Whether or not to start a home based business is probably one of the most important questions that you will ever have to answer. If you are even seriously pondering the question in the first place, then it probably means that there are circumstances in your life which are causing you to consider undertaking a venture which will have a significant and far reaching impact on your own life and on the lives of your immediate family memebers as well. Before you take a leap of faith into becoming a small business owner, there are a few areas of your life which will be impacted and which you should seriously consider before coming to any final decision as to whether or not a home based business is right for you.
FINANCIAL
Starting your own home based business can have many financial rewards and put you in control of your own financial future. However, there are a few things to consider before beginning your undertaking.
First, will you start your home based business on a part time basis and keep your day job until you are making enough profit to enable you to quit and devote your full attention to your business? Or would you rather quit your day job now so you can devote your full time and energy to building your business? There are pros and cons to both approaches and only you can decide which one you will feel most confortable with in the long run. If you have enough savings to meet your living expenses for a good six months to a year then it might be worthwhile to quit your day job to focus on growing your business. You'll see results a lot faster and that will give you the momentum you need to keep going. Starting a home based business requires a lot of up front work and if you are doing it on a part time basis it is easier to get discouraged when the results don't materialize as quickly as you had originally planned. On the other hand, having a full time income will enable you to spend more on your business without having to worry about meeting monthly living expenses.
You will also have to set a start up budget for your business as well. Any home based business will require some start up costs, even if they are only minimal at first. For example, if you are going to be doing business on the internet, you will need to register your domain name and pay a monthly fee to have your website hosted. Domain names can be registered for as little as $7.00 and monthly hosting can be obtained for a minimum of about $25.00. You'll also need to determine how much money you are going to devote to advertising your new venture. While there are some very good ways to advertise your business for free, eventually you are going to have to lay out some money to advertise if you hope to see the kind of profits that will make your online business worthwhile. While we are not talking about massive amounts of money here, a few hundred dollars would be a reasonable sum to get some quality advertising to promote your business and allow you to start making some sales which will generate even more cashflow to reinvest in your business.
PERSONAL
Most people who are interested in starting their own home based business cite personal reasons as one of their primary motivations. It seems that more and more people are getting fed up with corporate America these days and it's no secret that the average workday continues to get longer and longer, lunch hours become nonexistent, and the financial security that once came with retirement is no longer a reality for most people. Not only does having your own home based business put you in charge of your own financial future, it also allows you to start spending real quality time with your family. Most people are so exhausted at the end of a typical workday that just getting through dinner without nodding off is a real challenge. With a home based business, you control the hours you work and you automatically add at least one or two additional hours to your day that you would otherwise spend commuting to and from work.
Of course, getting your family adjusted to having you working from home may take some effort in the beginning. If you have very small children at home it can be a challenge to keep them out of your office while you are trying to get work done. If you are the primary caretaker, you will need to work in small spurts throughout the day while the kids are napping or watching a video and then put in a few hours after they go to bed for the night. Once they are in school, the routine becomes a lot easier because you can adjust your schedule around their schoolday and have most of your daily work completed by the time they get home from school.
Life can sometimes be a series of tradeoffs, so spending all that quality time with your family also means that you'll no longer have the social interaction that was once a part of your 9 to 5 routine. Now that you have a home based business, you will have to go out of your way to gain some of that same social interaction. Joining local small business organizations is a great way to make new friends, network and have your business become known in your local community. Alot of these organizations have weekly or monthly meetings with guest speakers at either a breakfast or afer work social event. In any case, socializing will now become a great way to network and spread word of mouth about your new business venture.
MOTIVATION
You have to be motivated to start any home based business. This motivation is twofold. I am talking here about both the internal drive to take action and get your business off the ground, as well as the vision you have in your head of what your business will eventually look like once it is established and what it is you want to accomplish with your business.
A home based business can bring many financial rewards, but alot of people will get discouraged with the up front work that is required to get any business off the ground. I have often heard an analogy used by folks who do business on the internet that I like a lot because I think it is so accurate. The analogy is that starting a home based internet business is like a rocket taking off. For those who are not NASA afficionados, a rocket apparently uses something like 80% of the energy that it will use during it's entire mission just during those first few minutes of liftoff. That momentum then helps carry it throughout the rest of it's journey. It's a lot like that with a home based business. It takes alot of up front energy, but one day you realize that the hardest part is over and you've created enough momentum to help make it easier from now on in. You have to have the motivation to get through those early days, otherwise you'll never create the kind of momentum that you need to see yourself through.
You're also going to need to identify your motivation in terms of what it is you want to accomplish with this business of yours anyway. Do you have a great idea or product that you want to promote? Most people actually don't, and that's okay. Selling your own product is often thought of as the most lucrative way to make money on the internet, but you can still make quite a bit of money by finding other people's products and promoting those as an affiliate. That means for every sale you make, you get a commission. And you can also generate residual income for yourself by recruiting other people to become affiliates under you. But no matter which way you go, you have to like what you're doing and what you're promoting. Starting a home based business will not bring the financial rewards you are hoping for if you are not doing something that makes you feel energized, excited, challenged and, perhaps most importantly, that you are providing a worthwhile benefit to those people who are buying your product or service.
Well, I certainly hope those few points have given you enough to ponder as you go through the process of deciding whether or not a home based business is right for you. I hope you come to the conclusion that it is, because there is no better way that I know of to take control of your own financial future. If you don't take the bull by the horns and do it for yourself, nobody else will. But don't forget to have fun along the way. Pick a home based business that you'll look forward to tending to day in and day out and that benefits other people in some way, and I promise you that the financial rewards will follow......
