Tag: business

How was the first day with minimal telephony?

GREAT.  I was able to contact T-mobile and get my phone to ring for much longer, giving me more time to answer a call in lieu of the now-disabled voicemail system picking up.  That alone has already come in handy, as I have been able to pick up calls from my wife and my techs long after it would have kicked over to voicemail, inevitably leading to phone tag and wasted time.  I’ve instructed my technicians that calls asking for me are to be screened aggressively, and only those which they are completely unable to assist should make it to my desk (as in one customer today who inquired about a custom computer and needed to discuss the options for getting that custom computer.)

Because I am being interrupted less often today, I have managed to mostly finish converting a multi-language website for one of my long-time business clients to a PHP-based and easily managed layout, including langauge-coded folders and more standardization across the board.  This has been difficult to work on for days now because of all of the unnecessary interruptions that customer service matters have caused.  Now that only essential issues reach my ears and break my concentration, my productivity is already seeing a significant boost.

This is the way it should be.  A business owner needs to focus on one thing only: the business and making it better.  Customer-oriented approaches to doing business are as crucial to success as ever, but the best advice I can give to a small business owner starting out is this: learn the value of making the people you supervise handle things; that’s what they’re there for, and you can’t do your job of supporting their efforts if you’re too busy doing theirs. A business relies not only on good personnel who know what they’re doing and have enough authority to help customers sufficiently, but also on good managers who can coordinate and support the creative and assistive forces of those personnel to ensure that they work together optimally.  Put another way, it seems impossible to coordinate and supervise your workers if you spend too much time doing their job and not enough doing your own.

Separating myself from customers and letting my people shine, both on the phone as well as in person, is proving to be crucial to my ability to do my job.  My techs can’t be expected to do work if I’m not out there revamping the website or performing SEO or passing out flyers or hitting up local businesses or whatever else I have to do as the most important manager in the business.

I can’t emphasize enough that this doesn’t mean I won’t ever talk to customers or do tech work myself.  It’s important for a manager of any kind to be “in touch” with what’s going on amongst the managed, and to provide guidance and assistance when it is seriously needed.

The problem is that many of us want our business to succeed so badly that we forget about the high-level management stuff as we worry over minutiae.  I’d say that as of today, I’ve learned that lesson, and I hope that this post helps others to do the same.

Please follow and like me:

Telephone? Bah! Why I am making myself scarce on the phone.

“Well, if we’re all done, I’ll just make myself scarce.”  I don’t know where I picked up the expression, but it’s really cute and gets a chuckle now and then.  In a more serious light, though, “making one’s self scarce” is exactly what I’m doing with phone calls, starting today.  Now, me being a small business owner may incite much questioning about this new policy.  Doesn’t a good business owner answer the phone and talk to customers?  What could possibly be the reason behind this?

There is an article that covers this topic well which deserves an honorable mention: Should You Turn Off Your Telephone? Now I’ll answer the question about why and how I am getting away from the telephone.

I have access to three professional telephone numbers: two at the shop which are daisy-chained together by call forwarding, and my own cell phone.  Both sets of phones have voicemail at the end.  Well, had voicemail.  About 15 minutes ago, I cut my T-mobile voicemail service off completely.  Every time I made a voicemail greeting, it would politely recite the shop phone number, insist on calling that number, texting, or calling back in 10 minutes, and explaining what to press to unblock a call, followed by a request, then a demand, to not leave voicemail because I won’t get it.  That request was not respected at all, and my phone would constantly blip up voicemail notification reminders despite my explicit demands to simply wait on a call back! Where did people lose their ability to understand basic English, and to respect my explicitly spelled out request and warning that I don’t check voicemail?

I felt disrespected beyond belief every time someone left a message.  It’s like they said “okay, I’ll leave one anyway because I don’t give a damn about what YOU want, Mister Smarty-Pants Business Owner!”  It’s like someone else spitting in my face.  There’s no excuse for it.  Nowhere in the realm of human decency is ignoring an explicit request even remotely close to existing, yet people do it daily.  I’ve come to realize that many people simply do not consider the human factor of people in business.  The reasons are obvious, but the most significant one is that each ten-minute conversation to them is one ten-minute conversation, while to me it’s just one ten-minute interval in a huge flood of calls that eventually ruins almost half of my potential work time per day.  I need that time to grow my business, write some software, redesign the website, print business cards, and things like that, but instead it is completely drained away having conversations that my technicians could easily handle if callers would stop demanding to talk exclusively to me for anything and everything under the sun.

