Continuing the capital conversation
Peter Remington's request that we provide "more articles on the capital that is available to grow a small business," published in The Green Sheet's Forum section April 25, 2011, issue 11:04:02, motivated Glenn Goldman, President and Chief Executive Officer of Capital Access Network Inc., to respond with the following:
Your request can be read two ways - and both are very interesting. On the one hand, it can be answered based on how merchants can access capital to grow their businesses (and your bankcard revenues). On the other hand, it can be answered based on how ISOs can access money to invest in their own acquiring businesses.
Both merchants and ISOs have been severely impacted by the Great Recession and have had to examine and re-examine every area of their businesses to survive. Every cost has been examined and cut where possible; every product offering has been examined for ROI or repositioning; every prospect and customer gets the best customer experience possible - in short, your business is leaner and meaner than ever before, and you've identified opportunities to invest in profitable growth as the economy recovers.
Those businesses that wait for full economic recovery will miss the boat. They will emerge from their bunkers to find that those who made the investments have captured and are holding the market share they want. It has always worked this way.
For the ISO community, we've heard that those with investment money are waiting for the uncertainty of recent regulatory developments to clear before they prepare to start issuing checks again. That means growth capital will be largely internally generated for the near term. That is good news for the merchant community, because one way for ISOs to generate internal profit is to provide merchants with working capital to help their stores grow.
When merchants grow, their processing volumes grow. When their processing volumes grow, ISOs make more money. When merchants grow using working capital accessed with the help of their ISOs, the ISOs make money through commissions paid by the capital provider. And there is capital available for merchants to grow. For example, through its subsidiaries, AdvanceMe Inc. and NewLogic Business Loans Inc., Capital Access Network has stepped up funding volumes in recent years to help meet the need for merchants to access working capital and for ISOs to make commissions.
It is ISOs with the strongest businesses who will be the first to receive growth capital when it returns to the market in a big way. Through excellent customer service and savvy marketing, it is possible to maintain and expand your book. Make sure your product mix is right for your merchants and your bottom line. Working capital commissions are a way to do good (for your merchants) while doing well (for your ISO).
So, the good news is that there is money available now for merchants to grow, which at the same time helps the internally generated growth of strong ISOs. As for third-party money, it will be a little bit of a wait, but you want to position your ISO to be first in line when the window opens again - which it always does.
Thank you, Glenn, for providing us an expert's view on the availability of capital for merchant and ISO growth - both what is being offered now and what will likely become available in the future.
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