Tuesday, November 18, 2008
Understanding Your Cash Flow
The single biggest reason the small business failure rates are so incredibly high today is this one simple fact: Most business owners don't really know what's going on with their most precious asset - their CASH.
Despite the fact that cash is the lifeblood of the business, the fuel that keeps the engine running, most business owners truly don't have a handle on the flow of cash into their business and the flow of cash out of their business.
The reason this problem is so widespread today is that each of us has been taught that managing the financial side of our business means having financial statements.
We have all been taught that financial statements show us the complete view of the financial side of our business.
Well, the truth is they don't.
*Recognize the Limitation of Financial Statements*
There is no doubt the basic financial statements that every business must prepare are very useful; in fact they are a must.
Banks require you to provide them. Investors require you to provide them. They are the common language of business. You cannot succeed in business without them.
At the same time, if you have no other tool for understanding and managing the cash flow of your business other than your basic financial statements, you will always feel out of control. You will be flirting with disaster because you will be neglecting the lifeblood of your business - your cash.
The accounting rules that govern the creation of financial statements are not about tracking the actual flow of cash through your business. They are focused on measuring profit or loss - not cash flow.
That's why a profit in your financial statements does not necessarily mean you created any cash.
By the same token, a loss in your financial statements does not necessarily mean you lost any cash.
I worked with a company recently that routinely reported an annual loss in their income statement of about $1,000,000. The beauty of that business was that it actually generated over $800,000 in positive cash flow.
The rules of accounting required an investment made years before to be amortized (expensed over time) in the income statement. The result was a big non-cash expense in the income statement every year that created a net loss.
But cash flow was unaffected. The cash continued to roll in despite the fact that the rules of accounting required this expense to be included in the income statement.
And the opposite scenario is also true.
The business headlines of the last three years have been filled with companies that showed incredible profits in their income statement. But their cash flow was a very different story.
They ended up in bankruptcy because they actually had a negative cash flow. They used more cash than they generated despite the profit shown in their financial statements.
*Take Control of Your Most Precious Asset*
The solution to this problem is to have a schedule of your actual and projected revenues and expenses in the context of your beginning and ending cash balances. Each month should be presented next to each other so the actual cash balances for previous months are shown next to the expected cash balances for the coming months.
A schedule like this presents the cash flow of your business in a way that makes it crystal clear where your money is going and where you expect your cash balance to be six months from now.
This is the secret to understanding the cash flow of your business.
Despite the fact that cash is the lifeblood of the business, the fuel that keeps the engine running, most business owners truly don't have a handle on the flow of cash into their business and the flow of cash out of their business.
The reason this problem is so widespread today is that each of us has been taught that managing the financial side of our business means having financial statements.
We have all been taught that financial statements show us the complete view of the financial side of our business.
Well, the truth is they don't.
*Recognize the Limitation of Financial Statements*
There is no doubt the basic financial statements that every business must prepare are very useful; in fact they are a must.
Banks require you to provide them. Investors require you to provide them. They are the common language of business. You cannot succeed in business without them.
At the same time, if you have no other tool for understanding and managing the cash flow of your business other than your basic financial statements, you will always feel out of control. You will be flirting with disaster because you will be neglecting the lifeblood of your business - your cash.
The accounting rules that govern the creation of financial statements are not about tracking the actual flow of cash through your business. They are focused on measuring profit or loss - not cash flow.
That's why a profit in your financial statements does not necessarily mean you created any cash.
By the same token, a loss in your financial statements does not necessarily mean you lost any cash.
I worked with a company recently that routinely reported an annual loss in their income statement of about $1,000,000. The beauty of that business was that it actually generated over $800,000 in positive cash flow.
The rules of accounting required an investment made years before to be amortized (expensed over time) in the income statement. The result was a big non-cash expense in the income statement every year that created a net loss.
But cash flow was unaffected. The cash continued to roll in despite the fact that the rules of accounting required this expense to be included in the income statement.
And the opposite scenario is also true.
The business headlines of the last three years have been filled with companies that showed incredible profits in their income statement. But their cash flow was a very different story.
They ended up in bankruptcy because they actually had a negative cash flow. They used more cash than they generated despite the profit shown in their financial statements.
*Take Control of Your Most Precious Asset*
The solution to this problem is to have a schedule of your actual and projected revenues and expenses in the context of your beginning and ending cash balances. Each month should be presented next to each other so the actual cash balances for previous months are shown next to the expected cash balances for the coming months.
A schedule like this presents the cash flow of your business in a way that makes it crystal clear where your money is going and where you expect your cash balance to be six months from now.
This is the secret to understanding the cash flow of your business.
Monday, November 17, 2008
Don't Let The Holidays Detour You From Your Financial Goals
Do you dread going to your mailbox and finding yet another credit card bill? Do you find yourself worrying about how you'll pay your bills from one month to the next ?
Guess what ? You're not alone. Almost half the households in America report having difficulty paying their minimum monthly payments on credit card bills and other debts.
We have become a nation hooked on credit. Recent government statistics on American debt show that:
~ Over 40% of US families spend more than they earn.
~ The typical U.S. household has an average credit-card balance of $8,940.
~ Credit card debt is up 36% from just 5 years ago.
~ 92% of U.S. family disposable income is spent on paying debts, up from 65% in 1975.