I want to be available to help everyone, but I am being forced to come to terms with the fact that I am one person with only 16 hours a day to do everything that must be done.  I understand now why corporate types rarely talk to customers: it’s simply not possible to do that and still get their own jobs within the company finished too.

I have decided that I must take charge of my time.  I must manage my time and treat it as the most precious resource in this company, as well as in my life.  It is limited and non-renewable, and I need to make all of it count for as much as possible.  If that means making a customer upset because they can’t speak directly to me, then so be it.  If a customer would refuse to do business with my business simply because they can’t talk directly to me whenever they feel like it, then I wonder whether they are the kind of customer we are in business to serve.  I hired and mentored a team of professionals so that I could extend my capabilities to more people, and it is extremely important that customers take advantage of their knowledge and willingness to help.

Not to mention the fact that some work might actually get finished around here now…

Please follow and like me:

The Sylvania G dies, but yields an AWESOME customer service experience.

It’s official: something went severely wrong with the Sylvania G netbook I bought in October.  The keyboard AND POWER BUTTON will completely “lock up” at random and QUICKLY, yet the computer itself still runs in the background, and the hard drive developed a couple of bad sectors (which I remedied by doing a zero fill–more on that in another post).  It’s fairly unusable now, and it’s still within the warranty period, so I called up Sylvania’s support number for help.  The company that actually makes these netbooks is called Digital Gadgets, and it is them who I have dealt with.  So, how did it go?

I haven’t been this happy about a customer service experience EVER.

I explained to the tech that I bought the netbook in October 2008, that I run a computer service shop, and detailed heavily what was wrong and the evidence that I had gathered to make my judgment call that the netbook was screwed up.  Apparently the ink used for the serial number sticker is poor, because it had smudged off to the point that it was unreadable, which I made very clear early on in the call.  This is about where you would expect me to spew off about the run-around I was given and the stupid hoops I had to jump through to prove to the person that it was indeed screwed up, because 99.9% of service and support agents have almost no authority to help customers and are usually in the business of preventing warranty returns at any cost.

But that didn’t happen, not even a tiny little bit.  No run-around?  Surely I jest, right?  WRONG!

The tech support agent, named William Lee, promptly started the process of generating an RMA and took my shipping address to send a totally free return shipping box to.  About eight hours later (and after business hours, no less) I had an RMA number in my email inbox, with instructions on what to do when the box arrived.  As of this writing, the box hasn’t yet appeared, but that’s because I only called them a couple of days ago.

It is astonishingly refreshing to be able to deal with someone like William.  He did everything exactly right, without a single flaw in his procedure.  He LISTENED TO THE CUSTOMER’S PROBLEM, taking the time to ensure he understood exactly what was going on from my perspective.  He also BELIEVED THE CUSTOMER’S STORY AND EXHIBITED BELIEF IN THE CUSTOMER’S GOOD FAITH, which is the exact opposite of what most suppot agents do: showing a lack of faith and general distrust of the customer right off the bat.  Because he LISTENED and BELIEVED, this brought about the UNDERSTANDING  that there was a clear issue covered under the warranty which needed to be resolved quickly as possible.  Within a reasonable time frame, he PROVIDED A SPEEDY RESOLUTION TO THE CUSTOMER’S PROBLEM.

Let me explain exactly why I am writing in this fashion.  William’s example should be followed by all companies, and sadly it is almost nonexistent in the corporate customer service landscape of today.  The benefits to the customer (in this case, myself) are fairly obvious: the problem was resolved quickly and the customer’s precious time was not wasted to achieve that resolution.  But what about the benefits of William’s actions to the BUSINESS?

