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In this article:\nWhy the average cost of rent for a small business is not the most useful statistic\nThe best way to approach your landlord about your rent to income ratio\nWhat percentage of your business should be spent on rent\nThe “unit cost” method of determining what you should pay for rent\nIf you’re a current business owner wondering if your rent is too high, this article is for you. If you’re considering renting business or office space for the first time, or perhaps the owner of a growing business wanting to move to a larger commercial space, please refer our article: \nHow much does it cost to rent space for a small business?\n \nIt’s time to address that gut feeling that you might be paying too much in rent. In this article, we’ll explain why questions like “what’s the average cost of rent for a small business” aren’t as useful as using a ‘unit economics’ approach.\nWe’ll also show you how to use unit economics calculations to determine if you’re paying too much for your rent, and discuss the best ways to negotiate a lower rate.\nThe “average cost of rent for a small business” and the wrong way to negotiate your lease\nWhen you’re trying to determine how much your rent should be, it’s tempting to try to research the average rent for a small business.\nMuch like when a renter searches through \naverage rent reports\n for a specific city to find their city’s average rent, this is the wrong approach and doesn’t really tell you anything useful (we’ll explain why below).\nFurthermore If you “just know” you are paying too much in rent, and you try to renegotiate, the first thing your landlord will say is, “Show me the proof! Show me the numbers.”\n \nwoman arguing with business landlord for what should I pay in rent\n\nResponding with, “But… I just \nknow\n you’re charging too much!” is a shortcut to stalemate and could even jeopardize your relationship.\nIf you want to make a strong case and generate black-and-white numbers, you need to know the “unit economics” of your small business.\nAlan Wille, CEO of Klipfolio, a business performance metrics company, defines unit economics as looking at the direct revenues and costs associated with the most basic element of a company’s business model. In other words, unit economics breaks down everything about your business into individual pieces.\nUnit economics is a more accurate view than “how much is rent for a business”\n“Done properly, a unit economics analysis will highlight opportunities, expose gaps, and direct you to optimal strategies for maximizing your profit,” Wille says.\nBelow, we’re going to look at how unit economics applies to rent. Let’s dive in.\nExamples of unit economics vs. average rent for a small business\nFor the sake of simplicity, let’s avoid spreadsheets and jawbreaking financial acronyms to learn about unit economics. Here are examples boiled down to help busy people to make quick, smart decisions.\nOne product costs $5 to produce, stock, and sell. It sells for $10. Looking at the economics of this unit, you can tell there’s a 50% profit margin.\nTo acquire one customer, it costs $25, between the online marketing campaign and paying the hourly employees on the sales floor. One customer typically spends $65. Looking at the unit economics, you can analyze your cost to acquire a customer (CAC) might be a little high, but still positive.\nOne square foot of space costs $6/month. But in one month your average gross revenue is $48,000. If your store is 1,000 square feet, that’s $6,000 a month in rent. Run the calculation and your rent is 12.5% of your monthly gross income.\nLet’s dig into this last example to tell if you’re paying too much rent as a small business.\nbusiness closed sign for how much should you pay in rent\n\nLearning your unit cost can keep your small business profitable.\nWhat percentage of a business’s revenue should be rent?\nTo calculate this commercial price to rent ratio, we’ll look at two things: (1) your type of business and (2) your competitors. Keep in mind the following percentages are rough and not exact. Use them as a benchmark.\nRestaurants: \nWhen calculating a good rent percentage for restaurants, the general rule of thumb is your total occupancy cost (rent and additional fees for property taxes, insurances, etc.) should not exceed 6-10% of your gross sales. (\nsource\n)\nAuto shops:\n The typical full-service auto shop spends 12-13% of annual gross revenues on rent. (\nsource\n)\nRetail stores:\n Retailers should target a base rental rate that is no more than 5-10% of gross annual sales. (\nsource\n)\nLaw firms: \nAttorney offices should expect to pay 6-7% of gross revenue, and even up to 15% for a prestigious address. (\nsource\n and \nsource\n)\nHair salons:\n Rent and property taxes should range from 3% for a remote location to 10% in a well-trafficked mall. (\nsource\n)\nKnowing these benchmarks, the next figure we need is gross sales. Finding this number is easy. How much money did your business make last year? What was the total sales for each month? Some small business owners will know this figure off the top of the head.