The Ultimate Guide to Choosing a POS System
A POS system is vital to running a business today, as it helps you accept and process various payment methods quickly and securely. In fact, 68 percent of businesses are taking advantage of the benefits of point-of-sale systems to handle their transactions.
But point-of-sale solutions today are more than just about transactions. They can help with every aspect of your business, from invoicing and inventory to analysis and accounting. There are many systems on the market to help business owners, but which is the right option for you?
This guide will cover all you need to know and sift through the information to help you choose the right system for your small business.
WHY YOU NEED A POINT-OF-SALE SYSTEM
A point of sale is simply where sales are made. On a micro level, this is the area where a customer completes transactions. This encompasses the hardware, software, and support that manages a transaction.
Traditionally, this would be a cash register. But you’re not running your grandmother’s business. In today’s business world, POS systems aren’t stationary, their mobile, cloud-based networks with comprehensive business functions. It’s a system that makes it easy for you to accept various forms of payment from your customers.
In the old days, cash was king, but that’s no longer the case. According to a recent study, the number of credit card payments grew 10.2 percent in 2016 to 37.3 billion with a total value of $3.27 trillion. And it’s not just plastic, with the emergence of digital wallets, such as Apple Pay and Android Pay, by 2020, it's expected that mobile payments will represent $503 billion in transactions. Here are some other things to consider:
- • Consumers and businesses will make 841 billion noncash transactions globally in 2023, a 46% surge from 577 billion in 2018
- • In a recent survey, 1 in 4 participants overall most often go cashless
- • The most popular mobile wallets accessed in-store by U.S. users as of April 2017 were Apple Pay and PayPal
A point-of-sale system gives you the ability to accept the form of payment your customers prefer, and the stats show consumers are moving away from cash. In business, making the buying experience convenient and easy for customers keeps them coming back, and consumers find noncash transactions more convenient.
In that sense, a modern point-of-sale system is mission critical to your business. Other reasons you should consider investing in a system include:
It gives your business more credibility
You may be just starting out, but you don’t have to operate like a “ma and pop” establishment. Having a system that accepts several types of payments establishes credibility with customers as soon as they walk in your store.
Stay up to date with modern technology
Technology moves fast, and when you have the latest technology, it helps you stay competitive in your industry and even helps even the playing field with larger competitors. For example, a POS system gives you the ability to accept EMV chip cards, which is significant when you consider 77 percent of consumers have chip cards and about 40 percent of merchants are able to process them.
Track and Analyze Sales Simply
Modern-day POS systems are more than transaction portals. They also analyze sales and give insights into your business; helping you understand consumer habits, capture customer data, track inventory, and analyze employee productivity. These tools equip you for success in whatever your business venture may be.
POS systems are essential to processing credit and debit cards and improving your business operations. It’s no longer a nice-to-have tool; it’s a must-have tool!
UNDERSTAND YOUR NEEDS AND WANTS
Now that you know a point-of-sale system is essential to your business, now you need to figure out which one to choose. So where do you start? It begins with figuring out your business needs and wants. Before you can look externally for a POS system, you need look internally at your business by asking yourself some questions:
- • What is the state of your business?
- • What are your business struggles?
- • What functions are you performing that a POS system can help?
What is the state of your business?
The stage of your business plays a huge role in determining the type of POS system you choose. Are you opening a new business? Are you looking to update from an old cashier register? Are you switching from a different POS system? With each scenario, you may need to take a different approach to meeting your business needs.
If you’re a new business owner you want something that is simple, easy to use, and will add a level of efficiency to your business. If you’re upgrading from old POS equipment, consider how you currently run your business and how the new system will not only help with transactions, but other processes like tracking sales and eliminating discrepancies between cash register reports and matching bank account balances.
If you’re switching from another POS system, think about what’s not working for you with your current system. Also, consider how your business may expand and choose a system that can easily grow with your business.
What are your business struggles?
Every business owner has some pain points, especially new entrepreneurs. But despite this, small business owners remain optimistic. According to the National Small Business Association, 80 percent of business owners are very or somewhat confident about the future of their business, and 60 percent believe that there will be growth opportunities in the coming year.
A POS system helps merchants achieve a new level of success by addressing some of the problems it’s facing, and some POS solutions can be customized with software that the merchant needs, instead of a one-size-fits-all version that might create additional work for time-crunched business owners.
