These days, eCommerce is big business. In 2019, annual online sales totaled $365.2 billion, and that number will only continue to rise. One forecast from Statista estimates that annual online sales will reach $419.9 billion in 2020.
Now is a great time to enter the eCommerce industry, and whether you’re just starting out or you’re looking to expand your reach online, BigCommerce might be a good eCommerce solution for your business. The software is easy to use, accessible for businesses of all sizes, and feature-rich. Keep reading to learn more.
What Is BigCommerce?
BigCommerce is cloud-based eCommerce software. You pay a monthly rate to BigCommerce, and in exchange, you gain access to a securely-hosted online store. In addition to your online store, you get an admin panel for managing your products and orders, 24/7 customer support, and a range of marketing tools.
BigCommerce is known for its ease of use. Even if you have no experience with running a website, you can still set up a site with BigCommerce. If you’re hoping to run an online store and you don’t want to worry about any of the technical aspects of hosting a website, BigCommerce is a great option.
What Can You Sell On BigCommerce?
BigCommerce can accommodate many types of online selling, including physical products, digital products, and more. Here’s a quick breakdown of the types of products that BigCommerce supports:
Physical Products: Sell clothing, home goods, beauty products, and more. BigCommerce even allows you to sell CBD products; just make sure you pick a payment processor that allows CBD sales.
Products With Multiple Variants: BigCommerce lets you sell products that come in multiple sizes, colors, or styles. You can set different weights and prices for each product variant.
Digital Products: Sell digital products for download. TheÂ maximum file upload size is 512 MB.
Subscriptions: Sell subscription products like beauty boxes or subscription cleaning supplies and toiletries. Recurring billing features let you bill customers automatically.
Event Tickets: Sell event tickets in the form of digital downloads. Customers can select event dates and immediately download and print their tickets
It’s important to note that BigCommerce also restricts the sale of some products. You cannot sell illegal or obscene goods (e.g. illegal drugs, fraudulent goods, or obscene images). BigCommerce users are also restricted from selling any products that infringe on copyright laws. For more details, read BigCommerce’s Acceptable Use Policy and Infringing Materials Protocol.
How Does BigCommerce Work?
BigCommerce operates entirely in the cloud. You don’t need to download anything to use the software. In order to get started, all you have to do is create an account and register a domain name. BigCommerce then gives you access to an unpublished website, a design editor, and an admin panel for uploading products and managing sales.
Once you have created an account, you can add your products (through a streamlined import feature or manually), configure settings for shipping and taxes, design your website, plan a marketing campaign, and launch your store.
BigCommerce’s integrations with popular payment processors allow you to accept payments securely on your site. As customers begin to purchase your products, you can use BigCommerce’s built-in features to process orders, keep in contact with customers, and continually adjust your selling strategies.
BigCommerce offers numerous features that allow you to sell on your own website, on other sales channels, and around the world. Take a look at what BigCommerce has to offer:
Unlimited Products:Â BigCommerce allows you to list unlimited products on every plan.
Sell On Multiple Sales Channels:Â Sync your BigCommerce site to your seller accounts on multiple marketplaces. BigCommerce connects to eBay, Google Shopping, Facebook, Pinterest, and Amazon. You can also sell in person with Square POS.
Sell Globally:Â BigCommerce offers integrations that let you sell in multiple currencies and calculate international shipping and tax rates. The software also supports multiple languages.
BigCommerce Shipping Manager: This built-in shipping feature lets you display calculated shipping rates at checkout.
Inventory Management:Â Track inventory levels for your physical products.
Marketing Tools: BigCommerce offers multiple marketing tools, including a discount engine, social sharing features, product reviews, and more.
Create A Blog:Â Host a blog on your online store.
SEO Tools: Earn more traffic with custom URLs, titles, header tags, and meta descriptions.
Analytics: Use BigCommerce’s reporting features to track traffic, sales, bounce rates, etc.
The Benefits Of BigCommerce
BigCommerce’s biggest advantage by far is its ease of use. Even if you have no experience running a website, you can build an online store with BigCommerce. The admin panel is well organized and easy to navigate, and the help center has answers to many of your initial questions.Â What’s more, users on BigCommerce don’t have to worry about hosting or site security. BigCommerce handles all of these technical aspects for you.
Users also appreciate how many features come built into BigCommerce’s basic software. Users say you don’t need to add many integrations (compared to other eCommerce software) because so much is already included with BigCommerce.
Finally, BigCommerce includes multiple support options for all users. Everyone gets access to support via phone, email, and live chat. There is also a thorough help center, useful guides, and a community forum that you can reference when you want to find answers on your own.
Ease of use
Good customer support
Good built-in features
The Drawbacks Of BigCommerce
While there are many advantages to using BigCommerce, there is no perfect eCommerce software. BigCommerce still has some areas in which it could improve.
One of the biggest drawbacks of BigCommerce is its lack of easy design tools. BigCommerce lets you change small elements of your site (like colors, photos, and text) without adjusting any code. However, in order to make large changes, you have to edit the code, or hire someone to do it for you. Unlike some eCommerce software (such as Shopify) BigCommerce does not have any drag-and-drop design tools.
I have also seen some user reviews that mention poor customer support. It seems that BigCommerce support representatives are not always as helpful as they should be.
Another disadvantage of BigCommerce is that not all features are available on all pricing plans. In order to gain access to advanced features like faceted search or abandoned cart recovery, you have to pay a higher monthly subscription rate.
Missing some advanced features
Expensive for some users
Who Should Use BigCommerce?
BigCommerce offers affordable pricing plans for businesses ranging from startup to enterprise.
User reviews suggest that BigCommerce is best suited to small to mid-size businesses since some features reportedly do not accommodate larger businesses very well. That said, there are a number of enterprise-level companies that use BigCommerce’s Enterprise software. These include Ben & Jerry’s and Skullcandy.
How To Get Started With BigCommerce
Getting started with BigCommerce takes only a few minutes. You can sign up for a 15-day free trial, no credit card required. All you need to do is enter your email address, phone number, and name. Then, you can create a password and select a name for your store (you can change this name later on).
Use your first 15 days with BigCommerce to really put the software through its paces. Add products, customize your shipping and tax settings, play around with the design tools, and test customer support. Make sure BigCommerce includes all the features your business needs so that when it comes time to choose a plan, you’re confident in your purchase.
Once those initial 15 days are up, BigCommerce will ask you to choose a paid plan to continue using the software. If you’ve decided BigCommerce is a good option for your business, go ahead and sign up for a paid plan (although we recommend sticking with the monthly billing option–not the annual billing option–for your first year).
Then, you’re off to the races! Launch your site, begin your marketing campaigns, and track your site’s traffic. For more detailed advice on setting up a successful online store, try How To Start A Successful eCommerce Business In 8 Easy Steps.
The Bottom Line
BigCommerce is an easy to use eCommerce software for small to large online sellers. The software is feature-rich, and the company offers numerous customer support options. Users of all sizes and skill levels can take advantage of what BigCommerce has to offer.
If you’re interested in learning more about BigCommerce, head over to our complete BigCommerce review. Or, for a detailed breakdown of BigCommerce’s pricing options, take a look at our BigCommerce Pricing post.
The post What Is BigCommerce? appeared first on Merchant Maverick.
Email marketing remains one of the easiest and most cost-effective ways to reach customers, and I can’t think of a single business that couldn’t benefit from email marketing in some way. That’s because it is both low cost and versatile — you can use it for promoting a product, or you can create a series of emails to warm your customers up and keep them connecting with you.
While, of course, it is entirely free to send an email, the cost of the platform is highly variable, depending on what your business needs are and a few other factors. You can often send simple email marketing campaigns for no cost with many platforms — including Square — but to send out emails based on triggered events or target your list wisely, you’ll usually have to start a subscription.
In this post, we’ll take a look at how you can send Square emails for free and what comes along with the Square Marketing subscription. Then we’ll compare some other email marketing platforms with Square, so you can see if you’re missing any features you may want or if it is just right.
What Is Square Marketing?
Square Marketing integrates with your Square POS so that you can send both one-off and recurring emails to your contacts. Because your Square Marketing syncs with your POS, you can target different types of shoppers with relevant messaging based on what they buy at your store.
Let’s discuss the different types of email marketing campaigns you can send and how Square’s email marketing features can support your goals.
Square Marketing Features
The Square email marketing subscription includes these core functions:
Unlimited email sends
Email designer to choose themes and styles
Fully integrates with POS and Square Dashboard
Automated email campaigns based on an event trigger
Automatic email collection with payment and digital receipt approval by your customer
Seamless coupon redemption
Sales and campaign real-time reporting performance data
Marketing Assistant bot helps guide campaigns and makes suggestions
When you use Square mail marketing for your campaign goals, you’ll find options under Blast CampaignsÂ in the left-hand margin. Blasts go out to your entire list and include:
Offering a coupon
Sending a quick update
Creating a newsletter
Sending an event invitation
Product or service announcement
Under Automated Campaigns, you have the option of setting up a simple workflow to reach customers after they take a specific action, triggered event, or period of inactivity in the case of a lapsed customer.
A thank-you email after purchase or signup
Bringing back lapsed customers
Birthday or anniversary email
Free Email Campaigns For All Square Users
Square offers four free email templates to all Square users, whether you have a monthly subscription to the company’s email marketing service or not:
Drive online orders
Promote gift cards
Collect payment or donation
Here is an example of a free email campaign I created under Drive Online Orders campaign:
Example of free email campaign set up with a general Square account
Overall, Square email marketing provides a basic feature-set with generous template options so that you can target based on your goals.
How Much Does Square Marketing Cost?
Square Email Marketing Pricing
Square marketing costs are broken down by the number of contacts, so you’ll have all of the features available no matter what price point you need:
0-500 Customer Contacts: $15/month
501-1,000 Customer Contacts: $25/month
1,001-2,000 Customer Contacts: $35/month
2,001-4,000 Customer Contacts: $45/month
4,001-9,000 Customer Contacts: $75/month
Square pricing continues to increase incrementally based on customer contacts.
If these plans seem like a little more than you need, and you’re only interested in sending an occasional marketing email to a smaller list, Square also offers a one-off email sending rate at $0.10 per emailÂ to your existing email contacts.
Keep in mind that Square offers four types of email campaigns to all Square users at no charge, which we covered in the section above.
How To Create A Square Marketing Campaign
Setting up an email campaign with Square Marketing is very simple. When I look at the Dashboard, what strikes me the most is how easy it is to find a ready-made campaign based on your objective. Each selection you make as far as goals guides you further into the process, with premade templates and designs already built for you. Square even adds suggestive text into the blocks that you can use or adjust. I can see how this would be particularly beneficial for someone if marketing or writing wasn’t already in their wheelhouse.
Below I’ve created a sample campaign, so you can get an idea of how the process flows from beginning to end.
Step 1) Define Your Objective
We are going to create a blast campaign to reach every contact with the same offer — a coupon. I’ve selected Offer a Coupon as our objective.
Step 2) Design The Campaign
After clicking the blue Design Campaign in the upper right-hand corner, I was taken to the email editor. I chose a floral design and am keeping all of the preset text Square offers to show you how simple the company makes it:
If you want more design freedom, you can also head into the drag-and-drop editor that’s accessed at the Blocks tab under Design Your Campaign. Since my goal is to highlight the simplicity in creating a campaign, I’m showing what you can produce with just a few clicks.
Step 3) Choose Your Audience
Next, you can choose to send to everyone on your list, or you can target certain contacts. You can see in the image below that you’ll also be able to share any promotion to your Facebook followers if you’ve linked accounts!
I’ve chosen to send my blast campaign to everyone on my list.
Step 4) Review & Send
The last and final step in sending your Square email campaign out to your customers is reviewing it. If you do not have a full email marketing subscription, as seen in the example below, you can opt to pay per email, or you can sign up for the free 30-day trial Square offers. I wanted to point out that you can also opt to resend the email if your customer doesn’t open it, and you can send a reminder email before the coupon is set to expire. Those send out automatically if you select that option on this screen.
