It’s been a busy year for Earth Garden in Wilton, Conn.. The high-end floristry, gifts and home furnishing accessories store recently opened a new storefront in its hometown dramatically expanding its product mix and amount of inventory while growing out its customer base at the same time.
One of the many new products flying off the shelves is a line of trendy reading glasses called eyebobs. “We know they’re hot. What we don’t know is which designs are our best sellers,” says Rachelle Bernabei, Earth Garden’s accountant.
Bernabei says it’s just impossible to keep track of them without a point of sale (POS) system. “Yes, we’re still using a cash register,” admits Bernabei, who is quick to point out that eyebobs are just one of a thousand different product lines they carry that are impossible to monitor as closely as they’d like without some new technology.
At the mention of upgrading to a point of sale (POS) system, Bernabei starts ticking off all the features she longs for not only to make her job easier, but further grow the business itself. “If we had a POS system we could store all of our customer data, keep better track of inventory, store financial data, and aggregate reporting that would help us track which products are moving faster than others and when and what to restock. We could get a better look at all our different segments of the business,” says Bernabei.
The end of cash registers
“When you think about it, the concept of a cash register is pretty archaic. It’s basically a cash box with a big calculator on top,” says Mark Tauschek, a senior research analyst from Info-Tech based in Ontario, Canada.
Archaic wouldn’t be too strong of a word. The cash register was invented over a hundred years ago back in 1883. Perhaps it is time to retire it to the Smithsonian along side the typewriter while leaving room for the fax machine that is undoubtedly soon to follow. In today’s digitally connected world, data is only as valuable as it is accessible and exportable to other applications.
Earth Garden’s cash register is a perfect illustration.” Well, it sort of does some things. It’s just that the information doesn’t go anywhere. It spits it out on a paper tape at the end of the day and all the sales data has to be manually inputted into our accounting system,” says Bernabei.
Upgrading to a POS system
So why not chuck those cash registers once and for all? The biggest reason is the cost, of course. Tauschek says the most basic system for a small, one-terminal shop could cost as little as a thousand dollars, likely it will be more like $2,000-$2,500 by the time an owner adds on things like bar code scanners and credit card capabilities. That may not sound like much until you consider stores like Staples and Office Depot still sell cash registers for as little as a couple of hundred dollars.
The other reason, says Tauschek, is that “10 years from now, you won’t be able to find a cash register anymore. But right now, although we are really talking about the really small, one-store Mom and Pop shops, some businesses just don’t need a POS system yet. They’re doing fine without one.”
Those businesses are increasingly a rarity; Tauschek offers the following advice to businesses who do find its time to integrate a POS system:
- Shop for simplicity. Make sure the system has an easy-to-use interface that requires minimal training. Most people that staff a terminal are typically the low-paid and, therefore, less educated employee.
- Check the vendor’s references. “Whether it’s the guy down the street, a vendor on eBay or a more established seller, talk to at least three or four customers,” says Tauschek.
- Consider the platform. Tauschek says, by far, most systems are Windows-based. However, Linux is making huge inroads in the POS space and contends they’re more secure systems. “The vast majority of attacks are against Windows. So that alone means Linux inherently has fewer security risks,” says Tauschek.
- Check the service contract. If the system goes down, how long can the business get by without a service call? The answer depends on the nature of the organization. Some businesses demand no less than a half hour wait for service, others two to hour hours. Waiting 24 hours for service is likely a revenue killer for most companies. Read the fine print before making a commitment. Response time could be a deal breaker.
- Start small. One of the biggest mistakes businesses make is buying more than they need. “All POS systems are scalable,” says Tauschek. Don’t add on things like bar code scanners, back end integration, gift card redemptions, and credit card and debit card signature pads until they are needed.
Choosing a POS system is one of the biggest technology commitments a retail or service business can make. When it works well, the return on investment (ROI) can be dramatic. When it doesn’t work, it’s a nightmare that can bring the entire business to a crippling standstill.
Other tips to consider before taking such a big step include the following:
- Be clear on why the POS system is needed for the business. What will it do that really helps the bottom line? How long will it take to pay for itself?
- Choose the software first. Make sure it is compatible with other hardware or applications the business is already using on the backend. For example, will it work with the accounting software already in use?
- Choose a vendor and software package designed for the type of business being outfitted. A book store shouldn’t buy POS software from a company that specializes in serving restaurants.
- Beware of the independent contractor with the homemade system. It would be great to have the right person just down the street, always available, reasonably- priced, and able to tailor the software specifically to the business. But what if that person botches the job or moves on without notice?
- Factor in the labor cost of implementation and training. For the business trying to find enough capitol to commit, this has to be considered. Paying someone to install the system, debug it, maintain it and train all the staff to use it can cost as much as the system itself in some cases.
SIDEBAR: POS System Vendors
The startup costs for a POS system can vary quite a bit, depending on the level of sophistication a business requires and the number of employee stations involved. For the small to mid-sized business just starting out, the best advice is to start small and build out the system as needed.
There are literally thousands of POS system vendors. It’s not unusual for first time buyers to go through two or three providers before finding the right solution. Business owners would be wise to avoid such costly mistakes and do their homework first.
Here are just a few POS vendors to start with that caters to smaller businesses:
AccuPOS This well-established vendor has been around for twenty years and sells both the software and hardware to build highly scalable POS systems. Software packages start below $1,000, with at least another $2,000 for the hardware. AccuPOS fully integrates with all the major accounting programs, including Peachtree, QuickBooks and BusinessWorks. AccuPOS has systems customized for both retail and restaurants.
Dell Point of Sale Solutions The familiar name may be reassuring for some businesses. There are three complete POS system packages offered for smaller shops, starting at $2,800. Dell bundles in QuickBooks POS software into its systems, another familiar name that would be attractive to many businesses that already use QuickBooks’ accounting software. Bernabei from Earth Garden, who’s been doing her research, offers one warning about QuickBooks POS software, however. “The largest font is 12 points. At our shop, we’re all over 40 and just can’t read it,” says Bernabei.
CAM Commerce Solutions It’s one of the best known names in the business, founded in the 80’s and publicly traded on NASDAQ. All of its solutions are Windows-based. CAM Commerce Solutions offers a varied palette of scalable software packages and hardware catering to growing companies.
Everest Software The Dulles, Va.- based Everest not only sells POS software for the front end of the business, it sells everything a small to midsize business needs for the backend too. It sells the accounting software, CRM, dashboard analytics, inventory control, shipping and receiving, along with payroll and marketing/ROI analytics. Everest consistently gets high marks from reviewers, although it is known to overwhelm users with a complex interface and data overload.