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Customers Won't Pay? How to Choose a Collection Agency

Posted: 24 Apr 2019 04:27 PM PDT

Collecting debt on delinquent accounts can be difficult, especially if your debtors move without providing a forwarding address. The longer your accounts remain delinquent, the less likely you are to recover the debt. In situations like these, hiring a debt collector to recover funds on your behalf may be your best option. 

Collection agencies, not to be confused with debt buyers, are most commonly paid a percentage of any outstanding funds they recover on your accounts, but they don't own the debt. When they collect a payment, they hand the money over to you, minus a certain percentage in fees. A standard collection agency will offer services, such as formal demand letters, phone calls and emails; however, top debt collection agencies provide additional services, like skip tracing, litigation and online portal access. 

When comparing collection agencies, it is important to analyze more than just the services offered. An agency's reputation for how it treats your debtors is equally important, since they are representing your business. There are strict laws surrounding collection efforts. Any reputable agency will follow those laws and treat your debtors with dignity and respect. 

When looking to hire a collection agency for your small business, consider the collection type (commercial collections, consumer, etc.), industries and locations they serve. Not every agency will be a good fit for your business. Below you can learn more about the agencies we selected, the features of each one, whether it services commercial collections (B2B), consumer collections (B2C), or a combination of the two. 

Editor's Note: Looking for a collection agency for your business? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have one of our vendor partners contact you about your needs.

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Collection Agency Best Picks

Best Collection Agency for Small Business: Summit Account Resolution

Summit Account Resolution (Summit A•R) is our choice as the best collection agency for small business because of its customized approaches, transparent pricing structure and extensive services available. It is an ideal collection agency for any small business seeking repayment on accounts that have been delinquent for up to two years. 

Summit A•R is great for any small business, as it provides collection services for both consumer (B2C) and commercial (B2B) collections. They collect within a range of industries throughout the United States, including medical, dental, employee reimbursement, consumer and court-ordered obligation, child support, spousal support and all commercial industries. If you are seeking collections in Hawaii, Nevada, New Mexico, New York, and North Carolina, you'll need to speak with a Summit A•R rep. These states have specific laws that can complicate the debt collection process. 

This agency charges on a contingency fee basis. Collection rates vary depending on collection type, size, and age. They average between 7.5 and 50% for each account, with consumer rates typically around 35% and commercial rates, which are slightly cheaper. The agency requires a $50 minimum debt to be collected on each account. In addition to standard collection services, Summit A•R provides accounts receivable consulting, skip tracing, accounts receivable recovery assistance and litigation. 

Summit A•R has an online portal on its website, and when you log in, you have immediate access to your delinquent accounts. You can check an up-to-date status of the accounts you've submitted, and you can submit new accounts to Summit A•R. When you sign on with Summit A•R, you receive an account manager as your dedicated point of contact. This agent will answer any questions you have, as well as treat your debtors with respect and dignity. 

You can read a complete review of Summit Account Resolution on our sister site, Business.com. 

Best B2B Collection Agency: Prestige Services Inc.

Prestige Services Inc. (PSI) is our choice as the best B2B collection agency due to its extensive features and excellent customer service. It provides standard commercial collection agency features – precollections, demand letters, final notice forms – as well as advanced techniques like skip tracing, litigation and an online portal. 

Because commercial and consumer debt collections are typically handled differently, it is ideal to use an agency that specializes in one of these areas, rather than both. PSI specializes in B2B collections, and it collects debt repayments throughout the United States, Canada and Mexico. 

PSI requires a $200 minimum collection balance and charges on a contingency fee basis. The agency's rates are generally 5 to 10% lower than many competing agencies. For accounts with a balance of $200 to $3,000, PSI's rate is 25 percent. For accounts with a balance ranging from $3,000.01 to $20,000, the rate is 22 percent. Rates are negotiable, and volume discounts can also be applied. Litigation fees are extra and can go up to 40 percent. PSI provides timely, efficient collection services; according to the agency, they typically reach a resolution with the debtor within the first 45 days after collections commence. After your debtor pays PSI, the agency releases an end-of-month remittance check to you, complete with payment details. 

On its website, PSI features two customer portal options – the placement portal and the status portal. Within the placement portal, you can get a free quote on a past-due account you'd like to turn over to PSI, and you can submit new accounts to PSI. The status portal provides live status updates for each account you've submitted. Within each status update, PSI includes detailed notes about the interactions between the collection agency and the debtor. 

You can read our full review of Prestige Services Inc. on our sister site, Business.com.

Best B2C Collection Agency: Rozlin Financial Group Inc.

Rozlin Financial Group Inc. (RFGI) is our choice as the best B2C collection agency. It offers all the necessary features and services a business needs to recover payment on delinquent B2C accounts. It provides its clients with online account access (with up-to-date status reports on its collection efforts), great reporting and customized approaches to debt recovery. Additionally, it uses advanced skip-tracing techniques to locate debtors, and as a last resort, it can forward on your claim to attorneys for legal action. 

RFGI services dental and medical practices, hospitals, schools, real estate and property management companies, utilities, retailers, and lending service providers (credit cards, auto loans, mortgages, etc.). 

RFGI's fees are based on how much money they recover from the debtor. If they are unable to collect on an account, there is no charge. RFGI's requires a minimum of five accounts. To request a price quote, you can call RFGI toll free, or you can complete a form on the agency's website to have a representative contact you. 

RFGI collection agents are required to participate in active training to stay up to date on the best collection techniques. This allows them to provide a tailored approach for each of your consumer collection accounts while complying with the latest laws and regulations. 

Debtors can pay RFGI via check, credit card or through an online payment portal. Once RFGI receives a payment, it mails you a check. If your debtor pays monthly, RFGI will send you a remittance check each month. If your account requires legal action, RFGI can refer your account to the appropriate parties for litigation.  

You can read our complete review of Rozlin Financial Group Inc. on our sister site, Business.com. 

When to Hire a Collection Agency

When it comes to collecting outstanding debt, generally, the more time that passes, the lower the chance you have of recouping the money. Most companies send past-due accounts to a collection agency when they are between 90 and 120 days past due. If you wait longer than 120 days, you are far less likely to ever recover the debt. 

It's time to start thinking about hiring a reputable collection agency when: 

  • New customers do not respond to your first attempt to collect the debt. When you do not have a payment history with the customer, there's a greater chance they will refuse to pay.
  • You've agreed to a payment plan, but the customer doesn't follow through. Customers who still won't pay after you've both worked out a payment plan are unlikely to pay what they owe you.
  • A customer completely denies responsibility for the debt. Unless you enlist the help of a collection agency, these debts are rarely recovered.
  • The customer makes unfounded complaints about your business, product or service as an excuse not to pay. Most of the time, these complaints are just an excuse to get out of paying the debt.
  • The customer has a history of financial irresponsibility.

If you have a delinquent account that matches any of these descriptions, there are certain steps you can take before hiring a collection agency. First, reach out to your debtor multiple times, in a polite but firm manner. If phone calls and emails don't work, send a formal demand for payment letter. This letter details the payment that needs to be met and is often required if you eventually file suit against the debtor.

If you have exhausted all of your options and aren't getting anywhere with a delinquent customer on your own, further attempts to collect the debt are better left to a professional agency that knows the appropriate way to collect debts while adhering to the Fair Debt Collection Practices Act. They may recover at least a portion of what you're owed, if not all of it. 

Choosing a Collection Agency

There are more than 4,000 collection agencies in the United States alone. Some handle consumer debt collection (B2C), while others specialize in commercial debt collection (B2B). Each collection type is investigated differently; however, many agencies handle both.

Determine if they fit your needs

Not all agencies will fit your specific business needs; it is important to carefully assess which agencies will. Some agencies cater to businesses of certain sizes (small business versus an enterprise), some focus on a specific region (local, national or international). Beyond basic collection efforts, some agencies provide additional services, such as billing, precollections, credit reporting and account receivables consulting. It is important to identify if an agency is well-suited for your business and will provide all the features you need.  

Determine if they specialize in your industry

Some collection agencies, primarily consumer agencies, specialize in specific industries, such as healthcare, insurance, utilities, credit cards, mortgages or auto loans, while others service a range of industries. If you provide a product or service within a very specific industry, the experience a collection agency has in that industry can be the tie-breaker between two reputable collection agencies you are considering hiring. 

It is important to hire an agency with an established track record of successful collections in your industry. The agency should be familiar with the terminology in your industry as well as state and federal rules and regulations governing your industry, if applicable. If you're in the healthcare field, for example, the collection agency you hire must be well versed in insurance requirements, medical terms and important laws like HIPAA. 

Find a Reputable Agency

Here are some tips to help you pinpoint a reputable, effective agency. 

  • Ask for referrals from your attorney, accountant or trusted business associates in your industry. Go beyond just asking for agency names. Find out why the person is recommending that particular agency. Does it have a high success rate? Are they known for their strict adherence to laws?
  • Search the directory of the Association of Credit and Collection Professionals (ACA) to find a member agency licensed in your city or state. ACA International is a nonprofit that establishes ethical standards for the industry and requires that its members adhere to them.
  • Check the Better Business Bureau (BBB) for ratings on the collection agency you are considering. One or two complaints can be a fluke; multiple complaints are a red flag.
  • Make sure the company is state licensed and/or bonded, if applicable. Many states require one or both.
  • Find out where the agency is licensed. If you only do business locally, an agency that is licensed only in your state is fine. If you have customers across the U.S., find an agency licensed in all applicable states.
  • Determine whether the company is insured. Errors and omissions liability insurance (E&O) is often a sign of a reputable agency. E&O insurance provides coverage for claims brought by consumers for improper conduct, such as harassment. In many cases, that coverage extends to your business. While E&O insurance is not required by federal or state laws, it's a sign of good faith.
  • Visit the collection agency. Before you commit, sit down with the collection agency to learn more about them. There's a lot you can tell about whether the agency is reputable by talking to them and how they handle delinquent accounts. Ask to see proof of results: What percentage of debts have they successfully collected? Find out which tactics and technologies the agency uses in its collection efforts. Ask for references and check them. If the company doesn't seem like a good fit, trust your instincts and move on.
  • Don't worry too much about size. A large, national firm is not necessarily a better fit than a small, local one. It depends on your needs, the agency's strengths, its reputation and its track record.
  • Properly trained collectors are crucial. Agents should be experienced and skilled negotiators. Find out if the collection agency's employees receive regular education and training. Courses are available through ACA and other membership organizations. If possible, arrange to listen in on a few calls before committing to a collection agency. 

Fair Debt Collection Practices Act

When choosing a collection agency, integrity and reputation are among the most important considerations. A company that uses dubious methods to collect debt damages your reputation, too, costing you current and future customers. In worst-case scenarios, your company can face litigation for a collection agency's illegal practices, even if you were not aware of its actions. 

All consumer collection agencies are required to comply with a federal law regulating the industry known as the Fair Debt Collection Practices Act (FDCPA). It's important you know the law so you can hire a collection agency that abides by its precepts and avoids FDCPA violations. 

