First, merchants had that heavy metal piece of equipment that made a “ca-ching” noise when you opened the cash drawer sitting in their shops. Then, many business owners used an automatic point-of-sale computer, which can be bulky and costs approximately R80 000.
Now, more entrepreneurs are opting to have their cash register, inventory tracking and customer records all run through an iPad or other mobile touch-screen tablet. An iPad looks modern and sleek, the device’s mobility gives a merchant greater flexibility in serving customers, and the cash-register software available for a tablet costs considerably less.
Over the next three to five years, many of the existing larger and pricier point-of-sale systems will be replaced with iPads, says Dave Kaminsky, an emerging technology analyst with Mercator Advisory Group, a payments-industry advisory firm headquartered in Massachusetts.
It’s impossible to predict when a total conversion of the market would occur, he says. In the same way that some customers continue to write checks in an age of online banking, some merchants will continue to use the older point-of-sale systems out of habit, he says.
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For Shannon Seip, transitioning from a more traditional point-of-sale system to an iPad-based system was a cost-saving no-brainer. The set-up costs for an iPad-based point of sale system for her healthy, kid-friendly café were R40 000 less than it would have been with a traditional point-of-sale system.
“For a small company like us where R40 000 makes a huge difference, that was a key differentiator,” says Seip, who recently moved her shop, Bean Sprouts Café & Cooking School, from Wisconsin, to Seattle. “That might mean an extra oven that we might need, right there.”
When Bean Sprouts was in Wisconsin, the café operated with a traditional point-of-sale system called Aloha, made by Georgia-based multinational corporation NCR. Now, Bean Sprouts uses an iPad-based point-of-sale system offered by Ontario, Canada-based Aireus.
To get set up with Aireus cost Seip $3,750 plus the cost of two iPads and printers. She selected Aireus for its relatively affordable start-up and maintenance costs, its compatibility with other financial software that Bean Sprouts uses and the customer service, among other reasons.
A range of iPad-based point-of-sale systems are on the market now. As more tech companies look to enter the point-of-sale market, some seemingly unlikely competitors are angling for the same turf.
For example, Chicago-based Groupon, known for running daily deals on local services and products, and San-Francisco-based Square, known for giving merchants a way to accept credit cards from their iPhones, both now offer point-of-sale systems tailored to specific segments of the restaurant industry.
Groupon’s restaurant software, called Breadcrumb Pro, starts at $99 a month, was released in October 2012 and is tailored to more full-service restaurant set-ups. Square’s free software, Square Register, launched in March 2012, and last month was updated with new functions for the smaller, quick-serve restaurateur.
While Groupon’s Breadcrumb Pro monthly software costs starting at $99 a month are higher than Square’s free software, Square’s swipe fee of 2.75 percent of a charge is higher than Groupon’s 1.85 percent of a charge plus a 15-cent transaction fee for any charge above approximately $17.
Point-of-sale system companies known for their larger and more powerful R80 000 systems, such as NCR, also have moved to provide iPad point-of-sale solutions. NCR’s iPad-based point-of-sale solution, called NCR Silver, launched last summer.
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NCR’s software is free, its swipe-fee charge at 1.99 percent is between that of Groupon and Square, and NCR requires merchants to pay an equipment-lease fee, starting at $29 each month. The 128-year-old company is confident that merchants will end up picking NCR’s longstanding expertise over the newer entrants to the market.
“When [merchants] do their research, even if it was marketing dollars from a Groupon or a Square that might have gotten them to start that research process, quite often that research process lands them with NCR,” says Christian Nahas, leader of the NCR Silver team.
“They are attracted to our stability, they are attracted to our history, they are attracted to our robustness, they are attracted to, ‘This is what we do.’ We are not a deal company that also has a point of sale or a payment company that also has a point of sale.”
What’s more, offerings from Groupon and Square don’t currently have the ability to serve the more sophisticated point-of-sale needs of larger enterprise chains, says Sucharita Mulpuru, retail analyst with industry advisory firm Forrester Research.
