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You’re the Boss Blog: This Week in Small Business: Half-Time Report

July 1, 2013 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

As we close the books on the first half of 2013, here are a few links to some of the most useful small-business articles and posts I have read this year. I hope they are as meaningful to you as they have been to me.

The Economy

Matthew Yglesias complained that economists use shoddy data, and Robert Frank explained why millionaire investors are still holding on to their money.

Management

Eric Barker listed 10 things  you can do to improve your everyday life. Brad Farris said that giving honest, immediate feedback is a leader’s first job — and also offered some suggestions on what to do when you’ve lost your business-owner passion. Karen Vitale gave advice to her 20-year-old self, and Mikey Rox listed 25 ways to boost creativity.

Social Media

Here’s the best story I have read about Yelp: Is the review site a bully — or just misunderstood? Amanda Jacobs had a few tips for managing your social media in just 20 minutes a day, and Jill Konrath provided an example of a LinkedIn strategy that pays off.

Entrepreneurship

Twitter’s Jack Dorsey had some sound advice for what to do when you have an idea: “Get it out of your head and start working on it.”

Human Resources

Both Jeff Schmitt and Alex Befekadu gave their views on employees to avoid, and Amanda MacArthur suggested five methods to increase employee loyalty and reduce turnover.

Finance

Matthew Toren outlined seven steps to ensure a successful crowdfunding campaign, and Joe Taylor Jr. offered advice for building a profitable banking relationship.

Cash Flow

Kathy Davis listed 10 ways to increase small-business profits and productivity. Jon Stow suggested a few common purchasing mistakes you may be making. And if you’re a seasonal business owner, Rohit Arora said you should make cash-flow projections part of your financial planning.

Start-Up

Kevin D. Johnson believes “the potential for attaining greatness is in creating new markets,” and Margie Warrell thinks you should take a risk because the odds are better than you think.

Retail

Nathan Hanks suggested five ways to win when serving local businesses, including: “Live amongst your customers.” And David Lipson had a few great tips for cutting expenses in your restaurant.

Red Tape

Pete Wise listed five legal myths small-business owners should avoid, including this one: “I don’t need a lawyer.” And David Bier explained how immigration creates economic benefits.

Marketing

Freshdesk’s marketing and communications manager, Sairam Krishnan, explained how his company finds and keeps stellar customer service reps, and Casey Newman explained why data is at the heart of marketing’s future.

Online

Dana Prince wrote that the “opt out rate” is just one of five important online metrics to watch closely, and Jayson DeMers explained how to build an online community around your business.

Mobile

Tobin Dalrymple suggested five ways to publish content on mobile and build your brand.

Technology

Daniel Saks said there were five things to consider when choosing small-business apps, and Carl Bass distinguished the myths from the truths of 3D printing.

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/07/01/this-week-in-small-business-half-time-report/?partner=rss&emc=rss

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DealBook: Can Square Remain Hip?

August 31, 2012 by Leave a Comment

Square Register uses the company's reader and an app to turn an iPad into a credit card register.Square Register uses the company’s reader and an app to turn an iPad into a credit card register.

It’s not exactly a hip question right now. But what exactly is Square?

Excitement is building around the payments company, which is led by Jack Dorsey, Twitter’s co-founder. It’s close to raising $200 million of new capital, and Starbucks said in early August that it was going to use Square’s technology.

Disappointed by Facebook and Groupon, technology industry watchers at least have hope for Square. It’s easy to see how nifty card readers and other innovations can make payments much easier for small businesses and their customers. Meanwhile, the Starbucks deal raises the prospect that other large retailers may partner with Square.

But it may too early to anoint Square as the firm that will lead us into a cashless society. The main issue with Square is that it’s not yet clear what it wants to be.

Yes, on the surface, it’s a company that provides payments to hardware and software to merchants. But it may struggle to achieve burgeoning profits from the payments fees paid by merchants, according to an analysis of the economics of those payments.

Square is almost certainly working to develop a much bigger revenue source. The success of that will likely determine the success or failure of Square.

As innovative as Square is, it cannot easily get around the established fixed costs charged by the payments industry, which comprises processing companies, banks and firms like Visa and MasterCard.

