She Works Hard for the Money, and Keeps More of it, too

According to USA.gov, saving money is the third most popular New Year’s resolution in 2009, right behind weight loss and reducing debt.  Not surprisingly, many small business blogs started off the year by sharing some of their favorite money-saving tips.  My favorite money-saving tips are those that don’t require any sacrifice on your part, either of needed materials, services, or time.  Yes, I should probably re-negotiate my phone bill, but not everyone is good at haggling.  Here are a few of my easy faves:

  • Re-examine your monthly bills: are you using all the minutes on that cell phone plan?  Do you pay to heat your entire home or office when you spend all day in just one room?  Does your bank charge you a fee every month for not keeping a mimium balance?  Take a look at your last few bills for gas, electricity, banking, phone and Internet service and make sure you are paying only for what you need.  Maybe a bright task lamp and a small space heater would be more comfortable and cost effective than turning on all the overhead lights and cranking up the thermostat ten degrees.  Maybe you don’t need to be paying for that text plan on your cell phone but you do need a better fit in your checking account.
  • Use coupons: before you buy anything online, Google the website and the words “promotional code” or visit a site like RetailMeNot or CouponCabin to find relevant discounts for your order.  These days you can save on almost every purchase, from office supplies to plane tickets.
  • Purge: (see my previous post on The Great Purge) I’ll bet there’s a lot of crap in your home or office that you don’t want, need or use.  Get rid of it — but DON’T throw it out.  Donate it to a school, thrift store or other non-profit, or if its got some value, sell it online.  Either way you’ll get money back, whether it’s cash, store credit or a tax write-off.
  • Invite more people over.  Rather than hanging out at bars or restaurants, eat, drink and socialize at your own house (or a friend’s).  Our friends used to have a weekly ritual called the “Triple D,” which involved dinner, drinks and dessert at a neighborhood restaurant.  This got really expensive, really fast, and was phased out in favor of a new ritual, “Family Dinner,” in which each week one of us hosts everyone else for dinner.  Those who don’t cook all pitch in to do the clean-up.  It’s usually better food, and it costs a whole lot less.

Hungry for more?  Check out the money saving tips on I Will Teach You To Be Rich, The SCORE Women’s Success Blog and Entrepreneur magazine.

Portland and Seattle d*s Biz Lady Meet-ups

Portland and Seattle ladies! Whether you have a successful design business already or are just thinking about making your craft hobby a full-time gig, you have to go to the design*sponge Biz Lady Meet-up.  This is one of the most useful informational events you will ever attend, not to mention one of the best networking opportunities available.  The San Francisco meet-up is what inspired me to start this blog in the first place, so GO GO GO!

The Portland meet-up is tomorrow, February 26th from 7-9pm at Design Within Reach Portland and the Seattle event is on Thursday, February 28th from 7-9 pm at Design Within Reach Seattle.

You’re supposed to RSVP but at this point, the ever gracious Ms. Grace Bonney is letting folks in anyway.  The event is free, but it is polite to bring a snack or drink to share with the group.

The meet-up is structured as a round-robin.  There are four speakers, who will speak about business financials, press and marketing, retail/wholesale, and successfully balancing life and work.  Everyone divides into smaller groups of four and spends about 20 minutes with each speaker before rotating to the next.  Bring a notebook and a lot of business cards with you and get ready to meet a lot of other very cool, like-minded BizMisses.  I met the super funny and very talented Christine Schmidt of Yellow Owl Workshop at the SF event.

I cannot stress the awesomeness of this event enough.  If can go, go.  I promise, you’ll thank me for it.

Business Credit Cards

When I signed up for my WaMu business credit card, I regretted it. It’s got a pretty high interest rate and gives me no rewards of any kind. I just signed up for it because I was already at the bank and my accounting seminar instructor said it’s much easier to keep track of your finances with a credit card than with a debit card (this is true — especially if you use Quickbooks).