  1. William spent as little time as possible chatting it up on the telephone.  This left William free to service other customers, reducing overall load on the customer service department at Digital Gadgets.  It also made William a much more valuable asset to the company, because William is able to service more customers than an agent who is given no authority and is required by the company to simply  toss customers through hoops.
  2. On the flip side, William did not abbreviate our conversation.  He spent the time required to understand my situation, but did not ask me to perform senseless exercises when it was quite clear that the problem was hardware-related and not fixable over the phone.
  3. I was heard but not patronized, AND a SIMPLE solution was presented QUICKLY.  This greatly increases my faith in Digital Gadgets as one of their customers, increasing the chances that I will purchase from them in the future AND RECOMMEND THEIR PRODUCTS TO OTHERS  AS WELL.  Over time and across many customers who are similarly situated, this leads to MORE SALES, which can quickly and easily exceed the cost of a warranty repair on my one individual netbook.

William is doing it right.  Other businesses could take a few lessons from how he handled my situation.  I can’t wait to get my fixed toy back in good working order, and I’m very happy to have bought a computer from a company that treats me like a customer should be treated.

Please follow and like me:

Chatham County Computer Repair Services and Networking: Siler City, Pittsboro, Goldston, Fearrington, Bonlee, Bennett, Silk Hope, and more

I’ve been sitting in front of a computer almost every day of my life since I was three years old, so I eventually got around to thinking, “why not use all the experience I’ve accumulated to create a team of amazingly skilled computer aficionados?” Since I set out to do just that and opened up shop, we’ve been in Siler City for around half a year now, starting with just myself and one other technician. Since then, we have clearly provided a sorely needed service in Chatham County, because I now have four in-shop and at least two regional on-site computer techs doing work for me. You see, we have some “crazy” ideas about doing business, such as **putting customers first** instead of our own wallets, and we’re willing to tell you exactly what’s going on without holding back information or making pie-in-the-sky promises. Here, it’s not about the bottom line, it’s about YOU.

Time ensures that things rarely remain the same.

At Tritech, many things have changed since even just one month ago. Here’s a spiffy list of such things. By the way, my new favorite word is “terse.” The magic of the word “terse” is that practically all of its synonyms not as terse as “terse.” It’s a self-fulfilling definition! ^_^ So, what’s been going on during my silence, you ask? Read on!

More credit card talk.

It’s looking like I can’t tap into the kind of funds I’d like to get without taking those disgusting credit cards after all.  Before I give in to the whole CC thing, I’d like to share some more information on why I don’t want to take credit cards and what I’ll have to do as a very small business owner to deal with the increased cost of business that card-taking entails.

First of all, credit cards take a cut starting at about as low as 1.7% but typically higher, depending on the conditions of the sale and type of card.  “Rewards cards” that give extras such as, say, 1% of the purchase price back to the purchaser work by taking that 1% away from the company that makes the sale.  If I take a normal card for a $100 item, I may lose 1.8% plus a flat $0.20 transaction fee, giving me $98.00 instead; with a 1% back rewards card, I would instead lose an additional 1%, meaning I get only $97 instead of $100 for the $100 item.  Because of these kinds of oddities, it’s almost impossible to determine how much each kind of card costs to process, and therefore how much higher prices must go to compensate (we’ll get into that in a minute.)

One of the newer trends in the banking industry is to give you a phenomenally high-interest account in exchange for swiping your card as credit a certain number of minimum times a month.  You could get an extra 2% interest or so if you swipe your VISA debit card as a credit card at least seven times a month!  Every swipe takes money from me, the business owner, and gives part of it to you via the higher interest rate, and part of it to the bank to make such a program profitable.  You are being actively encouraged to pay as credit, and therefore actively encouraged to rip off the businesses for a few percent of every transaction!  This kind of thing is absolutely dirty, and does not actually benefit anyone but the bank, because the net result is a price inflation at retailers to compensate for the additional loss to the CC companies.  That 2% interest is more than gobbled back up in the form of additional inflation across the board.

It helps to look at any typical for-profit business as some kind of a machine.  It exists solely to make money for its creators or shareholders.  If the business incurs an expense of some sort, it has to repackage that expense into the price it charges to you in order to continue making money at the same rate it was before that expense showed up.  If credit card fees take $300 per month out of monthly profits, the $300 per month has to be rolled into the cost of each product.  How does this work?  The formula is easily found with some simple algebra:

Final cost with CC compensation included =

(Total billed to customer + flat transaction fee) / (100% – average per-transaction % fee)

Plug in values as desired.  For a $3,000 (would-be retail price to you) high-definition television with 7% retail sales tax charged to a rewards card at 4% + a flat $0.30 transaction fee, the business has to compensate for your credit card transaction costs by jacking up the price as follows:

($3000 + $0.30) / (1.00 – 0.04) = 3000.30 / 0.96 = $3,125.3125 =

$3,125.32.