As your email list grows based on sales, Square automatically begins segmenting into targeted email lists for you (e.g., new, regular, or lapsed customer).
How Does Square Marketing Compare To Other Email Marketing Options?
Square email marketing software doesn’t have some of the features you’ll find in some other types of email service providers. It is built with the end-user in mind — a busy small business operator or manager who doesn’t have a lot of time to devote to marketing. While you will have everything you need to create a myriad of email campaigns, you won’t be able to create customized segmentation through tagging or create complicated if-then workflows like you can with other options, such as Drip or Salesforce. You also can’t A/B test to compare approaches in messaging or design. That said, Square does do what it says it will, and that is to simplify email marketing. It accomplishes this well for the small business by syncing data with your Square POS and even offering you campaign suggestions automatically.
Let’s take a look at how some of the other bigger names compare with Square, so you can decide if this suits your needs or if you need something with more bells and whistles.
Square Marketing VS Mailchimp
If you’re up for it, Mailchimp allows you to do a lot more than send a newsletter or create a simple email campaign. Mailchimp’s features are designed to extrapolate more data as your customers interact with your emails, landing pages, and social posts — and these are all included in the free plan.
Mailchimp’s generous free plan allows you to reach up to 2,000 contacts and is comparable to Square with providing basic reports and recommendations. One thing I like is that the first paid plan is only $9.99 and includes A/B testing, which can be a really cost-effective way to test campaigns and ideas.
You will also find a Mailchimp and Square Payments integration back in your Square Dashboard. If you do this, you can also sell directly from the free landing page and start selling online without a website. For more information about Mailchimp, read our full review.
Square Marketing VS Drip
Drip is a little on the pricey side, but it has a lot of features that help you dig into the data, and the whole platform is created with eCommerce in mind. Some of the customer feedback about Drip is that it can feel overwhelming because you’ll need to learn the platform to get what you pay for out of it. So if you don’t have the time to sit down and learn how to use all of the more advanced features, it is probably not the best option for you.
Where Drip truly shines is in the personalized campaigns you can create once the data starts coming in after you’ve set up your tagging and triggered events features. Through tagging and tracking, for example, you can learn exactly where your contacts go and what they’ve put in their cart. With that information, you can even set up automatic emails for triggered events, such as an abandoned cart or product promotion that fits with what they have browsed on your site. For these reasons, if you have an eCommerce shop and a bit of time to get to know the features, Drip provides a well-oiled marketing machine that is largely automated with plenty of data to dig your teeth into.
Square Marketing VS Sendinblue
If you have a more extensive list and want to experiment with more features, Sendinblue should definitely be on your list to consider. You can try this email marketing platform for free, and in fact, you can keep using Sendinblue for free at the lowest tier with limited features. And you can also test the service on all of your contacts on your list because the company doesn’t put a cap on contacts.
Sendinblue is one of our highest rated free email marketing platforms because it has an impeccable reputation on consumer review sites and consistently earns high ratings. A few of the most noteworthy features that the free plan includes are:
Marketing automation workflows
You won’t find these features with Square’s email platform, and for the paid tiers, the features and customer reach are leagues ahead if you compare the cost.
Square Marketing FAQS
Because Square is such a large platform and evolves quite frequently, we find that Square customers have some common questions about email marketing. From cost to some of the finer details, these are some of the more popular questions we come across.
How Much Is Square Marketing?
Square marketing starts at $15/month, and for that, you can send up to 500 emails to all of your existing contacts. Every pricing tier includes all of Square’s email marketing features. For more about the features and cost, check out the beginning sections above in this post for more details.
It is worth mentioning again, however, that you can send a few types of Square Marketing emails for free, and these templates can be accessed at your Dashboard under the Marketing tab.
What Is Considered A Reachable Customer?
A reachable customer means that you can send them your email marketing communications. So who is reachable? Square keeps track of your reachable customers automatically in your customer directory, and here’s who you’ll find:
Any customer you imported with an email address
Customers who have visited you and paid with a credit or debit card and elected to receive a digital receipt via email
Will I Be Automatically Charged More If I Exceed A Certain Number Of Reachable Customers?
Your subscription pricing will increase as your contacts increase, as your cost is wholly based on reachable contacts. With that in mind, be aware of any changes in cost as your list grows. Additionally, for those who also use Square Appointments, your list is automatically merged with your customer directory, so this can also increase your monthly cost.
Does Square Marketing Work With Square Checkout?
Yes. When you add your customer email during checkout, the information is synced with Square’s email marketing software so that your reachable list grows with it. Additionally, when you use coupon promotions through Square’s email marketing, the code is also synced to apply with Square Checkout.
How Do I Cancel Square Marketing?
As a reminder, you can try Square Marketing 30 days for free, and if you want to cancel before you’re charged, or cancel any other time, it is very easy to do so.
View all of your subscription billing details by going to the Pricing & Subscriptions section at your Square Dashboard. Here you can unsubscribe by clicking Cancel Service. Square discontinues your subscription for the service on the first of the following month, so you will continue to have access through your current paid-up month. You can also pause your subscription under Pricing & Subscriptions by clicking Manage next to your subscription and then Pause Subscription.
Is Square Marketing Right For Me?
Square Marketing enables anyone who already uses Square POS to have a simple and easy way to start sending out emails to their contacts, but is it right for your business? I would be comfortable recommending Square to any business owner who is strapped for time and wouldn’t consider marketing to be in their wheelhouse. That’s because sending out a campaign with Square is just so easy to use and set up, with a lot of prebuilt promotions, templates, and even copy that’s already written for you should you choose to use it. And when you do want to customize your emails, Square has a simple drag-and-drop editor that allows you to play around with formatting.
If you aren’t already sending emails and you don’t have experience with email marketing platforms, Square is a great place to start. However, if you want to go a little deeper and need some advanced features, such as tagging, advanced tracking, and A/B testing, you’re probably better off looking at one of the other options included in this post.
For more resources on small business marketing, check out The Best Free Email Marketing Software Programs and How To Create A Successful Email Marketing Strategy.
The post What Is Square Marketing & Is It Right For My Business? appeared first on Merchant Maverick.
So you have a contract with First Data/Fiserv, and you want to cancel it.
Maybe it’s because you think you’re paying too much in processing fees (you probably are). Maybe it’s because you’ve had enough of their bad customer service and are tired of dealing with their corporate bureaucracy (we hear horror stories). Or maybe it’s something completely different. Whatever your reason might be, you want out of this business relationship.
You may already have tried reading through your contract with First Data and found yourself drowning in 20+ pages of small writing, all in dense legalese, and you still don’t know how to cancel. Is there a shortcut?
Yes! And no.
In this article, we’ll explain how the cancellation process typically works. You’ll still have to read some of that contract, but we’ll help you find the relevant parts more quickly for quick lookups. After that, hopefully, you can cancel the contract without issues.
So let’s get started.
The Trouble With First Data Contract Cancellation
A First Data contract can be hard to cancel right away. The main problem is that it has an early termination fee (ETF), which could get pretty hefty if you cancel at the wrong time. To pay less of the ETF, you might have to wait a few months. But there are other obstacles as well.
First Data Customer Service Usually Holds You To The Letter Of The Contract
If you make a mistake while cancelling, it could get expensive.
For instance, during the course of writing this article, we looked through customer complaints both on our website and the Better Business Bureau site. Generally, the First Data customer service department is portrayed as unfriendly and unsympathetic, and holding you to the letter of the contract. One customer service representative even told a merchant that “It may be beneficial that you educate yourself on the MPA [Merchant Processing Agreement].” Even when they do authorize a cancellation-related refund, it might not be for the full amount they took from you.
As to the contract itself, it’s usually in dense legalese. This is not a commercial contract for beginners. To fully understand it, you’ll need to read — and comprehend — a few sections located in different parts of the contract before you truly understand how these sections work together. Even if you do read the contract, you might not fully understand the implications of each section. All this can lead to expensive mistakes.
The Contract Has A Strictly Defined Cancellation Procedure & Sometimes Narrow Cancellation Widows
The contract itself uses various ways to discourage cancellation. In addition to the ETF, to successfully cancel the contract, you must follow a strict termination procedure, avoid the automatic renewal mechanism, and pay a cancellation fee (which is different from the ETF). While there might be a narrow 30-day window to cancel when First Data increases its own processing prices, it is tricky to take advantage of those opportunities. Most of the time, the safest way to cancel is to follow procedure and cancel at the end of a term.
There Are Related Contracts That Have Longer Terms & Are Not Cancellable
To complicate matters, usually, there are several related contracts attached to the primary contract. One of them is an equipment lease contract. This part of the contract applies to you only if you signed up to lease equipment from First Data. The gotcha, though, is that the length of the lease might be different from the length of the main contract.
Usually, the lease is for 48 months and is not cancellable. The only way to get out of the lease early is to pay all the money due under the lease in one lump sum. If your main contract has a term shorter than 48 months, you might be stuck with an equipment lease contract even after you’ve successfully canceled your main contract.
Maybe you only signed the equipment lease because you liked the Clover equipment. We agree that the Clover line of hardware and software (Clover POS, Clover Go, and Clover Flex) is pretty nice. The trouble is, Clover is proprietary to First Data, so you can’t use it with another processor. If you cancel your First Data contract and wish to continue to use the Clover equipment and software, you might have limited choices on where you can go; ultimately, you’ll have to connect in the backend to First Data. (Fortunately, there is a solution to this problem, and we will discuss it later in this article.)
As to the other related contracts, the agreements we looked through allow First Data to cancel at will. If you wish to cancel, however, you typically have to use the main contract’s cancellation mechanism. There might be additional procedures in these sections that you must follow as well. Because your version of the contract might be different from the versions we were able to find, always double-check your version to understand your own obligations.
Even After You Successfully Cancel, You Might Still Not Be Done
Lastly, in our quick review of customer complaints, a merchant is sometimes not aware that they will have to return the leased hardware after the hardware agreement is cancelled, or they’ll continue to be billed for the equipment lease. Some merchants fail to understand this; others attempt to return the hardware but the equipment gets lost in the mail system somewhere on its way. All this can result in additional charges, which the First Data customer service department apparently holds you to.
Now that you have an idea of what you might be up against, let’s keep these possible issues in mind and go through the specific steps to cancel the First Data agreement while avoiding the issues above.
How To Cancel Your First Data Merchant Account In 11 Steps
To write this article, we did a quick Internet search and grabbed some First Data agreements from the First Data website. However, there are no direct links to these agreements from the First Data home page or menus, so, while we know the agreements are from First Data, we do not know under what circumstances First Data passes the agreements out, to whom, or how current they are.
From the file names, we do know that these agreements are tweaked to fit the needs of specific regions of the world. For instance, we found a version that seems to be for independent salespersons in the US. There’s a version for Canada, a version for the UK (might be used for the entire European Union), and another version for the Asia Pacific region.
To write this article, we looked through all these agreements. This article is meant to give you a general sense of these agreements, so please be aware that we haven’t dissected each paragraph or sentence. You may also have signed an older or newer version of these agreements. So, if you have specific questions about your specific contract, please consult a lawyer to get the “real” answer for your situation.
As we already mentioned earlier, the most pain-free way to cancel the First Data agreement is to wait until the end of the contract’s term, so this is what we’ll focus on below. If you need to terminate your contract with First Data because you need to declare bankruptcy (e.g. because of the economic crisis from COVID-19), please be aware that termination due to bankruptcy will put you on the MATCH list, and you’ll have trouble setting up a new card processing account in the near future. Be sure to talk to your bankruptcy lawyer about this issue and see if he/she can think of a way to avoid the MATCH list.
Bearing the above in mind, here are the general steps to cancel a First Data Merchant Processing Agreement (MPA).
1. Find Your Merchant Agreement
You should have a copy of your MPA. It might be in paper form, or it might be in electronic form. You might have to go through old emails. If you can’t find it, you might have to contact First Data for a copy. Likely, you’ll need your MID for them to be able to pull your contract, so be sure to have it at hand when you call. You should be able to find your MID in your statement.