“I am sure that everyone wants to position themselves as more,” Mulpuru says of the point-of-sale tablet options flooding the market. Groupon and Square may be best for the kinds of merchants that were previously cash merchants that are looking to now accept credit cards because of their low set-up costs and ease of adoption, she says. And because it is so expensive and time consuming for a larger retail operation to replace its point-of-sale system, new point-of-sale offerings will have a better opportunity with smaller retailers that either don’t have an existing system or for whom transition costs aren’t prohibitive, says Mulpuru.
Among smaller retailers, the major players like NCR have the advantage of name recognition in the point-of-sale industry, but whether they continue to dominate will depend on their ability to innovate ahead of the more nimble point-of-sale system start-ups, says Kaminsky.
So far, the biggest players have been keeping up and making necessary changes and updates to their systems, he says.
As Chicago-based Groupon tells it, moving into the point-of-sale business is a natural evolution from its daily-deal model. The daily-deals model is “super clunky today. Daily-deals is goofy, in terms of where it is going to be,” says Jeff Holden, senior vice president of product at Groupon.
Looking ahead five to seven years, Groupon wants to be the engine that connects consumer demand with local merchant supply constantly and in real time.
To do that, Groupon wants to become the point-of-sale system for merchants that run deals on its platform. Groupon expects to be able to constantly monitor for peaks and valleys in local small-business revenues and coordinate deals to automatically be sent to its 41 million active users to drive traffic to a shop when a business owner needs it, explains Holden.
“Local commerce is super inefficient, is super broken. What local businesses have to do to be successful is crazy,” Holden says.
In the still-burgeoning iPad-as-point-of-sale market, Groupon’s ability to monitor the peaks and valleys in a business’s traffic and drive customers to a local business at peak moments gives the daily-deal company a “significant benefit,” says Kaminsky.
Square also says that its move into the point-of-sale market was organic. The logical extension of providing merchants a way to process credit cards is offering a way to manage and track those payments. “We expect Square Register to be the default way any brick-and-mortar merchant manages and runs their business.
That means building features and functionality that make commerce easy for merchants of all kinds from restaurants, to boutique retailers to mobile sellers,” says Aaron Zamost, spokesman for Square. The option of a flat monthly fee combined with Square’s speed and agility in adding new features to its software make the company an attractive option for even some larger merchants, says Kaminsky.
As an entrepreneur, choosing a point-of-sale system for your business can seem overwhelming. New options and enticing sign-up offers are available regularly. For example, earlier this month, PayPal offered to waive transaction fees for the remainder of the year if a business replaces its cash register with an iPad operating PayPal’s free mobile-payment technology, called PayPal Here.
Business owners often choose an interface and financial dashboard that feels most comfortable, says Kaminsky. “A lot of times, they are going to say: These are all basically the same, they are providing the same service, the differences they have don’t make a difference to me.
And at that point, it is going to come down to, once again, that trust, whose name do you feel most comfortable going with,” he says.
While the tablet-based point-of-sale systems are gaining in popularity, they aren’t for everyone. Jerry Nevins and three buddies launched an artful frozen-drink lounge Snow & Co. in Kansas City, Missouri, in November 2011 with Ambur’s iPad point-of-sale system, for which they paid R10 000.
But by October 2012, after much deliberating over the cost, Nevins and his three other co-founders bought a R80 000 point-of-sale system from Micros. Along with the more traditional point-of-sale system, Nevins ordered hand-held mobile devices which waiters carry with them to tables to take orders from customers.
As Snow & Co. grew, Nevins wanted to be able to more carefully understand his customer behaviour. “I could get a sales report by ticket and by customer, and I could get a sales report by item, but those things didn’t tie together, so I couldn’t see what my customers were buying most often together,” says Nevins.
“If I wanted to get my hourly sales, I could run it out by hour, but I couldn’t get a report that would show me my sales by hour automatically.” With the more costly system from Micros, Nevins can generate these reports that he didn’t have access to with Ambur’s iPad system.
The team at Ambur is aware of the restrictions on its software reporting system, and it is working on increasing the reporting functions it can provide, says Jeff Su, the director of operations. When more robust software becomes available, customers will be able to access it for free, Su says.
He was unable to provide a timeline as to when more sophisticated reporting software would be ready. But, he says, what’s important to Ambur is that a potential customer is able to play around with a fully functional demo of its product before they purchase it.
“We want people to know exactly what is going to be happening and then they can ask any questions that they want, they can see it live in person or over a computer screen,” says Su.
Tablet POS Systems
Software: Breadcrumb Pro
Set-up: Starts at $99 a month, goes up depending on number of iPad terminals
Hardware: Restaurateurs can purchase third-party equipment or use their own tablet.
Swipe: 1.85 percent of a charge plus a 15 cent transaction fee
Launched: October 2012
Target market: Full-service restaurants and bars Early adopter: New York City-based restaurants, including Empellon Cocina and Terrior Park Slope
Software: Breadcrumb POS
Hardware: Merchants can purchase third-party equipment or use their own tablet.
Swipe: 1.85 percent of a charge plus a 15-cent transaction fee
Launched: May 2013
Target market: Quick-service eateries, salons and spas, retail establishments
Early adopters: San Francisco businesses are testing a pilot
Software: Square Register
Launched: March 2012
Hardware: Business in a Box cash drawer and iPad stand: $249 and $499 with receipt printer; Square Stand iPad stand: $299, includes integrated card reader (available July 2013)
Business in a Box launched: February 2013
Swipe: 2.75 percent of a charge for its services.
Target market: Local businesses and quick-serve restaurants
Early adopter: Oakland, Calif.-based Blue Bottle Coffee
Software: Vantiv Mobile Checkout Powered by NCR Silver
Launched: May 2013 (NCR Silver stand-alone program launched June 2012)
Hardware: $29 per month hardware lease, includes wired printer and Ethernet wire, cash drawer, iPad stand, encrypted credit-card reader. Merchant provides the iPad.
Swipe: 1.99 percent per transaction
Target market: Average customer makes between $100 000 and $1 million a year in sales; mostly restaurants, cafes, retailers and service providers.
Innovate For Change – Think Like A Social Entrepreneur
Why consider the social entrepreneurship model?
Social entrepreneurship is an exciting business arena that finds new, sustainable business solutions to long-standing problems. Social entrepreneurs see social challenges (such as poverty, homelessness, poor infrastructure or lack of quality education) as an opportunity for change.
This approach brings together the best that business practices offer and blends it with the best that civil society offers (a social mission, broader stakeholders involvement and the engagement of the community). By generating income from business activities and reinvesting its profits back into driving its mission, this approach generates both social value and economic value simultaneously.
Why consider the social entrepreneurship model?
1. Seeing social challenges as opportunities
South Africa’s social and structural challenges, from our poor ranking in health and education to the high level of unemployment, provide a myriad of opportunities for entrepreneurs that are willing to roll up their sleeves and work to build a better future.
The recent winner of the recent Nation Builder Social Innovation Challenge, Lungi Tyali, is a great example of this mindset.
Across Africa, there is a dire lack of provision for the electrification needs of the majority of the population, especially in rural communities. In South Africa, at present, there are 3.4-million households without a formal, metered electricity supply; 2.2-million in formal and 1.2-million in informal households. Lungi Tyali is the CEO of Solar Turtle who, with her business partner, James van der Walt, created a solar energy solution for rural and off-grid areas. Solar Turtle provides a solar-powered kiosk in a container that serves as a hub for renewable electricity. During the day, the solar panels are open to collect sunlight and at night they are enclosed and locked securely into the container.
Related: How To Be A Social Entrepreneur
2. Social entrepreneurship has low barriers to entry
Many of the most successful social enterprises start off small with an enterprising individual seeing an opportunity in their local community and building from this small beginning. There is no prerequisite for a university degree of formal training. Growing social enterprises can thus also offer employment opportunities to unskilled workers and youth without experience, addressing South Africa’s high level of unemployment.
One such story is that of Nonhlanhla Joye, the founder and facilitator of Umgibe Farming, Organics and Training Institute. Ma’ Joye, was diagnosed with cancer in 2014 and as a result, could not work to provide food for her family. She decided to grow organic vegetables in her backyard to feed her family. Unfortunately, the chickens ate all her vegetables and she had to come up with a solution.
She innovated a growing system using plastic bags. Before long Ma Joye was teaching other community members to use her growing system. A platform was born where poor communities started growing vegetables to feed themselves and collectively sell their surplus produce.
3. Corporate Social Investment, with purpose
Social enterprises also offer individuals and companies the opportunity to invest in lasting social change. Unlike traditional philanthropy, the impact of social enterprises has the potential to be much more lasting by directly providing affordable social goods and services, as well as employment opportunities.
Nation Builder, for example, is a platform* that brings like-minded businesses and civil society together in order to learn from each other and partner together for the greatest possible impact through wise and responsible social investing.
4. Personal actualisation
Perhaps the most rewarding advantage of being a social entrepreneur is the impact you can have on society, but this model also offers several personal benefits:
- working to solve issues you care about
- freedom to explore and create innovative solutions that can inspire change
- the opportunity to turn passion into profit
- working as your own boss.
Having The Perfect Product Isn’t Enough To Keep You In Business
The odds of the small business surviving aren’t stacked in its favour. It’s more likely to fail than succeed. That’s the bitter truth. However, once it’s able to shake off the niggling teething problems, watch it as it unfolds from a pupa to a beautiful butterfly.
There is a small bakery operates in my neighbourhood. It bakes bread; no cakes or other confectionaries. The best home-made bread that has your palates yearning for more. This is in sharp contrast with the bread produced by bigger bakeries. They also supply bread to the neighbourhood.
The bigger bakeries operate a model that is largely automated to the point that they lose a very important ingredient beyond flour, yeast and whatever goes into making bread. They lack the personal touch that gives it the home-made feel. This is why the neighbourhood bakery is preferred despite being pricier.
The small bakery isn’t without its flaws; avoidable flaws that may, sadly, sink the business. My view is more on the certainty of the demise of the business as observers would’ve noticed a slow yet steady decline in the output of the business. These flaws aren’t unique to the bakery, several other small businesses have share the same flaws.
Why would a customer who is willing to pay more for a product suddenly cease patronising the business. What other factor apart from higher price, in the absence of a drop in purchasing power, would make a customer buy bread of supposed inferior quality from the competition.
A couple of years ago when I moved to the neighbourhood the business was doing great. Even during a biting recession the shelves were always stacked with freshly baked bread of different varieties. Despite the excellent product on display, there was an unsatisfactory trend in the operation of the business.
For one, the sales personnel are rude. Having the right staff is necessary to grow any business, but when this very fundamental issue isn’t gotten right it will be fatal to the business. After all for how long would customers put up with poor service delivery in the face of stiff competition from bigger rivals.
Small business owners must realise that proper training of staff is as important as sourcing for capital and shouldn’t be overlooked as the survival of the business also rests on it. Bigger businesses in this regard always come out tops in comparison with their smaller counterparts.
Annually, big businesses spend billions of dollars on staff training for the simple recognition of the fact that having disgruntled customers, on account of poor service by personnel, is dangerous for business. Despite their size, big businesses tend to understand better the importance of the single customer. Also, how the discontent of a few customers can translate into poor sales which is detrimental to the business.
The mindset of a small business shouldn’t be different. Investing in staff shouldn’t be treated with levity to ensure the business not only stays afloat, but also grow it. Growing a business is in itself tough work, small business owners shouldn’t make it tougher by providing terrible service.
The neighbourhood bakery lacks this important feature and it’s been responsible for the steady decline in sales. I didn’t know the poor service rendered by the attendants had attained much notoriety until I was having a conversation with a group of individuals at a religious gathering and the issue came up. It’s a sad realisation.
For financial reasons small businesses aren’t known for recruiting the best personnel. Most employ the services of family members. While there is nothing wrong with this, it’s important to ensure such person is the best fit for the business. Employing family members may lead to a myriad of problems for the business. Therefore it will be in the best interest of the business not to employ an incompetent family member than have him ruin the business. This is a risky way of running the business.
The feeling of the customer towards the goods or services businesses provide is key to its success or failure. This is because customers can have the most unbiased assessment of the business rather than management and staff. Despite the poor service the bakery openly had on display, no one seemed to have bothered complaining to the owner of the business. So it may seem.
It will be in the best interest of a small business owner to leave an open channel for feedbacks from customers. This isn’t the case with the bakery and some other businesses face this challenge too which may lead to further problems.
The inability to provide an avenue for customers to channel their complaint to the proper individual creates a problem of inaccessibility. Accessibility happens to be an area of strength for small businesses because of their size. In larger businesses, despite creating channels for complaints there is usually no personal relationship between the owners and their customers. This is an area a small business shouldn’t be found wanting.
One would imagine that as a small business, the owner of the bakery should be easily accessible to interact with customers to in order to obtain feedbacks pertaining service and staff performance. This isn’t the case as the business clearly takes this important factor for granted. A lot of customers don’t know the owner of the bakery despite patronising it for years.
On paper the size of small businesses translates to easy accessibility. A closer look will reveal that the owners of small businesses tend to take a lot of things for granted. They fail to realise that they have to be consciously open to the idea and cultivate the habit of seeking feedbacks from customers. A small scale business has to maximise its potential for dynamism and flexibility. If it can’t take advantage of its unique qualities then it’s doomed.
There has been a reduction in the variety of bread baked and in addition to this is the equal reduction in the amount of bread on display generally. From observation it’s clear that patronage has taking a massive hit.
It’s painful witnessing the slow demise of a business with a good product due to its own failures. Having the perfect product won’t on its own keep the small business in business. The odds of the small business surviving aren’t stacked in its favour. It’s more likely to fail than succeed. That’s the bitter truth. However, once it’s able to shake off the niggling teething problems, watch it as it unfolds from a pupa to a beautiful butterfly.
Customers Are The Heart Of Innovative Businesses
Keep your customer at the heart of your business.
One of the main reasons start-ups fail is because they don’t create solutions that meet their customers’ needs. Failure is avoidable. Businesses that understand their customers feelings, challenges, expectations and motivations make themselves indispensable in highly competitive markets because they recognise that true innovation is led by customer insight.
An incredible example of a business that believes in innovation driven by insight is Netflix. They revolutionised the way people watch video content by listening to their customer’s needs. You’ve probably heard the story before: after paying a $40 overdue DVD fee, Reed Hastings co-founded Netflix. He was simply too busy to return his DVD. He recognised that this experience wasn’t exclusive to him, but that it was a problem that many people faced. He saw a gap in the market for receiving and returning videos more effectively, and that is how the $150 billion business was born.
If your start-up doesn’t fulfil a human need, then you’re setting yourself up for failure. It’s not enough to have a cool idea. Ask yourself, “What is the market need behind the offering?” and then test ways of delivering your offering in the most user-friendly manner. Talk to your consumers, understand their likes and dislikes and establish your business purpose before haphazardly allocating funds to R&D.
You can’t go from being a California based DVD-by-mail provider, to becoming the world’s largest online video streaming service without a business plan. It’s important to recognise the step-by-step process of success. Netflix didn’t go from delivering DVD’s to pouring capital into the production of video content within six months. That sort of development would have bankrupt the company almost immediately. It took 21 years for the business to become content creators.
- In 1999, the company became a subscription service because they found that customers preferred paying a monthly fee rather than making a once off purchase.
- Then, in 2009, the company used investor capital to expand their DVD collection because their clients wanted a larger selection of movies.
- In 2010, the business expanded internationally because they saw a gap in the market across various countries.
- Finally, in 2013, Netflix created its first original content series because customers craved fascinating content beyond the overused Hollywood archetype.
The point is: Progress didn’t happen overnight. The business had to set goals and objectives. They then had to fund their growth by presenting market opportunities, backed by customer insights, to their investors. Establish your start-up one step at a time and make sure every progression isn’t innovation for innovations sake – it must be inspired by a human need.
Netflix was founded by a computer scientist and a marketing director. While one partner focused on Netflix’ service development, the other focused on sales. Since the company’s origin, collaboration and balance have been the cornerstones of the business’ success.
Netflix is currently composed of a diverse team of tech-professionals and designers. They understand the importance of combining technology and design to offer customer-inspired user-experiences.
After conducting consumer research, Netflix discovered that series and movie artwork influences viewing decisions by 82%. This has resulted in the creation of more descriptive and provocative designs. Netflix is known for leveraging human-behaviour to revolutionise their service offering.
As an entrepreneur, you can increase your ROI by partnering with the experts that understand human-based innovation.
Keep your customer at the heart of your business.
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