How card fees affect you.

But if you don’t use a credit card, who cares? You do, because credit card companies have a clause in their contracts with merchants that explicitly prohibit charging any kind of additional fee to take credit cards.

That means that, even as a cash-paying customer, a merchant has to spread the credit card “cost of doing business” across all of their products and services. They can’t show card users that card users directly hurt the business every time they swipe a credit card, because that would discourage the use of credit cards and the contract says that’s not allowed. You, the cash-paying customer, are punished for the credit card users’ costs to the business you’re buying from. Isn’t that wonderful? (end sarcasm)

Ultimately, what this means to my business and my customers is that I will have no choice but to increase prices in anticipation of approximately 40%-50% of my sales becoming credit cards.  I’ve actually taken the time to produce a chart of actual prices of some of my store items, from cheap stuff like USB flash drives to entire computers, and how much I will have to boost my prices to compensate, per the above formula.  I assume a 5% rate because with a rewards card and/or large purchase amounts, the rates increase significantly and 5% is not unheard of by any means.

cc-price-increase

It doesn’t look like much at all when you’re dealing with a $13 2GB USB flash drive (the formula I used tacks on $0.89 in my spreadsheet), but the story starts to change when you reach larger orders and higher prices. Our display-model computer system, a brand new and complete unit designed to demonstrate what we can build for a customer, sells for $750. The formula spits out $789.68 as the new retail price I’d have to charge if I start taking cards. That’s basically $40 extra for whoever buys the system! If the person is getting an extra 2% interest for swiping their card seven times a month, and they have $20,000 in savings, I just charged them an entire month’s additional 2% interest on their savings account for that one purchase!  The problem is that I’d have to charge a cash-paying customer the exact same amount because the credit card companies won’t let me take cards at all if I discriminate against their credit cards versus other payment methods.  Granted, there’s the “cash discount” method, where you offer a discount for cash purchases, but that puts you in a grey zone where the CC company COULD say that the cash discount is simply a surcharge by another name, and therefore violates your agreement anyway.  It’s not like you can stop them from terminating your contract with them if you don’t do what they want, after all!

I don’t understand why an average person can be so oblivious–sometimes perhaps even downright ignorant–of “reality as marketed” versus true reality!  If it’s enumerated on a receipt: sales tax, food tax, bottle recycling tax, core charge for an auto part, battery disposal surcharge, government usage surcharge, 911 surcharge, property tax, vehicle tax–people soil their underpants over it, but if the same costs to them are hidden from them–payroll tax, unemployment tax, business liability insurance, “business-class Internet access” (often lower quality than the same residential access, yet for three times the price), income tax matching, and credit card fees–people will happily go along being ripped off.  This is why the government can get away with “we’ll tax the very rich to pay for everything we want to do!” as their excuse for any new government program or expansion of an existing one–no one considers the fact that the ultimate burden to pay those taxes falls on the consumers of a business’s products or services, because the “very rich guy” who runs the company rolls that $125,000-per-year tax on his income into the cost of the products the company sells…but you never know that this has happened and you go on, happily thinking that Joe C.E.O. is paying for your “free clinic” or your “basketball museum” or “free visit to the emergency room” or whatever other “freebie” you’re getting.  Pay no attention to the embedded costs hiding behind the curtain!  Never mind the fact that you’re still paying for the “free” stuff, but the payment you’re making is now hidden and not explicitly stated on a receipt!

Unbelievable.

The next time you swipe a credit card (or vote for a politician that claims an intent to “tax the rich and give back to the middle class” as both recent major Presidential candidates chose to position themselves), remember that you’re the reason that $3,125 television you just bought didn’t cost $125 less.  What can you do with $125?  Maybe buy a Blu-Ray player to hook to said new television?  Perhaps buy some movies or speakers?

Too bad.