Square charges merchants 2.75 percent of the amount transacted when a card is swiped, or $275 a month. That’s at the low end of the fee scale. But it may also be too low for Square to a profit on payments below $10, which are a big part of Square’s business.

Nebo Djurdjevic, chief executive of Cardis International, shows why. He simply calculates the money Square would take in with a 2.75 percent fee on a transaction and then compares that with the money it would have to pay out in fees to credit card companies and processors. (As a note, Cardis has its own product, which aims to cut the costs of smaller credit card payments.)

On a $5 transaction, Square would get 2.75 percent of $5, or 14 cents. But, citing public fee data, Mr. Djurdjevic calculates that, with a premium Visa card, Square would have to pay out 27 cents in fees. The theoretical loss to Square would therefore be 13 cents. The loss may be lower on other types of cards, according to Mr. Djurdjevic, who nevertheless thinks the Starbucks deal is a positive development for Square.

Square declined to comment on Mr. Djurdjevic’s numbers and their significance for Square’s business model.

The challenging economics won’t be a surprise to Square watchers. Enthusiasts may argue – correctly – that Square will make money on each payment that is over $10. And if Square gets picked up by larger retailers, larger payments may make up a large share of its business. Square may even have software that allows it to reduce slightly the amount it has to pay to card operators.

So what will the big, alternative revenue source be? Recent investors in Square must see one, given that the company now has an estimated valuation of $3.25 billion.

The company probably wants to take all the payment data and use it to help merchants with their marketing. Square might, say, take a cut of any business generated from that marketing. In other words, it may aim to be a more sophisticated version of Groupon. Square’s fans may say that, with a wealth of payments data, the company can do better than Groupon.

The more merchants that use Square’s payments system, the more data it will have. And with its low fees, Square may well draw in large numbers of merchants.

But as Mr. Djurdjevic’s numbers show, those low fees can also generate losses. And it’s not like other companies are standing still. For instance, PayPal and Discover recently announced that PayPal customers will next year be able to use the service in stores, not just online.

In all, it’s too early to tell whether Square is leading us, or itself, into a cashless future.

Article source: http://dealbook.nytimes.com/2012/08/31/can-square-remain-hip/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Disruptions: Design Sets Tone at Square, a Mobile Payments Start-Up

January 15, 2012 by Leave a Comment

Jack Dorsey, Square’s chief executive and co-founder, said the company's offices are designed in an open-air environment to promote trust and transparency in employees.Jin Lee/Bloomberg NewsJack Dorsey, Square’s chief executive and co-founder, said the company’s offices are designed in an open-air environment to promote trust and transparency in employees.

The headquarters of the start-up Square would be the absolute worst place to play hide-and-seek. There are no offices. Executives sit in open cubicles. All of the conference rooms, large and small, are surrounded by walls of clear glass. The only real place to hide, thankfully, would be the toilet.

This openness might seem odd given what Square does. It manages more than $2 billion a year in credit card transactions made through mobile phones. But the company is set up this way by Jack Dorsey, Square’s chief executive and co-founder, for a reason: to promote trust and transparency in its employees, which it hopes will translate to its customers. Design, he believes, has the power to determine a distinct mind-set, something he needs if Square is to succeed as a mobile payment system.

If Willy Wonka built a financial institution, instead of a chocolate factory, it would look something like Square. During an interview at the company’s San Francisco offices with Mr. Dorsey, we sat at a square table, in a square glass conference room — all of which are named after a famous town squares from around the world. Mr. Dorsey was eating nuts out of a square bowl. (Don’t worry, the nuts were still round, I checked.) Employees are even referred to as Squares.

“We believe strongly that the company is going to be reflected in the product and vice-versa,” Mr. Dorsey said. “The internal matches the external and the external matches the internal, and if we can’t provide a clean, simple, well-designed experience in here, it’s not going to be reflected in our identity. It’s in our DNA.” (Mr. Dorsey also is the chairman and co-founder of Twitter, where his obsession with openness is not as extreme.)

Square also borrows metaphors from traditional institutions, including the old United States Mint building, which sits across the street from the company’s office. “It looks like something that is built to last; it looks like it will stay up forever,” he said. “So how do you build that into pixels instead of stone?”