You absolutely can’t skip this step. Each contract has specific details that tell you when you can terminate your contract without penalty. If you try to cancel your agreement without looking up these specific details, you might be hit with a big payment on something completely avoidable.
2. Find The Effective Date
Finding the Effective Date is very important because this is the date when the clock starts ticking towards the end of the term of the contract. Usually, the contract will define/tell you how to find the Effective Date—it’ll either be in the first few paragraphs of an agreement, or it’ll be in a section called Term and Termination or similar.
With First Data, the Effective Date is typically the date they approved the agreement, but this varies by region, so be sure to double-check by looking at your agreement. If you’re in the US or in Canada, you might have to look through your physical file or old emails from First Data (or its independent sales representative) for a letter telling you that you’ve been approved to do business with First Data in order to nail down the exact date.
3. Find The Initial Term & Calculate The End Date Of The Initial Term
In the same Term and Termination section, you should usually see how Initial Term is defined. Sometimes, it points you to another section to look up the number. Other times, it’ll tell you an exact number starting from the Effective Date.
For the First Data agreements we looked at, the Initial Term might be something your salesperson fills out in your application (so you have to flip to your application form to check) or sometimes it’s specified as a part of the definition of Initial Term. The typical number we’ve seen is three to four years.
Once you have your Effective Date and the length of your Initial Term, you can calculate the end of the Initial Term.
4. If Necessary, Determine The Renewal Term
Once you have the Initial Term, then it’s easy to determine if you’re still in this initial term or you’re outside of it. If you’re still in the initial term, you can skip to the next step. If you’re outside the initial term, then continue to read below.
If you’re outside of the Initial Term, determine how long you’ve gone into your Renewal Term. Renewal Term should also be defined in this section (sometimes it’s in a section or two below the Initial Term section). Look for it. It should be easy to find.
For the agreements we looked at, the Renewal Term can be anywhere from month-to-month to up to six months at a time. You might also have an earlier version of the First Data agreement, where your Renewal Term is defined differently. Double-check the contract and determine the end of the particular Renewal Term you’re in.
5. Determine The Notice Period & Calculate The Exact Date By Which You Must Give Termination Notice
In the same Term and Termination section, you should also be able to find exactly how First Data wants to receive a notice of termination. For contracts in general (with any company and not only with First Data), the notice usually must be in writing. Typically, the contract will also spell out how many days in advance of termination they have to receive the notice. With First Data, typically this is 30 to 60 days in advance, but you should always check to make sure the number of days specific to your agreement. With month-to-month agreements, the notice period is typically 30 days.
Usually, companies want to have the notice in their hands by the notice date, so if your notice deadline is 30 days, don’t send the notice out on the 30th day. Send it out so that they get the notice at least a few days before the deadline.
6. Go To The Notice Section & Find The Form & Format You Must Use To Give Notice
Now that you know by which date you must inform First Data that you’re terminating the contract, go to the Notice section in the contract to lookup more specifics. This section is usually lumped with all the miscellaneous legal boilerplate language.
In the Notice section, you will learn how you have to give notice. Typically, your notice must be in writing and must be sent to a specific address by some specific delivery method—e.g., by mail, by courier, by fax. Follow that section to the letter. Given how strictly First Data holds its customers to the contract, you’ll want to follow this section exactly.
7. Calendar That Date
Now you know the deadline date by which First Data must receive your notice of termination, where to send the notice, and how you have to send it. If that date is several months away, you might want to put the deadline on your calendar so you don’t forget. Note again that the deadline is typically the date by which First Data receivesthe notice, and not the date on which you send the notice.
Fortunately, you’re free to send your notice any time earlier than the deadline date. However, common sense says you might not get the best service from a company that you have told you no longer wish to do business with, so you might want to hold off sending the notice of termination until just a few weeks before the deadline.
8. Note If There Are Cancellation-Related Fees Such As The Early Termination Fee & The Cancellation Fee
If you terminate your First Data agreement by finding the end date of your Initial Term or Renewal Term and by following the procedure above, you shouldn’t have to pay an ETF. Of course, if you don’t mind paying an ETF, then you can terminate any time by providing First Data with a written notice, following the procedure in Step 6 above.
If you’re thinking of paying the ETF, read through that section carefully so you understand how much you’d have to pay if you terminate early. This could get expensive, so think it through carefully before you do it.
Note that, when you cancel your agreement, First Data will also charge you a Cancellation Fee. The Cancellation Fee is separate from the ETF, and usually it’s a flat fee. Be prepared to pay this cost.
9. When The Time Comes, Send the Notice of Termination
This is a pretty self-explanatory step, but an important one. Send the notice of termination. Don’t put it off. Given how First Data customer service is described on the BBB complaint site, they’ll show you no sympathy if you don’t get this done correctly. Do it early and do it right.
Another thing to remember about the notice is that you should be very specific about the date on which you want to terminate service. Make sure there is no ambiguity on the last date of service, so First Data can’t extend the contract for longer than you wish or even mistakenly terminate the contract early and charge you an ETF.
Whether you send your notice by your country’s mail system or by private courier (e.g. FedEx, UPS, DHL), be sure to request a signed receipt so that you have proof First Data did get your notice and on what date. Too often, people claim they never got a piece of important correspondence, so your return receipt will come in handy to prove that you sent your notice of termination by the notice deadline and to the correct address.
10. Return Equipment If Called For By Equipment Lease
If you leased equipment from First Data, be sure to check all the termination language in that section of the contract. An equipment lease is typically not cancellable during the initial lease term (which is typically 48 months). You could cancel afterward, but there are specific steps involved, and maybe even a separate notice procedure. One of the most important things is that you might have to return the equipment, or pay for it outright (yes, you’d have to pay for the equipment that you’ve already paid for several times over during the initial term of the lease, which is why we hate leasing).
When you return the equipment, be sure to request a delivery receipt. This way, First Data can’t claim that they never received the equipment or that somehow it got lost in transit.
11. Keep An Eye Out For Unauthorized Withdrawals & Dispute If Necessary
Lastly, don’t trust that First Data will close your account correctly. Once you get the delivery receipt of your notice letter, look for something from First Data acknowledging the contract termination. If you don’t get anything, call to follow up.
Keep watching your bank account to make sure they stop taking charges from your account. They might have to withdraw some processing fees from the last day your account was active, and things like chargebacks might happen months after the termination. But if you have any questions, call and talk to them to make sure they’re not withdrawing money that they’re not entitled to. It’s your money, so you need to be responsible for catching their mistakes.
How To Find Alternatives To First Data Merchant Services
Before you completely terminate your business relationship with First Data, we hope that you’re already thinking of which payment processor you’re going to use next. After all, payment processors are a necessity! It’s nearly impossible to do business these days if you can’t accept credit or debit cards.
Fortunately, there are a lot of reputable providers out there, and we can help you find the one that makes sense for you. We recommend you start your research with this Best Of list (here’s one for high-risk businesses as well) and go on from there.
Can You Reuse Your Existing Clover Equipment?
As mentioned above, Clover hardware and software are proprietary to First Data, so you can’t use them unless, somehow, they’re connected to First Data in the backend. This means that if you have Clover equipment and wish to continue to use it, you’ll have to find a processor who does business with First Data. One way to look for such a processor is to investigate whether they sell Clover equipment. If they do, then it’s almost certain that they do business with First Data.
But if you couldn’t get a great deal with First Data by signing with it directly, what hope do you have for a great deal if you go through a middleman? While we don’t know how the business relationship between First Data and its front-end processors truly works, from what we have observed (and from the types of offers advertised on some of these processors’ websites), some front-end processors may indeed have a better deal with First Data than any individual merchant working with First Data directly could ever get.
This makes sense, actually. Front-end processors can promise a certain volume of business to First Data. These processors can also provide their own customer support, so First Data doesn’t have to spend time or resources dealing with these issues. In any event and whatever happened behind the scenes, some of these processors—including our highly-rated ones like National Processing, Payment Depot, and Dharma—can even offer month-to-month contracts and no ETF when you sign up with them. These processors also let you buy the Clover equipment outright, without a cumbersome and ultimately expensive equipment lease. It often makes more sense to work with First Data through a middleman than dealing with it directly.
Are Offers Of Early Termination Fee Reimbursement Too Good To Be True?
We sometimes come across processors that promise to buy out your ETF so you can terminate your existing merchant agreement early and sign up with them. Be careful with these promises. Sometimes, there’s a hard cap on how much they’ll pay, so be sure to first understand the amount they’re willing to pony up before you cancel with First Data. Keep in mind as well that signing with them might mean signing another long term contract that’s difficult to terminate—a contract that has its own ETF.
Be wary of any offer to buy out your ETF, in short. While sometimes the offer is real, other times you might be jumping out of the proverbial frying pan and into the fire. Get all the facts and do your math before you make a final decision.
Cancelling Your First Data Merchant Account Isn’t Easy, But It Is Doable
First Data is a large multinational company, and it’s one of the most “corporate” processors we’ve come across. It is, therefore, fitting that they’d have a very formal contract full of gotchas that newer business owners aren’t used to dealing with. While early termination penalties, strict termination procedures, and precise notice requirements aren’t unusual when large businesses work with one another, they can be shocking to a small business owner who just isn’t used to business-to-business style contracts. (If you wish to learn more about how to read merchant agreements, check out our guide on merchant agreements.)
But every contract can be cancelled, and the First Data contract is no exception. You will have to read the contract very carefully to find out the exact procedure and then you might have to wait a few months, but when the timing is right and you follow the procedure strictly, terminating the contract is actually fairly easy. So don’t be intimidated. If you have specific questions about your contract, it’s best for you to consult a lawyer, but if you have stories about contract cancellation with First Data, we’d love to hear about them. Just leave us a note below!
The post The Complete Guide To Cancelling Your First Data Merchant Account & Finding A Better Credit Card Processor appeared first on Merchant Maverick.
Businesses that rely on heavy equipment to carry out their day-to-day operations face some serious costs when it comes to acquiring, upgrading, or replacing their equipment. These large machines can be difficult to finance out of pocket, and even if you can, it may not be the most pragmatic way to do so.
Below, we’ll dive into some of the heavy equipment financing basics and cover what you should know about small business heavy equipment loans and leases.
What Is Heavy Equipment Financing?
Heavy equipment financing includes loans and leases used to acquire specialized vehicles, such as dump trucks, backhoes, and bulldozers, that are used in construction, excavation, or timber projects.
There are several different ways to go about financing heavy equipment, depending on whether you’d prefer to own the heavy equipment or simply operate it for a set period. Each has its advantages and disadvantages.
What Is Heavy Equipment?
While the phrase “heavy equipment” is most often associated with construction projects, it encompasses a wide variety of specialized vehicles controlled by licensed operators. Common examples of heavy equipment include:
Tunnel boring machines
Heavy Equipment Loans VS Leases
The most commons types of heavy equipment financing are loans and leases. At a glance, they share a lot of traits in common: term lengths, interest rates, monthly payments. They do, however, have different rationales and rules governing them.
An equipment loan is a term loan used, as you might guess, to buy equipment. Most equipment loans last between three to seven years, with some lasting as long as 10. In most cases, you’ll be expected to make a down payment of somewhere around 15% of the cost of the equipment. Relative to leases, loans usually have better rates but cover a smaller percentage of the total costs.
An equipment lease is used to buy or rent equipment. Leases themselves fall into two broad categories: capital leases and operating leases.
Capital leases are used to buy equipment and serve many of the same functions as an equipment loan. They don’t typically require a down payment and often cover 100% of the costs, with terms typically ranging from three to five years. Heavy equipment capital leases frequently come in the form of $1 buyout leases or 10% purchase option leases (10% PUT). This means that, at the end of your leasing term, you’ll have the option to buy your equipment for the amount specified: $1 in the case of $1 buyouts, and 10% of the equipment’s cost for a 10% PUT. Why so low? Well, a capital lease assumes you’re going to buy the equipment. In fact, the equipment is considered an asset for tax purposes. Capital leases are appropriate for equipment that doesn’t go obsolete quickly and slowly depreciates.
