Starting a new business in 2019 comes with its share of challenges: it’s more competitive than ever, sales channels and marketing are evolving, and basic operations are becoming more expensive.
But there are also reasons that operating a modern business has become a bit easier. Most importantly, technology aids in basic business operations. For both menial, day-to-day tasks and large-scale, big picture strategies, there is a vast world of software out there. Better yet, much of these new tools are not just accessible for enterprise businesses; SMBs can benefit, too.
For retailers, a key player in this will be the hub of all business operations: a retail point of sale (POS) system. No longer are POS machines just for ringing up a sale. Rather, they are powerful systems that can help businesses optimize their ordering, pricing, inventory levels, and much more.
If you’re opening a new business or in need of a new system, check out the guide below. We’ll walk you through the items to consider while shopping for POS software.
Inventory management is a critical feature for nearly every business, but especially key for those that have a large product selection. There are several primary reasons for optimizing inventory:
- Running out of a certain item will frustrate customers, sending them to competitors.
- Overstocked items tie up cash and shelf space.
- Smart ordering can reduce costs from vendors.
Many small businesses are intimidated at the idea of cleaning up their inventory system and improving efficiency. Fortunately, gone are the days of pen and paper or spreadsheets; all inventory can be electronically scanned into your POS system. Plus, you can consolidate inventory reports between stores or import old data in a new system.
Proper inventory management will improve many areas of your business. It will highlight pain points and provide vast insight into your operations.
Sales Reports and Metrics
Keeping your stock levels optimized is difficult without detailed sales reporting. A point of sale can generate product reports and break down sales in a number of ways. Whether you want to analyze a recent promotion or trim your catalog, a modern POS creates custom reports in a matter of seconds.
Some key categories for many businesses include the following:
- Gross margin
- Sell-through rate
- Sales by employee
- Average customer spend
- Customer conversion rates
- Turnover rate
Breaking down your store’s performance provides precious insight into your business and can help you plan marketing strategies, pricing, staffing, loyalty benefits, and much more.
Promotions, Time-Based Discounts
A modern point of sale system makes planning a new promotion simple. You can start a new promotion, edit an existing one, add time-based discounts, and run store-wide sales. Any changes will automatically update in your sales reporting so you can see how your margins are affected.
With all discounts and promotions tied to your POS system, gathering valuable data is seamless. It’s simple to measure the success of a promotion, price change, or large-scale sale.
Multi-Location and Franchise
For businesses with multiple locations or franchises it’s important to find a POS system that is built to keep data consolidated between each shop.
Multi-location businesses need to see inventory and reports for individual stores as well as the big picture of your operation as a whole. With all data under one umbrella, it organizes inventory management, sales reporting, ordering, and product analysis. Plus, it leaves room for growth – when you’re ready to expand to a new location, transferring product info and other data is as simple as a few clicks.
Franchises require similar features, with the added ability to calculate royalties for each franchisee. Uniform point of sale software between all franchise shops allows for better communication and smoother business operations.
Employee Reports and Custom Permissions
In the end, your bottom line and product performance are the most important figures. But there are many factors that are contributors.
One major factor is your staff. The team of associates are the face of your store and conduct the majority of interactions with your customers. So it’s vital to know how they’re doing.
Employee reports from your POS should be easy to generate and interpret. While keeping an eye on your staff can give you a general idea, breaking down their sales performance through the point of sale is more reliable. Below are several ways to categorize the data:
- Total sales
- Hourly sales
- Rates of conversion
- Commission collected
- Voids, comps, no tenders
- Average transaction total
Additionally, it’s helpful to set custom permission levels for each user. A modern point of sale is a powerful tool that provides broad access to all business operations. And while you probably trust the integrity of your staff, it’s important to protect your store against fraud and theft. Setting unique levels of access is a great way of doing so.
Return, Store Credit, and Refunds
Determining an optimal return policy is quite the balancing act: you want to be friendly to your customers but you can’t afford people taking advantage of it.
Once you lay out your policies on returns, refunds, and store credit, your POS system must make it easy to process them. The average customer doesn’t have time to wait in a long line or deal with a slow cashier. A smart policy in conjunction with a powerful point of sale will keep your customer service lines moving quickly and your customers content. Plus, it will protect your store against fraudulent returns and chargebacks.