You swiped those away.  But it was so convenient, wasn’t it?  And you get a “free” *cough*cough* flight to Hawaii in a year off your rewards points, too!  Yay!

Please educate yourself on what you’re really paying for when you buy something.  Ask any small business owner: “do you have to charge extra on all your products because of the fact that you accept cards?”  You’ll probably get some very consistent responses…or find a business owner that isn’t going to be in business much longer.

Please follow and like me:

Guerrilla dishonesty! Thanks, DirecTV!

I ordered DirecTV service for my home a month or so ago, because where I live we have Charter Communications for cable and Charter’s prices are astronomical (and service level significantly lower than what I’m used to.)  It’s unfortunate that Time Warner isn’t the cable provider in the area, because as an ex-contractor for them and as a long-time customer, I felt that overall Time Warner Cable was about as good as a monopoly cable company could get, and while no big company seems to do the customer right 100% of the time, they at least seemed to give half a damn about customer satisfaction and value for the money.  Honestly, I was disappointed that I’d have to move to satellite service, especially with the threat of things like long-term contracts looming.  Yes, you have to commit to a contract with DirecTV, but I understand that it’s a way of subsidizing the equipment installation costs, so it’s not that big of a deal to me.

What is a big deal, however, is the “teaser deals” and impossible-to-understand terms under which the service was sold to me.  I ordered a $40/month package because it was the lowest I could get with a DVR (vital to keep the wife happy, lest I be tormented for the rest of my days).

Imagine my surprise when I receive a bill with a base package price of $65.  That’s before some of the kooky fees that come along with the deal.

Here’s how it works: the sweet deal only lasts one year (12 months), and to get the sweet deal, you have to mail in or electronically submit a rebate request with an apparent 6-8 week wait for processing.  The representative forgot to mention that little detail, and I have to pay the significantly higher bill now, then wait until this rebate is credited back to my account at some arbitrary point in the future.

They really do make it impossible to know what you’re getting into.  You know all the fine print under their packages on their website?  Here’s copypasta of the one for my package (emphasis added):

Offer ends 3/3/09 and is based on approved credit; credit card required. Price reflects an $18 bill credit per month for 12 months after online or call-in rebate, plus an additional $5 bill credit per month for 12 months when you enroll in Auto Bill Pay program and provide a valid email address for the latest news and special offers from DIRECTV. New customers only (Lease required. Must maintain programming, DVR Service and/or HD Access). Lease fee $4.99/mo. for 2nd and each additional reciever. See offer details.

You have to have a credit card, pass a credit check, fill out a rebate form, AND give them access to your account or card, AND be willing to receive DirecTV spam, just to get the price they advertise.

Where did honesty and transparency in business practices go in this country?  Why do I have to jump through 100 hoops just to pay the price that the salesweasels at DirecTV shout about?  Doesn’t this seem a bit dishonest to anyone else out there?  If I ran my computer business the way DirecTV does their sales, I’d be out of business within a few months.  Every major electronics retailer seems to do the same thing with covertly hidden “pre-rebate” pricing and attempts to “add value” in ways that only add value to their wallets rather than the customer’s actual needs.

Let me be very clear: I feel that rebates are a dishonest business practice.  It’s a way to prey upon peoples’ personality flaws that prevent them from successfully and correctly submitting the rebate in order to extract more dollars from them.  Big business seems to be exclusively in the game of extracting as much cash from each customer as possible regardless of the morality of how they go about doing so and regardless of actual customer needs. It infuriates me to no end, and I’m tired of it.

When someone walks into Tritech Computer Solutions, they see each and every thing on my price sheet quoted with the actual final price.  There are no rebates.  There are no ripoff “extended warranty plans” to mess with.  The price quoted is the price paid.  No deception, no distraction, no questions necessary, period.

Why can’t every business work like that?  Dread the thought that a business actually keeps its customers happy and listens to their needs!  I suppose that’s the corruption of trying to pad out your books for the fourth fiscal quarter so your stock doesn’t take a hit!

Please follow and like me:

Why I don’t take credit cards. Also, rude customers!