\nThe last figures you’ll need is your business’s square footage and rent cost. We’ll provide different sums for the sake of illustration.\nFinally, here’s the simple calculation to determine if you’re paying too much in rent.\nGross sales / square footage = sales per square foot\nIf average monthly gross sales are $50,000 for a 6,000 square foot restaurant (average size for a Ruby Tuesday), then sales per square foot is $8.33.\nIf rent is $2/square foot, divide it by sales per square foot to get your percentage of income that goes toward rent.\n2.00 ÷ 8.33 = 24%\nIf this number is greater than the benchmark for your industry — restaurants, in this example, at 6-10% — then you can see you are paying too much in rent.\nIn our example, the restaurant is paying far too much in monthly rent. For every $8.33 in revenue that a square foot generates, $2.00 or nearly one-fourth of that is going to the landlord. This is too much, according to the industry average.\nThis calculation shows the unit economics of your rent, broken down into the revenue and expense of a single square foot. Why is this important? The restaurant owner in our example can now use the unit economics of their space to negotiate a lower rent agreement with the landlord.\nCalculate how much your business should pay in rent\nUse unit economics to calculate the return on each part of your business by analyzing the revenue and expense incurred by a single unit. Units can be anything.\nIn this article we focused on rent and the basic unit of a square foot, but you can use unit economics to analyze the return per employee, per desk, per customer, per product, per hour, etc.

Local business owners: are you paying too much in rent?

How can local businesses compete with Amazon?\nLet’s be honest: Amazon is a brilliant company that has permanently disrupted the retail world. Even longtime conglomerates like Barnes & Noble, Sears, JCPenny, and countless others have become proverbial Davids to Amazon’s Goliath. And, many businesses haven’t survived.\nIf so many small and big companies alike are being challenged like never before by Amazon, how can any business expect to survive and even thrive with such fierce competition? Is it as simple as learning how to sell on Amazon? Does the company have a secret weakness to exploit?\n10 ways local businesses can compete with Amazon\nThere are no easy solutions, but there are steps you can take to help ensure your business's long-term success. Here are 10 tips to help your small brick-and-mortar or e-commerce business compete with Amazon:\nBe unique\nYes, this sounds like an obvious piece of advice, but it couldn’t be more important in today’s business environment. Amazon sells just about everything, but it doesn’t sell \neverything\n. To compete, you’ve got to narrow your niche and offer something that can’t be found anywhere else.\nPerfect your website\nIf your website is difficult to navigate or simply has an outdated look, users will get frustrated and leave. Research shows that more and more people are shopping online. In fact, in \n2021 ecommerce revenue increased\n by 14.1%, reaching 13.2% of all retail sales, up from 8.1% in 2016. It might require a little time and attention to improve your website and ecommerce offerings, but you can’t afford not to.\nMake buying online easy\nEven after finding the perfect item, online shoppers will quit the buying process if something gets in their way. For example, if you require would-be shoppers to login prior to making a purchase, chances are they’ll quit. Make the online shopping experience seamless from start to finish.\n \nOffer a shipping solution\nNo one expects you to beat Amazon Prime’s fast and free shipping plan, but you should offer a shipping solution that works for your customers’ needs. Consider developing a shipping strategy that rewards first-time customers and frequent customers. If you make it easy and inexpensive for your patrons, they’ll likely keep coming back for more\n. \nGrow your online brand\nIs your company active on social media? Do you have reviews on sites like Google and Facebook? If you aren’t paying attention to your online business identify, your company is in trouble. Research shows that 90% of today’s consumers use online reviews when researching a product. Whether it’s shopping for a local pressure washer, tax accountant, or a bite to eat, people look to online voices before they make a decision. You can use that to your advantage.\nFocus on great customer service\nIt’s been said over and over again: customer service is the secret to keeping people happy. This sentiment is especially true in today’s Digital Age. Whether your customers are shopping online or inside your establishment, customer service is exactly where your small business can outshine the big guys. Provide your customers with personalized attention, service, and value they can’t get anywhere else, and they’ll be happy to support your business.