off when coupled with a good message and imagery.
First, you’ll want to figure out your target audience and demographic and do the needed research on these folks. Will your box provide convenience, discovery, whimsy, and/or special interest? Here are some general ideas to help you narrow down the focus and come up with something unique for your subscribers:
Gourmet foods, exotic snacks, coffee, tea, candy, etc.
Pregnancy and baby
Arts and crafts
Gaming and “geek” interests
Fitness and health
Curated clothing and accessories
Self-care and pampering
Inspirational / encouraging
Beauty and grooming
Pet care and toy
Home (plants, cleaning, candles, art)
If you are feeling inspired, keeping brainstorming those ideas and write them down — you’ll need them for the research and discovery steps coming up. Keep reading to find out what you need to know to expand your business or start a brand-new business based on the subscription box model.
Step 2: Before You Start Planning In Earnest, Make A Business Plan
A business plan acts as a blueprint for success. It keeps you on track, aligns your goals, and helps you cover the basics. You’ll also need a business plan should you seek out funding or investors for your subscription box endeavor. The most important person this business plan serves is you, however.
Of course, you’ll need to do some more preliminary research and get your ducks in a row before creating your plan, but it certainly does not have to be complicated. We suggest starting with a lean business plan, which is a one-page document that follows this basic structure:
If you need a little more direction, check out our post, The How-To For One Page Business Plans
Research The Competition & Check Out Other Subscription Box Companies
As a part of your business plan, you’ll want to research the competition. The best way to start that is via a Google search. Go through the first few pages and click through the businesses there. The most important thing you can learn here is the average price point. You also can find product ideas there, but it’s more useful to identify what’s not in those boxes so that you can provide a unique angle.
Step 3: Consider How To Fund Your Subscription Box Business
There are several ways to go about funding expenses. You’ll need to consider a few things to help you assess what exactly you’ll need here.
Will you be paying the full price for some or all items?
Can you source wholesale to save costs?
Can you approach local artists or specialty shops for unique and specially priced inclusions?
Can you reach out to pitch suppliers for special pricing or free samples (more on this later)?
You can certainly do a combination of the above list. But whatever you decide, you’ll need to cover initial costs in marketing, setup, shipping, and inventory. Once you have an idea of what’s going in the box and your costs to fill it, then you can consider how you’ll go about funding the business.
Here are some options to consider:
Borrow money with a startup loan.
Use funds from advanced orders from subscribers.
Utilize a business credit card.
Another approach is to start small and limit quantities initially so you can cover your own costs. By doing this you can reduce your financial risk, not to mention create some urgency in the sale thanks to limited inventory.
Should You Crowdfund Your Subscription Box?
You could think about crowdfunding your fledgling business idea. Crowdfunding certainly has its advantages, along with some unique challenges. For one, you’ll need to devote marketing dollars to outreach and exposure for your campaign. And with that, you’ll need to lead with a great story to stand out and get attention. The best part of all this strategy, however, is that if you get your backers to support your start-up costs, you can reduce your debt and gain supporters while you’re at it. This strategy would likely be best for unique, cause-related, and highly niche ideas, as you’ll have the most potential for excitement from your backers.
There are several types of crowdfunding and (even more platforms to choose from), but rewards-based crowdfunding is likely the most appropriate choice for your subscription box business. Interested in exploring this option for your business? For more ideas and information on crowdfunding, check out Crowdfunding for Startups: 8 Tips For Launching.
Step 4: Seek Out A Supplier For Your Subscription Box Service
You’ve got a few options on how you’ll actually fill your box. You could choose to purchase directly from a wholesale company, pay full-price, or use a combination of both. For some or all of your products, initiating a long-term relationship with a supplier becomes the smartest option.
You can start finding some amazing things for your subscription box by networking and establishing good relationships with vendors, suppliers, or artists. Those of you who focus on unique or one-of-a-kind items will particularly need to get relationships going with specialty shops, sellers at trade shows, local artists, and crafters. Etsy can be a wonderful source for contacting niche and specialty item sellers in all kinds of categories — not just handmade items. Many sellers would be more than happy to supply samples or a discount, and some may even be open to sharing in exchange for exposure.
If you end up creating a full website for yourself (more on that coming up), make it easy for vendors to get in touch with you through a dedicated page and instructions for how to submit a request. While you may not be fielding a lot of inquiries when you launch, get it set up so you’re ready to respond to those requests when they start pouring in.
Why You Need To Perfect Your Pitch Before You Talk To Suppliers
We recommend creating your one-page business plan (discussed in Step 2) before approaching suppliers. If you already have an email list or social following, lead with these resources; suppliers will be more than happy to work with you if additional exposure to their product is in the mix. Whether you’re asking for sample sizes or a discount, remember that transparency, a good plan, and confidence in your approach will go a long way in your pitch.
Step 5: Build Your Web Presence & Customer Service Channels
You can approach selling your subscription boxes online a few different ways:
Hire a firm or freelancer to build a fully custom site.
Integrate a shopping cart with an existing site.