Under FDCPA, collection agencies: 

  • Cannot call debtors before 8 a.m. and after 9 p.m., unless the debtor has agreed to it beforehand
  • Cannot call at inconvenient places. For example, if the debtor has requested to not receive calls at work, collectors can no longer call a debtor's employer
  • Must honor letters requesting that contact concerning a debt cease
  • Must contact a debtor's attorney if the debtor has one
  • Cannot contact third parties (including family and friends) more than once. They can only contact the third party to find a way to contact the debtor, and they can't state the consumer owes debt
  • Must send the debtor validation and verification of debt
  • Cannot threaten harm or violence
  • Cannot threaten garnishment, seizure of property or other legal action unless the agency is intending to take action (and is legally allowed to take that action)
  • Cannot make false statements, such as that the debtor has committed a crime or that the collector is an attorney
  • Cannot send documents that look like court or legal documents but aren't 

FDCPA only applies to consumer debt, not debt that someone accrued while running a business.

Many, but not all, states require collection agencies to be licensed and/or bonded. Always find out what your state requires and check whether the collection agency you're considering is compliant. While membership to ACA International is not mandatory, it does mean the agency has been vetted. 

If this is a commercial or B2B debt, look for a collection agency certified by the Commercial Law League of America (CLLA) and one that is a member of the Commercial Collection Agency Association (CCAA). Like ACA International, both require commercial collection agencies to follow a strict code of ethics, proper accounting principles and to be bonded. 

Aside from the lack of proper licenses and certifications, another red flag is whether the service has been sued. It's usually easy to uncover past (or current) lawsuits with a simple Google search.

Debt Collection Fee Structures

There are many factors that determine collection agency fees, including the size of the debt portfolio, the type of work required to collect the debt, the age of the account, the agency's experience and more. 

There are two main types of fee structures. The most common type – a contingency fee – is a form of tiered pricing, that only applies when an agency collects. The less-common type of fee structure is a fixed rate, or fixed fee, that is charged upfront.

Contingency Fees

Contingency fees are charged as a percentage of collected debt, and they are typically negotiable, especially for accounts that have a significant balance that is owed. Contingency fees, on average, range anywhere from 20 to 50% depending on the size of the debt and the age of the delinquent account. Some agencies display their rates on their websites. Most, however, require you to contact the firm for an exact rate on your accounts. 

The lowest rate doesn't always mean the best results. Pay attention to the return rate. If you pay a 25% fee on a $1,000 debt and the agency collects only $300, your return is $225. However, if you pay a 35% return rate and the agency collects $500, you reclaim $325. Talk to agencies but also do your due diligence (checking references, looking up customer reviews, etc.) to see how well an agency performs in recouping debts and its return rate.

Fixed Fees

Although it's not as common, some agencies charge a fixed fee for collections. The fee is paid upfront, and you keep 100 percent of what funds the agency recoups for you. An agency will typically only agree to do this if the debt is less than 90 days old – otherwise known as precollection – or just over 90 days old. This rate structure is rare, but it can save you money on collection fees if you are seeking collection on newly delinquent accounts. 

When assessing which fee structure is right for you, carefully consider the age, volume and breadth of your accounts. If you ask for a quote over the phone, request that the agent send you an email of the quote for future reference. Keep in mind, too, that many agents may negotiate on pricing if you ask.

How Collection Agencies Use Technology to Recover Money

The best collection agencies utilize a number of tools, such as technologies, partnerships with other agencies and attorneys, and a highly skilled and trained staff, to recover money owed to your business. 

Here's more about some of the tech they use to locate debtors and recoup money owed to you: 

  • Skip-tracing services locate customers who are hard to find. Typically, agencies consult databases that allow the collection firm to find debtors who have moved without leaving a forwarding address. Many agencies offer this service, but some provide advanced features that allow them to find even the most hard-to-locate people. If an agency does not offer skip tracing, it will have a much harder time finding debtors who have moved or fled the state, and the chance of you recovering any money is very slim.
  • Today's tech goes beyond phone calls and snail-mail letters; collection firms work with debtors to negotiate payments. These strategies appeal to younger debtors and those who are uncomfortable discussing their payment obligation over the phone.
  • Algorithm-based collections tailor collection strategies based on the debtor. Collection agencies are able to build a profile to better understand the debtor and the right way to resolve the debt. Often, email is the first form of communication versus a formal letter.
  • Online access allows you to quickly submit new delinquent accounts, monitor the status of current accounts, communicate with the agency and run reports on the status of your collections. This is especially helpful if you have multiple past-due accounts that need to be collected on and where time is of the essence. 

How to Work with Your Collection Agency

You want a collection agency that is a partner, not just a contractor. To that end, you'll need to invest effort into managing the relationship. The agency should be willing to meet face to face periodically to review the status of your accounts, and they should promptly return phone calls and emails, ideally within one business day. 

There's work to do on your end as well. To boost your chances of recovery money rightfully owed to you, provide the agency with as much information about the debtors as possible, including: 

  • Names, addresses and telephone numbers
  • Cell phone numbers and email addresses
  • Names of the debtor's spouse, friends, relatives and neighbors
  • Information about whether the debtor has responded to your debt collection efforts, and if so, how
  • Details about the purchase or transaction, including the date
  • Any paperwork related to the transaction, including contracts and credit applications
  • Nicknames, maiden names and aliases 

The more information the agency has, the more money you collect.

Vendor List

Here is a full list of collection agencies and a summary of what each company claims to offer. This alphabetical list also includes our best picks, which are marked with badges. 

Account Management Systems – AMS collects commercial debts. Based out of Tampa Bay, this debt collection service collects debts nationwide, charges no upfront or sign-up fees, and only collects money if they recoup your debts. https://www.amscollects.com/ 

Alexander, Miller & Associates LLC – Alexander, Miller & Associates is a national agency that specializes in large-balance collections. It offers demand letters, commercial credit reports, onsite investigations, prelitigation services and skip tracing. The vendor states it has collectors who specialize in trucking transportation and freight, wholesale seafood and produce, restaurant supply, and heavy equipment rental. https://www.amafirm.com/ 

Asset Compliant Solutions – Asset Compliant Solutions is a commercial collection agency that offers standard collection services as well as 45-day delinquent secured collateral loans, unsecured open and revolving lines of credit and an online portal. https://www.acs-cam.com/collection 

Atradius Collections – Although Atradius Collections is primarily a UK-based commercial collection agency, it also has a base in the United States. It specializes in multinational accounts and offers collection services to over 30 countries. It has a very high return rate. To get a free quote on pricing, you can access their online portal. https://agora.atradiuscollections.com/us/

Aspen National Collections – Aspen National Collections works with timeshare and education industries, as well as municipalities and utilities, to collect outstanding debts. It creates debt collection strategies tailored to each client it works with. This agency's website has an online portal so clients can log in and monitor the progress of their past-due accounts. http://aspennational.com/collections/ 

Benjamin Michael & Associates Inc. – Benjamin Michael & Associates is based in New York City. The firm utilizes several techniques, such as demand letters, skip tracing, and reports on demand, to help you recover debt from delinquent accounts. http://www.benjaminmichaelassociates.com/ 

Credit Management Company – Founded in 1966, Credit Management Company recovers debts for government, healthcare, higher education, financial services and commercial businesses. It has an online system for debtors to make payments. In addition to collection services, it offers claims resolution services. http://www.creditmanagementcompany.com/ 

Debt Recovery Resources – This is a full-service debt collection agency that not only helps recover debts but can help its clients improve their internal debt collection processes. Debt Recovery Resources can manage accounts receivable, perform free legal background checks and find debtors. https://www.debt-rr.com/ 

FCR Collection Services – Powered by FEDChex, FCR Collection Services offers several payment solutions to companies nationally. Services include check verification, automated clearinghouse, remote deposit capture, electronic payments and risk management. https://www.fcrcollectionservices.com/ 

Hunter Warfield – This collection agency provides services to a variety of industries, including property management, medical offices, financial services and commercial collections. This collection agency is best suited for businesses that provide credit on goods or services, or have extended, relationship-based contracts. https://www.hunterwarfield.com/ 

Martini, Hughes & Grossman – Martini, Hughes & Grossman offers customized approaches to debt collection. It has in-house legal advisors, skip-tracing technology, it sends status reports bimonthly, and it collects both B2B and B2C accounts. It can track down debt nationally and internationally and is accredited with the Better Business Bureau. http://mhg.bz/ 

National Service Bureau – National Service Bureau serves both B2B and B2C collections. It offers precollections, third-party collections, letter services, litigation and skip tracing to a variety of industries. These industries include commercial, education, financial, insurance, medical, telecom and utilities. http://nsbi.net 

*Prestige Services Inc. – PSI is our choice for the best B2B collection agency. It provides commercial collection services throughout the United States, Mexico and Canada. It provides professional skip tracing to help locate debtors, and it can investigate businesses. If the debtor won't pay even after all of PSI's efforts, the agency can forward the account to an attorney in the debtor's area. https://psicollect.com/ 

Rapid Recovery Solutions – Rapid Recovery Solutions provides collection services both nationally and internationally. It caters towards all commercial accounts and medical billing accounts by using a four-step system to collect funds from debtors. http://rapidrecoverysolutions.com/ 

Revenue Assurance Partners – This solution customizes its service to your business. You can outsource as many or as few internal processes as you want. The company states it has over 50 years of experience collecting past-due accounts. It also provides auditing, reporting, legal forwarding and other collection services. https://rapcollect.com/ 

Rocket Receivables – This debt recovery agency supports collections for small- and mid-sized businesses. It focuses primarily on industries including healthcare, education, professional services, residential, commercial, contracted services, trades and general retail. It offers fixed-fee pricing for newly-delinquent accounts, as well as contingency pricing for older accounts. https://www.rocketreceivables.com/ 

Ross, Stuart & Dawson Inc. – This commercial collection agency provides collection services to businesses throughout the United States. It can help you with follow-up letters and statements, soft calls, credit reports and portfolio liquidation services. http://rsdcollects.com/ 

*Rozlin Financial Group Inc. – RFGI is our choice for the best B2C collection agency. It uses a tailored approach to connect with debtors, including phone, mail, email and online chat. It offers collection services for a variety of industries, including dental and medical offices, hospitals, schools, property management companies, utilities, retailers and lending service companies (e.g., credit cards, auto loans, mortgages). It is a Better Business Bureau-accredited agency. https://www.rfgionline.com/ 

Smyyth LLC – Smyyth Collections LLC, partnered with Leib Solutions LLC, is a commercial collection agency that serves a variety of industries, including commerce, property and casualty insurance, health insurance, healthcare, law firms and CPA collection services. It provides basic collection services like first- and third-party collections, collection letters and call services, plus  more advanced techniques, such as accounts receivable management and revenue cycle consulting. https://www.smyyth.com/solutions/collection-management/ 

*Summit Account Resolution – This agency is our pick as the best collection agency for small businesses, and it serves both consumer and commercial collections. It offers an online portal, a skip-tracing department and litigation services. Once you sign up with this provider, you receive an account manager who is available to answer all your questions. https://www.summitcollects.com/ 

The Kaplan Group – The Kaplan Group is a commercial collection agency that specializes in international, judgement and large-balance claims. It requires a minimum of $1,000 to be collected on and has low contingency rates. It provides advanced collection services, such as background investigations, credit analysis, skip tracing, legal services and payment plans. https://www.kaplancollectionagency.com/ 

TSI – This agency provides collection services for commercial, education, financial, government and healthcare industries for both SMBs and enterprises. It provides basic collection services like demand letters, calls, and payment reminders, as well as more advanced services, such as first- and third-party accounts receivable management options and skip tracing. https://www.tsico.com/ 

Tucker, Albin & Associates – This B2B collection agency has a network of over 500 private investigators and attorneys to help with debt collections across the globe. It uses a tailored approach to collect on commercial debts. http://tuckeralbin.com/ 

Vengroff Williams Inc. – This agency focuses on four specific collection areas, including credit to cash, subrogation, revenue cycle management and collections business process outsourcing. It provides advanced collection tactics such as first- and third-party collections, nationwide subrogation management and claim recovery services. https://www.vwinc.com/ 

VeriCore – This international collection agency focuses on recovery, reporting and remittance. It provides a tailored approach to each collection account, ranging from soft to assertive. https://www.vericore.com/indexS.htm 

Verliance Inc. – Verliance Inc. is a Better Business Bureau-accredited collection agency that focuses primarily on the insurance industry. It offers many advanced collection services like first- and third-party collections, benchmarking data, credit checks, delinquency rate modeling and asset searches. http://www.verliance.com 

Your Collection Solution – This collection agency collects consumer and commercial debts. It has a contingency-based fee structure. Though headquartered in Florida, Your Collection Solution can work to recoup debt in the U.S. and in several other countries. The company states its management team has over 30 years of experience in the industry. https://www.ycscollects.com/ 

Editor's Note: Looking for a collection agency for your business? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have one of our vendor partners contact you about your needs.