Yesterday, we had a customer call up to get an external hard drive from us for $88.  I even offered to write him a quick backup script that would back his Windows user profile up to his external hard drive for no extra charge if he brought his computer with him.  Apparently he was coming from almost half an hour worth of driving distance, and at no point in the TWO telephone calls he made to my store did he ask about payment methods.  He liked our prices and I added further value to the service by offering to integrate the items he was purchasing for no additional cost.

When this man arrived at the store, he noticed my large green sign posted prominently on the front door stating that “we do not accept credit cards (but there’s an ATM next door!)”

The first words that myself, my wife, and one of my customers heard from this man were “I drove 25 minutes down here and was going to buy $160 worth of stuff, but you don’t take credit cards!”  His tone of voice was clearly hostile, as if I had insulted his mother.  He then said something which I cannot recall the exact wording of, but the gist of it was that “we just lost a sale because we didn’t tell him.”  My response to his poorly chosen attitude and words was “You didn’t ask, sir!”  That irked him enough to make him turn back around and say, “I’m not the one in business here, you are!” and subsequently storm out of the front door.

After an experience like this, you might be as perplexed as I was.  I did some thinking over the remainder of the day while my wife and customer issued some negative comments on this man’s handling of the situation, and felt that this topic was certainly important enough to deserve a very big blog post, explaining why this experience will NOT result in me taking credit cards.

I will openly admit that I am not blameless: I could have informed all customers on the telephone from the very beginning that we do not accept credit cards and prevented this scenario from occurring.  However, at the same time, this individual was dealing with a business which he knew nothing about, and made an (erroneous) assumption that “all businesses take credit cards.”  Common sense dictates that if one is dealing with a business that one has no experience with, the payment policy at that business is part of the information gathering process that a responsible consumer must engage in; while it’s safe to assume that Best Buy or Wal-Mart take credit cards, a lesser-known business such as mine is a great big question mark.  If you change auto mechanics, for example, and you’re calling a shop you don’t know anything about, do you ask the shop if they take credit cards, or do you make an assumption that they do and get flaming mad when they don’t?  It’s your payment method of choice, so it’s your responsibility to ensure that it’s accepted where you want to use it BEFORE you drive 25 minutes away.  While I am not blameless for failing to proactively inform potential customers, the customer is, at a minimum, equally at fault for the misunderstanding.

On to the main reasons why a very small business like mine does not take (and cannot afford to take) credit cards.  You need to understand how profit works, so let me explain it in brief.  Profit is easy: it’s just the price I charge a customer minus the price someone else charged me.  Let’s pretend that I purchase an item from a supplier for $60 each and resell the same item for $70 each.  On each item, I have made a profit of $10, because my price to a walk-in customer is $10 more than the raw amount I paid for it.  This would also be called a 17% markup.  (Cosmetics have markups as high as over 100%, but grocery markups are usually low single-digits.)  The bottom line:  my total profit on the $70 retail sale of an item is NOT $70, it’s $10.  The other $60 is just recovering the original cost of the item.  I’d have to sell $700 worth of those items just to make $100 in actual money for the business.

You also need to understand that credit card merchant services take a cut out of the total amount charged to the card before giving me my money.  As an example, this would usually be around 1.9% of the item’s cost plus $0.30.  I use 2% as an easy number to work with.  On a $100 item charged to a credit card, the card company takes a $2 cut, meaning I get $98 instead of $100.

Now, let’s explain how credit cards have affected my business so far.  This man refused to buy $88 of equipment, on which my profit would have been about $13, because we don’t accept credit cards.  We have been open for a little over one month so far, and out of all other credit card requests, this has been the only one that actively refused to make a purchase; the others walked to the bank immediately next door and pulled cash from the ATM, or wrote a check.  Therefore we are currently losing one sale per month due to our refusal to take credit cards.

The true problem lies in the ~2% cut that the credit card companies take.  For taking credit cards to not be worth that one lost sale’s potential $13 profit, I have to make enough credit card (a.k.a. “CC”) sales that I lose $13 to the CC company cut.