Choose an eCommerce platform including a site builder with website templates and a payment gateway all in one (e.g. Shopify, Read our review).
Sell via social channels only with a Facebook Store or Instagram Shoppable posts.
If the website part makes you a bit nervous, I have some good news for you. It really has never been easier to sell online — with little to no experience or technical expertise — by going with a website builder. Some platforms even offer all-in-one solutions with payments (including recurring billing), website templates, and a plethora of integrations for easier shipping and tracking built right in, too!
Where To Find eCommerce-Friendly Website Builders
Because they are both feature-rich, easy to use, and provide a lot of room to scale, we recommend Shopify and Square to business owners who are starting from the ground up with little to no tech expertise. And for those that do have coding expertise, you’ll have customization tools at your disposal, too! What makes me most excited about Shopify is that it enables multi-channel selling across platforms, including Facebook stores, Facebook Messenger, Instagram, and Amazon. With these options, you can take advantage of more opportunities for growth while meeting potential customers where they’re hanging out anyway. And what I love is that everything including your inventory and reporting is all synced no matter where you sell!
Whether you’re looking for just a shopping cart integration or a full all-in-one platform, I recommend checking out The Best eCommerce Platforms For Your Small Business as you can compare options side-by-side and get a lot more information regarding what to look for to match what you need.
I will leave one final thought in regards to eCommerce website builders â take advantage of any trial periods or demos to give yourself time to play around and explore your possibilities.
Why Your Choice Of Payment Processor Matters
Your payment processor is how you’ll actually accept payments, so this is an important business consideration. If you’re a fledgling entrepreneur, you’ll likely find yourself below the monthly volume of what many traditional payment processors serve.
Third-party processors like Square, PayPal, and Stripe (the backend processor of Shopify) make it possible for smaller businesses to start taking payments, and they provide an exhaustive set of (oftentimes free) tools to help you manage your business. ThisÂ convenience comes at a cost however: an increased risk of account freezes if you have an uptick in chargebacks or your account is considered higher risk.
Regardless of what type of merchant account you go with, however, you will have this risk, unfortunately. That’s why we recommend arming yourself with knowledge. Check out How To Keep Your Payment Processor From Holding Funds Or Terminating Your Account.
So what should you look for in a merchant account? Here is what you can keep in mind as you research companies:
Product Features: What comes with the account? Are there any beneficial add-on services like email marketing? Reporting tools?
Recurrent Billing: Allowing your customers to save and automatically be charged is a must!
ACH: Automatic bank transfers can lower your processing costs, and it’s another payment method to offer your customers.
Forms of Payment: Some payment flows like Shopify Payments let you easily add PayPal and digital wallets to your checkout.
Card Automatic Updating: This feature can prevent billing issues and ensures you don’t have to chase someone down for updating billing information if their card expires or gets replaced.
Check The Contract: Always read your contract! We recommend merchants avoid long-term contracts as they are often also laced with lots of fees.
Customer Service: It’s important to get the help you need when you need it. Companies that have several active customer service channels and generous customer service hours are a must for the eCommerce subscription box business.
Check out some of our top picks in payment gateways for online payment processing in our post The Best Payment Gateways For Online Payment Processing.
Solving The Customer Service Question
The customer service issue can also happily be solved with the right eCommerce platform, too. For instance, many web builders, like Wix, for instance, now include chatbots that allow you to communicate in real-time to field any incoming questions. Some companies direct their customers to send any order issues or inquiries via Facebook Messenger.Â If you’ve linked a Facebook business account with Shopify, for example, you can take advantage of order tracking as well. Of course, there are always reliable phone and email options. Whatever you decide, make it clear how your customers can contact you, along with the expected response time.
Regardless of customer service channels you ultimately choose, we suggest making it easy for your subscribers to alter their box or skip a month. Enabling them to easily skip a month may feel like losing a sale, but you’ll likely retain them for longer (and keep them less frustrated).
Step 6: Build A Marketing Plan To Draw In Customers
Getting a marketing plan down on paper is an absolute must, but it doesn’t have to be as overwhelming as it sounds. The subscription box biz is a bit competitive at the moment, and that’s where being savvy and making the most of the opportunities you already have can go a long way.
Social Media Marketing For Your Subscription Box
Social media can work wonders to establish your brand and get people excited. Follow the strategies below:
Start Posting Regularly: If you already have followers on social, you’re at an advantage, but if you don’t, consider building your following by posting regular content, tagging larger accounts, and networking.
Test A Paid Social Ad: If you’re up to it, I recommend testing a sponsored post or two to get people excited during your pre-launch focus and beyond. Facebook advertising is a very cheap way ($20-30 bucks) to get in front of potentially thousands of people, and your ad will go to Instagram automatically, too. It’s also easy to target your campaign (even down to niche interests).
Excite With a Giveaway: A giveaway is a tried-and-true method of increasing your footprint with every post! Ask your followers to tag friends, share, and direct them to your site to sign up with an email. You increase your reach exponentially while building an email list of people who are interested in you. It’s a win-win.