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How Entrepreneurs Can Avoid Hidden App Development Costs

Posted: 24 Apr 2019 02:00 PM PDT

So you're a business owner and you badly need an app to be created specifically for your business? Or, you're someone who has an awesome idea for an app and you're sure it will work, but you lack the expertise and time to hire and manage an in-house development team?

The truth is, custom mobile application development is often expensive and it takes a lot of time, but if you have the budget, you don't really need to stress yourself and figure everything out on your own. There are reputable app developers who can help turn your idea into a problem-solving and money-making app that is custom built to fit your requirements, your vision and your budget and it's just a matter of choosing who you'd trust for your project.

Here are some of the ways you can save yourself from having to cough up money for hidden app development costs:

  1. List down all your requirements and document them

As app builders, we've seen a lot of business owners who don't have the technical capability to understand the process of app development. Sure, they're done validating their idea, doing competitor audit and creating a strategy for their app, but still, if they cannot clearly communicate exactly how they envisioned the app to be, then the development process may drag on and the cost of building the app may reach the ceiling.

If you want to maximize your budget, make sure that your chosen team has the capability to deliver the app just how you want it to be. There's no better way to do that than by creating a detailed document that outlines your mobile application requirements. This document should tell your chosen and would-be contractors about your objective for the app, product & technical specifications, design practices to be used, functionalities and features, your monetization model, technology to be used, maintenance and upgrade requirements and many more. Be very clear with them and ask them upfront if there's anything in that document that they wouldn't be able to deliver, this way, you'll know what you can expect and they can be vocal about the possible challenges that you'll have down the road.

  1. Find a reputable freelance app developer or app development company

A reputable third-party provider has to have the experience and expertise you need. They need to understand your goals and your business and put themselves into your shoes so they can build the app from your perspective. They should be able to guide you and answer all your queries about the app development process. If you need them to, they should be able to provide you with an overview of the tasks involved for certain functionalities and features you want to see in the app.

If you can, find a local company or a locally-based app developer. They may charge you a bit higher but this guarantees that you are protected through contracts and NDAs. The language barrier and time zone differences could be overwhelming if you'll opt to hire foreign developers.

Before paying any fees, ask your contractors about their experience building an app similar to what you intend to have them build. Let them narrate some of the challenges they experienced and how they were able to overcome those challenges. Your goal is to make sure that they can go a mile further if things go wrong, and that they are flexible enough to meet your goals and deadlines without going over your budget. Research about their organization and see what people are saying about them. Always remember that if you try to cut corners when choosing a developer, you can end up having to pay more in the long run or worse, having to start from square one.

3. Good communication

If you want to ensure that the project will be completed on time and within budget, you have to communicate well with your contractor. The last thing you'd want to happen is for the project to drag on because you weren't available to provide feedback or confirm necessary changes. There's nothing worse than developers making the changes on your behalf because the project is already way past the deadline, but they, unfortunately, made an error and it resulted to more work needing to be done. Be available to them just as how you want them to be available for you.

4. Do the QC and QA

Although you have listed down all the requirements, try to check in from time to time and ask your developers for an update. They should be proactive and shouldn't give you a hard time when you're requesting to see what has been done so far. It is also worthy to have someone who can verify if the tasks being are done are necessary and are right.

For instance, you're requesting an Android app to target a global audience. This could mean that the developers will have to do device fragmentation to make sure that the app is compatible with all devices and OS versions. Tasks like this can impact the cost of the project because they are time-consuming. Having someone who can explain to you what work is involved in each phase of the app development can put you at ease and will alleviate the developers' stress too.

5. Be prepared for the testing and maintenance costs

Business owners who haven't had an app built for them in the past may think that once the app has been developed, there wouldn't be any other costs anymore apart from the server fees. The truth is, testing, maintenance, and future upgrades may still cost a lot of money, so it's better to prepare yourself and set aside a portion of your entire app development budget or have a separate budget for these processes. You cannot possibly opt out of the necessary upgrades because your app needs to adapt to changing environments.

It's also worth noting that an all-inclusive approach (designing and developing an app that can support as many platforms as possible) is very expensive to maintain.

Having an app built for your business can bring a lot of benefits in terms of branding, customer experience, business operations, sales, and even customer support. Having the right mindset and the right strategy in place can save you from unnecessary expenditures and stress.

Top 9 Industries For Virtual Reality

Posted: 24 Apr 2019 01:00 PM PDT

Virtual reality is likely not what you expect. You probably associate it with gaming, entertainment ads in malls, or movies like Ready Player One. But today virtual reality has been adjusted to serve various industries that seek new innovative ways to achieve success. Although there are many ways and spheres to apply this technology, some fields can benefit highly. 

1. Retail

VR technology is an excellent tool to increase profit and attract customers in retail. People have shown their appreciation of e-commerce service and are eager to go further. 70% of customers admitted they are strongly interested in virtual shopping.

Virtual reality experience provides customers with a completely new level of service from an ability to try on clothes while at home to decorating a room that is not even built yet. Variety of solutions makes it a highly applicable and adjustable tool. Big companies like IKEA, eBay or Topshop have already put VR into practice, each of them in their unique way. While IKEA suggests their customers a tour to a virtual kitchen of their dreams, eBay has built an interactive personalized catalog for easy shopping.

2. Health care

We all hope one day there will be no diseases and the world will be a perfectly healthy place. But until then we should keep developing the health care industry and the latest technology is what can help. Virtual reality is among them.

VR in healthcare can be useful for both patients and doctors. People receive therapy with VR applications to fight fears and phobias. There already exist solutions aimed to educate and share experience: virtual surgeries, emergency training, VR anatomy applications. There was even a live stream of an operation – that's how far it went.

But this is only the beginning. We have just started discovering the full potential of extended realities in healthcare and medicine. Maybe in five or 10 years, we won't even have to leave our house to get examined by a doctor and surgeries will be done remotely by operating a robot.

3. Film & entertainment

First it was just a moving picture. Then it turned into a 3D image. Now you can watch a film and be a part of it. Virtual reality cinemas is definitely a thing we should expect to appear more in the near future.

This new approach to storytelling blurs the boundaries between the story and the viewer making him a central element of the movie. There has even appeared a new term – "cinematic VR" – a type of VR experience based on 360-degree videos filmed with a special camera. However, such films can also be made from scratch using 3D graphics, like this short movie about a shark attack.

Many companies have started embracing virtual technology to present their products with a twist. For example, Sony announced developing a "non-game virtual reality project" based on the TV show Breaking Bad and Disney offers a range of immersive entertainment based on their animation films.

4. Marketing & advertising

Marketers today are in constant search of better ways to draw customer's attention. People are getting bored of typical advertising and virtual reality is what can awe them. VR experience offers people a unique way to interact with the brand that will surely be remembered.

There is no one way how to use VR for advertising – each brand comes up with new solutions and creative ideas. Some, like Patron, use 360 videos to tell about the story of their company and product. Topshop, for example, offered their customers an entertainment dedicated to their summer collection. Such a flexible tool as virtual reality grants marketers endless opportunities to create and excite their customers.

5. Automotive

VR's potential in the automotive industry is starting to unleash. First steps were taken several years ago and since then companies keep exploring what VR can bring them.

Creating a concept and designing a manufacturing line based on virtual data was an idea of Ford. Ford's Immersive Vehicle Environment is aimed to combine forces of engineers from different countries to work on the design and simulate assembly work taking into account employee safety.

Volvo and Audi, on the other side, focused on user experience. The first one offered their customers an opportunity to take a virtual test drive using their smartphone, while Audi's application allowed the customers to try various configurations of the car.

6. Construction & real estate

A picture is worth a thousand words. Especially when it comes to construction and design – it is much easier to persuade a person to buy or rent a house if they see it. And virtual reality is a perfect tool for visualization.

75% of users prefer a virtual tour to help them to take a decision. Virtual tours allow a customer to see and explore the house or a flat at any time without leaving a comfortable office. In some cases, it is even possible to take a look at the building in construction and make some changes to the owner's taste. Interactive applications also allow playing with design and furnishing to style the accommodation.

Architects and designers also benefit from implementing VR into their work. With virtual reality, it is much easier to visualize the construction plan, check if there are any mistakes and share opinions with colleagues.

7. Sports

Sport attracts a lot of attention. Millions of people watch matches or races on TV and the internet and thousands visit live events. VR combines the excitement of a live event with the comfort of your own home. There are services that broadcast live events using 360 cameras. In such a case the viewer enjoys the experience as if they were there in person.

Professional athletes adopted VR as a means of training. US Olympic ski team members used virtual sessions to prepare for the Winter Olympics in South Corea. One of the skiers even used it as a part of her post-trauma rehabilitation.

Virtual reality in sports is undoubtedly useful for both the spectators and the sportsmen so VR broadcasting and immersive training will definitely take their place in the industry.

8. Education

Education must be interesting to be efficient. That is true for both children and adults. Immersive workshops and simulators contribute to educational process increasing students' engagement and general efficiency. Virtual workshops will help children learn how laws of physics actually work, what the Solar system looks like and how to grow a plant.

Educational applications are not always tied up to the school environment. People of different professions use VR simulators to upgrade their skills. It is especially important when it helps people avoid or cope with dangerous situations: there are solutions for firefighters, doctors, military. Training and workshops are themselves a useful activity, but VR adds even more value making them innovative and engaging.

9. Tourism

The same as real estate, the tourism sphere takes all the advantages of VR as a visualization tool. Travel agencies now have the ability to showcase the destination much better than with a brochure. Thomas Cook used virtual tours across different locations to convince people they should travel more. It is reported that this move resulted in 190% uplift in New York excursion bookings.

Besides traveling around the world, VR solutions also include visiting museums and galleries. The Metropolitan Museum of Art and The British Museum presented 360 video excursions to let people see the treasures they have. Seeing them on screen may encourage some to go there in real life.