\nCreate a loyalty program\nWhile you’re focusing on customer service, don’t forget to create a loyalty plan. Everyone likes free, so treat your repeat visitors to something extra when they come back again and again. The more a customer comes back, the more value you’ll get from them and the more likely they’ll continue to patronize your business.\nEmphasize the “local” in local business\nToday’s consumers care about their communities, and more and more are embracing the “shop local” trend. If you’re not active in your community, get out there. Start participating in events, like sponsoring the local high school team or joining a cancer walk. Open your doors to your neighbors and they’ll come in.\nTreat any employees right\nIf you have employees and they hate their jobs, their disdain and frustration will ooze into every corner of your business. Treat your employees with respect and make the workplace somewhere they want to be. Happy employees will treat your customers right.\n \nLove your business\nLet’s be real: being a small business owner is tough, and it hasn’t gotten any easier. There are so many thing to manage, and you simply can’t be an expert in everything. But if you love your business, your passion will shine through in everything you do.\n \nAmazon is a juggernaut, but your business can survive and even thrive if you focus on delivering a truly unique customer experience. Take a few simple steps and see what happens. We’re rooting for you!

10 ways local businesses can compete with Amazon

In this article:\n10 best practices for small business email marketing\nWhy should every small business consider email marketing?\nHow much does email marketing cost?\nWhat is the ROI of email marketing for small businesses?\nAs we’ve written before, \nemail marketing\n is hands-down the most powerful, effective, and efficient marketing tool for small businesses. If you follow the email marketing best practices detailed below, you can increase customer loyalty and revenue, improve conversion of potential customers, and expand your marketing audience.\nHow much does small business email marketing cost?\nDespite what you might think, small business email doesn’t have to cost an arm and a leg. Websites like BEE free, Stripo, Chamaileon offer free HTML email templates, including simple drag and drop options. You can also elect to simply send a personalized email to your list from your business email account, using the default template.\nMany small businesses prefer to use dedicated business email platforms like MailChimp or Constant Contact, both of which offer robust tools for creating professional-looking emails and managing your lists. \nAccording to the sources we found, Constant Contact costs between $20 and $70 per month, depending on your number of contacts and the features you want. MailChimp offers free plans to get you started, the next tier is $10/month, and the “Pro” level plans start at $199 and up (an unlikely choice for a truly small business). Whether these are worth the cost of entry is up to you. \nIs email marketing worth it for small businesses?\nDespite a commonly held belief that email marketing is outdated or ineffective, it has been shown to have an unparalleled ROI of up to 42:1. \nOf course, this is not to say that you are guaranteed to make $42 for every $1 you spend on email marketing, but industry data supports that general figure. One report specifically for small business email marketing reported that users experienced a 183% return on their investments. So it’s clear that it’s worth your time.\nWhichever email service provider you choose, be sure to follow the best practices below to maximize benefit and minimize potential problems when sending promotional emails.\nLet's go over the top 10 email marketing best practices for small businesses:\n1. Get permission, and build your email list the right way\nWhile studies show 86% of customers actually want email from businesses they patronize, it is without question better to get permission before you email potential or current customers. \nGetting email addresses doesn’t have to be an awkward or involved process. It can be as simple as adding an email address field on your point-of-sale platform at checkout, including a “send me an email receipt” option during the purchase process or on your online or order form, or you can go truly old-school and leave a bowl for business cards or a clipboard near the check-out counter where customers can elect to write down their email addresses to receive promotions.\nYou should also encourage your social media followers to send you their email addresses to be included in special offers and promotions for your business.\nPopular business email platforms like MailChimp and Constant Contact allow “opt-in” or even a “double opt-in” process. A double opt-in requires a potential recipient to first agree to receive emails, but also requires that they then click a link in a welcome email confirming their subscription to begin receiving marketing emails.

