The Green Sheet Online Edition
May 22, 2017 • Issue 17:05:02
Positioning your ISO for success from the start
On your way to building an ISO, the decisions you make during the startup phase are very critical; often they make the difference between success and disappointment. As enterprising merchant level salespeople (MLSs), we are driven by results, and most of us want immediate results. However, building an organization is far different than making a single sale, and it is a much more involved process requiring patience, perseverance and, of course, a well-executed plan.
I believe where most ISO owners and MLSs run into trouble is that they don't place enough emphasis on the management side of their established or fledgling ISOs.
I can tell you without doubt that "if you build it they will come" does not apply to the ISO business. It is far too competitive and requires a great plan that differentiates your company from others. And the plan must be executed almost to perfection. However, if you take the necessary time to plan your startup strategy and keep in mind the tips I'm about to share with you, you may be well on your way to success.
Tips for startups
Here are five tips to keep in mind when starting out:
- Start small: Nobody likes the idea of starting small, but starting small enables you to truly fine tune your plan before you do a complete rollout. This is critical, because for a startup that doesn't have significant capital, one poorly executed plan may be the end of the road. Starting small protects you against major financial setbacks until you have all your ducks in a row.
- Think twice before borrowing: We work in an industry where "leverage" has become a cool term, and for experienced ISOs, it is indeed an invaluable tool in growing their ISOs, but when you're starting out, it may also be the quickest way to get yourself into trouble. I've seen ISOs start out with a lot of debt before having a meaningful sales engine in place. This puts a tremendous amount of pressure on you and your team to produce quickly, which often leads to making poor management decisions. Build the foundation of your business first before you consider borrowing expensive money.
- Know your sales model and your market: Do you know your sales model and target market? If the answer is yes, and you are able to articulate it in clear and simple terms, then you are likely experiencing success with your sales efforts. However, if you do a little bit of this and little bit of that and occasionally something else, then you may want to consider focusing on a particular model and niche. The most successful ISOs have a clear understanding of their market and their sales approach. So, for example, whether your model involves recruiting experienced agents or you recruit brand new agents into the industry, focus on just one model when you are getting started, and introduce new channels down the line if necessary.
- Sometimes less is more: To this day, one of the first questions new MLSs ask me is, How many employee do you have? ‒ as if that's indicative of an ISO's success. I can tell you with confidence that it's not. In fact, there are ISOs in our industry with hundreds of employees that have reported all sorts of financial distress. You would be far better served if you run your business efficiently, and only hire up when absolutely necessary. Try cross-training your current employees and pay them better. Not only will they be happier, but they will also be more involved in the initial growth of your business.
- Don't forget the name of the game: At the end of the day, we are in this business for the residuals or recurring revenue, because that's ultimately what builds value for your company. Don't fall in love with making quick money from equipment leases and risk alienating the same customers that you depend on for monthly residuals. Selling a merchant account is not a one-time sale. Your merchants have to be sold and serviced every single month in order for them to continue doing business with you for the long term. In short, you have to earn your residuals every month.
These are just a few tips that I hope will help you start off on the right track. There is obviously much more that goes into managing and operating an ISO, and I hope to cover much more, including perspectives from members of GS Online's MLS Forum, in upcoming articles.
SIDE NOTE: 10 years ago in Street SmartsSM
In "To certify or not to certify: That is the MLS question," The Green Sheet, May 29, 2007, issue 07:05:02, then Street SmartsSM author Dee Karawadra and members of the MLS Forum discussed the topic of MLS certification. This was before the Electronic Transactions Association established the payments professional designation, a voluntary certification program. To date, there is no governmental form of certification for professionals in the payments industry, and there is no agreement about whether governmental involvement would be helpful: www.greensheet.com/emagazine.php?article_id=96.
Aaron Nasseh is the founder and Chief Executive Officer at Finical Inc. His extensive sales and management experience includes having previously served as the General Manager of CardPayment Solutions and Vice President of Sales at iPayment Inc. He may be reached at email@example.com or at 818-330-4055.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.