 VR is a budding industry

As you see, VR is far more than gaming only. It can be applied to many spheres and bring them benefit as well as joy and fun. So next time you think about how to make things better in your business, consider virtual reality.

Advice for Dealing with a Bossy Co-Worker

Posted: 24 Apr 2019 01:00 PM PDT

Co-workers play a significant role in how we feel about coming to work each day. Having supportive, fun-loving colleagues can make you feel eager to come into work in the morning, while toxic co-workers make you dread each workday.

One type of co-worker that is especially difficult to handle is an individual who is overly bossy. A bossy co-worker is generally someone who dictates the room, whether intentionally or unintentionally, and shares their opinion as fact. Their behavior may consist of telling you what to do, critiquing you on how to do your job or even monopolizing brainstorm sessions. Dealing with a bossy co-worker is frustrating and sometimes impedes productivity.

If you have a bossy co-worker who is making your life at work miserable, follow these five tactics to create a more even playing field.

Step 1: Create boundaries.

It is important to create and enforce transparent boundaries between you and your co-workers. This can be easy if you have different job titles, as you can then simply divide up the workload based on your job descriptions. Having predetermined responsibilities can be helpful in deflecting unreasonable requests from bossy co-workers.

Selena Rezvani, author of Pushback and vice president at BeLeaderly, suggested proactively discussing your job description with your manager to determine what tasks are superfluous to your role and worthy of passing on. 

"Contract verbally with your manager that they'll back you up and provide cover if and when you say no to a task," said Rezvani. "If your boss endorses the boundary you've created, you have a much better chance of overcoming pushback from your colleague later on."

Step 2: Acknowledge and decline demands.

It can be difficult to just outright ignore someone who keeps telling you what to do, and it is unlikely to resolve the situation anyway. Often, bossy co-workers just want to be heard. Therefore, you should politely acknowledge your co-worker and decline their offer.

Andres Lares, managing partner at Shapiro Negotiations Institute, said it is best to first neutralize your emotions, since dealing with a bossy co-worker can be an emotional challenge.

"The more emotional you are, the less rationally you behave," said Lares. "Conversely, the more your emotions are in check, the more you can be in control of a positive outcome."

Additionally, Rezvani suggested having a few friendly but firm retorts ready for a bossy colleague, should they tell you to do something outside of your job description. Instead of saying "That's not my job," reply using one of the following responses:

  • "That's an interesting project. I'm not sure it's realistic given my workload."
  • "Let me steer you to someone who knows more about that."
  • "OK, thanks for the feedback. I'll discuss that with my manager."

"At a minimum, train yourself to buy more time and not to give a yes in the moment," said Rezvani.

Step 3: Address the situation.

If your attempts at deflecting the situation remain futile, politely confront your bossy colleague about their actions. To best address the issue, identify the cause behind your co-worker's bossiness and prepare the proper invitation.

Identify the cause.

Based on research he conducted for his book Bullies, Tyrants and Impossible People: How to Beat Them Without Joining Them, Lares believes there are three basic types of difficult people:

  • Situationally difficult: Those whose situation or circumstances make them difficult.
  • Strategically difficult: Individuals who believe being unreasonable is effective.
  • Simply difficult: Those with an ingrained personality characteristic.

"The key is to figure out why they are being difficult (the type) in order to decide what strategy is best for dealing with them," said Lares. "Once you know which type of individual you face, you can employ the appropriate techniques to help shape and determine the outcome of the encounter."

Prepare the proper invitation.

When you are addressing a bossy colleague for the first time, Colin McLetchie, president of Five Ways Forward LLC, said it is important to have a practiced, well-thought-out opening request. According to McLetchie, the four key components of your request are as follows:

  • Affirm the value of the colleague and your wish for their continued success, assuming this is true.
  • Express that you have a concern about something you've noticed.
  • Connect those things with "and," not "but." This deliberate response sidesteps the emotional trigger most people have to hearing "but."
  • Ask permission to share, which allows the other person to make a choice. If the answer is yes, you likely have their full attention to what you're about to say.

McLetchie said one example of an opening request might be "Thomas, I hope you know that I very much value our working relationship and your efforts on our team, and I've noticed something in our interactions that is causing me concern. May I share what I've noticed and make a request?"

After your opening, McLetchie said you should share your observations and make your official request.

He suggested saying something like "I have no doubt you have the best of intentions when we're working together, and what I've noticed is that I often bristle in our conversations, because it feels as if you're telling me what to do as opposed to collaborating with me on who will do what. It would be more effective for our partnership if you asked me more than telling me. Is that something we can work on together?"

"There is no reason why your conversations can't be both kind and clear, and also drive to action and commitment," said McLetchie.

Step 4: Wait for a change.

After approaching your colleague and settling on an agreement, give the other party time to change. Since some people are bossy by nature, it may be difficult for them to drastically change right away. Allow time for growth and inform them if they are repeating offensive behavior.

Do not confuse this with letting them get away with their old behavior. If you aren't seeing any improvement in their actions, it may be time to escalate the situation further.

Step 5: Involve a manager or HR.

According to McLetchie, leaders love it when team members resolve collaboration issues on their own and resort to manager and HR interference as a last-ditch effort. However, regardless of the attempts you've made to resolve the situation independently, you should always feel safe to report inappropriate behavior. Your manager or HR department should consider your statement with respect and resolve the issue in a professional manner. 

For managers or HR staff, if an employee approaches you with a complaint about another colleague, especially in the sense of workplace harassment, promptly acknowledge and address the issue.

When approaching the bossy employee, it is best to address them from a place of concern, rather than attack. For example, you can let them know that their actions upset someone else, but that you know that wasn't their intention. Agree on a set course of action and monitor future behavior.

How to Accept Credit Cards

Posted: 24 Apr 2019 12:45 PM PDT

No matter what type of business you have, you need to be able to accept credit card payments from your customers. Sure, it's easier just to accept cash, but you also want to accept credit and debit cards, since so many people prefer to pay for things this way.

But to do this, you need to choose a service provider – which can be challenging, because there are hundreds of payment processing companies to choose from and several factors to consider before selecting a processor. To find the most convenient and least expensive route from your customer's credit card to your bank account, you want to look for credit card processing companies that have low rates, few fees and month-to-month contracts.

If your business is new or not yet accepting credit card payments, you're probably wondering, "How do you accept credit cards?" and "How much does it cost to accept credit cards?" These steps will walk you through the process of setting up credit card processing for your business. Scroll down or click on the links to learn more about each step.

Here's what you need to do to accept credit cards:

  1. Decide which type of processor will be the best fit for your business. Should you work with an aggregator, a merchant services provider or a direct processor? How do you know which type of credit card processing service you need?
  2. Identify how you plan on accepting credit cards and evaluate equipment options. Do you plan to accept credit cards online, at a countertop checkout station in a brick-and-mortar store, or do you prefer a mobile credit card processing solution that uses a smartphone and a card reader? Or do you want to accept payments multiple ways?
  3. Learn about credit card processing fees and pricing models. This helps you know what to look for – and whether you're getting a good deal or paying more than you should.
  4. Call three or more credit card processing companies for pricing quotes. Many service providers customize their rates for each client, so you need to figure out what a good deal is for your specific business. You also need to know what information you should never give a sales rep until you're ready to sign up with a processor.
  5. Read the contract before you choose a processor. Find out which terms are negotiable, where to find sneaky hidden fees and when you should look for a different option.
  6. Apply for a credit card processing account. Once you've decided which payment processor you want to work with, it's time to apply for a merchant account.

If you're ready to choose a service provider, check out our credit card processor recommendations and reviews. If you plan to use a point-of-sale system to accept credit cards, we have POS system recommendations and reviews for those as well.

Editor's note: Looking for information on credit card processors? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

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1. Decide which type of processor will be the best fit for your business.

The first thing to consider is whether you need a service that works with individuals or if you can work with those that only serve businesses. The second thing you'll need to factor in is the average monthly volume of credit and debit card payments that you accept. Here are four use cases to help you find the right payment processing solution.

If you're an individual wanting to accept credit cards for personal use – for example, if you want to accept credit cards at a garage sale or for freelance work, or if your business isn't yet official – Square is a good option. It's one of the few payment processors that works with both individuals and businesses, and all you pay is a small fee each time you accept a credit card payment – there are no monthly and annual fees. Square gives you a card swiper, or you can buy an inexpensive chip card reader from the company.

If you simply want to be able to accept credit card payments from friends, family or other people you know and trust – such as the friends you split the bill with at dinner last night – you can use PayPal or peer-to-peer payment services like Venmo, Apple Pay Cash, Google Pay Send or Zelle.

Tip: You don't want to use a P2P payment service to accept payments if you don't know and trust the individual, as buyers can reverse transactions.

If your small business processes less than $2,500 per month or has small sales tickets, you want to work with a payment facilitator like PayPal, Square or Stripe. These are cheaper to use at this processing volume because you only pay a small fee – expressed as a percentage of each sale and, sometimes, a per-transaction fee – for each credit or debit card payment you accept. Even though payment facilitators charge a higher percentage than other types of payment processing rates, you save money because you don't pay any other fees. There's no setup fee, monthly fee (such as statement and payment gateway fees) or annual PCI compliance fee.

Payment facilitators, also called mobile credit card processors, are sometimes referred to as merchant aggregators, as they sponsor multiple merchants under their master merchant accounts. This makes it easier to sign up for an account, and there are fewer fees to pay, but they can be more restrictive. You should carefully read the user agreement to make sure the goods or services you provide aren't prohibited. Also be aware that if there are irregularities with your processing, such as abnormally large transactions or a sudden spike in monthly volume, the processor may freeze your funds – which can be hard on your cash flow.

Tip: If you have small sales tickets, save money by choosing a credit card processing company that only charges a percentage of each sale. Some also charge a small per-transaction fee – usually 10 to 30 cents – but this adds up quickly if your sales tickets are small.

If your small business processes more than $3,000 per month or has large sales tickets, you want to work with an ISO/MSP like Helcim, Flagship Merchant Services, Fattmerchant or Payline. These payment processing companies can set you up with a merchant account, and even though they charge fees that the aggregators don't, they have lower rates, which saves you money when you're processing at this volume or higher.

ISO/MSPs are independent sales organizations (ISO) and merchant service providers (MSP) that resell merchant accounts from direct processors. Because you're still processing a lower volume than big businesses, you're not likely to get better rates from direct processors. You'll want to shop around to find low rates, few fees and a month-to-month contract.

Tip: If you process a low volume of credit cards each month, look for a payment processor that doesn't charge a monthly minimum fee, which is the minimum dollar amount of credit card processing fees you must generate each month. If you don't generate enough in fees, you pay a fee to make up the difference. When you call for quotes, be sure to ask what the monthly minimum is and the dollar amount of sales you'll need to process each month to meet it.

If you process a high volume of sales each month, you could also consider working with a direct processor like First Data, Chase Merchant Services, Elavon, TSYS or Worldpay. These companies tend to be better suited to large businesses, but they work with small businesses as well.

Direct processors provide merchant accounts and have relationships with the banks and credit card brands. Again, you'll want to comparison shop for favorable rates, fees and contract.

If you plan to use a point-of-sale system, you want to check with the company to find out which credit card processors the POS system is compatible with, as that may limit your options. Some require you to use their in-house processing services, but the best allow you to work with third-party payment processors so you can shop around for low rates and fees. 