You may get fewer email addresses on your “send” list this way, but remember the point of email marketing is to send timely messaging to your most profitable customer base, not to simply build an impressively large email list and blast out thousands of emails to people who really aren’t interested (and who will likely mark your emails as spam, which could get you in hot water with your email service provider and even with the FTC—see below).

So, while it’s likely not a huge problem to send occasional reminders or relevant offers to everyone associated with your business whom you have an email address for (as long as you follow the rules), you will almost certainly see better results if you are 100% up front about getting customers’ specific permission before you send them promotional emails.  \nMaking sure you have a solid “opt in” process in place will set you up for greater success as regulations change.\n2. Learn the regulations and follow them\nSending unsolicited emails is illegal in quite a few European countries, and consumer privacy laws are being tightened in the U.S. as well. \nYou need to familiarize yourself with the FTC’s Compliance Guide on the CAN-SPAM act, and which types of email are subject to these regulations, \nhere\n.\nMake sure to comply with regulatory directives regarding spam and unsubscribing. Include an unsubscribe link in every email and make sure to promptly and correctly remove any addresses that request to be unsubscribed, to avoid landing in hot water. \nPersonal email service providers like Gmail are very wary of “spammers,” but as long as you are emailing people who have opted in to receiving promotional emails, or you are emailing your actual customers rather than a purchased list of random contacts, you should be perfectly fine (as long as you comply with the CAN-SPAM act and follow correct unsubscribe practices).\n3. Avoid common “spam” techniques \nSmall business owners are often tempted to emulate the promotional emails they themselves receive… but this can be a big mistake. \nWhen crafting your subject lines, headers, and content, you should avoid generic subjects, caps lock, lots of special characters or EXCLAMATION!!! MARKS!!!! or anything even close to resembling “OMG!! TRY THIS ONE WEIRD TRICK TO SAVE $$MONEY$$!!!!” \nemail marketing best practices 3\nMany popular email service providers will automatically scan such emails and send them to the spam folder, and you may be flagged as a disreputable sender, which will defeat the purpose of sending emails to build loyalty.\n4. Be brief, interesting, and accurate\nUse the appropriate format and messaging expected by your industry and audience. This might include newsletters, offers, sales, birthday wishes, “thank yous” for purchases, reminders, holiday hours notifications, discounts, product announcements, or whatever else you think your customers might want to hear about.\nMake sure your company name or brand appears in the “from” line correctly, and keep your subject lines to 8 words or less, and <40 characters, including spaces. Include a compelling reason for people to read your email in the subject line.\n5. Make it worth customers’ while\nThink of ways to incentivize signing up for your email list. Can you give 10% off today’s purchase when they sign up? Can you promise 5% off all future purchases for everyone on your list? You should ask yourself, “What’s in this for my customers?” \n6. Make sure your links and any embedded content actually work properly\nBefore you send an email, double check that everything displays and works the way it should: videos play, links actually function and redirect to the proper websites, click-to-order takes you to the correct product or offer on your website, email contact links open the appropriate email software and populate the address correctly, HTML emails display content correctly on desktop and mobile, etc. Send yourself and/or your employees test emails and ideally check function on multiple platforms and browsers.\n7. Keep images small\nAny images you include should be optimized for web and should be kept below 100K in size—50K or below is preferable. This helps the email load quickly and fully. You only have one or two seconds before today’s impatient users will give up on your email and delete it. (Pro tip: this also applies to your website pages.)