For centuries banks were built with thick stone walls, marble slab floors and heavy metal doors, all of which gave customers the feeling that bankers were dependable and trustworthy.

Square transactions primarily occur on a small plastic plug, inserted into a smartphone’s headphone jack, through which people swipe credit cards.

A hefty chunk of marble it is not. Square’s front door to customers is a smartphone application. Square has to provide the simplest experience possible, Mr. Dorsey believes, because, along with good design, it will evoke trust and confidence in a new financial institution that lives in a smartphone.

“We need to build something that never gets in the way of our users doing what they want to do,” he said. That concern is necessary because Square lacks the money to use mass media to show people how it works. When JPMorgan Chase introduced a new mobile feature that gave its banking customers the ability to deposit checks with their mobile phones, the financial behemoth spent millions of dollars on charming television and print ads of newlyweds in bed getting their wedding haul of checks into the bank.

Square has accrued a million customers just by word of mouth. That’s a tiny portion of all merchants accepting credit cards, so it still has a lot of work to do. “Traditionally in a financial institution, you have massive barriers to working together, you have a risk-averse culture and you have a lot of fear,” Mr. Dorsey said. “It’s rare for a financial institution to focus on design first.”

While the approach sounds very New Age-Touchy Feely-California, Silicon Valley companies have shown over and over again — think Apple, Google, Intuit — that clean and thoughtful design can win converts to a new way of doing things.

Article source: http://feeds.nytimes.com/click.phdo?i=db8aa325924893af76dc35486269a190

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Payment Method Bypasses the Wallet

May 24, 2011 by Leave a Comment

On Monday, Jack Dorsey, Square’s co-founder and chief executive, announced a way for shoppers to pay by simply giving their name to the merchant. Mr. Dorsey, who also co-founded Twitter, said customers would use a new feature on Square’s iPhone or Android apps, called Card Case, to make payments. Merchants would use one called Register to ring up and track purchases.

Using cellphones to ease offline purchases is a crowded corner of tech investment. Most companies are tackling one aspect of purchasing, like mobile payments or coupons. But Mr. Dorsey is thinking big. He wants Square to be involved in every step of the transaction process by replacing cash registers, loyalty cards and paper receipts. “We think it should be one system,” he said.

The start-up faces formidable competition. Square’s goal is to replace cash registers and point-of-sale terminals and the companies that make them, like Verifone. Square is also taking on the many start-ups that offer cellphone loyalty cards, like Foursquare, and competing with Google, Apple, PayPal and major credit card companies and banks to provide mobile payments.

Square’s new payment services are available at only 50 merchants in New York, San Francisco, Washington, St. Louis and Los Angeles.

Shoppers can use the Card Case app to search for those businesses, pay their bill and store receipts. A shopper opens the app, which looks like a brown leather wallet, clicks to open a tab at a store and then gives the merchant his or her name. The shopper’s credit card number is already stored with Square. Merchants see a photo of the Square user so they can confirm it is the same person.

With the Register feature, merchants can appeal to nearby shoppers who have the Square app by posting deals or menus. They can also store receipts digitally and track customer behavior.

Some shoppers said they were uneasy trusting Square with their credit card information when all it takes to pay is a name, not a plastic card.

According to Square, the photos and the fact that people can only pay if they and their phones are nearby adds a level of protection. For purchases more than $50, shoppers also have to enter a personal identification number as they do at an automated teller machine. Mr. Dorsey compared it to Amazon.com and Apple’s iTunes, which store credit card numbers so people can easily make purchases with their e-mail address and password.

Square joins a host of tech companies, phone carriers, banks and credit card issuers that are trying to replace wallets by letting people use their phones to pay. Most of the efforts are in the early testing stages. Unlike Square, most of the others plan to use a technology called near-field communication, or N.F.C., through which phones communicate information like credit card numbers to the merchants.

Initially, the company most in Square’s sights is Verifone, whose point-of-sale terminals and software are in 70 percent of businesses in the United States. In an interview before Square’s announcement, Doug Bergeron, Verifone’s chief executive, said that Square would not catch on for payments because people will prefer N.F.C. technology and have security concerns about using Square.

Article source: http://feeds.nytimes.com/click.phdo?i=1cf4f7f376e40b22e610097902956be1

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