Tap Into Influencer Marketing: Whether you have a lot of followers or not, an inexpensive way to boost your brand is through influencer marketing. By offering your box to an established YouTube personality in exchange for a shout-out or review on their page, you can reach potentially thousands with your brand name. Influencers will likely be happy about to devote some screen-time to your sub box, as it’s not always easy coming up with fresh content.
Email Marketing For Your Subscription Box
If you already have an established business or a robust email list, email marketing is a great way to promote your subscription box service. Email is still one of the cheapest and easiest ways to advertise new products and services. I love that Square offers this as an add-on service for only $15/month and includes analytics, templates, and targeting.
Don’t have a list? Consider reaching out to another local business and paying a small fee for a shout-out in their next newsletter. Make sure you create an email form on your site to make it easy for people to show their interest in your box. You could even use a credit card number to reserve a spot for a limited quantity of boxes before you’ve even launched! Fanning the flames of FOMO (fear of missing out) is never a bad idea in marketing.
To get the most bang for your buck when it comes to emails, check out How To Create A Successful Email Marketing Strategy (all skill levels).
Step 7: Create A Strategy For Headache-Free Shipping & Fulfillment
There are two major pathways to take with shipping and fulfillment: doing it yourself or outsourcing fulfillment. Of course, the size of your operation and your budget are factors, as well as logistical and space considerations.
Creating a strategy that gets your boxes out on time is key, but you are probably looking for the lowest possible overhead and tools that can help you save time. There are a plethora of integrations that work with Shopify and other eCommerce platforms to make it easy to print labels and ship from your home.
When it comes to costs, your shipping fees can vary widely depending on what’s in your box, size, and materials you need. In your planning stages, do research on which carriers are most economical and if it’s best to use multiple carriers. Most importantly, when it comes to packing up your goodies and shipping out your subscription box, keeping everything protected and beautiful (not to mention eco-friendly) goes a long way in customer retention. The truth is that when you’re starting out, you’re building your reputation one box at a time.
Thankfully, we have a library of comprehensive and easy-to-digest resources to help you find the right solutions and make the best choices for your business. For answers to questions about shipping and fulfillment, check out our posts, 8 Hacks For Saving On Shipping CostsÂ and Learn To Delegate: What It Means To Outsource Your eCommerce Fulfillment.
5 Tips To Keep Your Subscription Box Business Growing
Create Referral Campaigns:Â Make the time-tested and powerful technique of word-of-mouth advertising work for you through a referral campaign. All you need to do is incentivize current subscribers to refer your box to their friends and family. Whether that’s through a bonus box or a few extra treats in their next shipment, those who successfully recruit friends and family to your brand deserve some celebration!
Stellar Customer Service:Â Nothing creates a solid reputation better than stellar customer service. To be the best, it’s not just about answering inquiries or solving problems, it’s about being proactive and listening to your current customers. Send them an email and ask them how they like their box, make amends right away for any issues (even if they weren’t your fault), and generally bring a “service with a smile” approach. Turning a customer into a brand ambassador is the ultimate sign of customer loyalty, and providing excellent care is how you’ll accomplish it.
Check Your Reports & Recognize Trends: Whatever eCommerce platform you go with, take advantage of any and all reporting and insights. Is there a certain geographical area that stands out? A peak time of year for sales growth? What is your “deadzone” in terms of new signups? Knowing the answers to these questions can help you target marketing and encourage growth through marketing when you need it most.
Identify Opportunities & Always Be Closing:Â Knowing what your customers love most about your boxes and looking at your sales reports gives you key insights into what items to purchase for upcoming boxes and new opportunities for growth. Once you have established customers, consider offering related or additional products that you know they’ll get excited about (because you’ve done your research). Remember Dollar Shave Club’s expansion from just the humble razor to a full line of personal care products? You want that potential growth for your business, too! Whether that’s through expanding into a new niche, identifying a new under-served market, or just boosting your sales with your current subscribers, always be closing!
Understand Cash Flow & Plan Ahead:Â Absolutely essential for any small business, including your subscription box company, is knowing your cash flow. You’ll need to figure out your cash flow so that you can make better decisions about your finances. To do this, you must understand how to create a cash flow statement, which breaks down your operating cash flow, cash flow of investments, financial activities, and net cash flow. We make this easier to understand and show you what tools can help in our post, How To Calculate & Analyze Business Cash Flow.Â
Are You Ready To Launch Your Subscription Box Company?
Launching a successful subscription box service requires some smart legwork, including researching your potential customers, curating irresistible products, buzz-building advertising, and structuring a plan of action. With the right eCommerce tools and a well-thought-out business plan, you can whittle down what feels like a giant, overwhelming project into something that’s more manageable.
For more startup resources, check out Small Business Startup Loans: Your 8 Best Options and The Beginner’s Guide To Starting An Online Store.
The post How To Start A Subscription Box: 7 Steps To Launch A Thriving Business appeared first on Merchant Maverick.