\n8. Proofread your copy\nIf you aren’t the best writer or editor in the world, hire or beg the services of someone you trust to proofread the “copy” (words) for typos, grammatical errors, clarity, and brevity. Professional-looking emails will be free of common mistakes, text formatting issues, etc. \n9. Consider including a text-only version for people who prefer not to open HTML emails\nSources disagree on which format produces the best results (HTML or plain text) but it’s a good idea to cover your bets when possible. So, you might include a plain-text version of every HTML email you send. \nWhy? Some people won’t even look at plain text emails, and some won’t look at HTML emails. When you build an HTML email in most of the common email platforms, there will be an option to also create a plain-text version that will be displayed for recipients who have their preferences set to display plain-text email only, and vice versa. \n10. Try drip campaigns\nWhile a more general email blast to all customers on your list can be effective, more sophisticated users might consider creating “drip” campaigns. \nDrip campaigns are series of emails intended to accomplish a particular goal for a particular group of customers. For example, you can select only those customers who have made recent purchases. A simple after-purchase drip campaign might look like this:\nThank you email —-> offer special pricing on a similar purchase —-> reminder —->\nIf you have a website where customers can purchase from you, you can send a drip campaign specifically to customers who have put items in their virtual shopping cart but then left the website. A drip campaign in this case might look like this: \n(cart abandonment) —-> nudge (“item left in your cart”) —-> purchase confirmation —-> thank you —-> (start a post-purchase drip campaign)\nNaturally, you can create drip campaigns for any group of customers, such as those who have purchased several times in the past but haven’t visited within the last year. \nSources:\n
\nhttps://www.constantcontact.com/blog/email-marketing-best-practices/\n
\nhttps://mailchimp.com/help/best-practices-mailchimp-email/\n
\nhttps://www.fundera.com/blog/email-marketing-strategy\n
\nhttps://www.betterbuys.com/marketing-automation/reviews/constant-contact/\n
\nhttps://ecommerce-platforms.com/compare/mailchimp-vs-constant-contact\n

Top 10 best practices for small business email marketing

In this 4-minute read:\nDon’t be afraid of skepticism\nHow to tell if a review is fake\nWhy do people post fake reviews?\nWhat’s being done about fake reviews?\nThe most common way to determine whether to shop at a new business is to look at their online reviews, whether those are from Google, Yelp, Facebook, or any other review platform. Sometimes, however, it can be difficult to tell if the reviews we read are real.\nWe’ve all heard of businesses paying for positive reviews, and many people create fake profiles online. So, how do you know if you can trust online reviews for the local businesses you research? \nSkepticism about online reviews is good\nFirst, don’t feel bad if you are skeptical of a particular review or set of reviews. \nFake reviews\n do exist, so you need to trust your instincts, and skepticism is constructive for helping you sort out the trustworthy reviews from those that aren’t. \nThere are all kinds of sketchy practices that businesses use to game the review system, so if you feel that something is off, it’s probably because it is. \nHow to tell if a review is fake\nIt can be difficult to tell is a review is trustworthy, but it all comes back to that skepticism. Be smart and trust your instinct. Pay attention to these signs to see if something feels off about the reviews you are reading:\nAfter not receiving reviews for months, there are suddenly 20 reviews within the span of 30 minutes\nA huge influx of new reviews at the time a new product is released\nRepetitive phrases throughout different reviews\nAnonymous profiles with no image or with images that aren’t of real people\nFalse information about the company\nRead \nhow to spot fake online reviews\n for a more in-depth look. \nYou can also try browser extensions like ReviewMeta and FakeSpot to see what trust ratings they give to the reviews you read. There are tons of resources created to help consumers like you to find good, honest reviews.\nWhy do people or businesses post fake reviews?\nOnline reviews have a powerful impact on businesses. They can help local businesses rank better in the search engines (so they can show up in front of customers like you), and they also have a huge impact on converting new customers to their products and services. \nMost of us read reviews before opting into a new service or committing to a new product. And this is why there is such a huge emphasis on online reviews. Some companies will do anything they can to get your business, even to the point of buying or creating fake reviews. \nWhen a company posts fake reviews or pays someone to post fake positive reviews on their own listings, they are just trying to get you to buy what they’re selling. It’s a “black hat” tactic that goes against most search engines’ guidelines. \nAnother type of fake review is when business owners or employees post fake negative reviews on their competitors’ listings to influence potential customers. This is also against most review platforms’ policies, and can create more confusion about the legitimacy of online reviews. \nWhat is being done about fake reviews?