This week I got an offer in the mail from Citibank, so I figured it was time to switch. They wanted me to apply for their CitiBusiness Card with Thank You Network. It seemed like a pretty good deal. When you wade through the point nonsense, you essentially get 3% back on “qualified business purchases,” which they define as “purchases at certain office supply merchants, and on professional services,” and 1% on everything else you buy. You can also transfer your balance from another credit card and get 0% APR on it until May. Still, I thought I might be able to do better.

I did most of my research at CreditCards.com. This site is basically just a list of rewards cards. They don’t provide much specific information about any of them. For that you need to visit the card provider’s web site and read the terms and conditions. You really need to read the fine print carefully, because there is some weird stuff in there. For example, I got pretty excited about the Chase Business Cash Rewards Card, because it advertises in HUGE type that you can get 5% cash back with every business purchase. When you read the fine print, however, you discover that this only happens when you spend exactly between $2,000 and $2,500 every month. This is clearly a rule that was written just to screw the undiscerning applicant, since there is no logical reason whatsoever to encourage people to spend within that precise $500 range. The American Express Blue card has similar bizarre restrictions.

Other hidden rules have to with sliding rewards scales.  You can theoretically earn 3-5% cash back on lots of cards, but if you spend, say, less than $1,500 a month, you’ll only get 0.25% back. This makes more sense from a business perspective (after all, the more you borrow, the more interest you might have to pay), but it’s still kind of sleazy.

In the end, it came down to the CitiBusiness Visa and the Amex SimplyCash.  The CitiBusiness Visa was tempting because of the huge signing bonus (10,000 frequent flyer miles when you first enter the site, 15,000 when you’re trying to leave it), but Citibank web sites are extremely slow and unreliable on my computer.  I’ve also heard some not nice things about Citicorp as a company.  So I went with the Amex, because the rewards were simple, high (5% on business purchases, 1% on everything else), and never expire.  As an added bonus, Amex will also give you discounts at lots of major companies through their “Open” business network, like Delta, Hertz and FedEx Kinkos.  The discounts average 3-5% and it’s automatically deducted from your credit card statement, so you don’t have to remember to show or mention anything at checkout.

If I were just starting out, I might sign up for both cards, since some retailers don’t accept American Express.  I’m just going to keep my WaMu business Visa for now, though.  It may not give me any rewards or cash back, but it has an awesome online module to track my credit profile (including free FICO score tracking!).  WaMu websites are the best in banking, in my opinion.  They’re simple, fast and provide all of the information I need in a format that makes sense.

Little Thing I Learned Today

In trying to set up my payment gateway tonight so I can begin accepting credit card orders on my web site, I learned that while you are required to collect every customer’s CVV2 number (the three-digit one on the back of the card), it is illegal to store it in any way for any length of time.  I verified this right here on page 12 of Visa’s Merchant Rules document.

Getting an EIN: the Easiest Part of Starting a Business

If you’re a sole proprietorship, you need an EIN.  Well, legally you don’t need one, but in a world full of identity thieves, isn’t it nice to be able to keep you social security number to yourself?  As a new business owner, an enormous number of people are asking for it these days. I find it really disconcerting to have to write it on every bank, credit, shipping and merchant service application I fill out.

An EIN, or Employer Identification Number, otherwise known as a Federal Tax ID, does not actually require you to employ anyone to get it. In fact, it’s so easy to get, you’d be a fool not to do it right now.  All you have to do is visit the EIN page on the IRS’s website.  You can apply in five minutes online (though only during certain hours — I have no idea why), and be instantly approved.  You just print your identification page at the end of the process and you can start using it immediately for almost anything (you have to wait two weeks before using it to file your taxes).  The best part?  It doesn’t cost a dime.

One small note: an EIN is not what will allow you buy things wholesale, at least not in the state of California.  For that you need a seller’s permit, which is a whole other kettle of fish, and is the same document that you need to collect sales tax.  This requires more time and money than getting an EIN.

What are Merchant Services?