Operating leases are similar to capital leases but with a few key differences. Operating leases are usually for a shorter period, generally two years or less. At the end of the leasing term, you’ll have the option to purchase the equipment (typically for fair market value, which is why you’ll sometimes see these leases called fair market value leases), return it, or renew your lease. Depending on the exact terms of your lease, it may count as an asset or a business expense.
How Heavy Equipment Loans & Leases Work
Heavy equipment loans and leases both work a little differently. As I described above, both feature monthly installment payments and interest. Where loans have down payments, which are paid at the beginning of the loan, leases have residuals, which are paid at the end of the lease. Both residuals and down payments can vary based upon the type of agreement you sign with your financer. In the case of residuals, they may be optional if you choose to return your equipment or renew your lease.
Note that heavy equipment loans and leases aren’t substantially different than other types of equipment financing. The main difference is that you’re dealing with more specialized and expensive equipment than most other industries. That means you’ll need to work with a funder who is willing and able to extend you both the amount of money you need to acquire the equipment and a suitable amount of time to pay it off if you’re buying it.
Used VS New Equipment
Depending on the type of heavy equipment you’re looking for, you may have the option to finance used equipment as well as new. Used equipment can often fall into the hands of equipment lessors (companies offering leases) when the equipment is returned to them rather than purchased. These companies may simply provide operating leases for businesses who will use the equipment for a short time and then return it.
If you’re looking to buy used heavy equipment from a third party, and you need financing, make sure your financer can work with the reseller in question.
Expected Terms & Fees
Generally speaking, the term length of your heavy equipment loan or lease depends on two factors: whether you’re renting or buying, and how long the useful life of the equipment is. It’s rare for a loan or lease to have a term length that’s longer than the equipment’s expected useful lifespan. In practice, you’re probably looking at somewhere around the five-year mark for most heavy equipment financing.
Interest rates on loans and leases can and do vary widely, depending on your financer and your fitness as a borrower/lessee. Interest rates for heavy equipment usually start in the high single digits, with the ceiling somewhere just short of 30%.
Loans and leases can also come with all manner of supplemental fees, or none at all. If you can help it, you should always try to deal with financers who will charge you the least amount of these fees as possible. A standard fee for a loan is the origination fee. This is an amount deducted from the money you receive from your loan rather than a fee you pay directly. Leases, on the other hand, sometimes have administration fees that are charged to “keep your account active.” These may be annual or month-to-month.
Additionally, you can expect to pay late fees if you fall behind on your payments.
What About Collateral?
So that multiton vehicle you’re financing? It’s worth quite a bit, and your financer will either have a lien on it or own the title to it, depending on the type of financing you receive. The nice thing about equipment financing is that the equipment you’re financing is the collateral. If you default on your loan or lease, the financer can simply repossess the equipment.
That said, if you have particularly bad credit, you may also have to make a larger loan down payment or pay a month of your lease in advance.
How The Application Process Works
With any kind of equipment financing, it’s usually a good idea to have the specific make and model of equipment as well as a vendor/seller in mind before you apply to help expedite the process.
If you’re going through a bank, credit union, or captive lessor, you’ll probably need to apply on-site. Online financers, as you might expect, will generally offer the ability to apply through their websites. Both entities will be looking for the following information:
Time In Business: Has your business been around long enough to be stable?
Personal Credit Score: How much of your credit are you using, and do you have a history of paying it back on time?
Debt-To-Revenue Ratios: Are you likely to have the resources to be able to pay your loan and lease?
Your financer will attempt to ascertain all of the above by asking for corroborating documents. You can save yourself some time and grief by having these documents available when you apply:
Personal identification/driver’s license
Three to six months of bank statements
Tax returns/financial statements
A quote from your equipment vendor
Some financers may ask for additional information.
After you’ve submitted your information, the financer will consider your application and likely do a soft or hard pull on your credit. Equipment financing tends to be on the quicker side as bank financing goes, but with more substantial investments such as heavy equipment, you may be looking at a lead time as long as weeks to a month or two. If you go with an online lender, the process will be much faster — usually measured in days — though you’ll probably end up with a higher rate than you would by going through a bank.
If you’re approved, the financer will usually directly pay the vendor, though, in some less common cases, you may receive the money directly to buy the equipment.
Are You Qualified For Heavy Equipment Financing & Is It Right For Your Business?
Heavy equipment isn’t cheap. Even with generous financing, you’re looking at a significant financial burden. Consider the investment you’re making and to what degree it will directly contribute to your revenue. Does it make more sense to rent or to own?
To qualify for heavy equipment financing, you’ll want to have a credit score of at least 620, preferably higher. Leases, which don’t involve down payments, usually have a higher credit requirement than a comparable loan. That said, don’t assume that you can’t get financing even if your credit is under 620; there may be high-risk lenders willing to work with you…for a price.
Is Heavy Equipment Financing Not Right For You? Your Other Options
Do you still need heavy equipment, but don’t think a heavy equipment loan or lease can get you there? Check our list of top equipment financers to make sure. If you don’t find what you’re looking for there, you still have other options.
Since you’re dealing with expensive items with long utility lifespans, you may want to consider other kinds of long-term loans. In particular, SBA 7(a) and 504 loans can provide the high borrowing amounts and long term lengths you need. Both can be used to purchase equipment.
Looking to finance other types of equipment and landing here accidentally? Maybe you’re looking to finance laundromat equipment or tech equipment?
The post Heavy Equipment Finance Basics: What You Should Know About Small Business Heavy Equipment Loans & Leases appeared first on Merchant Maverick.
Worldpay is one of the largest merchant services providers in the industry and also a direct processor with a worldwide presence. Recent acquisitions have made the company even bigger, with an estimated $1.5 trillion in annual processing volume. Because of Worldpayâs commanding market share, many merchants eagerly sign up for an account with the company, thinking that âbigger is better.â After all, most of us do business with industry-leading companies all the time. We buy our smartphones from Apple, our cars from recognizable brand names such as Toyota or General Motors, and just about everything else from Amazon. Big-name brands can offer better selection, better customer service, and more competitive prices, right?
Well, no. Unfortunately, the merchant services industry doesnât work the same way as the technology, automotive, or retail sectors. Huge direct processors such as Worldpay can be a good deal for a large, well-established business that has the leverage and the negotiating expertise to hammer out a deal thatâs beneficial to both parties. However, small business owners frequently get stuck with the worst possible terms, including tiered pricing plans, long-term contracts with expensive early termination fees (ETFs), and sometimes outrageously overpriced processing equipment leases. Make no mistake — Worldpay and other large processors aggressively market to small businesses. The collective market share is simply too big to ignore. However, as an individual small business owner, you wonât get the kind of favorable terms and competitive prices that a large business can get. Youâll also struggle to get the companyâs customer service department to pay any attention to you.
For these reasons, many small business owners have quickly soured on the idea of having Worldpay as their merchant account provider. Weâve seen dozens of complaints against the company, both on consumer protection sites, such as the BBB, and in the Comments section of our Worldpay review. Unfortunately, closing a merchant account is never a simple process. Providers such as Worldpay go out of their way to make it as difficult as possible in the hopes of discouraging you from terminating your business relationship with them. In this article, weâll discuss why itâs so difficult to get out of a Worldpay merchant account contract and lay out the specific steps that youâll need to follow to do so successfully. Weâll also show you how to find a better provider and give you a few recommendations for you to check out.
The Trouble With Cancelling A Worldpay Merchant Account
In addition to the usual problems with high prices, long-term contracts, and poor customer service, one of the most persistent complaints that merchants have about Worldpay is that it is extraordinarily difficult and frustrating to get out of your contract and close your account once youâve decided to do so. Worldpay — and most other traditional processors, for that matter — seems to go out of its way to make it as difficult and inconvenient as possible to close a merchant account once youâve signed up, regardless of the circumstances. The company is counting on a steady stream of income from your business, and it doesnât want to give it up for any reason.
The following is a brief (and incomplete) list of problems that merchants have had in trying to close their accounts:
Missing Paperwork: The merchant submits a written request to close the account, but Worldpay claims it never received the request. The account remains open — often for many months after the closure request was submitted — and monthly fees continue to be deducted from the merchantâs bank account, even though the account is obviously no longer being used.
Disappearing Equipment: Merchants know that they have to return processing equipment, such as credit card terminals and POS systems, at the end of their contract unless they originally purchased them outright. Somehow, Worldpay frequently âlosesâ returned equipment in transit, giving the company an excuse to charge the full price for the missing equipment. If you leased the equipment, lease payments would continue for the entire length of the original leasing agreement, regardless of when your merchant account was closed.
Inability To Reach Customer Service: Once youâre on Worldpayâs radar as wanting to close your account (often through a voicemail or email requesting help in closing your account), you can be virtually assured that the company will never return your calls or respond to your emails again.
Closing Your Account By Telephone:Â Even if you do manage to reach a real person at customer service, be very wary if they allow you to close your account over the phone. Worldpay requires a written notice, which must be submitted within the required notice period to take effect. If a customer service representative offers to close your account over the phone without that notice, youâll likely find that your account was never really closed, and youâll continue to be charged all of your monthly account fees indefinitely until you figure out that this is happening.
Being Erroneously Charged An Early Termination Fee (ETF):Â Letâs be clear here: If you agreed to an early termination fee (ETF) as part of your contract when you opened your account, and you end up closing your account before the end of your current contract term, you will be charged an ETF as soon as your account is closed. However, if you obtained a written waiver to the ETF when you negotiated your initial contract, or youâre closing your account at the end of the current contract term, you should not be charged an ETF at all.
How To Cancel Your Worldpay Merchant Account In 4 Steps
So how do you properly go about closing your merchant account with Worldpay? Despite what you might think, the company canât legally keep you bound to your contract forever. It has to provide a procedure for terminating your contract and closing your account, and Worldpay has to honor it if you follow this procedure to the letter. Like most providers, instructions for closing your account are contained in your contract documents, usually in very fine print buried somewhere in the middle of the document, where Worldpay is hoping youâll never find them.
Believe it or not, Worldpay is actually a little more transparent than many other providers in this respect. An FAQ on the Worldpay website contains the following instructions:
In order to cancel your account, WorldPay requires that a 30-day written notice be submitted via fax or US mail. On the cancellation notice please verify the purpose of the account cancellation, along with the company name, 5 digit Account ID, signature of the primary contact on record, and an email address to which a confirmation can be sent. Please do not assume your account is cancelled until you receive confirmation via email.
While this information is accurate, it doesnât cover everything you need to consider before closing your account. Youâll want to review your merchant agreement carefully to find the full details of how to close your account. One key takeaway here is that you cannot close your account over the telephone. Worldpay, like most providers, requires that you submit your request in writing. While the company knows full well that this requirement makes it more inconvenient and time-consuming to close your account, having a written record of your request protects you as well. If you find that youâre still getting charged monthly account fees after you thought your account was closed, youâll have a written record of when your request was sent as well as proof that you provided all of the required information.
Weâd also note that the 30-day notice requirement is more or less the industry standard for account closures. Like most financial organizations, processors work on a 30-day billing cycle. You should expect that you might be billed for the month after you submit a request to close your account. However, you should protest any charges beyond that. Weâve seen other providers require a minimum notice of 60 or even 90 days before closing your account, which makes it that much harder to get your notice in before your contract automatically renews for another year. We strongly suggest that you pad the minimum notice period by as much time as you can to minimize any possible delays in mailing your written notice to Worldpay. For example, thereâs no reason why you canât send in the notice 45 days (or even earlier) before the end of your current contract term.
You also need to consider the reasons why youâre closing your account and whether youâre shutting it down at the end of a contract term or in the middle of one. Ideally, youâll want to time your account closure so that it occurs at the end of your contract term. Doing this prevents the contract from automatically renewing and absolves you of any responsibility to pay an early termination fee. However, if youâve decided to close your account before the end of your current contract term, you will probably have to pay the full ETF. If youâre closing your account to switch to a competing provider, thereâs no point in protesting the ETF. However, if youâre closing your business for good (as opposed to selling it or transferring ownership) and no longer need the account, you might be able to convince Worldpay to waive the ETF.
With these considerations out of the way, letâs examine the step-by-step approach youâll need to follow to close your account successfully:
1) Find Your Merchant Agreement
Contract documents relating to your merchant account are critically important, and we recommend that you keep both digital and written copies of all of them. Most contracts usually consist of a Merchant Account Application (which spells out pricing and terms unique to your account) and a Terms and Conditions section (which lays out the boilerplate provisions that apply to all merchants). You might also have separate documents for equipment leases and third-party services (e.g., payment gateways). You should also keep copies of any waivers granted by your sales representative when you initially set up your account.
2) Review Merchant Agreement For Termination & Account Closure Provisions
While the quote above from Worldpayâs FAQ gives a good overview of the account closure process, itâs not legally binding. Youâll want to review the full closure requirements contained in your original contract documents. Worldpay, like most providers, uses a variety of standard contract documents that change over time. Donât assume that a blank contract document you found on the internet is identical to the one that applies to your account.
In addition to identifying specific account closure procedures and requirements, youâll also want to determine your accountâs anniversary date. That is the date when your current contract term expires, and a new term will automatically begin if you havenât initiated the process to close your account. This date can be either the day you signed your contract, the day you first started using your account, or some other date as defined in your contract. Unfortunately, while providers go to great lengths to spell out how your anniversary date is determined in your contract, theyâre not so forthcoming about what date theyâre actually using for your account. A customer service representative should be able to provide this information for you, as your provider uses your anniversary date to determine when your contract automatically renews and when any annual fees are due.
Weâd also note that if you intend to continue in business with a new provider after youâve closed your Worldpay merchant account, the transition will be much smoother if you can have the new account set up and ready for use before your current account closes. That will prevent the unfortunate possibility of being unable to process any credit or debit card transactions while waiting for the new account to activate.
3) Follow Account Closure Provisions To The Letter
Once youâve nailed down your account closure requirements and determined your anniversary date, you need to follow those instructions to the letter. This is not the time to get sloppy. A missing signature, incorrect merchant account number, or any other errors on your part will almost certainly result in your closure request being rejected (or delayed just long enough for the automatic renewal clause to kick in).
We highly recommend that you contact customer service before initiating a closure request, even though theyâre not likely to be very helpful. While Worldpay appears to accept any form of a written request that contains the required information, many other providers will insist that you submit your request on a special form. This form wonât be included as part of your contract and wonât be available from the providerâs website. Instead, youâll have to ask for a copy and hope that the company sends it to you in time.
We also recommend that you print out your account closure request and submit it via Certified Mail. Emails can get lost or âaccidentallyâ deleted all too easily, but using Certified Mail gives you a record of when your letter was mailed as well as when it was received and who signed for it. You might need this information if the company later tries to claim that it never received your request.
Besides a written request, you might also need to return any processing equipment that doesnât belong to you. This mostly applies if you received a âfreeâ terminal as part of your initial merchant account setup. These terminals are provided for your use for as long as you keep your account open, but they remain under Worldpayâs ownership. Youâll need to send any such equipment back to Worldpay as soon as your account is closed to avoid getting charged the full value of the hardware.
Unfortunately, it isnât so easy to get rid of leased equipment. If you made the mistake of leasing your processing hardware, youâre pretty much stuck with both the equipment and the monthly lease payments for the duration of your leasing contract. If youâre switching to a new provider, you might be able to have the equipment reprogrammed to work with their processing system.
4) Monitor Account Statements & Any Additional Charges
Unfortunately, weâve received way too many complaints from merchants whose problems with Worldpay didnât end when they closed their accounts. As weâve discussed above, thereâs a possibility that youâll continue to be charged monthly (and possibly annual) account fees long after you thought your account was closed. The burden is definitely on you to monitor your account statements and your business bank account to catch any of these charges. While itâs normal to be charged fees during the month after your account is closed, anything beyond that should be brought to the companyâs attention immediately.
Worldpay promises to notify you by email when your account is closed, but you shouldnât assume that this is the final word. Any number of hiccups can occur that might prevent your account from actually closing. If this happens to you, your first course of action is to notify Worldpay immediately and provide all documentation related to your account closure request. If the unauthorized charges continue, we highly recommend that you file a complaint against the company with the BBB. Believe it or not, even huge companies such as Worldpay care about their online reputation, and theyâll usually be a lot more helpful in trying to resolve the situation once youâve gone public with your grievances. As a last result, if none of the above actions have worked, you may have to close your business bank account to stop the automatic withdrawals. We realize that this is a tremendous inconvenience, but itâs better than being charged every month for an account that youâre not using.
How To Find Alternatives To Worldpay Credit Card Processing
As weâve discussed above, merchants have found many reasons to leave Worldpay for a better (and more affordable) provider. The processing industry is extremely competitive, and providers are always trying to convince established businesses to switch to them from their current provider. Some companies will even offer to pay your early termination fee from your current provider if you sign up with them. While this might sound like a terrific deal, it usually is not. Why? Because nothing is ever truly âfreeâ in the processing industry, and any provider that will pay your ETF for you is almost always going to require you to agree to another long-term contract with them in exchange for this benefit.
So how do you find a better provider than Worldpay? We can help! Our article on how to choose a merchant service provider can guide you through the fundamentals of evaluating pricing, contract terms, and other considerations in selecting the best provider for your business. We recommend that you narrow your choices down to several of the best providers you can find and obtain quotes from each of them. Armed with this information, you can make an informed decision as to which one will (hopefully) offer you the best combination of fair pricing, flexible contract terms, and top-notch customer service for your business. There isnât a one-size-fits-all solution that works best for everyone, so bear in mind that a company thatâs good for a large, established business often wonât be a good choice at all for a small business. Once youâve decided on a provider, our article, How To Negotiate The Perfect Credit Card Processing Deal, can show you how to get the best terms from your chosen provider. Finally, if you have no idea where to start, our Merchant Account Comparison Chart provides a head-to-head comparison of some of the best merchant services providers in the industry.
Switching From Worldpay To Another Processor Isnât Easy, But It Is Possible
As weâve emphasized above, closing your merchant account is never an easy process, and providers deliberately make it as difficult as possible to discourage you from switching to a competitor. In this regard, Worldpay is no different from any other traditional provider that relies on long-term contracts to keep merchants on the hook for as long as possible. In fact, Worldpay’s willingness to accept a simple written request and offering to confirm your account closure via email puts the company slightly ahead of its competition.
However, you wonât have these kinds of problems in the first place if you sign up with a provider that offers true month-to-month billing with no long-term contracts to all their merchants. Many of our top-rated providers donât use long-term contracts or early termination fees at all, so closing your account is simply a matter of making a phone call or submitting a written request. You wonât have to worry about expensive cancellation penalties or continuing to be charged fees for months after youâve shut down your account.
If youâre unhappy with Worldpay — or any other provider — we recommend that you take a close look at your contract and see what it will really take to get out of it. Weâve outlined the steps above that youâll need to follow to put a bad provider behind you, hopefully without having to pay an exorbitant amount of money to do so. Good luck!
The post The Complete Guide To Switching From Worldpay To A Better Credit Card Processing Company appeared first on Merchant Maverick.
These days, we see delivery options everywhere. You can request on-demand delivery for your groceries, prescriptions, and take-out orders. With so many consumers turning to these options for convenience — and safety in light of the coronavirus crisis — you may be wondering: Is there space in the market for you?
Owning a delivery business is a great opportunity for many entrepreneurs. Depending on the niche you plan to serve, you can start your own business with just one vehicle and no employees. What’s more, you can quickly scale your delivery business as demand increases.
Are you considering starting your own delivery business, but you aren’t sure how to start? Keep reading for a step-by-step guide to starting a delivery business.
Why Start A Delivery Business?
One of the main reasons you should consider starting a delivery business is the steady increase in demand and market share.
According to the State of Logistics Report 2019, the market size of same-day delivery services in the US is expected to reach $7.4 billion in 2020 (up from an estimated $6.1 billion last year). What’s more, this report projects market size will increase to $8.5 billion in 2021.
The same report reveals how same-day delivery services are divided by delivery types. Fourteen percent of the market share of same-day deliveries are C2C deliveries (for example, transactions from Craigslist, eBay, and Facebook Marketplace), while 23% are B2B deliveries, and 63% are B2C deliveries.
By starting your own delivery business, you can take advantage of this demand for same-day delivery.
How Much Does A Delivery Business Cost?
Startup expenses for beginning a delivery business vary, depending on many factors. That said, you should plan for the following expenses:
Purchasing or leasing vehicle(s)
Time (your time and your employees’ or contractors’ time)
Cost of operating a physical location (if you have one)
As you plan for your business, make sure you create a budget that accounts for all the expenses listed above as well as any other relevant expenses.
How Much Does It Cost To Become An Amazon Delivery Service Partner?
Perhaps you’ve seen advertisements online for Amazon’s Delivery Service Partner (DSP) program for entrepreneurs. These advertisements state that with Amazon, you can start your own delivery business for as little as $10,000 capital. These advertisements make running a delivery business look easy. All your business comes through Amazon, so there’s no need to find customers, and with very little startup cost, you can begin managing a team of 100 employees who drive a fleet of 10-40 vans.
Amazon makes this program look very desirable, stating that its DSP program is highly competitive and that you’ll profit $75K-$300K per year. However, I advise you to do your research before applying to become a DSP. I’ve seen numerous reviews that break down the costs of operating this type of business, revealing that according to Amazon’s numbers, you’re only likely to profit $7,500 per van each year. This is a very slim profit margin, and to earn this profit, you have to take on a lot of liability.
For more information on the potential downsides of becoming an Amazon DSP, check out this video from Franchise City.
Types Of Delivery Services
There are many possible niches your business can fill. We recommend that you consider partnering with local businesses that frequently need to deliver their products to consumers or other businesses. Here are a few niches you should consider:
Yard supplies delivery
Dry cleaning delivery
Starting A Delivery Service: The Step-By-Step Guide
Once you have an idea of the type of delivery business you want to start, it’s time to take action! Here are the first nine steps you should take to start a delivery service.
Step 1: Make A Business Plan For Your Delivery Business
The first step in starting any business is to make a business plan. We recommend starting with a one-page business plan, in which you list the following information about your business:
The problem your business solves
For more information on writing a business plan, try our article: The ‘How-To’ For One Page Business Plans. You’ll even find a downloadable form on this page that you can use to create your business plan.
Step 2: Look For Funding
Every startup requires capital, and with a delivery business, you have to invest in a lot of equipment up front. If you don’t currently have the funds you need to start your business, we suggest looking into financing options. Here are a few options you might consider:
Business lines of credit
Business credit cards
Merchant cash advances
For more information on each of these financing options, read our article, 8 Ways To Finance Your Small Business.
Step 3: Find Business Software
Finding the right software for your business can streamline your day-to-day operations, and it can even reduce the number of people you have to hire to get your business started. Here are a few types of software that you should consider adding to your business, along with a few software recommendations:
GPS Software: Use this software to locate delivery pickup and drop-off locations. You can use a device such as Garmin for your GPS navigation, or you can use a free app on your mobile device (such as Google Maps).
Mileage Tracking Software: Mileage tracking software helps you bill clients accurately, and it can help you claim business expenses during tax season. One of our preferred accounting software, QuickBooks Self-Employed, has an app that you can use for tracking mileage. Or you can use an app such as MileIQ.
Accounting Software: Every business needs good accounting software. We likeÂ QuickBooks Online and Xero.
CRM Software: CRM (customer relationship management) software helps you track customers’ contact info and interactions. A couple of good options are Salesforce and Zoho CRM.
Website Builder Software: Build a website for your delivery business using an affordable and easy-to-use website builder. We recommendÂ Squarespace and Wix to most business owners.
Time Tracking Software: If you hire employees or independent contractors to drive your vehicles, you’ll need a tool to track their time. Some time tracking software packages even include GPS tracking features. Check out our article, Must-Have Time Tracking Software Businesses Should Know About, for a few recommendations.
Step 4: Source Equipment For Your Delivery Business
One of the big startup costs you should anticipate is the cost of equipment. Depending on the types of products you decide to deliver, you’ll need to choose equipment that can help deliver shipments safely and efficiently. Here are a few examples of equipment you may need:
Vehicles (sprinter vans, pickup trucks, freight trucks, trailers, or refrigerated trucks, depending on your shipments)
Cell phones or radios for all team members
Tablets and card readers for processing payments and signing off on orders
As you create a list of the types of equipment you need, you should also consider how you’ll pay for that equipment. Will you purchase it outright or use equipment financing? Make sure you calculate the interest rates you pay for equipment financing into your business’s budget.
Step 5: Register Your Business & Get Insurance
To legally register your business, you first have to decide on a business structure. The business structure you choose depends on the amount of liability you are comfortable with and if you plan on hiring employees. Business structures include:
Limited Liability Partnership
Limited Liability Limited Partnership
Limited Liability Company (LLC)
If you are just starting up, and you plan on working independently for a while, a sole proprietorship is a good option. However, if you plan on hiring employees, you should look into setting up an LLC. For more information on the pros and cons of each business structure, try our complete guide to business structures.
The next step is to register your business name. As you choose a name for your business, consider using keywords, such as “delivery,” “same-day delivery,” or even “floral delivery.” That will help your business appear in Google searches. During this step, you should also look into available domain names. Choosing your business name and domain name at the same time can help you create consistent branding and make your site easier to find online.
Your final steps are to register your business with the IRS, register for business licenses and permits, and register with your state’s revenue office. For more information on these steps, see our article, How To Register Your Business: The Complete Guide.
As you set up the legal part of your business, make sure you sign up for any necessary insurance. These insurance plans protect you and your business, and they also protect your employees. Here are some types of insurance you should purchase:
General Liability Insurance: This insurance package covers delivery services and delivered products. This insurance protects companies against lawsuits related to delivery services. Learn more about small business liability insurance.
Commercial Auto Insurance: Commercial auto insurance covers damage or theft done to a fleet of vehicles, an owner’s vehicle used commercially, or an independent contractor’s vehicle. Also, commercial auto insurance covers bodily injury and medical expenses. If your business operates trucks, you may also need commercial truck insurance. Read What Is Commercial Auto Insurance & Do You Need It? for more information.
Garage Liability Insurance: If you plan on storing vehicles on-site, you’ll also need garage liability insurance.
Commercial Property Insurance: To protect your employees’ property (things they store in their vehicle while they are at work), you can also sign up for commercial property insurance.
Workers’ Compensation Insurance: Workers’ compensation insurance is required in most states. This insurance covers medical costs and lost wages for work-related injuries.
Step 6: Create Your Online Presence & Marketing Plan
The next step you should take in starting your business is to create a solid online presence and marketing plan.
Your business’s online presence is the overall impact of your brand’s website, review pages, and social media interactions. Essentially, your online presence is made up of everything your brand has done online. Work to create a strong online presence from the very beginning by building a beautiful and easy-to-navigate website and registering your business with business directories, such as Google My Business and Yelp. For more information on developing an online presence, read How To Build An Online Presence For Your Business In 9 Simple Steps.
Finding & Keeping Customers
As you build up your business’s online presence, you should also consider the ways you will draw customers to your business. Make a plan for acquiring and retaining clients. Will you purchase online advertisements or claim an ad spot on the radio? Will you place ads on billboards or in the local newspaper? Will you partner with local businesses and rely on them for new customers?
No matter what you decide, make sure you have a plan for your marketing approach. And if your attempt doesn’t pan out, adjust your marketing strategy, and try again.
Once you have found customers, do your best to draw them back to your service by giving them a great experience and having quality marketing strategies. We recommend using CRM software to keep track of your former customers and reach out to them again in the future. Learn more about how to retain repeat customers with our article, 11 Ways Businesses Should Be Using CRM Software.
Step 7: Determine Your Rates For Delivery
Your next step is to decide on how much you’ll charge for deliveries. There are a few different ways you can price your services.
Many delivery companies charge on a per-mile basis. Each mile driven costs a set amount. In another model, you can charge a base rate and then add per-mile costs on top of that base rate.
As you set your prices, you should also determine the boundaries in which you will deliver orders. You can choose to not make any deliveries outside of these boundaries or charge a distance surcharge.
Make sure that your prices account for your company’s total overhead (including fuel, vehicle maintenance, time, and other costs) to protect your profit margin.
Step 8: Set Up Payment Processing
As more businesses transition to accepting digital payments, you should also consider what your payment solutions will be. If you choose to accept digital payments (which we recommend), you need to set up a payment processor.
The payment methods that are best for your business depend on who your delivery business serves. If you deliver directly to consumers (and consumers pay upon delivery), you’ll need a good method for accepting credit card payments. A mobile device with a card reader would work well in this instance. A couple of good payment processors that allow you to accept payments this way are Square and Payment Depot Mobile.
If you serve other businesses, however, you should consider alternative payment methods. Businesses that sell B2B can often qualify for lower credit card processing rates, so it might be worth pursuing a processor that caters specifically to B2B companies. On the other hand, ACH (automated clearing house) payments are cheaper overall, and they are a good alternative to credit card payments. For additional guidelines on accepting payments as a B2B business, check out The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More.
Step 9: Manage Expenses For Your Delivery Service
As you operate your business, you should have a plan for how you’ll track and manage expenses.
Use good accounting software to track tax-deductible expenses, such as fuel, repairs, and new equipment. Take a look at our article about tax write-offs for more information.
In addition, you should make a plan for how employees will purchase fuel on the road. Will you give drivers access to the company credit card, or will you reimburse your employees for their gas purchases? Make plans for these expenses before you begin your first delivery.
Is Starting A Delivery Business Right For You?
Does starting your own delivery business still seem right for you? Are you prepared to handle the challenges of planning delivery routes, and are you ready to face the competition of the ever-popular delivery apps?
If you’ve answered yes, we’re here to support you as you begin! Sign up for our newsletter to get up-to-date information on owning and operating a small business. To read more about starting your own business, take a look at these articles:
The ‘How-To’ For One Page Business Plans
8 Ways To Finance Your Small Business
How To Register Your Business: The Complete Guide
Types Of Business Structures: The Complete Guide
How To Build An Online Presence For Your Business In 9 Simple Steps
The Complete Guide To B2B Payment Processing: Credit Cards, ACH, Software & More
The post How To Start A Delivery Business In 9 Easy, Hassle-Free Steps appeared first on Merchant Maverick.
Few businesses have quite the same relationship with their equipment as laundromats. Essentially, your equipment is almost the entire draw of your business. Customers will be regularly paying you to directly utilize your equipment, so it goes without saying that you want to spend a lot of time thinking about your equipment purchases.
If you’re thinking about starting your own laundromat and want to get a sense of how much the equipment will cost, where to buy it, and how to finance it, you’ve come to the right place. Read on for more information.
The Equipment You Need To Start A Laundromat (& How Much It Costs)
If you’ve been to a laundromat, you probably have a general idea of what types of equipment you’ll need to get your laundromat up and running. Nevertheless, let’s lay them all out to make sure we’re on the same page. You’ll need, at a minimum:
Commercial washers ($700 – $25,000 each)
Commercial dryers ($1,000 – $20,000 each)
A payment system
Coin-based ($100 – $200 per machine, $700-$1,200 per bill-to-coin changer)
Card-reader system ($40,000 – $80,000)
Water heating system ($15,000 – $40,000)
You’ll probably want:
Tables for folding ($60 – $600/each)
Seating ($30 and up/each)
Laundry carts ($50 – $80/each)
Vending machines for snacks/detergent ($1,000 – $5,000/each)
This is the reason your customers will come! Commercial washers come in a number of different sizes, with capacity ranging from 1.7 cubic feet to over 4.5 cubic feet. Many laundromats provide different sizes for different loads, charging more for use of the larger machines. In general, top-loaders are cheaper than side-loaders but are less energy and water-efficient. Even so, there’s a pretty enormous range of prices for washing units. For any given model, you want to take into account the long-term costs of the machine in terms of both utilities and maintenance. If you’re aren’t hunting for the absolute cheapest or most expensive models, you can probably expect to pay somewhere between $1,000 and $3,000 per unit.
Most customers who use laundromats will also want to dry their clothes on site. Dryers can be heated by electricity or gas, but the majority of new laundromats will probably opt for electric (typically 240 volts) unless they already have a convenient infrastructure for gas. If you’re short on floor space, you may want to consider stackable dryers, which allow you to double the number of units you can fit within your shop. Expect to pay a bit more for the privilege, however.
Dryers generally have a larger capacity than washers, ranging from 5.5 to over 9 cubic feet, as more space is needed to effectively dry the same amount of clothes. Like washers, you can probably find decent units for between $1,000 to $3,000 each.
A Payment System
The once-ubiquitous coin-operated laundry is a rarer sight than it used to be, but it’s still a viable option for laundromats looking to minimize startup costs. The coin boxes, feeder slides, and wiring add a small amount of expense to each machine. You’ll also need to spring for a bill-to-coin changer or two to ensure that your customers have quarters to feed your machines.
The downsides of a coin-based system come into play down the road. While you won’t exactly be a bank, you’ll have a lot more cash onsite, which means you’ll have more security risks than you would with a card-based system. Those risks can add expense–collecting the coins, transporting them, etc.
A card-based system, on the other hand, offers a lot of long-term conveniences. You won’t have to worry about collecting or keeping track of coins, and your customers won’t have to worry about having cash on hand when they walk in. Even better, these systems make it easier to track your sales. Additionally, they can function a bit like loyalty cards, encouraging customers to come back and spend down the value on their cards. Some systems also allow you to offer perks like dryer credits.
The downside, of course, is that these systems are pricey to install, adding upwards of $40K to your startup expenses. If you can afford it, though, the general consensus seems to be that they’re worth it.
Water Heating System
If you’re offering warm and hot wash cycles, you’ll need a heating system for all that water you’ll be using. These systems come with or without a storage tank. The advantage of the former is that it keeps hot water at the ready for use, but utilizes more energy to do so. Either way, you’ll want to make sure your system is powerful enough to produce enough hot water for all your machines should they run at once. With a tank storage system, you’ll want to consider its recovery rate to make sure it can meet peak demand, whereas with a tankless system your concern should be with the amount of hot water it can produce on demand.
While not necessary per se, there are some other items that will improve your customers’ laundromat experience and help you stand out from the competition.
First, there’s the stuff that helps customers take care of their laundry. I’m talking about carts that make it easier to move wet laundry to dryers, and dry laundry to tables for folding. And speaking of tables, you’ll probably want those too. How about seating for customers who are waiting for their laundry to finish? And maybe a way to buy detergent, fabric softener, or dryer sheets if they didn’t bring their own?
Vending machines are a common sight in laundromats, and for good reason. Your busy, captive clientele are likely to get thirsty or peckish. It’s not unusual for such machines to be a significant source of revenue for laundromats. Vending machine prices vary quite a bit depending on the model and whether you buy new or used, but you’re probably looking at an outlay between $1,000 and $5,000 each.
The final consideration is entertainment. Let’s face it, doing your laundry isn’t the most exciting thing in the world. Sure, many customers have smartphones, but maybe they’d be more comfortable watching TV! How about some toys to occupy kids? And who doesn’t associate laundromats with old-fashioned coin-operated arcade games? While none of these are necessary, they can be difference-makers when people are choosing where to do their laundry.
Where To Purchase Laundromat Equipment
You can purchase laundromat equipment through a number of different sources. The option that’s best for you will likely depend on your budget, your location, and your business plan.