\nWith the amount of false information on the internet, is there even a way to trust \nany\n of the reviews that we read? Fortunately, the search engines and review platforms are dedicated to providing authentic experiences and they each have their own way of handling review scammers. \nYelp and Google both have the ability for any of their users to report suspicious reviews for possible removal by the platform administrators. To learn more, see our \ncomplete guide to removing fake reviews\n, and help report false reviews when you come across them. \nIn addition to the popular search engines and review platforms cracking down and trying to provide the best customer experience for their users, law enforcement and regulatory authorities are taking this type of false information seriously and have put laws into place to protect people from unjust review practices. \nPurposely misleading customers violates federal law and can be grounds for a lawsuit under the Lanham Act, which was enacted by Congress in 1946. The Lanham Act was put into place for trademark registration and protection, but it also covers deceptive advertising practices. \nIn recent years, the Federal Trade Commission (FTC) brought a case against fake paid reviews in which a company posted fake reviews on Amazon for a weight-loss supplement. This led to an investigation into their product and huge financial obligations. \nIt is the goal of the FTC to protect and educate consumers, so there are guidelines and laws in place that require these online review platforms to subject to trustworthy practices. As the problem of fake reviews increases, the attention from regulatory authorities and review platforms is also increasing.\nShould I just ignore online reviews?\nDefinitely not. Don’t discount all reviews because of the few that may be misleading. While it may seem there is a huge amount of deception out there, there are a lot of genuine reviews, too. You just need to know the signs to look out for and pay attention to the reviews that come from real profiles, with full names, and photos of real people. \nPay attention to business owners’ responses on Google and Yelp reviews. These can offer you more insight into fake negative reviews and give you more information about how businesses treat their customers. \nOnline reviews can tell you the good, the bad, and the ugly about the businesses you are researching, and that research is important for making sure you get the best customer experience possible. \nReal reviews are valuable to consumers and businesses\nWith more and more news coming out about the FTC and other organizations fighting fake reviews, most local businesses are trying to adhere to trustworthy review practices and provide their customers with feedback from real people. \nYou can help contribute to the solution by sharing your own honest experiences with the businesses you come across.

Can you trust online reviews for local businesses?

In this 6-minute read:\n4 advantages (for vendors) of accepting card payments\n5 advantages (for businesses) of paying vendors and suppliers with a credit card\nHow you can pay nearly anyone using a credit card\nThough consumer credit card use is growing by leaps and bounds, business-to-business credit card payments are still not as widely adopted. In fact most businesses still pay at least half of their bills using paper checks.\nThe reasons some vendors and suppliers don’t accept credit card payments are varied, but primarily the concern is the added fees associated with credit card processing.\n\nCredit card processors\n and \nthird-party payments facilitators\n generally charge between 2% and 5% to businesses that accept these payments, and for some vendors, these fees can eat up a significant portion of their profit—or all of it. \nHowever, there are several advantages to both payer and payee when you source your business bill payments using a credit card.\nLet’s go over a few perks (for the vendor) if they accept card payments, and then we’ll talk about why paying vendors and suppliers using a credit card can provide more than just convenience for you and your business.\nAdvantages (for vendors) of accepting digital payments\nSo why should vendors and suppliers consider accepting credit card payments? Here are just a few benefits: \n1. Credit card payments are much faster than mailing a check\nCredit card payments are reconciled nearly instantly, so vendors get their money much faster than when you mail them a check. This means they can balance their accounts faster and more accurately. \n(Image)\n\n2. Credit card payments are more secure\nThere are multiple levels of validation and identity confirmation happening behind the scenes whenever your vendors accept a credit card, particularly if they use EMV chip validation. The risks associated with accepting a check include insufficient funds, identity fraud, etc. \nCredit card processors help assume the risks (which is part of why they charge a fee), so vendors can be more confident of the funds arriving in full when they accept digital payments.