This, it turns out, is a very complicated question. Merchant services, generally speaking, are ways for your business to process credit cards. But there are many different kinds of merchant services, and each business only needs one to three out of the myriad available. Figuring out which merchant services I need, making sure they are all compatible with each other and finding them affordabley is proving to be a more challenging task than I had anticipated. I still haven’t quite settled on the providers for my credit card processing needs but at least now I know what I’m looking for. It took me days to figure this out.

I started with my bank, since most banks offer merchant accounts and you can often get a competitive rate if you are already a customer. I have a free business checking account with Washington Mutual so I went into my local branch before the holidays and they put me on the phone with Ethan, their TransFirst merchant services guy. That was when the questions began that I couldn’t answer:

Ethan: “Are you looking for POS, online or MOTO processing?”
Me: “What’s the difference? Er…sign me up for one of each?”
Ethan: “Well, how much do you generate in monthly credit card sales, on average?”
Me: “I don’t. I don’t have a credit card processor yet.”
Ethan: “Okay, then, what would you estimate?”
Me: “I don’t know. I don’t know how many customers will choose to use credit cards.”
Ethan: “Well how about the types of payments you will be accepting. Will you need a virtual terminal, a gateway, a wireless device?”

Sensing I might be in a little over my head (though I clearly covered well), I mumbled something about “running my numbers” and told him I’d get back to him. Then began several days of trying to figure out what the hell he was talking about.

First I visited craftster.org (Lord, how I love this web site) and read the 8 page thread about processing credit cards. Since crafty Biz Misses always comparison shop, I thought this would be a great place to begin to find details and good deals. Many of the posters recommended Propay, Thompson (a reseller for Chase Paymentech) and Amex PuchaseExpress (for Amex processing, specifically). Then I looked up Quickbooks, since I have their accounting software. If their rates were reasonable it would be a bonus to have something that would seamlessly integrate with my bookkeeping. Some more searching brought up TermNet, Paynet, Heartland, MSI (Merchant Services, Inc.) and Chase Paymentech themselves. Some companies post their rates and charges up front, but visiting these sites was most helpful for coming up with a fairly comprehensive list of questions to ask their sales representatives. I wrote all of the companies’ names and my questions into a grid for easy comparison and started calling.

I’ll save what happened next for the next post, since, as I said, I haven’t yet settled on my merchant provider(s), but here’s what I learned after three straight hours of excruciating phone calls:

  1. You need a completely different set of services depending on whether you swipe credit cards in person (at your brick-and-mortar store, for example), take phone or mail orders, or want people to be able to buy things on your web site using their credit card.
  2. A business like mine, which needs to be able to take phone, mail and Internet orders, needs both a merchant account and a payment gateway, in addition to SSL encryption on my web site.
  3. Some companies can provide one, two or all three of those services.
  4. Every company charges a different mix of one-time, monthly, and per-transaction fees that make it nearly impossible to compare prices accurately.
  5. If you can speak to an authorized sales agent, rather than a “customer service representative” you can often negotiate lower or waived fees for yourself.

What I’m currently shopping for is a merchant account with a “virtual terminal” and a payment gateway. The virtual terminal component will let me take “card-not-present” orders. I can have customers give me their information by phone, mail, or in person (like at a trade show) and then process the transaction later through the virtual terminal (a website). This works fine for all of my non-Internet sales, since if the transaction doesn’t go through for some reason, I just don’t ship the products until it is resolved. A virtual terminal is definitely not the way to go for accepting cards at events like craft fairs unless you’re imprinting the card, collecting a billing address and looking at ID for every sale. I could collect Internet orders using a virtual terminal, too, but no customer wants to enter in all their information only to be told their order will actually be processed within the next 24-48 hours. That’s where the payment gateway comes in. A payment gateway, like Authorize or LinkPoint, is what you need to instantly process a credit card through your web site. I know this sounds confusing, but here’s a great article from OurShop.com that explains (and diagrams) everything.

Tomorrow I should finally have everything squared away, at which point I will actually post the gargantuan chart comparing about a dozen merchant services. I may even make a few recommendations. Stay tuned!