Spring is the time for renewal, making it a great opportunity for small businesses from a diverse set of industries, from contractors to cafĂ©s, lawyers to landscapers, retail stores to restaurants, to refresh the ways they operate. Areas ready for a refresh are those that cause challenges for a business. For many, one of the most challenging parts of running a business is getting paid.
To best navigate that challenge, every owner should take a step back and ask themselves the question âHow do my customers actually want to pay?â
To help small businesses answer this question, and better understand the ways their customers prefer to pay, payments and point-of-sale company Square recently conducted a national study that reveals 79 per cent of Canadians are now âcard-firstâ buyers who typically reach for a debit or credit card first when making purchases. Businesses that donât accept cards run a risk, as the average Canadian customer has only $46.50 on them in cash, and hasnât visited a bank or ATM to withdraw cash in 17 days. This means that when a customer wants to buy, but card payments are not in the mix, itâs a gamble to hope that Canadians have enough cash in their wallet to cover a purchase.Â Â
The average Canadian customer has only $46.50 on them in cash, and hasnât visited a bank or ATM to withdraw cash in 17 days
Someone who knows what can happen when customers arenât carrying cash and a business canât accept cards, is Squareâs co-founder Jim McKelvey. He was operating a glass-blowing business and missed out on a $2,000 sale of one of his glass faucets because he couldnât accept a potential customerâs credit card.
While McKelvey was acutely aware why he lost out on the sale, this isnât always the case. Itâs perhaps more troubling that the same study showed businesses frequently lose out on sales that they never knew existed. Almost half of Canadians (47 per cent) avoid businesses where they canât pay by card, and an equal per cent havenât made a purchase because they werenât able to pay by card. Yet these missed sales fly under the radar of businesses, as 85 per cent of cash- and/or cheque-only small businesses donât think theyâre missing out on sales by not accepting cards.
The way a business accepts payments also impacts the way consumers view the business. Specifically, 67 per cent of Canadians think cash- and/or cheque-only businesses are old-fashioned. On the flip side, sellers such as Anet Gesualdi, co-owner of AG Macarons in Toronto, have said that being able to accept cards, in all forms such as contactless cards and mobile wallets such as Apple Pay, has shown their customers they are a forward-thinking business.
Other innovative local businesses like salad shop Field & Social in Vancouver are further leading the way, showing other businesses that completely cashless sales could be the future. Owner Barbora Samieian made the decision to stop accepting cash a couple of months ago and says the response from customers has been overwhelmingly positive.
While going cashless might not be the next step for your business, business owners should follow Samieianâs thoughtful approach to assessing which way her customers preferred to pay. Before Samieian went cashless, she spoke with customers and learned the vast majority wanted to pay with a credit or debit card, which encouraged her to make the transition. In fact, over two-thirds of Canadians (69 per cent) say they would be more likely to buy from a local business if they can pay by card.
Too often, small businesses make the mistake of focusing on how they want to be paid, and not how their customers want to pay them, which leads to them not getting paid at all. That is a huge challenge as no business, large or small, can afford to miss out on sales.
Cathy Vigrass is Squareâs Head of Canada and is passionate about making commerce easier and more accessible for businesses of all sizes.
First published at http://business.financialpost.com/entrepreneur/money/cash-is-no-longer-king-as-small-businesses-who-dont-accept-cards-will-learn-to-their-detriment