2. Identify how you plan on accepting credit cards and evaluate equipment options.

You want to be able to accept credit card payments wherever and however your customers want to pay, whether that's in person at your business or another location, online through your website or electronic invoices (including both one-time and recurring payments), over the phone, or across multiple channels.

Once you decide how you'll accept credit cards, you need to think about what kind of credit card processing equipment you'll need. All card readers can accept magnetic stripe cards, but you want a model that can accept EMV chip cards as well, because it protects you from liability for fraud occurring at the point of sale. EMV card readers also allow you to skip signature authentication, which can speed up the checkout process.

Ideally, the card reader will also have NFC technology that allows you to accept mobile wallets like Google Pay and Apple Pay so you won't have to upgrade your equipment again as this payment method becomes more popular.

Nearly every credit card processor sells processing equipment, and in most cases, you'll get at least your card reader from them. If you already own a terminal, the processor may be able to reprogram it, though there is sometimes a fee for this service. If you want to buy peripherals from a third-party vendor, you'll need to check with the processor to check for compatibly.

You should plan to buy your credit card processing equipment upfront. Payment Depot explains in a blog post why you should never lease a credit card processing terminal. One merchant signed a lease for $99 per month with a 48-month term for a machine – in effect, paying $4,800 for a machine that costs $300 to purchase. The FTC also cautions against leasing credit card processing equipment.

Also be wary of "free" equipment, as you may be charged higher rates and additional fees (such as an "insurance fee" or some sort of equipment maintenance fee), and most companies require you to return the equipment when you close your account.

Here are some of your processing hardware and technology options.

Mobile credit card reader

This is a portable device that you use with a smartphone or tablet and a credit card payment app. Some models plug into the headphone jack or lightning connector on your phone or tablet, but many newer models connect via Bluetooth. Many processors give customers a free credit card swiper, but you should upgrade to a model that accepts EMV chip cards and NFC contactless payments. These are very affordable, usually costing less than $100.

Mobile card readers can be used as stand-alone devices or as part of a larger system. Though popular with small business owners who accept credit cards on the go or in the field, they're also useful for businesses that want to process transactions from anywhere in the store or those that only run a few transactions each day at a physical location.

Credit card terminal

This type of card reader often has a built-in receipt printer and keypad (for PIN debit transactions). Countertop models connect via dial-up or Ethernet. Wireless models connect via Bluetooth, Wi-Fi, 3G or GPRS. All new models are EMV compliant so you can accept chip cards, and most also have NFC technology so you can accept mobile payments. Credit card terminals usually cost $150 to $600.

Payment terminals are the most common type of processing equipment and are best for businesses that need a card reader to connect to or work alongside a POS system, or those that don't need the credit card processing system to do anything but accept payments. [See our related article: Credit Card Machines: Answers to Frequently Asked Questions]

Point-of-sale (POS) system

This is a complete checkout station that typically includes software, a tablet or touchscreen, a card reader, a cash drawer and a receipt printer. Some systems have built-in card readers, while others connect to or are used alongside a credit card terminal or mobile credit card reader. Barcode scanners and other peripherals may also be added.

Available for purchase from merchant account providers or POS companies, POS systems' pricing depends on the type of system you choose. Tablet-based systems that work with third-party hardware are usually the least expensive. These systems are best for businesses with a physical location, particularly those that want to connect to other business software, such as accounting or inventory programs. [Check out our POS systems recommendations and reviews.]

Payment gateway

If you want to accept credit cards online – for example, if you sell goods or services through your website or an e-commerce platform – you need a payment gateway. Most credit card processors can set you up with this technology and help you connect it to your site. Some processors have proprietary payment gateways, and others set you up with a third-party gateway like Authorize.Net. There's usually an additional monthly fee for this service, and some processors also charge a gateway setup fee and another per-transaction fee.

Tip: If you already accept cards at a physical location, check with your processor before signing up with another service to take credit cards online, as some contracts have exclusivity clauses that prevent you from working with multiple payment processors.

Editor's note: Looking for the right credit card processor for your business? Fill out the questionnaire below to have our vendor partners contact you about your needs.

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3. Learn about credit card processing fees and pricing models.

Credit card processing fees are confusing, but you need to understand what they are and what they're for so you can negotiate the best transaction rates and avoid paying more than you have to for this type of service.

The three common types of credit card processing fees are as follows. Scroll down or click on the links to learn more about them.

  • Transaction fees (or rates): These are the fees you pay for every transaction. They're usually expressed as a percentage of the sale plus a flat fee for each transaction. For clarity, we refer to these fees as rates. Processors have different methods of calculating and charging these rates – we refer to these as pricing models – which can make it tricky to figure out what you'll actually pay and whether or not you're getting a good deal.
  • Service fees: These are monthly and annual account maintenance fees, such as statement fees and PCI compliance fees. Some of these are standard fees, but others aren't charged by the best credit card processors.
  • Incidental fees: These are fees that you're charged for on a per-occurrence basis, and are triggered by certain actions on your account, such as chargebacks. Again, some of these are standard fees, but others aren't charged by the best credit card processing services.

Transaction fees

Transaction rates are calculated differently, depending on the pricing models the processors use. 

Pricing models

The three most common pricing models are interchange-plus, tiered and flat-rate pricing. Here's how each option works, along with information on which pricing model is best for different business types and sizes.

Flat-rate pricing is usually charged by payment facilitators such as Square and PayPal. There are different rates based on how you accept your customers' credit and debit cards. This is the simplest pricing model.

Here's an example of flat-rate pricing, using PayPal's transaction fees:

  • Card present. For cards that you accept in person using a chip card reader or a magstripe card reader, either in-store or mobile, you pay 2.7% of the transaction. This is the lowest rate, because this payment method has the lowest risk of fraud.
  • Card not present: keyed in. If your customer's card doesn't work and you have to key it in, or if you accept a payment over the phone and key in the card info, you pay 3.5% plus 15 cents for the transaction. This method is more expensive because you don't use the physical card to process the transaction, so there's an increased risk of fraud.
  • Card not present: online. When you accept an online payment – through your website, a payment page linked to your website or an electronic invoice – you pay 2.9% plus 30 cents. This method costs more than the card-present method because it's a remote transaction, but it's lower than the keyed-in rate because it requires your customer to supply additional verification information (like your address and the CSV number on the back of the card).

Tip: There's usually no rate difference based on the type of card you accept, which is both a pro and a con, depending on the cards your customers favor. It's a benefit if you accept a lot of rewards credit cards or American Express cards, as you don't pay a higher rate. (Other processors charge more for these cards – around 3.5% isn't uncommon for a card-present transaction using a premium rewards card.) However, if most of your customers pay in person using PIN debit cards, you're paying more than you would with other pricing models.

Interchange-plus is the best option for most businesses. Industry experts recommend interchange-plus pricing because it's more transparent than the other pricing models, showing you exactly how much of a markup you're paying the service provider.

Interchange fees are set by the card associations, or card networks, that pay the banks involved in the transaction for moving money from your customer's credit card account to your business bank account. There are hundreds of interchange rates, depending on the type of card and the brand. The card networks also charge small for each transaction. These rates are the same for every processor – regardless of whether they're a payment facilitator, ISO/MSP or direct processor – and they're non-negotiable. The only negotiable part of a transaction rate is the processor's markup.

With this model, the processor passes on to you the interchange rates and card association fees charged by the credit card networks – Visa, Mastercard, Discover and American Express – and adds a markup percentage and per-transaction fee.

When you receive a quote for this pricing model, it's only the processor's markup percentage and per-transaction fee that you'll receive, so for each transaction, you'll pay this amount on top of the interchange rate.

Here's an example of interchange-plus pricing, using Helcim's transaction fees. When you accept a credit card payment in person using an EMV chip card reader or a swiper, these are the rates you'll pay:

  • Processor's markup: 0.25% plus 8 cents. This is the rate you're quoted when you ask for interchange-plus pricing. This is the only negotiable portion of this rate.
  • Interchange rate: 1.65% plus 10 cents. This is an example of what it might cost to process a retail transaction using a Visa Rewards credit card.
  • Card association fee: 0.15% plus 2 cents. This is the fee that Visa charges for credit card transactions.

So, for this transaction example, the full rate would be 2.05% plus 20 cents.

Tip: The best processors offer this type of pricing to all their customers and post their rates online. But most of the time, you have to specifically ask for it, and there may be hoops you need to jump through to qualify for it, such as processing a certain volume of sales each month or processing with the company for a specified amount of time, such as six months to a year.

Tiered pricing can be a good option if your customers typically pay in person using regular debit cards, though it can be expensive if they prefer to use premium rewards, corporate or international credit cards. Most processors prefer this pricing model, but industry experts advise against it, as it's less transparent than others:

  • There's no way to know exactly what the processor's markup is, as each processor sets its own tiers and decides which interchange rates fall into each tier.
  • Most processors don't post tiered rates in full online. Instead, they advertise teaser rates (that apply only to regular debit cards accepted in person). Many sales reps don't disclose how many tiers, the pricing for each tier, or what types of cards and transactions are included in each tier unless you specifically ask for this information – leaving merchants with an unhappy surprise when they get their first bill.
  • Transactions can be "downgraded" for various reasons, resulting in higher rates than those you were quoted. When you call for a quote, you'll want to ask which actions can cause a transaction to be downgraded.

Tip: When you call for a quote, you should ask for interchange-plus rates. Otherwise, be sure to ask how many tiers there are, the rate for each tier, and which types of cards and acceptance methods are grouped into each tier. There are usually three tiers: qualified, mid-qualified and non-qualified. Some only have two, though, and there may also be separate tiers for debit and credit cards.

Service fees

In addition to processing rates, most full-service credit card processors charge an assortment of fees to maintain your account and provide customer support. Payment facilitators don't typically charge these fees. Before you sign a processing contract, be sure to read it and make sure you're aware of all the fees that the processor charges so you won't be shocked when you get your first bill. Here are the most common service fees.

  • Monthly fee: Also called a statement fee, it covers the processor's cost of preparing monthly statements and customer service. It usually costs $5 to $15. It may be higher if it includes a gateway fee and a PCI compliance fee. If you choose to receive paper statements by mail, there may be an additional cost.
  • PCI compliance: This fee is usually charged annually and costs around $100, though some processors include it with the monthly fee or charge it quarterly. For this fee, service providers help you certify that your business complies with PCI guidelines. If you fail to establish your compliance, you're charged an expensive PCI non-compliance fee each month until you get certified. Some processors offer to waive this fee for the first year when you sign up for an account. Payment facilitators are PCI compliant, so their merchants don't have to certify and pay this fee.
  • Gateway fee: If you accept payments online, you need access to a payment gateway. Usually this fee is charged monthly and costs about as much as the monthly fee, but some processors also tack on a small per-transaction fee.
  • Monthly minimum: If you process a low volume of transactions each month, you want to look for a provider that doesn't charge this fee, as it's normally calculated against the processing fees you generate, not the full dollar value of each transaction. Usually this minimum is $25, though some processors set it higher. Be sure to ask the dollar amount that you need to process each month to satisfy this requirement. 

Incidental fees

Some fees are only charged when certain actions have taken place. For instance, if a customer initiates a chargeback, you would need to pay a chargeback fee. If you use the processor's address verification service (AVS) or call its voice authorization center as fraud-prevention checks before you process a transaction, you pay a small fee. Again, be sure to read the contract in full before signing up with a processing company so you know exactly what fees to expect.

