The Green Sheet Online Edition
September 22, 2014 • Issue 14:09:02
Managing your ISO during the first year: 10 tips
So your merchant services business has been steadily growing, and now you have made the decision to expand your sales office and hire a team. Starting your own ISO is undoubtedly an exciting time, an anxious time and a time filled with opportunities as well as pitfalls.
My goal is to help you avoid some of the potential pitfalls so that you can enjoy the journey while channeling your energy into what really matters: sales!
Advice you can build on
Here are 10 tips to keep in mind:
- Have a plan: This sounds obvious, but you would be surprised to learn that many people just have an idea in mind, but do not actually have a written plan when they start a business. It is much more difficult to execute an idea than a written plan, so take the time to write out a very detailed plan, and then take the time to evaluate it honestly.
- Know your budget: Before you launch your business, you must have enough capital to give yourself a fair opportunity to build your business. With the margin compression that we are experiencing in the payments industry, it is unlikely that you are going to be profitable from the first month, so make sure you have prepared a detailed budget with the help of your accountant to ensure that you will have enough capital to get through the building phase. Depending on your sales model, this period could be anywhere from a few months to a few years.
- Hire slowly: One of the most common mistakes that new ISOs make is believing that growth is synonymous with having more employees. This crippling myth could be fatal to the financial health of your business. Recruit employees only when your sales justify the hiring. As a new ISO, your first goal should be growing your sales and not your payroll.
- Sales, Sales, Sales: With your new office comes a lot of operational overhead, which means your finances will likely start in the red. Your goal as the business owner should be to quickly get out of the red. The only solution is to increase sales and lower your overhead as much as possible. This sounds easy enough, but it's a skill requiring a solid plan that is executed to perfection. So make sure you have a tested and proven sales strategy before you start.
- Pay for experience: As a startup, you should surround yourself with experienced players. You cannot afford to hire inexperienced employees who are going to learn at your expense. It is far better to have a smaller group of top-notch players who are going to be contributing members of your organization than a group of amateurs learning on the job. Remember, if you know more than all of your employees, then you're in serious trouble.
- Know your purpose: You need to be absolutely clear about your purpose, and you must make sure everyone on your team knows and understands your vision for the company. It is very difficult for a team to run in sync if everyone is not on the same page.
- Have a marketing budget: Most startups don't have the luxury of a big marketing budget to do a "branding" campaign, but you should at least allocate enough capital to be able to reach your target market. If people don't know that you exist, they are not going to do business with you.
- Reality check: Don't be afraid to reevaluate your plan. In our industry, things change at a very rapid pace. A plan that is superb today may not be that great a year from now. Allow yourself the freedom to listen to the market and amend your plan if necessary. This does not mean you are changing your destination; you are just changing your direction.
- Protect your company: While it is tempting to draft your own agreements and handle your own legal matters, it is foolish to do so. It is far less expensive to hire an attorney before you have a dispute. For a startup, litigation is very costly and time consuming, and it will inevitably divert you from your goal. As attorneys like to say, "He who represents himself has a fool for a client." So make sure your company is well protected.
- Have fun: As Ralph Waldo Emerson said, "Life is a journey, not a destination." I've learned this from my own experience. You must enjoy what you are doing, and you must have fun doing it; otherwise, what's the point? If money is your only driving force, then you should do a personal inventory and get a better understanding of your true purpose.
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