How did we get ourselves in such a mess ? According to Dayana Yochim, a journalist and teacher for The Motley Fool, "It's not just that we're borrowing more money and paying it back more slowly; it's that we're spending money we used to consider off-limits."
Yochim points to the popularity of home equity loans and lines of credit as just one example. "Home equity loans are more popular than ever as people borrow against their home to feed their spending binge."
According to a BusinessWeek report, total household debt topped 100% of disposable annual income last year for the first time ever.
"The problem with credit for many people is that it's just too easy to get into a rut with bad spending habits," says Rich Vorland of Consumer Credit Counseling. "Credit gives everyone the instant gratification of getting something they want right now. We don't have to save up for it. We don't have think of how we'll pay for it until the bill arrives."
And therein lies the problem for many holiday shoppers. Too often we pull out the plastic without thinking of how we'll actually pay for the things we buy. How many of us are still paying off credit card debt from last year's holidays? Adding additional debt will only keep you buried in debt for many more years.
For example, let's say you have a credit card debt of $2500 with an APR of 18%. If you only pay the minimum amount due it will take you 20 YEARS to pay off your balance, assuming of course you don't make any other credit purchases. On top of that you will have paid your credit card company a whopping $3,365.51 in interest!
If you've been working to eliminate or pay down credit card debt, don't let the holidays detour you from that goal. Use only cash to pay for the presents you plan to buy. If you must use a credit card, set a goal to pay off that debt within one to two months. Otherwise you'll be right back where you started from or even worse - further and further in debt.
Guess what ? You're not alone. Almost half the households in America report having difficulty paying their minimum monthly payments on credit card bills and other debts.
We have become a nation hooked on credit. Recent government statistics on American debt show that:
~ Over 40% of US families spend more than they earn.
~ The typical U.S. household has an average credit-card balance of $8,940.
~ Credit card debt is up 36% from just 5 years ago.
~ 92% of U.S. family disposable income is spent on paying debts, up from 65% in 1975.
How did we get ourselves in such a mess ? According to Dayana Yochim, a journalist and teacher for The Motley Fool, "It's not just that we're borrowing more money and paying it back more slowly; it's that we're spending money we used to consider off-limits."
Yochim points to the popularity of home equity loans and lines of credit as just one example. "Home equity loans are more popular than ever as people borrow against their home to feed their spending binge."
According to a BusinessWeek report, total household debt topped 100% of disposable annual income last year for the first time ever.
"The problem with credit for many people is that it's just too easy to get into a rut with bad spending habits," says Rich Vorland of Consumer Credit Counseling. "Credit gives everyone the instant gratification of getting something they want right now. We don't have to save up for it. We don't have think of how we'll pay for it until the bill arrives."
And therein lies the problem for many holiday shoppers. Too often we pull out the plastic without thinking of how we'll actually pay for the things we buy. How many of us are still paying off credit card debt from last year's holidays? Adding additional debt will only keep you buried in debt for many more years.
For example, let's say you have a credit card debt of $2500 with an APR of 18%. If you only pay the minimum amount due it will take you 20 YEARS to pay off your balance, assuming of course you don't make any other credit purchases. On top of that you will have paid your credit card company a whopping $3,365.51 in interest!
If you've been working to eliminate or pay down credit card debt, don't let the holidays detour you from that goal. Use only cash to pay for the presents you plan to buy. If you must use a credit card, set a goal to pay off that debt within one to two months. Otherwise you'll be right back where you started from or even worse - further and further in debt.
How to Master the Financial Side of Your Business
I conducted a survey recently to determine the degree to which small business owners have their cash flow under control.
The survey results showed that only 20% of business owners feel like they have the cash flow of their business under control. That means 8 out of every 10 business owners are trying to manage their business without having the financial side of their business under control.
That's a recipe for disaster!
It's like riding along on the freeway in a driving rainstorm and you discover that your windshield wipers won't work. You can't see the cars in front of you or behind you. You slow down to a crawl. You're just hoping and praying the rain stops before you end up in a terrible accident.
In business, you need a clear view into the financial impact of your business decisions so that you put the odds of success in your favor. You have to take control of this part of your business... or it will take control of you.
THE SMALL BUSINESS FINANCIAL DILEMMA
The results of the survey highlight what I call The Small Business Financial Dilemma.
It works like this.
As a small business owner you wear lots of hats. You are in charge of Marketing, Operations, Customer Service, Accounting, Finance, Administration, Human Resources and everything else that must be done to run a successful business.
After a while, some of the work that needs to be done is put off. Often times it's the accounting and financial component of the business that is sacrificed.
A little time passes and you begin to notice you don't really know what's going on with the cash balance. You may be looking at financial statements, but you are confused about what they are telling you about what's going on with your cash balance.
THE RESULTING DILEMMA
Running a small business means you are always making financial decisions and financial commitments. You are making those financial commitments each day and in the back of your mind you are asking yourself these questions:
"Can I really meet these financial commitments I'm making?"
"Am I going to have enough cash to run my business properly?"
Slowly but surely, worry and uncertainty about your cash begins to drag you down. You find yourself spending more and more of your time fighting cash flow fires rather than growing your business and taking care of customers.
THE SOLUTION TO THE PROBLEM
The secret to taking control of your cash flow is to ask yourself two simple questions.
- What is my cash balance right now?
- What do I expect my cash balance to be six months from now?
If you CAN'T answer these two questions, then strap yourself in for a wild ride. You are on a roller coaster ride that's about to become really frightening.
On the other hand, when you CAN answer these two questions, you have just regained control of the financial side of your business. You will experience the almost magical feeling of control that comes from mastering this critical part of your business.
You will feel like I did back in 1991 when I first discovered the secret to taking control of the cash flow of any business. I was amazed how simple the solution was and how it transformed the way I managed the business from that point forward.
NEVER RUN OUT OF CASH
Remember, it's all about the cash. If the cash ever runs out, then everything you worked so hard for goes right down the toilet. That's why the financial side of business is so crucial to your success.
Take the time to ask and answer the two critical cash flow questions each month.
By taking control of your cash flow, you are putting the odds of success in your favor. You are doing your part to avoid becoming a small business failure statistic.
You are making sure you have the financial information you need so you Never Run Out of Cash.
The survey results showed that only 20% of business owners feel like they have the cash flow of their business under control. That means 8 out of every 10 business owners are trying to manage their business without having the financial side of their business under control.
That's a recipe for disaster!
It's like riding along on the freeway in a driving rainstorm and you discover that your windshield wipers won't work. You can't see the cars in front of you or behind you. You slow down to a crawl. You're just hoping and praying the rain stops before you end up in a terrible accident.
In business, you need a clear view into the financial impact of your business decisions so that you put the odds of success in your favor. You have to take control of this part of your business... or it will take control of you.
THE SMALL BUSINESS FINANCIAL DILEMMA
The results of the survey highlight what I call The Small Business Financial Dilemma.
It works like this.
As a small business owner you wear lots of hats. You are in charge of Marketing, Operations, Customer Service, Accounting, Finance, Administration, Human Resources and everything else that must be done to run a successful business.
After a while, some of the work that needs to be done is put off. Often times it's the accounting and financial component of the business that is sacrificed.
A little time passes and you begin to notice you don't really know what's going on with the cash balance. You may be looking at financial statements, but you are confused about what they are telling you about what's going on with your cash balance.
THE RESULTING DILEMMA
Running a small business means you are always making financial decisions and financial commitments. You are making those financial commitments each day and in the back of your mind you are asking yourself these questions:
"Can I really meet these financial commitments I'm making?"
"Am I going to have enough cash to run my business properly?"
Slowly but surely, worry and uncertainty about your cash begins to drag you down. You find yourself spending more and more of your time fighting cash flow fires rather than growing your business and taking care of customers.
THE SOLUTION TO THE PROBLEM
The secret to taking control of your cash flow is to ask yourself two simple questions.
- What is my cash balance right now?
- What do I expect my cash balance to be six months from now?
If you CAN'T answer these two questions, then strap yourself in for a wild ride. You are on a roller coaster ride that's about to become really frightening.
On the other hand, when you CAN answer these two questions, you have just regained control of the financial side of your business. You will experience the almost magical feeling of control that comes from mastering this critical part of your business.
You will feel like I did back in 1991 when I first discovered the secret to taking control of the cash flow of any business. I was amazed how simple the solution was and how it transformed the way I managed the business from that point forward.
NEVER RUN OUT OF CASH
Remember, it's all about the cash. If the cash ever runs out, then everything you worked so hard for goes right down the toilet. That's why the financial side of business is so crucial to your success.
Take the time to ask and answer the two critical cash flow questions each month.
By taking control of your cash flow, you are putting the odds of success in your favor. You are doing your part to avoid becoming a small business failure statistic.
You are making sure you have the financial information you need so you Never Run Out of Cash.
Financial Middleman for Small Business
Small online businesses are mostly represented by home-based entrepreneurs. In this regard any payment scheme or system should meet at least two criterions:
First. It should be relatively cheap. Individuals are usually not enjoying huge investment potential in contrast with legal entities. Second. It should lead to complete automation of financial transactions as a result of lack of time or inability for the majority of entrepreneurs to hire support stuff to serve these transactions.
In short, it all comes down to the shortage of money and time. For these simple reasons, sophisticated e-commerce systems based on merchant accounts are expensive, hard to establish and support for an average entrepreneur. That is why third party payment processors that will handle all online orders on your behalf became widely popular among small businesses. They require very little effort to establish and even less effort to support. In most cases they will provide you with completely automated as well as quick and reliable for your customer way of payment.
This will allow you to accept payments 24/7 focusing your business to work on other tasks and activity.
In practice once set up, the whole customer paying and product delivering process becomes fully automated and consists of the following steps:
1. Customer fills out the order form and clicks on the submit button to pass the order to the payment gateway;
2. Automatic payment gateway routes credit card (e-check etc.) data and purchase amount to the payment processor of the merchant (seller) acquiring bank;
3. Acquiring bank sends authorization request to the payment processor of the customer's issuing bank;
4. Issuing bank validates customer's account, credit limit and authorize the transaction, freezing the specified amount on the customer's account;
5. Issuing bank routes authorization code (or "transaction declined" message) to the acquiring bank's payment processor;
6. Acquiring bank routes payment approval (declined) message to the payment gateway;
7. Payment gateway notifies the merchant (seller) about approved (denied) transaction;
8. Provides customer with the product s/he ordered, the details of shipping etc. or notifies about payment problems;
9. Banks' clearing settle the mutual transfer of funds, crediting the respective merchant (seller) account with the specified amount of purchase.
All these steps due to complete automation process, if we don't speak about phone or mail orders etc., will take somewhat between several seconds to several minutes, still usually faster than when you are billed at the store's pay desk and much faster considering the speed of going for online shopping instead of the "offline".
This publication intended to analyze existent picture of third party processing companies and represent you the comparative facts that would help you to determine your preferences based on business needs and capacities.
The table below will provide you with basic features of the most "visible" today's online payment processing players. Please note, that the online financial market evolves extremely fast, so the table data is accurate as on the February 2003 what I cannot guarantee in a month, all the more in a year, so my advice here is to choose 3-5 most acceptable and affordable financial intermediaries (even if some important for you feature is missing) and recheck their services and fees once more at their web-sites before making any final decision.
------------------------------------------------------------Company Name in alphabetical order:1) Setup fees 2) Monthly fees 3) Commission structure*
2CheckOut:1) $49 2) no 3) $0.45 + 5.5%;
CCNow:1) no ($11.95 for Int.) 2) $9.95 3) $0-$100 - 0%, $100+- 9%(11% for Int.);
ClickBank:1) $49.95 2) no 3) $1 + 7.5%;
IBill:1) no 2) no 3) $0-$9,999 - 15%, $10,000-$24,999 - 14% etc.;
MultiCards:1) $15 or $150 2) no 3) 11.9% or 9.9%;
PayPal:1) no 2) no 3) $.30 + 2.9%;
PaySystems:1) $49.00 2) no 3) $1.00 + 3.95% or $0.45 + 5.5%;
ProBilling:1) no 2) no 3) $0-4,999 - 13.5%, $5,000-12,499 - 12% etc.;
ProPay :1) $35.00 (yearly) 2) no 3) $.30 + 2.9%;
Regsoft:1) no 2) no 3)$0-$30 - $3.00, $30+ - 10%;
Verotel:1) no 2) no 3) $3.75-$75.00 - 13.5%;
V-Share:1) no 2) no 3) $0-$15 - 20%, $15-$100 - $3+4%, $100-$200 -$2+5% etc.
------------------------------------------------------------Company Name in alphabetical order: 1) Credit Cardsacceptance 2) Online Check acceptance 3) Phone(Fax) ordersacceptance 4) Recurring Billing feature
2CheckOut: 1) yes 2) yes 3) no 4) yesCCNow: 1) yes 2) no 3) no 4) noClickBank: 1) yes 2) yes 3) no 4) noIBill: 1) yes 2) yes 3) yes 4) yesMultiCards: 1) yes 2) yes 3) no 4) yesPayPal: 1) yes 2) yes 3) no 4) yesPaySystems: 1) yes 2) yes 3) no 4) yesProBilling: 1) yes 2) yes 3) no 4) yesProPay: 1) yes 2) yes 3) no 4) noRegsoft: 1) yes 2) yes 3) yes 4) noVerotel: 1) yes 2) yes 3) yes 4) yesV-Share: 1) yes 2) yes 3) yes 4) yes
------------------------------------------------------------* Commissions are charged in two most popular ways: * depending on the sales volume, for instance, 10% for $0-$1000 in gross sales and 5% for $1000+ or; * flat fees plus percent of the transaction amount: $2 + 5%, so if you sell your item for $50 the commission is $2+$2.5 (5% out of $50)=$4.5 Note, that commissions shown for credit card billing may be the same or may differ from company to company for online checks and, especially, for phone order processing.
As you see, the table compares the most common features of services, while some secondary options like affiliate program, online auctions support or inability of such companies like PayPal to process all worldwide customers including yours truly, were left behind.
IBill and Verotel, for instance, have retail price maximum limits. The dominating majority of payment processors charge additional fees for chargebacks and refunds, while Regsoft, Verotel or V-share offers a completely risk-free start up, charging commission from actual sales only.
The middleman you will commit to should offer easy ways to administrate your account, view statistics, add/delete products on sale, setup price, tune and customize with your web-site image the order page etc.
Depending on the nature of your main product: tangible or intangible, some companies may or may not meet your needs. Check Verza.com payment processing company for tangible and shippable goods. They are the Mother company of Verotel - division specially designed for intangible products or "bits" sellers.
Carefully read terms & conditions agreement, other regulations as well as charge back policy before signing up for any service.
Find out the offered ordering security options. While some companies provide sophisticated fraudulent control system and supply you with both server secured order form and non-secured order form for your customer convenience, other payment processors had problems even with the coding of their order web-pages, what allowed anyone to literally steal your intangible products by downloading them without payment. That happened because the URL of the so-called "Thank you" page (where sellers arrange their info materials to download) was clearly visible in the source code of the order form. This is unacceptable.
You may also want to test their support system and uptime the same way you do before selecting a web-hosting provider. Because your order page(s) is(are) hosted at the 3rd party payment provider server(s), if they are down for any reason, it may be very sad for your customer to choose a product, click on the order link and get error or "The page cannot be displayed" massage.
As you see there are a lot of points to check and analyze. On the other hand, remember a rule of not complicating things. The key for easy decision-making process is not to avoid research as some people do going for the first offer they see, rather than knowing your needs and capabilities including financial beforehand.
Determine them at the very beginning and search companies accordingly, making the whole research smooth and easy. Besides, on the contrary to, say, domain name choosing, payment processor service is temporal to help you build your online business in a quick, cheap or zero cost way. At some stage due to economy of scale it will be cheaper and more effective for your business to establish personal merchant account with respective e-commerce gateway system.
First. It should be relatively cheap. Individuals are usually not enjoying huge investment potential in contrast with legal entities. Second. It should lead to complete automation of financial transactions as a result of lack of time or inability for the majority of entrepreneurs to hire support stuff to serve these transactions.