[Math Alert!]….If the $13 I lost is 2%, then 1% is $6.50, meaning 100% is $650.00 in sales on credit cards instead of cash that I have to make per month to lose money by taking cards.  If that sounds confusing, let me say it another way:  if I sell $650.00 a month or in merchandise on CCs instead of cash simply because I made CCs available, then I’ve paid that $13 I would have earned to CC companies anyway!  $650 a month is roughly equivalent to 11 hours of PC service before I pay a contract technician $20 for each hour of labor! If you consider that my business only yields $40 per billable hour, yet I’d be charged the 2% rate on $60 instead, that’s $1.20 per billable hour and represents a 3% cut instead of 2%.  In other words, once you stop looking at a credit card fee as a percentage of the cost to the customer and start looking at it after some expenses are paid out, that “little” 2% fee starts to grow pretty huge.

Let’s take all this stuff and expand it out a bit more with a (simplified) hypothetical situation.  If you were to examine CC cuts in terms of my net profit (actual money made after all obligations paid) instead of gross profit (money earned beyond the original cost of the item or sale, meaning services are usually pure gross profit), the picture gets worse: supposing I sell two hours of service a day, about 25 days a month, and half of those hours are charged on a credit card.  That’s $3,300 in a month for services, half of which I lose a 2% cut on, which is $33.  Now, $33 out of $3,300 total sounds awful small…until you pull out the double-whammy:  expenses.  The power company ain’t givin’ us no free powah!  You think the plaza space is as cheap as your apartment, too?  No, sir!  Cut out $1,000 a month for the retail space, $120 a month for power, $30 a month for water/sewer, $120 for business DSL, and a random figure of perhaps $100 in consumables such as paper and toner.  Then, after that $1,370 or so is deducted, don’t forget that the tech got 1/3 of the labor charges, so $1,100 was paid out to the tech for his work as well!  (All that ignores my initial startup costs and interest on the small business loan for SIMPLICITY, so this is an UNDERESTIMATE!)

In such a simple example, we took in $3,300 total from customers for services.  By the time expenses were taken into account, $2,470 of the $3,300 was gone.  Before the CC fees, this example yields $830 in net profits.

Anyone who’s been in school knows that percentages are easy:  “part over whole, times 100.”  So take the CC fees of $33 and do the math:  (33/830) x 100 = 3.976% of my actual earnings lost to the credit card companies.

This assumes that no one uses a stolen credit card and issues a chargeback, which could potentially cost me hundreds or even thousands of dollars; for example, if someone buys a $750 computer with a stolen card and the card’s owner issues a chargeback because they (honestly) didn’t purchase the computer and shouldn’t be out that $750, the CC COMPANY TAKES THAT MONEY AWAY FROM ME WITH ALMOST NO RECOURSE.  One fraudulent purchase of a new computer could wipe out an entire month’s net profits.

How do bigger businesses deal with these issues?  There’s only one answer:  everything is more expensive.  Period.  I can give a 4GB flash drive to a customer for $17 while my small but established competitor sells them for $40 because these “costs of doing business” are not rolled into the price of my products and services.  I don’t have 4% or more of my actual earned income being eaten by CC fees.  I don’t have the threat of CC fraud and subsequent chargebacks.  Add to that the fact that my margins and rates are already quite low and my customer service and turn-around are a million times better, and there’s no way even an established competitor can actually compete.

(Granted, a check could do about the same thing to me, so adding cards to the mix makes the risk significantly greater, and CC fraud is far more prevalent and easily executed than check fraud.)

The point is that the cost of taking credit cards isn’t exactly worth it, and the risk of chargebacks is too hazardous.  If the customer wants to use cards so badly, they can always step next door and withdraw a cash advance from the ATM, and eat the CC fees themselves that way.  So far, I have yet to have that happen to my knowledge.

If the customer doesn’t want to eat the CC fees, why in the heck would I?

If it wasn’t against CC merchant agreements for me to charge an extra fee for taking cards, I’d take them without too much hesitation.  The only way I can charge customers extra for taking cards and not run afoul of merchant agreements is to price all my items and services with the CC fee increase included, then offer a “cash discount” for non-CC buyers.  It’s the same thing as charging a fee to the card user, but also causes all my stated prices to increase, decreasing my competitiveness.  Completely unacceptable.

When the CC companies learn and change their merchant agreements, I’ll probably take cards.  Until then, it’s too risky and expensive, especially to such a small business as mine.

Please follow and like me:

I am not a carpenter!