Shoppers are quickly adopting modern forms of payment. Cash and checks are infrequently used, and even swiped transactions are going by the wayside.
Due to payment industry regulation, EMV chip payments are much more common. U.S. law says that in order for retailers to be protected from fraudulent transactions all credit transactions must be made with a chip rather than a swipe. Debit transactions have additional security with the PIN entry, so do not face the same regulation.
Recently, mobile payments have become more ubiquitous. Less out of any legal concern, retailers should accept contactless payment methods to add convenience to the shopping experience. Most users expect to use their mobile wallets at any retailer they visit. Failure to offer the option might drive away valuable shoppers.
In order to accept these types of payment, make sure that your POS system is integrated with all appropriate hardware.
For each transaction, your merchant service provider will take a small percentage out of the sale as a fee for facilitating the transaction. The structure of these fees is remarkably complicated, but it’s worth learning the basics. Even a small percent increase or decrease in your processing fees can have a huge impact on your bottom line.
Retailers have two options for payment processing:
- Processing is built into the POS system itself. In these cases, the POS provider is also a credit card processor. They will require merchants to use their processing service, often at higher rates than the industry average.
- Processing comes from a third-party integration. For more options and negotiating power, you can look for POS software than integrates with various processors. This leaves you with the opportunity to find the cheapest solution for your business.
While various POS providers cater to different business verticals, third-party integrations are important, too. They provide more robust solutions for specific operations. Consider the following areas to inquire about integration options:
Customer relationship management – Most great POS solutions offer a point-based loyalty program, but some businesses might benefit from a robust integrated CRM system.
Accounting software – Building your accounting into your POS system will streamline your payroll and taxes.
eCommerce – More businesses are moving toward an omnichannel shopping experience. Just like it’s important to keep all brick and mortar locations under one POS system, a retailer with a physical location and online store needs the two to communicate through integration.
Ticketing and membership – If you sell tickets, season passes, or membership discounts, all printers and turnstiles need to integrated with your point of sale.
Additionally, some POS solutions have open APIs, so subscribers can build any integration they desire.
Your POS software is what powers all communication and operations, but it must have reliable hardware on which to run.
Most point of sale systems come with various hardware options to fit different needs:
Desktops – Checkout counters at most retail stores typically use some type of desktop solution. While bulkier than other options, desktops are faster and more powerful than other options. They also might come with customer-facing screens and touch screens for both cashiers and shoppers.
Tablets – Many businesses incorporate tablets in addition to desktops. They are useful for opening new lanes quickly during busy hours and allow employees to check out guests from the floor instead of solely the checkout line.
Phones – For the smallest retailers, payment can be made directly through your personal phone. This is not suitable for larger operations.
Receipt printers – For the time being, we still print receipts. And receipt printers can add QR or bar codes for promotional reasons.
Payment machines – As discussed above, modern credit card machines are recommended.
Scanners – For fast checkout, scanners are used to ring up each item.
Look for POS software that integrates with various options. In many cases, existing stores can save money by keeping their existing hardware if it integrates to their new software.
Training, Support, and Contract
Finally, you’ll need to consider the details of your agreement with your POS solution.
All modern systems are cloud-based. This means that all data is stored in remote servers, making it secure and accessible from off-site.
The software is also typically subscription based. Because the software is constantly evolving, the SaaS model ensures that subscribers are always getting the most up-to-date solution. Any upgrades to the software will be automatically downloaded to each user.
Contracts vary from month-to-month to several years. Month-to-month is generally more wise in case the solution isn’t working for your store, but longer term contracts may offer discounted rates.
Finally, inquire about training and support fees. Some solutions charge clients additional fees for phone or chat support. It’s recommended that you find a solution that offers great customer service at no extra cost.
Hopefully, this breaks down the process of shopping for a new POS system. It’s a critical purchase for any business and options must be adequately weighed. Consider each of these features and prioritize which are most important for you business. Going into the shopping experience knowing what you want and the right questions to ask will make the process much more productive.