What functions are you performing that a POS system can help with?
Small business owners are known for doing it all. According to author and serial entrepreneur Andrew Griffiths, overwork is the most common cause of burnout for business owners.
Many times you serve as the CEO, accountant, marketing director, and HR director. That’s too much to handle. Think of some tasks you need to automate and consider which POS system can help you accomplish that.
Here are few tasks a POS can help you automate:
- • Accounting: POS solutions integrate directly with accounting systems and can help automate aspects of tax preparation.
- • Supervising employees: Systems that help with creating schedules, making payroll, handling time-off requests and shift trades.
- • Managing inventory: Staying on top of your inventory is a labor-intensive task. Leverage POS technology to track sales, returns, and restocking.
- • Analyzing the competition: Get solid data to build your business with a system that provides charts, graphs, and heat maps help you compare sales to nearby competitors and understand the health of your company in relation to industry standards.
THINGS TO CONSIDER
Once you’ve looked internally at your business needs, it’s time to start examining the solutions available to meet your needs. As you start to shop for a POS system, here are some things you need to consider:
Ease of Use
You shouldn’t have to have an engineering degree to set up and use the POS system. It should be user-friendly. The system should be easy enough to use that you don’t need to consult your manual regularly or call for tech support all the time.
The size and type of business determines what type of hardware you need. If you’re a small retailer, you may need a tablet, card reader, and cash box. If you have a larger operation, you may need terminals, receipt printers, barcode scanners for inventory, or more.
POS systems start with the software, so examine its capabilities and costs to make sure it’s a fit for your business.
Does the system integrate with tools and solutions that you’re already using? Many POS systems have software that easily fills in the gaps of processes, but if you prefer a solution for something like accounting, consider if the system integrates with third-party vendors.
Does the system automate processes and reduce manual inputs? Look for a system that can automate as much as possible, such as using data from your logistics and supply chain to update inventory and order information.
Security is also essential. Sixty-one percent of cyber attacks hit small businesses. POS users need to be confident that every transaction is protected with end-to-end encryption and data tokenization, and that the system remains Payment Card Industry (PCI) compliant.
No matter how technically savvy you are, it’s good to have access to technical support. Whether you run into issues or need help setting up the system, look for a POS that provides support (preferably 24/7 support) with email, live chat, and phone availability.
Obviously you need to consider the cost of the POS system. Take into account the hardware in your budget. The type and number of terminals you purchase should align with your business’ needs. Some companies, like Clover, sell all-in-one payment processing systems. Others sell pre-configured packages or kits and a la carte items (like readers for magstripe and chip cards, stands, cash drawers, and printers) that must be combined with an iPad or Android device.
Also consider the operating costs, such as card processing fees. Typically, these are a small percentage of the total purchase price, plus an additional, nominal flat fee. If a card is manually entered (versus swiped or dipped), expect the processing fee to be slightly higher. Opt for a POS provider that gives you the ability to choose the credit card processor. Otherwise, you could be stuck paying higher fees to the processor of their choosing.
POS systems boast many types of features in addition to accepting payments, such as inventory tracking, customer management, invoicing, returns, employee scheduling, and analytics. Make sure the system you choose has all the features your business needs.
It’s not all about the product, it’s also the company behind it. When you purchase a POS system, you’re also doing business with the company. Here are some question to consider about the POS provider:
- • Is the company financially viable? You don’t want to pick a company that is struggling financially and may be out of business within a year
- • Is POS their primary business? A company that focuses primarily on POS tends to have more expertise and commitment to their solution
- • What experience do they have serving businesses like yours? Consider whether the company is used to helping businesses like yours, if not, it may be a red flag
- • Is the company a provider or reseller? Providers tend to have a better relationship with business owners and provide better merchant support, quality and expertise than resellers
- • Does the company have positive or negative reviews? Research what others are saying about the company, its service, and its product when considering a POS
These are a lot of things to consider, but they are essential to doing your due diligence in finding the right system for your business.
PICKING THE RIGHT FIT FOR YOUR BUSINESS
Now that you’ve considered all the features and elements of a POS system, it’s time to decide what solution is best for your business. The type of business you have as well as its size and operations can help make the determination for you.
Type of Business Determines Type of POS
Operating your business effectively and serving customers means something different depending on the t ype of business you run. A coffee shop is run different than a food truck, and a clothing boutique has different needs than a construction contractor.
Your POS system should cater to these differences while also matching up with your business’ physical space.
You’ll probably want a traditional set-up with a full-service POS if you have a retail store, salon, dry cleaner, or quick-serve restaurant such as a pizzeria. Consider a countertop POS system, which are available in various sizes and are sleek and take up less space than traditional cash registers.
A single terminal is sufficient for most stores, but if you have a larger space or if you have a surge of patrons during specific times such as lunch, it might be better to get more than one terminal to handle such traffic.
If you run a food truck, pay-at-table restaurant, or are a vendor at festivals, a mobile POS might be the best choice for you. A mobile POS gives you the flexibility to process payments right at the point of sale instead of making customers wait in line. Faster service means happier customers.
What’s Your Budget?
As mentioned earlier, consider the cost of the system when determining the right POS system for your business. Cloud-based POS solutions usually have tiered pricing models, where cost depends on the number of stores, customers, products, terminals, as well as features. Examine the tiers to see what you need and the potential ROI on your investment.
And don’t forget to take into account the processing fees as when mentioned earlier.
Can You Scale Your Business Easily
Ideally, your business won’t remain flat. It will grow. Make sure you consider your needs one, five, and 10 years from now. Think of how fast you expect to grow and let that help determine your POS needs. Can you easily add features to the POS? What’s involved with upgrading and what’s the cost? As a business owner, you need to constantly be thinking ahead, so let that aid you in your decision making process.
Get References from Other Businesses
Once you’ve narrowed down your choices, find out what other businesses are using those same solutions. You can ask the company for references or ask around the local business community about the POS they use. When looking for references, make sure they are using the software version you are evaluating.
Get a Trial or Demo of the POS
Try before you buy. As much research as you do, nothing beats seeing the solution in action. Most POS vendors offer demos or free trials so you can test out the software.
A trial lets you check out all the features and benefits and see how it all operates. Make notes of any problems you have as well as what you like or don’t like about the system. Take notes and follow up with the provider to ask questions.
Taking these steps will help ensure you find the right POS for your business.
MAXIMIZE YOUR POS TO RUN YOUR BUSINESS
While your POS system will meet your basic needs of sales and inventory, it is so much more. Once you decide on a system, look into ways you can get the most of it to improve your business.
Many systems include extra features, add-ons, and apps that boost your business. You may want to keep it simple in the beginning, but once you’re comfortable, explore all the system has to offer. Here are some capabilities to use to your advantage:
Explore Business Insights
Data analytics are a dynamic part of modern POS systems. While this used to be the realm of only medium to large business, it’s now possible for small business owners like you to take advantage of these insights.
Explore the data analytics the POS offers. Ideally, your system should create detailed sales reports complete with charts and graphs. It also should have an easy-to-comprehend dashboard that provides sales, cash, and inventory data in real time.
The main benefits of these types of insights include:
- • Uncover trends: Data can unlock meaningful trends in sales, such as who’s buying what, and when and where they’re buying it
- • Gain a competitive edge: Analytics keeps track of competitors performance compared to yours, measuring your sales versus industry standards
- • Expand your footprint: Get hard data on when’s the best time expand your business and where you should expand it
Discover Apps and Add-ons
Just like there are several helpful smartphone apps that make your life easier, there are apps for your POS system that help you run your business. Check to see what apps and add-ons your provider offers. For example, Clover has a large App Market consisting of free and paid apps, which include apps created by Clover and third-party apps that integrate with the POS.
As you use the system, ask your employees for feedback on how they like the system and other ways to maximize it. Also, don’t let the relationship with your provider end at the point of purchase. Stay in touch with them about new products, features, and ways to maximize your business with your new POS.
A POS system is one of the most important investments you can make in your business. Make sure you consider all aspects of your business and where it’s heading to find the right fit for you. A good POS can help you save time and money, as well as help you run your business better.
Clover can tailor a POS solution to meet your needs and help you start processing transactions securely while providing customer insights, business intelligence, and essential sales data. We help you get paid, sell more, and run your business better. Find out how you can get started today.