\n3. It can help make a vendor’s business more “legitimate”\nCredit card processing companies generally have a robust underwriting process as a part of approval, so when a vendor accepts credit cards, it can give their business more legitimacy and credibility than if they only accept cash or checks. Some consumers will only do business with companies that accept credit cards, and this feeling can translate over when those consumers start businesses of their own.\nAlso, vendors and suppliers are in constant fear of being outbid and outperformed by their competition. If the competition is accepting credit cards and you aren’t, and prices are similar, the vendor that accepts digital payments may attract more business.\n4. Accepting cards can improve cash flow and save valuable time\nAs we discussed above, credit card payments arrive much quicker than by check—most processors can get your funds deposited into your account within a couple of days max, versus 4-6 business days for the mail to arrive, plus a few days or even a week for the check to clear a bank. And that’s AFTER whatever delay there is in getting the payer to write and mail the check in the first place, which can take weeks.\nSince your funding is available much sooner, this frees up cash flow and all the time spent preparing and sending out invoices, and processing paper checks.\nYou may also like: \nWhat’s the cheapest way to accept credit cards?\n \nAdvantages (to businesses) of paying vendors and suppliers via credit card rather than by check\nNow let’s talk about some of the benefits to businesses who pay vendors using a credit card, rather than sending paper checks.\n1. Credit card payments save time and improve cash flow for businesses\nAs noted in the section above, sending a check can take quite a few days or even weeks to complete the process and clear a bank. When you pay vendors using a credit card, you speed up the process and free up cash for other business expenses.\n2. Increased purchasing power and business credit\nSince you don’t have to pay off your card balance for at least 21 days (and often longer, if your account is in good standing), you can effectively borrow business funding at 0% (plus you get perks and rewards) to pay vendors and suppliers. \nIf you need to spend a little more than you currently have in your bank account to order supplies for a large order you’re working on fulfilling, a business credit card with an appropriate limit can make that easy. (Just be sure to pay it off once you sell the widgets you make using the supplies.)\nIn addition, as you regularly pay your credit card statement on time and use much of your available credit, you can increase the credit limit available to your business and improve your business credit rating, which can lower your interest rate for business loans and other expenses.\n3. Perks, miles, rewards, cashback, discounts\nNearly all credit cards offer perks and advantages to members, and for small businesses this can be a huge asset. You might get a price break or increased cashback for using your business card to pay vendors and suppliers.\nBusiness owners who rack up lots of airline miles using one of these cards can pay for a significant portion or even all of their business travel expenses, get discounts for business expos, enjoy free concierge service, get free car rental insurance and discounts, and much, much more.\n(Image)\n\nSome businesses use their cashback bonuses to improve their business, buy equipment, pay for employee team-building events, pay for company car maintenance, or even pay utilities. The uses for rewards points/cashback bonuses are almost limitless.\n4. Paying all your vendors, suppliers, and bills with one card vastly streamlines your accounting process\nWhen you have to keep track of expenses and bills for your business, the simpler the better. If you can move all of your monthly business expenses and vendor payments to a single card, it’s much easier to keep track of, plus you get the benefit of your credit card statement to help you keep things accurate.\n5. It’s more secure than writing a check\nWhen you pay with a credit card, your issuer and processor help absorb the risk of fraud. (This is one reason they charge fees for the service.) When you mail someone a check, you are giving them your bank account (via the routing number and account number) and your signature. \nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cashout your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at\n \nSolo.co\n.