Over the past week or so, my focus has been entirely on preparing our new computer service shop in Siler City, NC, to open.  If you’ve never opened a business on a shoestring budget (and yes, $50,000 is an extremely thin budget to open even the smallest and cheapest shop you can think of!) then you don’t realize how huge of a challenge it can be.  So far, in only one week’s time, myself and two of my family members have managed to move most of the computer parts I had stored in my home (as well as miscellaneous furniture, i.e. desks, I don’t need anymore) for Tritech into the new shop, constructed four 10’x8′ walls to create a “front” and a “back”, spackled more holes in the wall than I could count, spent two hours getting the somewhat unmaintained front windows cleaned up, and that doesn’t count all of the “business” side of stuff:  paying the rent for the space, filling out forms for a business privilege license, getting a temporary sign permit, getting the power and water services turned on, and preparing fliers and other “propaganda” (as I like to call all advertising) to let the entire city know that we’re opening up soon.

“How is $50,000 a “small amount” for business purposes?” you might ask.  I thought that it was a substantial amount of money myself, but I have quickly come to realize how horribly tiny it is, and that if I manage to get this off the ground without getting another loan to supplement it, I’ll be fairly lucky.  Here’s how $50,000 will generally break down for my business (the amounts are not exact, they’re rough estimates from my memory):

One-time and non-recurring items:
$ 13500  Rent for 14 months, ~1100 sq. ft.
$   200  City permits, licenses, and water/sewer deposit
$  1200  Purchased items so far (carpet, lumber, spackle, paint, tools)
$   150  Sheetrock we're purchasing today
$   250  ~12'x9' temporary GRAND OPENING banner
$  1000+ Lit electric sign above the retail space (+installation)
$  1000  Two additional smaller sign panels for the plaza panel (+installation)
$   800  Approximate gasoline costs after everything is completed
$   500  Miscellaneous infrastructure parts (networking, etc.)
-------
$ 18600  Total non-recurring (startup) costs
Recurring monthly costs (approximate):
$   200  Power bill
$    40  Water/sewer
$  6000  Payout for a staff of three technicians (approximate)
$   500  Monthly gas expenditure for my business travel (parts, advertising, etc.)
$  1000  Small business loan monthly payment
$   120  High-speed Internet access
-------
$  7740  Total direct cost per month to stay in business

After starting the business, I have roughly $31,400 left to keep the business going if I make no money whatsoever.  That means that I have about 4 months worth of operating funds TOTAL after I open up shop.  I’m extending this somewhat by doing some of the work myself, but the bottom line is that I don’t have much funding available after starting up to keep things going.  This means that a very slow half-year start could very well cause the failure of my business.  Luckily, if I can’t get business going in half a year, that means either there was never a market there in the first place (and I already know there is), or I can’t run a business worth anything at all!

Conspicuously absent from that list of expenditures is “carpenters” and “painters” and “general contractors.”  That’s right, I did my research and learned how to frame and build a wall entirely by myself!  For the most part, it’s worked out great, but I’ve had some helping hands along the way when, for example, the walls needed to be anchored to the concrete floor.  I’ve surely saved thousands by doing it myself, but it has been “my own personal slice of hell on earth,” slaving away night and day to get the job done before opening the doors to our new customers.

I am certainly not a carpenter, but being willing to do some hard work on my own has saved me a substantial amount of money, which I can then use to make other improvements to my business, such as installing a security system.

I had previously decided to not acquire Internet access, but because I’m hiring contractors to do the bulk of the computer work, if one decides to tap my Internet access, the others will be able to take over the work of the browsing person and receive the pay for the job that is “on hold” due to excessive Internet play.  With employees, I’d have to do something about it, but with contractors, they can balance each other out, and my manager on duty can act as a “whip” to make sure that no one is egregiously abusing my Internet access while they’re doing jobs for me.

While this might seem an injustice to techies who love the Internet as I do, the increased productivity that will be generated can quickly lead to more business, and that means that my existing staff will get raises which I doubt I will receive many complaints for issuing!  My ultimate goal is to put Best Buy and the like totally out of business by providing what they don’t: great service, super-low prices, and ultra-fast turn-around times.

But first, I have to finish putting up the sheetrock.

Please follow and like me: