Financing for Your Small Business: Tips to Get Started

All retailers, big and small, need to provide reasons for shoppers to come back to their store or site. In fact, sixty-one percent of small and medium businesses report that more than half of their revenue comes from repeat customers. Today’s empowered shoppers have high expectations and are accustomed to receiving offers that will propel them to immediately make a purchase. These offers may include incentives such as discounts or financing options. For small businesses in particular, offering instant financing is an ideal way to meet today’s shoppers growing needs and build loyalty.

Financing Builds Loyalty and Sales

When a small business offers customers a way to pay for a purchase over time and manage their cash flow effectively, it creates positive sentiment and drives loyalty. According to an MMR Research report, nearly two-thirds of previous users of store financing come back and finance at least one additional purchase of $500 or more and 33 percent do so three to five more times. This data shows that offering financing is regarded as a positive interaction and drives customer loyalty.

The resources to research new financing offerings and implement these new products has been hard to come by for small business owners and is typically regarded as an “after hours” activity.  The good news is that small businesses now have increased access to new technology and processes that require a smaller investment of time and money to implement. But while offering financing sounds great and all of this new technology is welcome news, how does a small business pick the right option and partner? Here are a few tips to consider:

• Matching Goals – Make sure that the potential results of the financing options you offer align with your overall business goals. For example, if a small business owner is looking to convert sales and increase average order value (AOV), then offering point of sale financing is a great way to help meet these goals.
• Customer Feedback – Customers can help guide what type of financing option a small business should provide. If a customer walks away or abandons a purchase, take note of whether they express that they wish the store had other payment options. Are your customers asking about financing terms and conditions? If so, find out what they might find attractive. 
• Cost – One of the biggest factors in choosing a financing provider is cost. It is important to secure a full picture of how much the option is going to cost your business and when. Will there be fees on every transaction or minimum monthly fees? When does a business get charged? All of this information should be secured up front and terms should be clear. If not, run away.
• Integration – This has almost become a “four letter word” for small businesses. A new technology or system may promise to be simple, but in reality may drain scarce resources. Ask the potential financing provider for a clear breakdown of the integration process and what is involved. If the information is not clear or not available, this is an immediate red flag. Financing technology has drastically improved in just the past few years alone. Blispay is an example of a new technology that makes financing easy and accessible for small businesses and shoppers. With Blispay, small businesses get financing up and running quickly with no integration or incremental costs outside of existing credit card fees.
• Shopper Experience – It is really important to understand how a customer is going to interact with a financing offer, and where this happens, in a store or online. For example, credit decisions are typically a private matter, so it is important to choose a financing option that allows a customer to have privacy, especially in a store. Options that allow a shopper to quickly apply right on their phone or mobile device are ideal. And just as a business owner expects terms to be transparent and clear, the same should be true for the shopper.
• Sales Floor and Back Office Impact – It’s important for a small business to factor in how the new financing impacts sales associates. Will there be a lot of training involved? Is the process taking the associate away from other duties for too long?  It’s also important to understand the impact of the financing option you choose on back office process and when your business will receive its money.

Financing can help propel a business to new heights and shoppers love to have the option. There are financing options that drive repeat sales and build loyalty. Armed with these tips, small business owners need to take advantage and choose the right partner.