In short, it all comes down to the shortage of money and time. For these simple reasons, sophisticated e-commerce systems based on merchant accounts are expensive, hard to establish and support for an average entrepreneur. That is why third party payment processors that will handle all online orders on your behalf became widely popular among small businesses. They require very little effort to establish and even less effort to support. In most cases they will provide you with completely automated as well as quick and reliable for your customer way of payment.
This will allow you to accept payments 24/7 focusing your business to work on other tasks and activity.
In practice once set up, the whole customer paying and product delivering process becomes fully automated and consists of the following steps:
1. Customer fills out the order form and clicks on the submit button to pass the order to the payment gateway;
2. Automatic payment gateway routes credit card (e-check etc.) data and purchase amount to the payment processor of the merchant (seller) acquiring bank;
3. Acquiring bank sends authorization request to the payment processor of the customer's issuing bank;
4. Issuing bank validates customer's account, credit limit and authorize the transaction, freezing the specified amount on the customer's account;
5. Issuing bank routes authorization code (or "transaction declined" message) to the acquiring bank's payment processor;
6. Acquiring bank routes payment approval (declined) message to the payment gateway;
7. Payment gateway notifies the merchant (seller) about approved (denied) transaction;
8. Provides customer with the product s/he ordered, the details of shipping etc. or notifies about payment problems;
9. Banks' clearing settle the mutual transfer of funds, crediting the respective merchant (seller) account with the specified amount of purchase.
All these steps due to complete automation process, if we don't speak about phone or mail orders etc., will take somewhat between several seconds to several minutes, still usually faster than when you are billed at the store's pay desk and much faster considering the speed of going for online shopping instead of the "offline".
This publication intended to analyze existent picture of third party processing companies and represent you the comparative facts that would help you to determine your preferences based on business needs and capacities.
The table below will provide you with basic features of the most "visible" today's online payment processing players. Please note, that the online financial market evolves extremely fast, so the table data is accurate as on the February 2003 what I cannot guarantee in a month, all the more in a year, so my advice here is to choose 3-5 most acceptable and affordable financial intermediaries (even if some important for you feature is missing) and recheck their services and fees once more at their web-sites before making any final decision.
------------------------------------------------------------Company Name in alphabetical order:1) Setup fees 2) Monthly fees 3) Commission structure*
2CheckOut:1) $49 2) no 3) $0.45 + 5.5%;
CCNow:1) no ($11.95 for Int.) 2) $9.95 3) $0-$100 - 0%, $100+- 9%(11% for Int.);
ClickBank:1) $49.95 2) no 3) $1 + 7.5%;
IBill:1) no 2) no 3) $0-$9,999 - 15%, $10,000-$24,999 - 14% etc.;
MultiCards:1) $15 or $150 2) no 3) 11.9% or 9.9%;
PayPal:1) no 2) no 3) $.30 + 2.9%;
PaySystems:1) $49.00 2) no 3) $1.00 + 3.95% or $0.45 + 5.5%;
ProBilling:1) no 2) no 3) $0-4,999 - 13.5%, $5,000-12,499 - 12% etc.;
ProPay :1) $35.00 (yearly) 2) no 3) $.30 + 2.9%;
Regsoft:1) no 2) no 3)$0-$30 - $3.00, $30+ - 10%;
Verotel:1) no 2) no 3) $3.75-$75.00 - 13.5%;
V-Share:1) no 2) no 3) $0-$15 - 20%, $15-$100 - $3+4%, $100-$200 -$2+5% etc.
------------------------------------------------------------Company Name in alphabetical order: 1) Credit Cardsacceptance 2) Online Check acceptance 3) Phone(Fax) ordersacceptance 4) Recurring Billing feature
2CheckOut: 1) yes 2) yes 3) no 4) yesCCNow: 1) yes 2) no 3) no 4) noClickBank: 1) yes 2) yes 3) no 4) noIBill: 1) yes 2) yes 3) yes 4) yesMultiCards: 1) yes 2) yes 3) no 4) yesPayPal: 1) yes 2) yes 3) no 4) yesPaySystems: 1) yes 2) yes 3) no 4) yesProBilling: 1) yes 2) yes 3) no 4) yesProPay: 1) yes 2) yes 3) no 4) noRegsoft: 1) yes 2) yes 3) yes 4) noVerotel: 1) yes 2) yes 3) yes 4) yesV-Share: 1) yes 2) yes 3) yes 4) yes
------------------------------------------------------------* Commissions are charged in two most popular ways: * depending on the sales volume, for instance, 10% for $0-$1000 in gross sales and 5% for $1000+ or; * flat fees plus percent of the transaction amount: $2 + 5%, so if you sell your item for $50 the commission is $2+$2.5 (5% out of $50)=$4.5 Note, that commissions shown for credit card billing may be the same or may differ from company to company for online checks and, especially, for phone order processing.
As you see, the table compares the most common features of services, while some secondary options like affiliate program, online auctions support or inability of such companies like PayPal to process all worldwide customers including yours truly, were left behind.
IBill and Verotel, for instance, have retail price maximum limits. The dominating majority of payment processors charge additional fees for chargebacks and refunds, while Regsoft, Verotel or V-share offers a completely risk-free start up, charging commission from actual sales only.
The middleman you will commit to should offer easy ways to administrate your account, view statistics, add/delete products on sale, setup price, tune and customize with your web-site image the order page etc.
Depending on the nature of your main product: tangible or intangible, some companies may or may not meet your needs. Check Verza.com payment processing company for tangible and shippable goods. They are the Mother company of Verotel - division specially designed for intangible products or "bits" sellers.
Carefully read terms & conditions agreement, other regulations as well as charge back policy before signing up for any service.
Find out the offered ordering security options. While some companies provide sophisticated fraudulent control system and supply you with both server secured order form and non-secured order form for your customer convenience, other payment processors had problems even with the coding of their order web-pages, what allowed anyone to literally steal your intangible products by downloading them without payment. That happened because the URL of the so-called "Thank you" page (where sellers arrange their info materials to download) was clearly visible in the source code of the order form. This is unacceptable.
You may also want to test their support system and uptime the same way you do before selecting a web-hosting provider. Because your order page(s) is(are) hosted at the 3rd party payment provider server(s), if they are down for any reason, it may be very sad for your customer to choose a product, click on the order link and get error or "The page cannot be displayed" massage.
As you see there are a lot of points to check and analyze. On the other hand, remember a rule of not complicating things. The key for easy decision-making process is not to avoid research as some people do going for the first offer they see, rather than knowing your needs and capabilities including financial beforehand.
Determine them at the very beginning and search companies accordingly, making the whole research smooth and easy. Besides, on the contrary to, say, domain name choosing, payment processor service is temporal to help you build your online business in a quick, cheap or zero cost way. At some stage due to economy of scale it will be cheaper and more effective for your business to establish personal merchant account with respective e-commerce gateway system.
Setting Your Financial Priorities
Whether you know it or not, you are always setting your financial priorities. Some may decide that a new stereo system is more inportant than this month's electric bill. This may be a little off the wall but it is still setting your priorities.
Anyone wanting to better manage their money would be wise to determine what their financial priorities are and stick to them. Of course, if you see that these priorities will not put food on the table and pay your bills then you will have to rethink your priorities.
Setting your priorities is simple. You just decide what is the most important aspect of your finances and put that item on top. However, if you decide on that stereo over your electric bill, you may find yourself in the dark with no need for a stereo.
There are basic priorities that pertains to everyone. These are simply a matter of survival. Here is a list of the basics:
WaterFoodShelter
That was a tough one.
What does it take to ensure that our basic needs are met? The main ingredient is a source of income to pay the rent or house payment, pay the utilities, and buy the groceries. This is where you start setting your priorities.
Before you can spend another penny, you have to take care of what you need to survive. Don't put off the rent or house payment, utilities and don't skimp on your groceries and necessary health items. If you do you will start experiencing money problems much sooner than you would if you had delayed paying other bills instead.
What's next? If your source of income happens to come from a job, then I would say your transportation. You have to get back and forth to work so you can afford all of the other stuff. This would include your vehicle payment, gas, insurance and maintenance. If your source of income is not a job then go to the next step.
And Now? Naturally, this would be your other bills. You can even split this category a little further.
First, you have your bills that are secured by property. You should always pay these bills first.
Secondly, your unsecured bills which are probably credit cards.
The reason you should always pay your secured bills first is that it is much more likely that they can take the secured property and probably will unless payment is made. While credit cards companies are notorious for their threats, they very seldom follow through. I'm not saying not to pay them, just that they aren't as high a priority as your secured bills.
Next would be your savings. I really to hate to list savings as your last priority because having a savings can prevent the use of those dreaded credit cards and help in so many ways. If you have the money to cover all of your other priorities then you should always put savings at the top of the list. However, if you don't have enough money to cover your bills and expenses then your savings will have to be the first to go.
Just to recap. The below list is an example of what your financial priorities should look like:
1. Groceries and Necessary Health Items2. Housing (Rent or House Payment)3. Utilities4. Transportation5. Secured Bills6. Unsecured Bills7. Savings
Anyone wanting to better manage their money would be wise to determine what their financial priorities are and stick to them. Of course, if you see that these priorities will not put food on the table and pay your bills then you will have to rethink your priorities.
Setting your priorities is simple. You just decide what is the most important aspect of your finances and put that item on top. However, if you decide on that stereo over your electric bill, you may find yourself in the dark with no need for a stereo.
There are basic priorities that pertains to everyone. These are simply a matter of survival. Here is a list of the basics:
WaterFoodShelter
That was a tough one.
What does it take to ensure that our basic needs are met? The main ingredient is a source of income to pay the rent or house payment, pay the utilities, and buy the groceries. This is where you start setting your priorities.
Before you can spend another penny, you have to take care of what you need to survive. Don't put off the rent or house payment, utilities and don't skimp on your groceries and necessary health items. If you do you will start experiencing money problems much sooner than you would if you had delayed paying other bills instead.
What's next? If your source of income happens to come from a job, then I would say your transportation. You have to get back and forth to work so you can afford all of the other stuff. This would include your vehicle payment, gas, insurance and maintenance. If your source of income is not a job then go to the next step.
And Now? Naturally, this would be your other bills. You can even split this category a little further.
First, you have your bills that are secured by property. You should always pay these bills first.
Secondly, your unsecured bills which are probably credit cards.
The reason you should always pay your secured bills first is that it is much more likely that they can take the secured property and probably will unless payment is made. While credit cards companies are notorious for their threats, they very seldom follow through. I'm not saying not to pay them, just that they aren't as high a priority as your secured bills.
Next would be your savings. I really to hate to list savings as your last priority because having a savings can prevent the use of those dreaded credit cards and help in so many ways. If you have the money to cover all of your other priorities then you should always put savings at the top of the list. However, if you don't have enough money to cover your bills and expenses then your savings will have to be the first to go.
Just to recap. The below list is an example of what your financial priorities should look like:
1. Groceries and Necessary Health Items2. Housing (Rent or House Payment)3. Utilities4. Transportation5. Secured Bills6. Unsecured Bills7. Savings
Are You Swiftly Killing YOUR Financial Future?
Don't get defensive, and don't become offended by the points made in this article -- this is meant to HELP you. So if you're ready to learn how to avoid a common marketing faux pas, then put on your thinking cap and let's get to work! :)
And, what's this suicide marketing "no-no" that's could be killing your profits? That would be...
LACK OF ORIGINALITY.Yep, you heard right. Get your complimentary barf bags from that overhead compartment -- you'll need 'em for this one. Are you sick of hearing the same dried-up cliches over and over again in sales letters, ads, and every day business talk? You know, the ones loaded with overused phrases like"It's a WIN/WIN situation!""Houston ... we have a problem."
"It ain't over 'til the fat lady sings."
"Drive your hit counter CRAZY!"
And so on. If you're not sick to death of the lack of originality displayed at every turn, you soon will be. It makes me think,"Uh oh ... here we go again! Just another marketing know-it-all that thinks (s)he's hot stuff because (s)he's learned a 'popular' catch phrase."I guess some people say,"Everyone else uses it, so it MUST be okay!"Uhhhgggghhh ... Gag me with a spoon!I mean, really. Aren't YOU fed up with all of the "FREE" this and "NOW!" that, "SKYROCKET" this and "BOOST" that? BE ORIGINAL, for goodness sakes. Whether you're willing to believe it or not, this can be affecting your advertising and sales results in a very bad way. And what's worse, some of our International business people or newer clientele may not have a clue as to what these cliches even mean.
And what about:
"This DUMB little ad..."Oh? If it's so dumb, why the heck were people using it? That ad was plastered all over the Internet, and quickly became ineffective for that reason. These people should have gotten a clue AND a THESAURUS. If you're worried that using a thesaurus isn't "modern" enough, you might try http://www.thesaurus.com ;-)Are YOU still assassinating your financial future with this one often-overlooked marketing "no-no?" If so, this is your fair warning. Sure ... SOME of those overused, washed-out cliches may still be working, but for how long? I know it may be tempting, but don't let the Internet and all its splendor overtake you. One quick remedy is to come up with your OWN catch phrase.
It's simple, really.
Create your own metaphor that's easily applicable to the type of business you're in. Can't think of a new one that 'tickles your fancy?' Then try thinking of a well-known saying that ISN'T used commonly in your industry. My own personal saying is
"Do not pass 'Go.' Do not collect two-hundred dollars."You probably know that phrase is well-known to Monopoly players all over the world, but NOT in business. You can apply it to anything you don't want your listener or reader to do, just as you would any of the less original sayings you hear every day.But, 'if push comes to shove' ... just don't use one. ;-) They can cloud your message, and it can make you seem less than creatively inclined. You've been warned -- now it's up to you.
And, what's this suicide marketing "no-no" that's could be killing your profits? That would be...
LACK OF ORIGINALITY.Yep, you heard right. Get your complimentary barf bags from that overhead compartment -- you'll need 'em for this one. Are you sick of hearing the same dried-up cliches over and over again in sales letters, ads, and every day business talk? You know, the ones loaded with overused phrases like"It's a WIN/WIN situation!""Houston ... we have a problem."
"It ain't over 'til the fat lady sings."
"Drive your hit counter CRAZY!"
And so on. If you're not sick to death of the lack of originality displayed at every turn, you soon will be. It makes me think,"Uh oh ... here we go again! Just another marketing know-it-all that thinks (s)he's hot stuff because (s)he's learned a 'popular' catch phrase."I guess some people say,"Everyone else uses it, so it MUST be okay!"Uhhhgggghhh ... Gag me with a spoon!I mean, really. Aren't YOU fed up with all of the "FREE" this and "NOW!" that, "SKYROCKET" this and "BOOST" that? BE ORIGINAL, for goodness sakes. Whether you're willing to believe it or not, this can be affecting your advertising and sales results in a very bad way. And what's worse, some of our International business people or newer clientele may not have a clue as to what these cliches even mean.
And what about:
"This DUMB little ad..."Oh? If it's so dumb, why the heck were people using it? That ad was plastered all over the Internet, and quickly became ineffective for that reason. These people should have gotten a clue AND a THESAURUS. If you're worried that using a thesaurus isn't "modern" enough, you might try http://www.thesaurus.com ;-)Are YOU still assassinating your financial future with this one often-overlooked marketing "no-no?" If so, this is your fair warning. Sure ... SOME of those overused, washed-out cliches may still be working, but for how long? I know it may be tempting, but don't let the Internet and all its splendor overtake you. One quick remedy is to come up with your OWN catch phrase.
It's simple, really.
Create your own metaphor that's easily applicable to the type of business you're in. Can't think of a new one that 'tickles your fancy?' Then try thinking of a well-known saying that ISN'T used commonly in your industry. My own personal saying is
"Do not pass 'Go.' Do not collect two-hundred dollars."You probably know that phrase is well-known to Monopoly players all over the world, but NOT in business. You can apply it to anything you don't want your listener or reader to do, just as you would any of the less original sayings you hear every day.But, 'if push comes to shove' ... just don't use one. ;-) They can cloud your message, and it can make you seem less than creatively inclined. You've been warned -- now it's up to you.
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