Tip: To learn more about credit card processing fees, including a list of fees you should never pay, on check out our Small Business Guide to Credit Card Processing Fees on our sister site, Business.com. 

4. Call three or more credit card processing companies for pricing quotes.

The best credit card processor for your business is the one that offers you the best value – with low and transparent rates, no hidden fees, and either a month-to-month contract or pay-as-you-go services. Though many of the best credit card service providers post their pricing online, some don't, preferring to customize their rates for each client. You should plan on calling at least three processors and requesting price quotes and a contract to review so that you can compare rates and fees for your specific business.

Even if all top credit card processors on your list post their pricing online, it's a good idea to call and speak with a sales rep, because there may be a promotion available or you may be able to negotiate a better deal. It also gives you a taste of the company's customer service quality, allowing you to evaluate how prompt, helpful and knowledgeable the rep you speak with is – which can be an important consideration as you're choosing a service provider, especially if the rep will be your account manager.

Tip: Never give a sales rep your bank account information or Social Security number until you're ready to sign up with that company. Likewise, never sign anything or provide any documents that carry your signature until you're ready to sign up with that company. (That "application" they want you to sign is actually part of the contract. If you sign it, you've signed up for an account.) If you look at online complaints for this industry, numerous merchants report being signed up for a credit card processing account without their consent, which is why you should take these precautions.

If you already know what you need and just want to see our recommendations for the best credit card processing services, visit our best picks page here.

5. Read the contract before you choose a processor.

No one wants to read the contract before signing up for a service, but with this industry, it's just something that you need to do. If you sign up with a full-service processor, you risk being locked into its services for several years, paying more than you expected. If you sign up with a payment facilitator, you may find out too late that it has certain processing limits or doesn't support businesses in your industry, resulting in frozen funds or a closed account.

The best credit card processing companies provide their services on a month-to-month or pay-as-you-go basis and don't charge any early termination fees.

Standard credit card processing contracts

Used by ISO/MSPs and direct processors, these typically have three parts: the application, the terms of service and the program guide. Some applications have links to the other two documents in the fine print, but usually you'll need to ask the sales rep to send each of them to you separately.

  • Application: Usually this document includes credit card processing rates and some fees. It asks for your bank information, Social Security number and signature – again, don't fill out this information until you're ready to sign up for an account, have read the contract in full, and have verified that the rates and terms are correct and waivers have been noted. Most contracts include a personal guarantee that allows the processor to collect money from you directly if your business can't pay its processing bills and also lets it perform credit checks on you.
  • Terms and conditions: This document describes the length of the term and additional fees that you may incur. Most have three-year terms and automatically renew for one or two additional years if you don't cancel in writing within a 30- to 90-day window. One clause to watch out for is for "Additional Services." You'll note that it doesn't explain exactly what these additional services are or what they cost, but does note that you have a short window – usually 30 days – to opt out if you don't want these mystery services and fees.
  • Program guide: This is where you'll find cancellation instructions and the fees that apply if you decide to close your account. Sometimes processors don't provide the program guide upfront, and if you don't ask for it, it will be tucked in with the processing hardware you order – which is a little late, since by that time, you've already signed up for the processing service. If you sign a standard contract and then need to cancel your account before the end of the term, you will be charged a steep early termination fee that costs hundreds of dollars. Some long-term contracts also have "liquidated damages" clauses that can cost you even more money. Sneaky processors may claim not to charge early cancellation fees, but instead charge "early termination fees (ETF)," "early deconversion fees (EDF)," "exit fees" or "lost profit fees."

Tip: If the processor you want to work with has a lengthy contract, ask your sales rep if month-to-month terms are available and if they can waive the early termination fee and any liquidated damages. Most companies want your business and are willing to give you more favorable terms.

User agreements

Most payment facilitators have user agreements instead of contracts. These are much shorter, but still important to read. You want to check the list of prohibited goods and services to make sure the processor will work with your business. You also want to read the terms to find out if there are any processing limits, to make sure they won't affect your business. One factor to keep in mind is that aggregators are very risk-averse and will freeze your funds if there's anything about your transactions that looks suspicious, such as a sudden spike in volume or transaction size.

6. Apply for a credit card processing account.

This is the easy part! Once you've decided which payment processor you want to work with, and have read the contract to verify that the rates and fees match what you were quoted and any waivers are noted, it's time to apply for an account.

When you sign up for a merchant account with an ISO/MSP or direct processor, you fill out the application portion of the contract. This is often online, but many sales reps are happy to walk you through the application over the phone. You provide details about the business and yourself, including your employer ID, Social Security number and bank account information.

The processor then reviews your application and sets up your account. This usually takes up to two days, but some processors can get it done the same day you apply, while others take up to a week. Your sales rep can help you decide what processing equipment you need as well as any extra features, like gift cards and loyalty programs. Once your equipment arrives, the processor will help you set it up and test it to make sure it works properly and you know how to use it.

If you sign up with a payment facilitator instead, the process is very easy. You fill out an online form to create your account, entering some brief information about your business and yourself. Then, you can order processing equipment and download the app onto your phone or tablet.

Frequently Asked Questions About Credit Card Processing

What is credit card processing?

Credit card processing is a series of actions that securely moves money from a customer's credit card account to a merchant's bank account. It takes multiple parties to do this – credit card companies, banks and processors – and each of them takes a portion of the transaction fees you pay the processor in exchange for their services.

How does credit card processing help businesses?

Credit card processing helps businesses give their customers more payment options. With it, you can accept all major credit cards – Visa, Mastercard, Discover and American Express – as well as debit cards. With a new credit card reader, your business can also accept payments made using contactless cards and mobile wallets like Apple Pay and Google Pay.

What are the benefits of credit card processing? Can't I just accept cash?

You could just accept cash – and some businesses do – but you risk losing business from customers who prefer to pay with credit and debit cards. According to the Federal Reserve's 2018 report on the Diary of Consumer Payment Choice, 30% of all transactions are paid in cash, 27% are paid using debit cards, and 21% are paid using credit cards. Of course, these numbers shift depending on the dollar amount of the transaction, the type of business you have and the average age of your customers.

What is a merchant account? Do I need one?

Both ISO/MSPs and direct processors can set you up with a merchant account and a merchant ID (MID). They then act as middlemen between your business and your customer's credit card company or bank. They process payments and make sure the money is appropriately withdrawn from a credit card account. Once the money clears all of the processing protocols, it can be transferred to your business bank account. [See our pick for best credit card processor for small business here.]

Payment facilitators set you up as a sub-merchant under their merchant account. The pros of this arrangement are that it's very easy to set up your account, the company takes care of PCI compliance, and there are usually no monthly or annual fees. The cons are that there are more restrictions on your account, the processor won't work with certain business types, and there are limits on how much you can process. If you process more than $100,000 a year, you'll be required to get your own merchant account.

How does credit card processing work?

When your customer inserts a card into the credit card reader, the data on the card and a request for payment is securely transmitted between the processor, the credit card network, and the bank that issued the card. The bank that issued the card authorizes or denies the payment request, and the information is transmitted back through the credit card network, the processor and the merchant bank. At the end of the day, the merchant batches their transactions and the data again travels through these channels to debit the customer's credit card for the amount of the transaction and deposit the funds into your business bank account.

What are the best ways to use credit card processing?

The best way to use credit card processing is to accept payments across every channel your customers want to use to pay you, whether that's in person at your physical business location, using a mobile device if you're working offsite, or taking payments online through your website or electronic invoices. Depending on how your business works with customers, you may need to use multiple acceptance methods.

What kind of cost should you expect for credit card processing?

No matter which type of processor you work with, you'll pay transaction fees for every card payment you accept. If you work with a full-service processor, you'll also pay a variety of other fees. See step three above for more information about pricing.

What is the average fee for credit card processing? What kinds of fees come with credit card processing?

For each transaction, you'll pay a percentage of the sale (usually 2% to 4%) and often a per-transaction fee as well (usually 10-30 cents). If you work with a payment facilitator, there usually aren't any other fees. But if you want your own merchant account, you'll have account service fees such as a monthly fee, gateway fee and an annual PCI compliance fee.

How much are credit card fees for merchants? For customers?

It depends on several factors, such as the types of cards your customers use and how you accept them, the processor you work with, and the model it uses to calculate your fees.

Most processors prefer to use the tiered pricing model to calculate your processing costs, but industry experts recommend the interchange-plus pricing model, as it's more transparent. You'll want to ask which pricing model the company uses when you call for a quote.

Customers don't usually pay credit card fees directly. Most of the time, merchants include this expense in the prices they charge their customers. Although it's legal in most states for merchants to add a surcharge when customers pay by credit card or to set a minimum purchase requirement, most merchants don't, as there are certain rules you must follow – and it annoys customers.

What kind of equipment do you need for credit card processing?

The type of equipment you need depends on how you plan to accept cards. If you have a brick-and-mortar location and a countertop checkout station, you'll need a credit card terminal. If you plan on using a POS system, you'll check with that provider before choosing a processor to make sure you choose one that's compatible. If you want a mobile credit card processing solution, you'll need a credit card reader that either plugs into your phone or tablet or connects via Bluetooth. See step two above for more information on credit card processing hardware.

Ready to choose a credit card processing company? Here's a breakdown of our complete coverage:

Why “Hacking” Growth May Not Be The Best Route to Success

Posted: 24 Apr 2019 12:00 PM PDT

Everyday in the news we're reading stories about some fantastic 'hack' that made a startup's user base explode or generated a sudden spike in leads overnight. Just like the lottery, it can be fun to imagine what we would do if we suddenly hit on some unknown way to bring in massive amounts of revenue overnight.

If you've found that hack, you're in the lucky 1% that we all envy. Please don't forget us when you're famous!

This article isn't meant to trample your dreams of overnight success. If anything, understanding the dangers of seeking hacks over solutions will be more likely to drive long term success for your business.

I'm aware that may not sound as sexy as finding a social media hack that will blow up your Instagram account, but there's a reason for this, and the reason is rooted in a business principle I've come to love and appreciate over time.

The one key growth strategy I've shared with all my clients is to: Plan for the rule, not the exception.

The rule is that, ultimately, long term strategies, like writing great content and posting regularly, will in time increase your organic traffic and build your brand up as an authority in your niche.

The exception we all hope for is that our content goes viral – if this happens – amazing! But as a responsible business you should plan for the rule, not the exception.

Finding hacks is great, but if you're building a business that needs to stand the test of time, you also need to build a foundation based on long term strategies that will bring stable predictable results.

Here are three tips to ensure you're planning for the rule and not the exception.

1. Set realistic data driven KPIs

Fast easy hacks can lead to exciting spikes in your data that leave you with a natural high. But they can also just as easily drop off due to a sudden change in algorithms or when your competitors inevitably catch on and start using the same tactics. This just makes the drive to find the next quick fix that much more enticing.

However tempting it may be, ultimately, these aren't strategies you can scale and continue using in the future. The main difference between true growth marketing and quick hacks is that the former is based on data driven insights, while the latter is based on lucky breaks and hunches.

Finding stable growth strategies for your company takes testing, data analysis and even more testing to find the right formula. Overall it's a longer term process, but it rewards you with deeper insights into your customer base/audience and long term scalable gains.

