Monthly Archives: June 2016

Money-Black-Hole

Merchant Services Fees

You’re an expert in your field, and people used to persistently seek you out. But, things have changed and you just don’t yet see how technology can benefit your business practices. Sure, you may have the latest and greatest computers and super-fast Internet access, but you haven’t yet really sought out to understand and embrace technology for your business methods. Which would be okay if your progressive, tech-savvy competitors weren’t soaring past you.

But, they are.

Truth is, there are businesses out there that have figured out how to work around the system, and turn the tables with technology. They’re paying less for merchant services and attracting more customers.

While many business owners are reluctant to change, it’s time for a shift.

Let’s look at an example.

On average, merchant services generate over 3 billion dollars in fees every year. Most small business owners don’t know it, but they are paying an average of 6% in merchant service fees, just for the privilege to accept credit cards. Sad thing is, they think they are paying 3%, but once all the fees are properly factored into the equation, the figure is much higher.

Think of it this way, 6% in merchant service fees means:

  • $6 for a $100 transaction

  • $60 for a $1,000 transaction

  • $600 for a $10,000 transaction

  • $6,000 for a $100,000 transaction

Yikes. Small business owners are mindlessly trusting that these larger credit card processing companies actually care about their business, and are acting honestly and fairly. Well, let’s be real. They’re not.

Credit card processing companies regularly embed hidden fees, and make decisions on the behalf of unknowing business owners. They do the research, and are pretty pleased that you’ve decided to trust them so completely. In exchange for their decision-making on behalf of your business, they take a larger percent of your earnings than you ever signed up for. Much of the money you work so hard to make never ends up in your hands.

Some small businesses do a little better with an online merchant service provider, such as PayPal, where you’ll spend 2.9% plus $0.30 per transaction. But, PayPal isn’t the best solution. That’s still a lot of money, and they can choose to hold your funds for up to 6 months at their discretion, all while they accrue interest on your money.

But, there’s an even better way. Did you know that there is actually a way for you to make money from merchant service providers?

The Durbin Amendment

In 2010, an amendment was passed called the Durbin Amendment, placing limits on the fees that could be collected by banks for debit card transactions. Unlike credit cards, under the Durbin Amendment, big banks could no longer collect tremendous merchant service fees from debit card purchases. This means, that merchant service companies pay less to the banks when processing debit cards.

It would have been kind if they passed the savings on to small businesses, but they didn’t. Even though processing a debit card only costs the processing company about 1%, they still charge small businesses the same fees they would if it was a credit card, earning them a profit of up to 5% every time a debit card is used. It really adds up, especially in light of a recent study that showed that 60% of all online transactions are paid by debit card.

So, how can small businesses benefit from the Durbin Amendment?

By using a new online merchant service provider called Square Cash, and a cash back debit/credit card.

Square Cash

Square Cash is a simple to use merchant service platform, and you can get started in 3 quick steps.

  1. Download the “Square Cash” application on your smartphone. Note: this application is different that the traditional “Square” app.

  2. Sign up for a free business account. All you’ll need to sign up for a business account is a business debit card to link to the account.

  3. Choose an online “Cashtag” website to accept debit card payments.

  4. Give your customers your “Cashtag” website.

Now, when customers visit your “Cashtag” website, they will be prompted to enter their debit card number. You’ll pay a flat rate of 1.5% for all transactions that are processed through “Square Cash,” and your money will be available immediately for withdrawal from your business bank account.

Cash Back Debit/Credit Card

Then, the next part of the savings-equation is to open a cash back debit/credit card. I highly recommend either the Citi Double Cash back rewards card, or the Fidelity Visa Signature card, as they offer 2% cash back on all purchases.

This is good news. Think about it, if you’re paying 1. 5% to process all of your transactions, and are getting 2% cash back each time you make a purchase on your card, you are effectively turning the tables on credit card companies and profiting. 5% by accepting payments, rather than paying out 6% or even 2.9%.

Don’t qualify for the cash back credit card? No problem. PayPal offers a business debit card that offers 1% back on all purchases without any type of credit check, so all you need to do is transfer your earnings from your business bank account to your PayPal business account and use the PayPal Debit Card to make all of your purchases. While you won’t profit from this, you will still cut the fee that you’re paying down from 1.5% to.5%, which could potentially save you thousands of dollars every year.

At this point, you’re intrigued. Well, there’s more where that came from. Learn valuable tactics to take back control of your business by signing up for my free e-newsletter.

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Why It Might Be Time for a Virtual Assistant

Does this sound like your typical day?

You start with scanning through and ultimately answering a slew of emails that somehow collected through the night. Then, you move onto accounts payable, followed closely by – your favorite – accounts receivable. You’re starting to feel buried just as the phone rings, that delightful sound. Now, you’re officially sidetracked. Something’s wrong, and you’ve got to put a fire out.

Once you figure out a solution on the fly, you settle back in to your to-do list, and decide to tackle researching the best value for that new receipt scanner you need. And then, it happens. Before you know it, the day is gone and you weren’t able to focus on your business. You weren’t able to get anything of real substance done because your day-to-day is flooded with distractions.

Sure, an assistant would be great, but you wonder if explaining tasks to them would be more time consuming than just doing them yourself. And, you wonder how you could justify one or two on-staff assistants when you consider your ever-growing, already-overwhelming overhead. Even if you can justify the cost, the thought of training them is daunting, and the idea of them wasting time at the water cooler or perusing social media on their smartphone is downright infuriating.

I know, crazy – enough to make you want to shut down for the day and take a brisk walk.

But, what if there was a way to have an assistant only when you needed one? What if there was a way to pass off those smaller tasks that keep you from growing? What if those tasks could be taken care of without all the paperwork and interoffice politics that make hiring such an irritating task?

Well, there is.

Using virtual assistants can be a great alternative to a centrally located office with local employees. Typically, many have viewed hiring a virtual assistant as risky in the past. Why? Truth be told, many are scared simply because it’s something new. People fear unknown territory and hesitate to step out, especially when it comes to their small business. Rightfully so, your business is your life and it’s all about calculated risk.

But, have you ever considered what risk you’re taking by trying to do it all by yourself?

If you know what you need and can articulate the task, there is a virtual assistant out there that is ready and willing to help. Hiring a virtual assistant is a great way to have someone when you need them and a great way to grow your business – without all the risk of taking on a full time employee.

Still don’t believe me?

Well, consider this. You hire Sally to work in your office. Sally wants to be paid hourly and is looking for full time employment to work as an assistant for you. She is more than qualified and you know a part timer is probably not going to be as committed. You need to consider that she will be paid hourly whether you have work or not for her, she will need health insurance, you will need to contribute to her social security, taxes, take care of employment paperwork, manage her, follow up with her on tasks, train her on the way things are done at your office, and ensure that she is doing the job right.

But, here’s the real kicker. If Sally turns out to not be the best and brightest that her resume promises, you’re going to have to deal with hiring someone else to pick up the slack, let her go, or deal with discipline in the workplace. These three options are not really appealing when you consider that you originally hired an assistant to lighten your load.

Virtual assistants work on an as needed basis, and require minimal paperwork. In addition, these people are experts, and even if it’s not working out, you can move quickly to replace them, without the emotions and endless paperwork.

Why pay someone to sit at a desk and collect during a slow season? Why get overwhelmed when it’s busy season and you need someone else? You can always call on a trusty virtual assistant, or two.

That being said, virtual assistants aren’t always the replacement for an on-site person. But, they can significantly lighten your load and allow you to propel your business without much risk. The key is knowing your needs, properly articulating tasks, and communicating your expectations right from the get-go.

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How Low Interest Impact Small Business

Ever wanted to fire your bank?

If you’re like millions of business owners, you likely look at the bank as a necessary frustration. You drive up, give them your money, and quietly accept their wait times and lofty fees.

Most importantly, it is the interest rates that most affect small businesses, whether the owners understand the real implications of the numbers or not. So, why are interest rates today so low? To answer that question, we’ll have to look at the Federal Reserve. The Federal Reserve oversees banking in the United States, and is supposed to protect American consumers from unfair banking practices. But, it turns out, the Federal Reserve is actually intimidated by today’s big banks, and is concerned that they do not have the infrastructure in place to protect the country from the banks’ nefarious methods. In response, the Federal Reserve acts in a fearful, cowering manner, rather than trying to fix the broken banking system. Ultimately, it’s up to American consumers to look out for themselves. Even though you have so much already on your plate as a business owner, add this banking concern to your list of worries.

It wasn’t always this way.

Back in the day, if a business owner put $20,000 into a savings account, a healthy 5% return would yield them $1,000 a year. Business owners could then use that $1,000 for working capital to run their business better, or to head out on a much-deserved vacation.

Today, we are living and working in a low interest rate environment. In today’s banking culture, most banks, like Bank of America, Chase, PNC, and Wells Fargo offer customers a pathetic .01% interest, which would give that same small business owner mentioned earlier about $2.00 a year on that $20,000 they deposit. Two dollars. That $2.00 might be worth a coffee at a fast food joint. And while many online banks offer 1%, the outlook still isn’t great. These banks get the privilege of using your money for their own gains, and don’t even think of paying you fairly for it. They’re just getting richer, and basically robbing customers of their much needed vacations and potential working capital. And, strangely, nobody is really doing anything about it. Getting frustrated, yet?

To banks, your money – sitting in their bank – is theoretical. But, for you and me, it’s completely real.

Now, there is an alternative: a concept known as self-banking. Let’s cut to the chase – there are secret savings accounts that almost no one knows about from companies like NetSpend, that offer 5% interest. Yes, that’s a 5 with no points before it. Five. While NetSpend is certainly not an ideal company, with their lofty fees and enticing accounts meant to draw you in, customers can benefit from using this tool, depositing money in the savings account, and leaving it alone. NetSpend is a company with over 10 million customers, who tries to reel people in with their generous savings accounts, expecting that customers will end up paying them much more over their lifetime in ongoing fees. So, while this account is attractive and useful, if you aren’t certain on how to avoid the pitfalls, NetSpend will try and trap you the best way they can, and you certainly won’t benefit in the long run.

By utilizing hidden online banking companies, rather than relying on more traditional avenues, you can finally take the power out of their hands, fire them, and put yourself back in control of your financial destiny. Problem is, you’re left to research this on your own, and take some calculated risks. Unless, of course, you contact me. And I’ll be happy to get you pointed in the right direction.

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