Advantages of paying vendors and suppliers with a credit card

In this article:\nWhat is credit card processing?\nSteps and parties involved with credit card processing\nHow can credit card processing help your business?\nMost businesses are familiar with the concept of credit card processing. It allows customers to purchase items or services with their credit or debit cards in person and online. But what you might not know is that this process is much more complex behind the scenes. \nThroughout this article, we’ll walk you through how credit card processing works and why it’s important for pretty much any business. \nWhat is credit card processing?\nThe basic concept of credit card processing is that a customer swipes, “dips,” or taps their card on a terminal or enters their card information online, the payment is authorized, and the transaction is complete. However, that’s only what happens on the surface. This process is much more intricate than it seems, and it can be helpful for business owners to understand how this works. \nHow does credit card processing work?\nSo, what are the steps involved in credit card processing? It can help to understand all of the parties that are involved first. \nOf course, you have the cardholder, or customer, and the merchant (your business). Other participants include:\nThe merchant’s bank: The bank that is receiving the payment from the purchase\nThe processor: This is usually a POS (point of sale) service provider that is used for to process the payment. It may be a traditional payments processor, a third-party payments facilitator, or some extension of your bank that provides the ability to process credit cards\nCredit card network: The provider of the card itself, like Visa or Mastercard. They act kind of as a liaison between the payment processor and the banks involved\nIssuing bank: The customer’s bank that issued the credit card and where the payment is being pulled from\nKnowing each party’s involvement in the process will help us to explain exactly how this works behind the scenes. \nThere are three main steps that take place in processing a credit card transaction:\nAuthorization\nAuthentication\nClearing and settlement\nWhile it seems that everything happens immediately and the payment goes through with ease at the counter or online, the entire process can take 24-48 hours. \n(Image)\n\nLet’s start with step 1: Authorization. \nThis is the part the most of us are pretty familiar with. In this phase, the issuing bank as to give approval to the merchant to proceed with the transaction. \nThe customer gives their card to the merchant to swipe on a terminal provided by the processor, or provides their credit card number into a field online. Then an internet connection or phone line is used to send the credit card information to the merchant’s bank. \nThe merchant’s bank then passes those details along to the credit card network, and the credit card network requests authorization from the issuing bank. The authorization request includes the following information:\nCredit card number\nExpiration date\nBilling address\nCVV or security code\nTransaction amount\nStep 2: Authentication\nAuthentication is the final step that takes place in the store or online as the transaction is completed, but it isn’t the final step of the entire process. This just allows the customer to go through with their purchase and accept their goods or service. \nIn this phase, the issuing bank uses fraud protection tools like Address Verification Service (AVS) and the card’s security code to verify the credit card. \nThe issuing bank gets the authorization request from the credit card network and validates the card details and checks to see if the customer has any funds available in their account. The issuing bank then approves or declines the transaction and sends this back through the credit card network, which then passes that information onto the processor or merchant bank. \nWhen the merchant receives approval to move forward with the transaction, a hold is placed on the purchase amount in the customer’s bank account. \nThen the customer receives their receipt and continues on their day.\nThese first two steps take place in a matter of seconds, but it’s good to know how much is going on behind the scenes so that is something does go wrong, you can assess the situation from a point of knowledge and understanding. \nStep 3: Clearing and settlement\nThe final stages of the credit card process occur at the same time and over the course of the next 24-48 hours. \nAt the end of each business day, the merchant will send all approved transactions to their payment processor or bank. The processor then sends the approved transactions back to the credit card network, where the forward each approved transaction onto the issuing bank. \nThis is where the customer might see a hold or “pending” amount in the bank account until the transaction is finalized. Within 24-48 hours the issuing bank will send the funds back through the credit card network and to the processor and merchant’s bank. \nAny fees that are owed to the credit card network or payment processor will come out of these funds, and the merchant will receive the remaining amount. \nOnce everything goes through, the hold will be removed from the customer’s account and they’ll see their transaction information posted on their account. \nHow can credit card processing help your business?\nCredit card processing isn’t a new concept for small businesses. Most businesses offer some form of credit card processing, whether online, via a terminal, or even over the phone. Because it isn’t common practice to carry cash around and fewer people even have checkbooks anymore, customers expect businesses to accept credit cards. \nHaving some form of credit card processing will allow your business to have more opportunities for sales, whether you’re in retail or the service industry. \nOne thing that prevents some business owners from getting a credit card processor is the fees that are associated with it. These fees can vary a lot and may be a percentage of each transaction or a flat rate per transaction required by your service provider. While these can add up and be intimidating, the increased sales that you are likely to get from offering credit card transactions will more than make up for the increased cost. \nYou may also like: \nWhat are alternative payment methods and why should your business consider them?\n


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Advantages of paying vendors and suppliers with a credit card

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