A study by MIT and Google found that only 26% of companies agree that their functional KPIs are aligned with their company's strategic objectives, revealing a disconnect in short and long term planning. The study cites one reason being that only 27% of respondents agreed that their organization is mostly or predominantly data-driven in its decision-making.

Set functional KPIs with your longer term strategic objectives in mind. Teach your workforce to aggregate, analyze and interpret your company's data with a long term focus. Instead of looking for an X% increase in followers after one event, share the value of tracking smaller, but consistent daily growth increments over the space of a month or quarter.

2. Create a culture where failure is celebrated

Experimentation is key to innovation, but the fear of failure is what prevents most people from actually acting on great ideas that may take more time and resources. Studies show that focusing only on short term gains actually blocks the organizational learning that comes from putting effort into finding more difficult to reach solutions, ultimately hurting your business in the long run.

Invest time and resources into building a culture which encourages weekly data driven experiments, that teach you great lessons when they fail and help you make marginal improvements when they work.

The best way to offset experimentation fails is by keeping them small and contained. Instead of focusing 80% of your time on an unsure bet, try testing it on a small scale using 20% of your time. Dedicate the 80% to building more stable long term growth strategies like lead nurturing journeys and SEO content. Atlassian and Google have been using the 20% time tactic for years, leading to some of their most innovative services including Gmail and Google Maps.

So try new things, experiment, but most important of all, share results and learnings transparently. Try holding a five minute weekly standup during which teams can openly discuss something that failed that week and what they learnt from it. This practice really helps to show people that failure is simply part of the learning process and, as long as we take the time to reflect and draw insights, the experience is valuable. We do this at Aerialscoop and it really helps people to be more comfortable with the five step process we follow:

3. Look for quality, not quantity

Growth isn't always about quantity. Focus on gaining active users, not just users. One of the biggest mistakes companies make is just acquiring as many users as possible and assuming they add value. If a user isn't actively coming back to your product and building a relationship with your brand, the likelihood you can monetize that user is vastly decreased.

Similarly, tools and hacks that promise to grow your Instagram and Twitter followers overnight may sound great on the surface, but in fact, inflating your numbers with followers who aren't actually interested in your product or service won't give you any useful insights. Instead, using your social channels to test the impact of different content strategies and develop a strong online brand will help you gain loyal, active followers.

Finding smart creative ways to find users is a good thing. Just make sure you're planning for the rule and not the exception by: making experiments data-driven, sharing both successes and failures transparently and valuing quality over quantity.

401(k) Matching Means Successful, Productive Employees And Tax Breaks for Your Business

Posted: 24 Apr 2019 11:00 AM PDT

 

As a small business employer, if you don't already provide a 401(k) and 401(k) match for yourself and your employees, right now is a great time to consider getting started. Although it may feel like the 2018 tax season has just exited the stage, this is the perfect time to determine how to get the most out of your business investments for 2019. To my way of thinking, there are four highly compelling reasons:

  • You can save a significant amount for your own retirement, while decreasing your taxes.
  • Implementing a 401(k) match program, when done properly, can potentially pay for itself in reducing your tax bill.
  • In this tightening labor market, one of the most powerful ways to recruit and retain employees is to offer benefits that show you're making investments in their future.
  • Encouraging your workforce to save for retirement is a worthy endeavor in and of itself.   

Instead of making tax payments, why not contribute to your retirement and your employees' financial stability? By providing a 401(k) match, the corresponding tax reduction can essentially negate your costs in matching their contributions. What you'll save depends on your income and tax bracket.

Best-case scenarios for tax savings

To max out your contributions and tax savings, how much of an employee match might make sense for you?

Here's an example. In 2019, a single business owner can make a maximum contribution of $56,000 to a 401(k) profit-sharing plan. At the top bracket of 37%, this contribution would save more than $20,000 in federal income taxes ($56,000 x 37% = $20,720). In other words, making up to $20,720 in matching contributions ends up in the retirement plans of valued employees, rather than down the federal tax hole. If a married couple owns a business together and can contribute $56,000 each into the plan, then the value of the total match (and tax savings) would double – equaling over $40,000.

Essentially, in the example above, these employers are offsetting taxation on a sizeable amount of earnings that would be taxed at the federal level of 37% – plus any state income tax exposure they may have. (For those of you feeling the burden of the $10,000 federal limit on state and local deductions, that's an added incentive.) These earnings are placed in a retirement plan and can typically be taxed at much lower rates in retirement with the right guidance from tax and financial professionals.

Utilize professional help

Launching a plan and establishing the right match requires specialized expertise. Plus, if you're like most business owners, the time needed to research plans is better spent on growing your company.

There are tons of different plans available in the marketplace, and fee structures can be highly complex. For example, a plan's fees can be set up based on the amount of assets in the plan, the number of eligible or actually enrolled employees, or the number of transactions made. Other plans charge a flat rate that doesn't vary regardless of plan size. Others offer hybrid fee structures. Some (but not all) administrative fees can be deducted from your business expenses.

Be sure to interview several retirement plan consultants and digital retirement plan platforms to find the best fit for your company's needs. Setting up a 401(k) match program with the help of your tax professional, financial advisor and a skilled retirement plan consultant will help ensure you secure the right features, fine-tune tax benefits, align the program with your big-picture financial planning – and reduce your own time investment.

So, what percentage match is right for your business? You'll want to ask your retirement plan consultant to run different contribution scenarios. They can help you fully explore any potential plan and match in terms of its costs and benefits. It should go without saying that launching a retirement plan without adequate cash flow is a terrible idea. You also want to be sure you're meeting all legal and tax requirements.

Here's a summary of steps you'll want to take:

  • Interview multiple retirement plan advisors
  • Determine a budget for retirement plan contributions
  • Ask for fee schedules of potential plans
  • Run retirement plan scenarios
  • Run a cost-benefit analysis
  • Include your other advisors (Financial advisor, CPA, CFO) in the process

Once you have a plan in place, you should meet annually with your advisors to confirm that your retirement plan is meeting your objectives – and that your cash flow can continue to support the contribution amounts required under the plan's rules.

Additional tax breaks and employee incentives

Should you provide any additional benefits to your key employees? And what about your own retirement planning? These are important questions you should be exploring with your tax advisor.

For valued employees, there's a wide range of compensatory benefit programs, such as discretionary profit sharing, that could enable them to share in your company's success. Every tactic is different and dependent on your business' resources and objectives. A basic 401(k) allows you (and your employees) to contribute $18,000 - $24,000 annually. A 401(k) profit-sharing plan allows you to contribute up to $56,000 annually.

For your own retirement and tax planning, you can create additional types of vehicles like cash balance and defined benefit plans that would allow you to defer taxes on $100,000 - $200,000 a year, depending on your circumstances and business income.

A significant impact

The latest news from the U.S. Labor Department on the rebound in hiring underscores how talented workers are getting harder to attract – and retain.

Your business depends on your employees working behind the scenes to keep it thriving. By investing in them, you're demonstrating your dedication to their well-being. Particularly in a small-business setting, this kind of support helps promote a positive and hopeful culture.

As a business owner, a 401(k) match may or may not represent a big investment. But for your employees, it just might help solidify their sense of value to the company and encourage them to save more for retirement – while providing you with a significant tax break.

In my opinion, that's a big win for everyone. 

39 Tech Terms for Entrepreneurs

Posted: 24 Apr 2019 05:18 AM PDT

One of the defining characteristics of nearly every entrepreneur is a burning desire to know the latest technology available to them – tech that either makes their efforts easier or that allows the business owner to push beyond existing constraints into new territory. 

Small business owners are pulled in several different directions all the time. By assigning tasks that you can do yourself and those you can delegate to others, such as experts, small business owners can spend more time focusing on what needs to be done drive the business forward. 

Here is a list of terms small business owners should familiarize themselves with as they make critical decisions on technology, marketing and human resources. 

Computing

Internet of things (IoT): The internet of things (IoT) describes the increasing number of items using smart technology that allow you to control security from your phone, turn lights on and off in your building, control heating and cooling when you're not in the office, and many other items.  

Server hosting: Servers are devices that support a company's computer and internet networks. Servers are typically owned by internet service providers (ISPs), which lease out server space in addition to providing customers with internet connectivity. ISPs "host" a company's information – its website, email, data, etc. – on their servers. Some servers are located in ISP data centers, while others are leased directly to businesses.

Businesses that don't have the in-house technical support necessary to maintain a server typically rent space on a remote server or use a managed hosting service. Managed hosting services provide businesses with their own servers and full-time technical support.

Other businesses lease their servers from ISPs, but without the extra tech help. Having a dedicated server, as this is known, is cheaper than managed hosting services, but it's only feasible for companies that possess technical expertise.

 

Data center: A data center houses computer and data storage systems, including servers. Many data centers are owned by ISPs or large companies, like Google or Amazon.

Linux hosting: Linux is an open-source operating system that can be installed on web hosting servers. Many servers run Microsoft operating systems, but some businesses believe that Linux is a more secure and reliable option, and prefer using a web hosting service that runs Linux.

Cloud hosting: Companies that don't lease servers may instead pay for their data to be stored on virtual servers. These servers are based in the cloud and can only be accessed with an internet connection. Businesses typically access cloud-based servers through a software interface specific to their cloud hosting service provider.

Cloud backup: Data backed up in the cloud is transferred from a business to the data storage provider's servers over the internet. Cloud backup, also called online backup, can be set up to occur automatically, making it a convenient data storage option. It's also an affordable service because it does not require the use of any additional hardware on the part of the business.

Back end: What you see when you click on a web page is the front end. The back end is everything "behind the scenes" on that page, like web servers, databases, or applications, that make it work. When developing your website, what is in the back end influences what search engines see.

Virtual private network (VPN): A VPN allows users to connect to private networks from anywhere for added security. For instance, instead of using the public network at a local coffee shop or hotel room with a heightened security risk, employees can connect to your private network with the same security as if he or she were sitting at their desk.

Web app: While this sounds like an odd term, it is exactly what it describes: A web page that looks and acts like an app on a smartphone or tablet. This provides viewers with a familiar format and more intuitive navigation as well as being immediately mobile-friendly.

Application programming interface (API): An API helps different components of a software program work together so it seems to operate as a single software application. They are very common and help eliminate complicated coordination to make use of the software easy for the user.

Technology stack: There are many different components to a network, from security to navigation. A technology stack describes how those components are layered, like data management, logins and retention. Benjy Weinberger, lead programmer at Four Square describes it like this: "A common example of a technology stack is the LAMP stack: Linux for the operating system, Apache for the web server, MySQL for the database and PHP (or Python) for the server coding environment."

Domain name service (DNS): Every domain name is translated into numbers as an IP address when it is entered into a browser's address bar. The DNS is a directory of those numbers.

Open source: Open source describes code that is available publicly and that anyone can use. Users can take it and modify it for their purposes. WordPress is a great example.

Machine learning: An example of machine learning is Siri, Apple's friendly iPhone helper. This uses a form of artificial intelligence, which is growing by leaps and bounds as more companies incorporate it into products and services. By inferring a general set of rules, refined by use, the algorithm finds an approximate solution in place of having a specific algorithm for each individual function.