Laundromats are such a common business there are actually quite a few companies that exist primarily to service them. These distributors specialize in selling, servicing, and installing laundry equipment. They also usually deal in parts, which can be useful if you’re trying to keep older machines running. If you decide to use a distributor, make sure they have a good reputation and work with the brands you want to use. If you’re looking to keep costs really low, many distributors also deal in used equipment.
You can also try to buy your equipment directly from the manufacturer. While many brands still work with local distributors to sell their products, some also offer their own financing programs to help customers buy their products. Coincidentally, if you know the brand of equipment you want, you can often use a manufacturer’s website to find distributors in your area.
While they aren’t nationally known like some other industries, there are a number of laundromat franchises operating in the US. Plugging into a franchise usually raises your starting costs. You’ll have to pay a franchise fee upfront, conform to franchise standards, and may have to pay royalties every month. In exchange, you benefit from the franchise’s advertising and supply chains. Keep in mind, a franchise will most likely lock you into specific brands and layouts.
You can, of course, buy equipment from retailers, but unless you’re taking advantage of a great sale or can come to some kind of bulk buying/financing agreement, this probably won’t be the best way to purchase the majority of your laundromat equipment. It may, however, make sense to buy some of your smaller one-off purchases this way.
Laundromat Equipment Financing Options
By now, you’re probably realizing that equipment makes up a lot of the cost of starting a laundromat, with total costs for an average-sized laundromat ranging between $200K – $500K. If you don’t have that much money lying around under your mattress, you’ll need to seek other sources of financing.
If you have decent credit (620+) and would rather have monthly payments rather than a large initial expense, you can lease your laundromat equipment. Leases come in two general forms: capital leases and operating leases. Capital leases are effectively loan substitutes, meaning you’re financing equipment with the intent to own. Operating leases, on the other hand, are rental agreements that allow you to utilize equipment that is technically owned by the leasing company. This can be a useful arrangement if you want to frequently upgrade your machinery. If you’re buying from a manufacturer, see if they offer captive leasing, or are partnered with any equipment leasing companies.
Keep in mind, however, that leasing is almost always more expensive over time than buying.
If you’re looking to buy and can afford a downpayment, a slightly cheaper option than leasing is to get an equipment loan. Equipment loans are secured loans that use the equipment being purchased as collateral. This tends to result in better term lengths and rates than you’d see with a similar unsecured working capital loan.
The Small Business Administration can help new businesses that may not otherwise qualify for competitive loan rates and terms to get them. The two most popular programs, 7(a) and 504, can both be used to purchase equipment. The term lengths offered by these programs can spread the cost of your equipment out over a long period and give your business time to mature. Just be aware that applying for SBA loans is an involved, time-consuming process.
Start Your Laundromat Business Off With The Right Equipment
Remember, a laundromat is itself something of an equipment rental business, with the customer “borrowing” your machines for short intervals to clean your clothes. That means your equipment should be one of the top priorities of your business.
Ready to do some purchasing? Check out our favorite equipment financers. Confused about some of the terminology? Take a look at our breakdown of the differences between equipment loans and leases.
The post Laundromat Equipment Guide: Expected Costs, Where To Purchase, & How To Finance Laundromat Equipment appeared first on Merchant Maverick.
Depending on the circumstance, selling a business can be a devastating, rewarding, or lucrative experience — and sometimes a surprisingly emotional one. In this post, we’ll dig into the hows and what-ifs you’ll want to explore before, during, and through the transitional phases. Understanding the basics and planning can help you avoid falling into some of the common pitfalls that may spring up during the process of a business sale, so let’s get started!
Questions To Ask Yourself Before Selling Your Business
Selling a business can be a lot more complicated than it might seem at first glance. While this post focuses on the practical to-dos of selling your business, let’s start with some open-ended questions that may help you clarify your goals.
Why do you feel it is a good time to sell your business?
What is your time frame?
Do you have flexibility with your time frame (if it meant maximizing profits)?
What do you want for the future of your business? Is retaining certain elements of your business important for you?
Will you use a broker to do the legwork in finding a buyer or do you have the time to invest yourself?
Now that we’ve got you thinking, let’s explore the work you’ll need to do before you sell and how you can sell it wisely.
How To Sell A Business Successfully In 7 Steps
If you’ve made a definitive decision to sell, or you are still in the discovery phase, here are the steps you’ll need to understand if you are to move ahead successfully and get the highest sales point as possible.
1. Preparing An Exit Strategy
If you currently do most things yourself in daily operations, start delegating as many responsibilities as you can so that the buyer sees your business can run smoothly without you. Make no mistake: buyers will look at this aspect closely, and it can make a huge difference in selling your business. A well-oiled machine that doesn’t need too many adjustments will go for a higher price.
Another important component for your exit strategy is a packet of general information about your company, including your origins, media mentions or publicity, company growth, marketing strategies, and general employee information. This information gives your buyer a more complete picture of your business and its trajectory over time.
Of course, if your company operates mostly online, you’ll also want to share statistics, including search engine ranking, keyword ranking, visitor statistics, and demographics, as well as any competitor analysis. Remember, your buyer needs all of this information to make a calculated risk and feel confident in doing so.
2. Getting Financials In Order
Organizing your finances is extremely important. It is probably one of the most important things you can do. After all, your business is just one of the options available to a buyer. If your contracts and documents aren’t in order, if things are unclear, messy, or you’re just not ready, the buyer will move on quickly.
Your buyer will likely present you with a checklist of requested information after they’ve given you a letter of intent (more on that later), so being prepared as early as possible for this will help everything go a lot smoother.
Here are some of the documents you’ll want to start rounding up:
Intellectual property (ensure loose ends with any contractors)
These are all things you can start gathering right now to organize your financial documents and contracts. Not only will you be more confident with prospective buyers, but they’ll also be more confident in the health of your business! In addition, you’ll want to plan for the following:
Most states require a documented shareholder meeting if applicable.
Get any undocumented agreements (e.g., equity sharing) settled.
Go through your financials and tax statements with a CPA or accountant so that things are categorized properly and compliant.
Going through your financial and tax statements with a CPA or accountant may help you spot areas in your business that you want to adjust the next year or two to maximize profits. When you are looking at what sorts of expenses you list on your business taxes, for instance, you may decide that an ancillary expense is hurting rather than helping your profit margins, and opt to adjust one or more items in the next fiscal year. If your business is large enough, these changes might make a significant impact on your business valuation. That’s why if you can, pushing your target sale date down the line a year or two may end up paying off for you when it comes time to sell.
3. Obtaining A Business Valuation
Much like when buying a home, the appraisal process is an important aspect of selling a business. An accurate business valuation is critical because it brings credibility to your asking price. When it comes to your business valuation, not all types of businesses are the same; the selling price of your business may vary widely depending on the industry and current trends during any given year, as well as projected growth.
And of course, the higher your profits, the more valuable you’ll likely be to a buyer. This is another reason why you may want to go back and consider what expenses you deduct on your taxes, as those expenses count against your profits in that regard. If you are planning to sell in the next year or more, be aware of the long game and choose carefully what expenses you take on — and how you categorize them.
4. Finding Buyers
If you haven’t already been approached to sell, now it’s time for what may be a challenging phase: Finding a buyer!
You’ll want to spread the word to your colleagues and acquaintances, as well as advertise to target a broader audience of small business owners or interested parties. Or you may want to keep everything confidential. In that case, a broker is a vital player in moving ahead.
If your efforts to sell your business yourself don’t become fruitful for you, it may be time to think about finding a broker. Sure, they will take a cut of the final purchase price, but they may be able to vet out better buyers for you. Not to mention, they will be focused on getting the highest asking price possible because it means a better commission for them! Because a qualified and experienced broker could help you save a lot of time and maximize profits, it may be wise to start looking for one even if you’re not quite ready yet.
Making Your Business More Desirable To Buyers
Having all of your ducks in a row — via impeccable document organization and accurate valuation — will make your business more attractive as people start gaining interest and checking you out as a prospect. Remember, your potential buyers are looking for the lowest risk and highest reward, of course, but the information you bring to the table can be a huge deciding factor in closing the deal.
Once you’ve hooked an interested party, we recommend you pre-qualify your potential buyer. In doing this, your company enjoys a bit more protection because then you’ll only discuss the particulars of your business with serious buyers who have provided some background financial information about themselves. From a buyer’s perspective, a pre-qualification can also encourage them to become more invested in moving through to the next phase.
5. Conducting Due Diligence
If you have found a potential buyer, fantastic! Now it’s their responsibility to really take a look under the hood and find out more about your business. After they give you a letter of intent, they’ll also probably hand you a laundry list of items for you to retrieve. Again, we go back to our own due diligence from the beginning when it comes to keeping clean books and an organized back office.
For larger deals, this process can take months, and that’s why it is so important for you to have a unified front so that it goes smoothly as possible.
Before the deal is finalized, you’ll likely have some very probing questions to answer about your business. Depending on how familiar your buyer is with your industry, you may field high-level questions focused on your company and employee culture, all the way down to the nitty-gritty analysis of the financial and tax documents you’ve prepared for them.
6. Finalizing The Deal
As the deal becomes finalized, now is the time to prepare and communicate with employees about the leadership change.
Many business owners find that the whole process is quite a bit more work than they anticipated, and have already brought a broker on board. If that’s the case, the pressure is mostly off of you to tie up all the loose ends. If not, having an attorney handle finalizing the contracts is probably the wisest decision, as they may be able to catch blind spots you missed and provide greater protection to your business.
7. Preparing To Hand Off Your Business
While all of your energy was probably focused on getting the deal finalized, don’t forget to keep the post-sale transition period in mind. Some buyers want the seller to stick around for an adjustment period (sometimes a few months). Whatever the expectations are, make sure you have those settled and clarified.
A Word About Your Merchant Account
To hand off your business, you’ll have to work out all of those minor (and major) details regarding transferring ownership, too. You’ll need to contact your merchant services provider, for instance, to learn what the protocol is when it comes time to transfer leases, contracts, and any equipment related to your payment processing services.
If you’re stuck in a long-term contract with your payment processor, you’ll have to fill out a change in ownership request formÂ to change the legal entity on the contract with your merchant account. How smooth and flexible this process goes for you largely depends on the flexibility of your contract (if you’re bound by one) and the company with which you work.
Wondering if your merchant account has an early termination fee or a binding agreement? Check out Does Your Merchant Account Have An Early Termination Fee?Â as well as Does Your Merchant Have An Auto-Renewal Clause?Â We show you how to avoid some of the major pitfalls when it comes to contracts, but there are plenty of other options we discuss in both posts to help you avoid this frustrating issue to begin with!
Selling A Business: A Step-By-Step Checklist
Here is another quick recap of the main points we dug into above. You’ll want to keep these in mind as you plan your exit strategy and move towards a successful closing:
Establish a desired time-frame for the sale.
Define your personal goals in selling your business.
Delegate responsibilities and tasks to employees and managers.
Organize contracts and financial documents, and ensure everything is in writing (no verbal agreements).
Get a business valuation.
Spread the word about your sale or find a broker to do the legwork and networking for you.
Pre-qualify your interested buyer.
Allow for due diligence with your buyer and provide documentation as requested.
Have a lawyer or attorney assist in finalizing the sale.
Tie up loose ends with contracts (e.g., your merchant account and/or equipment leases).
The Bottom Line? Selling A Business Requires Organization & Motivation
Starting your exit strategy with these general tasks may seem tedious at the time, yet they represent some of the higher priorities for buyers. Remember, a buyer is a human and as such, they’ll likely apply gut instinct and emotion as well as careful scrutiny when it comes time to make a decision. The truth is that buyers are looking for what feels right and represents the least amount of risk, and yours isn’t the only business they have to choose from. That means that getting your papers organized and in shipshape, having confidence in your “why,” and understanding the process are absolutely critical to successfully selling your business.
For more resources that may help you get things in order before you sell your business, check out Best Accounting Software For Accountants and CPA VS Accountant: Which Do You Need For Your Business?
The post How To Sell Your Business: The Complete Guide To Selling A Company In 7 Simple Steps appeared first on Merchant Maverick.
Tech equipment–computers, IT equipment, and related items–poses some unique issues for businesses trying to decide whether to lease or buy. Tech equipment becomes obsolete more quickly than almost any other type of equipment, making it a poor long-term investment. At the same time, many businesses need to keep their tech hardware up-to-date in order to remain competitive.
Should you buy or lease your tech equipment? Read on.
How Does IT Equipment & Computer Leasing Work?
The word “lease” is often associated with rental agreements — like the ones you sign when you rent an apartment or lease a new vehicle. While those examples are the most common, the term has grown to encompass a number of other types of agreements.
Capital VS Operating Leases
While there are an enormous number of lease types with names like “triple buyout lease” or “synthetic lease,” almost all of them fall under two major umbrellas: capital leases and operating leases.
A capital lease encompasses leases like conditional sales agreementsÂ as well asÂ $1 buyout leasesÂ andÂ $10 buyout leases. A capital lease transfers ownership of the item in question to you, the lessee, either immediately or early during the lease’s terms. For all intents and purposes, the item is considered yours–it’s an asset on your balance sheet. Compared to operating leases, you’ll have higher monthly payments but a much smaller residual payment at the end of your lease (hence the $1 buyout, for example). You rarely, if ever, have the opportunity to return the equipment at the end of your lease. And why would you? You’ve already paid for its entire value, plus interest. If this sounds a bit like a loan, it should. You’d essentially use a capital lease as an alternative to an equipment loan.
Operating leases are more traditional leases. In fact, they’re sometimes called “true leases.” With an operating lease, the leasing company retains ownership of the equipment while you’re giving operating rights to it. This means the equipment is considered an operating expense for your business, rather than a purchasing expense. The most common type of operating lease is the fair market value lease (FMV). Typically, monthly payments will be lower with operating leases, but the amount left over at the end will be larger. Operating leases usually give you the option of returning the equipment to the leasing company at the end of your lease. You also have the option to buy it for its fair market value price, but in most cases, you’d be better off with a capital lease if you prefer to keep your equipment.
If a lease has a buyout option, that means that you have the option to purchase (buyout) the equipment at the end of your lease. Many types of leases are named for the terms of the buyout. For example, a fair market value lease grants you the option of buying the item at its fair market value. A $1 buyout lease? You guessed it; you can buy the equipment for a dollar at the end of your lease.
Why the enormous difference in buyout amounts? Remember, a capital lease frontloads the cost of the equipment into your monthly payments. The $1 residual is essentially just a formality; you’ve already paid for the item. On the other hand, with an FMV lease, you’ve only been renting, so the cost to buy is based on what a used piece of equipment that age would cost on the market.
There are a lot more obscure types of lease agreements that you may run into, but generally speaking, you can expect capital leases to have small, insignificant residual payments and operating leases to have larger, more significant ones.
Common Lease Terms
Equipment leasing comes with a lot of jargon. Let’s demystify some of it.
Lessor:Â The company financing your lease. Think “lender” but for leases.
Lessee:Â The person or company taking out the lease. Think “borrower” but for leases.
Term Length:Â The length of your lease. A typical tech equipment lease may run anywhere from a year to five years. The longer your lease, the more expensive it will be in most cases.
Interest:Â The amount you’ll be charged in excess of the value of the equipment. Rates usually start at around 6% and top out in the high teens, though some may be higher depending on your credit, the lessor, and the type of lease you select.
Fees: These vary by lessor and state. They may include supplemental charges like administration, restock, insurance, and origination fees.
Monthly Payment:Â The amount of money you’re expected to pay your lessor every month.
Residual:Â An amount required to purchase the leased equipment at the end of the lease. Generally speaking, the lower your monthly payment, the higher your residual, and vice versa. Capital leases have lower residuals than operation leases.
Leasing VS Buying Computers & IT Equipment
So why would you lease tech equipment instead of buying it? Let’s look at some of the advantages and disadvantages of leasing tech equipment.
Advantages Of Leasing
Easy Upgrading: Tech equipment becomes obsolete very quickly, which can make it a poor longtime investment. An operating lease may allow you to stay up-to-date on the latest technology without having to re-purchase every couple of years. This can help small businesses keep up with the technological curve.
Smooths Out Cash Flow: Breaking the cost of your equipment down into predictable monthly payments has its advantages, even if you are paying more over time.
Shipping & Installation May Be Covered: Unlike business loans, leases more frequently cover the full expense of factory-to-operational expenses.
No Downpayment: With the possible exception of having to make your first month’s payment up-front, the entry costs of a lease tend to be very low.
Disadvantages Of Leasing
More Expensive: Between interest and fees, it’s pretty much guaranteed that you’ll be spending more money on the equipment than you would if you have purchased it outright.
You Can’t Easily Resell: If you want to offload your equipment before your lease is over, you may run into some legal complications. Make sure you know your lessor’s policies before you try to transfer ownership to a third party.
Legal Complexity: There are a lot of different types of leases with a lot of different rules. Is the item an asset or an operating expense? Well, that depends on the type of lease you have! Are you responsible for maintenance and upkeep, or is the lessor? Again, it depends on the type of lease you have.
You Need Good Credit: Given the responsibilities that come with leasing, most lessors want to see a solid credit score
Advantages Of Buying
Tax-Deductible: As a business owner, you can write newly purchased equipment off of your taxes.
Cheaper: It’ll be a bigger expense up front, but over the longterm, you’ll have saved a good bit of money.
The Equipment Is Definitely Yours: Want to resell, modify, lend it to your cousin in Tallahassee, or smash it with a sledgehammer? You can! (Check your local laws regarding e-waste, though, if you take the smashing option.)
Less Complicated: Buying is simple. You exchange currency for ownership of the item. There’s not much fine print to sift through.
Disadvantages Of Buying
You Need Cash On Hand: Buying means paying the price of the equipment all at once. That means you have to have a decent chunk of cash in your reserves — or be willing to take out a loan. This can be a big ask for businesses that run on thin margins.
You’ll Be Stuck With Obsolete Equipment: Tech equipment isn’t the best long-term investment. Eventually, you’ll be stuck with obsolete gear that isn’t easy to get rid of. And on that note…
It Depreciates Quickly: Ever tried selling your iPhone four years after you bought it? Tech moves quickly.
Computer Leasing VS Buying: Which Is Better For Your Business?
There are advantages and disadvantages to both buying and leasing computers and IT equipment. Consider leasing equipment with a high turnover rate if you work in an industry where being on the bleeding edge is advantageous. On the other hand, if you have modest tech needs and can comfortably use the same gear for longer than five years, it may make more sense to just simply buy the equipment you need. There are additional considerations for businesses trying to smooth out their cash flows or otherwise apply their limited resources to maximum effect.
Don’t have the cash to buy outright but aren’t sure if a lease is right for you? Consider an equipment loan. Not sure where to look for equipment financing? Check out our Best Equipment Financing Companies. Just starting out and need equipment for your office? Try our guide on how to Get The Equipment You Need For Your Startup Business With A Loan Or Lease.
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This post originally appeared at How to Build a Minimally Viable Website via ShivarWeb
So you want to get your product/service/thoughts in front of an audience, and you need a website. Time to buckle down and create a massive, beautiful site, right?
When you’re launching anything, the most important goal is to get data. Without data, you can’t possibly make something as good as it can be — and that applies to your website, too.
You need data on what it takes to build & run the site of your dreams. You need data on who actually visits your site and what they do. You need data to decide what to do next.
One of the biggest mistakes business owners make when launching a website is starting too big and too well-designed (especially eCommerce sites).
You don’t need pages and pages of content or a fancy design. What you do need is a minimally viable website.
Here’s how to build one…
Define Your Goals
Before you do anything, you need to decide what you want to achieve with your website. What do you want people to do once they’re there? If you’re looking to make sales, what are your revenue goals?
This part of the process may seem counterintuitive — after all, this article is about creating the minimally viable product — but it’s key to building your site on the right foot.
Defining your goals upfront will help you know what to look for in the data you get and whether or not you’re on the right path, so don’t skip this step.
Choose Your Platform & Domain
Most business owners feel like their website has to use fancy tools and platforms to get the job done. Not so. In fact, a simple HTML template can be all you need (you can even host it for free with a Dropbox hack if that’s your thing).
If you’re into WordPress or some other website builder and can churn out a quick website, then go that route. Weebly and Wix both offer free plans on their subdomain.
The point here is to get your content somewhere quickly and simply but to also keep your options open for when you’re ready to make changes (and to track data).
Some companies like InMotion Hosting have a specific quick start setup service for $99 + hosting (which you need anyway). Companies like NameCheap will also bundle it with your domain.
A custom domain can be important – but remember that you can always change it. Your goal right now is data – not perfection. Go get a cheap domain from NameCheap or GoDaddy.
Set Up Analytics + Goals
Speaking of tracking data… the whole point of an MVP (or MVW in this case) is to capture data so you can find what works and what doesn’t. In order to be able to capture this information, you need to set up analytics and goal tracking.
There are a lot of options, but Google Analytics is the go-to solution (it’s also free).
The key is to make sure you have goals set up based on whatever action you want people to take. If you’re an eCommerce store, you need to be sure you have an eCommerce checkout set up. Make sure it’s a goal. Make sure the whole package is working correctly because you have to accurately track conversions (aka sales) – if you are using a minimally viable payment solution like PayPal or Gumroad – this might mean simply setting the thank you page redirect.
If you’re looking for email opt-ins, make that a goal. Set up any action you’re looking at as a conversion in Google Analytics for tracking. And like eCommerce sales, you don’t have to get fancy. This might mean setting your MailChimp thank you page redirect as the sign-up goal.
If you plan on marketing your website (which you should), you should also link Google Analytics to Google Ads and set up a retargeting audience with Google Analytics.
And lastly, you should set up a Facebook Ads account and place a retargeting (audience pixel) cookie on your website. And learn what exactly Google Analytics does.
Set Up Focus Pages
As I’ve already mentioned, you don’t need a 100+ page website on your first launch. When you’re creating a minimally viable website, you should focus on setting up a few landing pages where you can send traffic for conversion.
In some cases, this can actually be done with a single page.
Take this website: Fix the Electoral College. I built this with a single HTML file hosted on a Google Cloud account. I never wanted to build an entire website dedicated to the structure of American politics with all the security updates and information architecture needs — just a single, shareable resource. This single page website got clicks and shares from hundreds of key state legislators in a very targeted Twitter / Facebook campaign. Mission accomplished!
The goal is to create very specific pages (or a page) that visitors can land on and take action. If you can do that in one page — awesome! Do that. If you need more than one, then take that route. Just remember that this should be as simple and clear as possible and focused around whatever conversion you’re looking to measure.
Test, Test, Test
Once you’ve got your website up, it’s time to start testing and optimizing. The goal here is to keep what works and get rid of what doesn’t.
Keep in mind that everything you do will conform to the 80/20 Principle. I’ve seen lots of analytics profiles across a wide range of industries. In every single one, every metric conforms to 80/20.
20% of the products make up 80% of sales.
20% of content drives 80% of organic traffic.
20% of ad spend drives 80% of revenue.
When evaluating your website, keep your focus on the 20% that matters, and keep expanding the overall amount of opportunity. If you’ve never read much about the concept, check out the original 80/20 Principle by Richard Koch AND the follow-up 80/20 for Sales & Marketing by Perry Marshall.
Now that you’ve got your minimally viable website, it’s time to take some concrete next steps. Remember, this isn’t about more planning. It’s about action. The whole point of launching your MVP site is to get feedback so that you know what to do next.
Check out InMotion’s Quick Start service or NameCheap’s one-pager that will bundle with a domain purchase.
To get that feedback, you’ll need to get people to your site and taking action. Check out this guide to promoting your website (for free) to get started.
Once you’ve gathered data – you’ll need to set up a more permanent website with more options. You’ll want to explore my essential guide to eCommerce platforms or my WordPress website guide or my guide to website builders.