Software as a Service (SaaS): Otherwise known as "software on demand," this is a term associated with cloud computing. SaaS is a way of delivering business software via the internet. SaaS usually is billed on a monthly basis, making it more affordable than other software options. Many business management software packages, such as project management software, are now also available in SaaS form.

Systems

Content management systems (CMS): These applications manage the content of a website. They usually include a web-based publishing feature, which allows for editing and formatting of content without the use of web coding language, like HTML. Many CMS programs feature one-to-one marketing tools that enable targeted advertising.

Digital centralization: This term refers to centralizing as much information as possible in one area. Instead of several different apps or program, the trend is to try to get as much in one spot as possible to make it easier for entrepreneurs.

ERP software: Enterprise resource planning (ERP) software allows a company to manage various aspects of a business – such as accounting, inventory and human relations – in one place.

Business intelligence software (BI): BI is the information a business collects about itself and can include a broad swath of information. Companies purchase the enterprise software modules that are relevant to their business and use ERP software to view all the data collected by these modules in a uniform manner. Business intelligence software lets companies keep all their BI data in one place so that it is easier to access and analyze.

Contract management software: Many businesses operate on contracts made with customers, vendors and employees. Contract management software helps businesses track all aspects of their contracts, from initial negotiations to monthly billings.

Performance management software: Human resources professionals often rely on performance management software to track employee performance. Large amounts of data can be organized and analyzed more efficiently with the use of this software.

Customer management software: Customer management refers to the way in which a business collects and manages data about its clients. Companies use customer management software to keep track of all the information they collect on clients, such as service calls made or previous products purchased. This helps them close future deals and grow relationships with customers.

Learning management system: Learning management systems are used by businesses training employees. Such systems help human resource departments plan, implement and assess the training process. Video conferencing, discussion forums and other interactive features are usually included within a learning management system's software.

Document management: Document management refers to the system of creating, sharing, organizing and storing documents within an organization. Document management software can be used to help facilitate the document management process.

Version control: Version control keeps programmers and engineers, for example, from writing over the work of their co-workers. This keeps not only historical data intact to backtrack how a task was accomplished, but also allows for progress on multiple fronts when teams are collaborating on systems. Having access to older versions allows better troubleshooting as well.

Managed services: Many day-to-day business activities can be outsourced as a means of cutting costs and increasing overall efficiency within a company. Such a practice is known as managed services. Human relations activities and information technology activities are two common areas of expertise often subjected to this practice.

Distributed systems: The bigger your business becomes, the more it needs a distributed system to handle the data and server requests that come in and flow out. These systems use several computers connected on a network to provide a service, compute data or accomplish tasks.

Marketing

Customer experience (CX): This seems like a pretty simple term, but it probably has the most impact on your success. CX is the way your customer interacts with you, and their opinion of it. Businesses no longer only compete locally; the internet has made every market a global one.

Steven McDonald, a digital marketer writing for SuperOffice, said. "For example, if you book a vacation on the phone, and the person you are speaking with is friendly and helpful, that's good customer service. Yet, if your tickets arrive early and the hotel upgrades your room, then that's a good customer experience." What can you do to improve your customers' experience?

Virtual reality (VR) and augmented reality (AR): At first glance, these terms look like they should be categorized in the technology section, but unless you are developing these advancements, you are most likely to find them in ways to promote your product and service. Putting on VR goggles and interacting with your product at a trade show or conference booth can be an enticing way to engage the attendees and keep them talking about your service well after the event.

Big data: Big data describes collecting and analyzing large amounts of information. It is based on a quantitative, numerical foundation of algorithms, which can make it very effective but somewhat limited until interpreted by the organization and used appropriately.

Minimum viable product (MVP): The MVP is the latest in startup and new venture business models. The purpose is to use validated learning – for example, real feedback on the product versus beta or test input – to get the most from the minimum amount of development and effort. 

Email marketing: Email marketing is the promotion of products and services via email. Businesses can get creative with their emails by including images, videos and other exciting content that customers will be more likely to read.  

Merchant account: Merchant accounts are agreements with banking institutions necessary for your business to accept credit and debit card transactions. In exchange for converting credit card payments into cash, banks charge merchants interchange fee as well as other fees.

Content curation: Content curation is basically choosing content to share online. This can be cultivated from existing content but should always be made new or "fresh" in some way to stay relevant, and to meet search engine algorithm specifications for higher ratings.

Engagement: Knowing how many people use your online resources and how often they interact with your social media efforts is called tracking engagement. The more engaged your audience is on social media or your website, the more you know your message is being heard and resonating.

Impressions. Along the same line as engagement, an impression occurs each time a piece of your social media is seen by consumers. The goal of an impression is to make it a memorable one.

Organic: Organic is a term that relates to your content that individuals have liked or viewed, because they come to it naturally instead of through paid promotions. As such, it ranks higher in search engines.

Marketing automation: There are software or online services that measure marketing efforts through tools such as emails, social media, reporting, analytics and customer relationship management. Social media posts can be input and scheduled for release and then data collected to measure effectiveness.

A/B testing: Using A/B testing, a business can release two pieces of online content, like a marketing email, blog post or web page, and see which version receives the most response. It helps narrow down marketing and advertising avenues.

Some source interviews were conducted for a previous version of this article.

How to Bring an Integrated Approach to the Way You Manage Projects

Posted: 24 Apr 2019 05:00 AM PDT

Over the last few decades, project management has gone from something limited to the construction and manufacturing industries to a mainstay of everything from creative agencies to IT departments.

While this has certainly helped more and more businesses bring efficiency and structure to their projects, it has also created a new problem: fragmentation.

Different departments within the same company end up developing their own project management best practices and methodologies. There is little communication across departments and teams, leading to a vast amount of PM knowledge that remains stored in silos.

The result is all too familiar: wasted resources, overwhelmed managers and derailed projects.

As your business grows, you have to think deeply about the way you organize your projects and the knowledge they produce. It's not enough to follow the latest project management methodologies; you also have to integrate your approach across projects.

The need for an integrated project management approach

Think about all the projects you currently run in your company. Are they all similar in size, scope, and maturity? Of course not. Like any company, your projects will vary greatly in their size and scope. This difference eventually leads to a situation where different managers and departments end up developing their own methodologies for managing projects.

After all, you can't really use the same approach to manage a two-week, $5,000 project as you would to manage a year-long, $500,000 undertaking. This essentially creates a vast amount of project management knowledge that remains localized within individual teams or departments. Your IT department might have its own PM (project management) approach, which might be completely different from the marketing department.

This leads to several problems:

  • As the number of projects increase, so does the number of best practices. Capturing all this knowledge and turning it into actionable insight becomes a massive challenge.
  • Different project management power centers emerge within the company, all of which jockey to push specific methodologies. This can lead to paralysis as managers debate which approaches to use, rather than actually running the project.
  • Since there is no integrated PM approach, projects remain isolated rather than being organized into portfolios. This makes it much harder to share resources across similar projects.
  • As the number of methodologies and best practices multiply, so does the amount of work project managers have to do to keep all involved stakeholders happy.

For instance, an IT project and a marketing project might encounter the same design problem. But if you don't have a way to share knowledge across projects, you'll never be able to collaborate across departments and come to a common solution.

In fact, a wide-ranging study conducted by the Hawaii East-West Center found that an integrated approach to project planning yields substantially better results. I understand that this might not seem like a big deal when you're a small company, but as you grow in size, you'll find that the huge number of projects you manage creates a tremendous amount of knowledge.

Unless you adopt an integrated approach, this can easily lead to resource wastage, poor communication, and mismanagement – all impediments to your growth.

How to create an integrated project management approach

An integrated PM approach essentially means combining and coordinating all the processes that go into managing a project. Your goal is to simplify and bring clarity to each process.

Take reporting as an example. Usually, a project manager might have to report to several stakeholders during the course of a project – IT supervisor, resource manager, project management office (PMO), etc.

Maintaining different reporting standards for all these stakeholders can get overwhelming very quickly.

With an integrated approach, you would:

  • Identify the stakeholder with the most complex requirements (in this case, usually the PMO).
  • Create reporting standards and templates based on this stakeholder's requirements.
  • Apply the same standards and templates to all other stakeholders, removing details where necessary.

This way, instead of a project manager creating several reports for each stakeholder, the entire company can use the same integrated reporting standards.

The question now is, how exactly do you go about identifying and integrating all these processes?

Here are three tips to help you get started:

1. Identify and separate processes from projects

A project is a distinct, independent undertaking with a definite start and end. "Create a new website," for instance, would be a project.

A process, on the other hand, is a repeatable and reusable activity with no definite start or end. "Send a project proposal" would be a process since it's something you would do for every project.

For an integrated approach to project management, you should be able to identify all the processes that make up your projects. For example, when developing a new website, you might have the following processes:

  • Send weekly project status report
  • Create a communication plan
  • Create and send creative brief

While the specifics might vary, each of these processes can follow the exact same template across different projects. By identifying and separating them, you can standardize all your process and add/remove them to individual projects as necessary.

2. Organize projects into portfolios

One of the core tenets of integrated project management is the sharing of knowledge and resources across similar projects. For example, you might have two projects that both need to use an expensive resource, such as a high-end 3D printer. If you were to run the two projects in isolation, you will have to hire the 3D printer twice. But by grouping the projects into a portfolio, you can organize them in such a way that they can use the 3D printer at the same time, saving you time and money.

This grouping together of different projects is called a portfolio. Each portfolio can be managed by a single manager who can take steps to better utilize resources across all projects within the portfolio.

Try listing down all your projects. Identify what's common across them. Some ways to organize these portfolios are:

  • Based on size or budget (Under $10,000 projects, $10,000-$50,000 projects)
  • Based on the intended result (Grow website traffic, capture more leads)
  • Based on business impact and importance (High-margin projects, prestige projects)
  • Based on the core handling department (Marketing projects, design projects)
  • Based on growth or performance (High market share projects, high market growth projects)

This study published in the International Journal of Project Management outlines an integrated approach to project portfolio selection.

3. Break down your projects into distinct phases

How exactly do you start your project planning? Do you jump straight to the planning phase, or do you invest resources to first fully understand the requirements? The former approach is fraught with risk. You might jump straight to creating the project plan only to find that the stakeholders are not in agreement, or the objectives aren't clear to all parties.

This is why you should adopt an incremental approach where you understand the scope and vision over time, building consensus over time.

With this approach, you would:

  • Start by creating a project charter. This is a broad "vision" document that identifies the project's core objectives, intended outcomes, and the tentative project team.
  • Expand the charter into a project scope plan. This plan identifies the measurable goals of the project, what it must accomplish, what's included in it (and what's not).
  • Grow the scope plan into a project plan. This plan will list the activities you will undertake to meet the goals and objectives outlined in the project scope.

At each stage, consult stakeholders to ensure that they're all on the same page. This way, if there is any conflict about the project's goals and expected outcomes, you'll be able to spot them before you even start the project. This can save a ton of resources, particularly when you're handling complex projects.

Do your best to stay organized

As your business grows, you will find that it's increasingly difficult to keep all your projects organized. You might end up underutilizing some resources and overextending others. At the same time, you produce a ton of knowledge, all of which remains isolated instead of being shared with everyone.

An integrated approach to project management solves all these problems. By integrating your processes, breaking projects into smaller phases, and organizing everything into portfolios, you will find it easier to share resources and knowledge.

The result is more savings and less wastage.
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