Have No Fear
You've decided you're ready to become aggressive in [launching your business], developing new products and entering new markets. You have [been urged to take these risks] by your most valued advisors, but you are a conservative individual. How do you handle the anxiety of living with risk?
Roberto Goizueta, the late chairman of Coca-Cola, once said, "If you take risks, you may still fail; but if you do not take risks, you will surely fail. The greatest risk of all is to do nothing."
Recognize that few things in life come with guarantees. Overly cautious businesspeople waste a lot of resources trying to avoid risk. They would [do] better to learn how to minimize the adverse effects of risk.
*Establish cut-off points to indicate the limits beyond which you will not go.
*Maintain control by delegating risk and responsibility.
*If you encounter failure, take the responsibility for it, decide what went wrong and take the necessary corrective steps.
*Obtain the necessary financial and human resources to deal with risk by being willing to share the potential rewards with others.
*Reduce the intellectual and financial sides of risk by using other people's brains and other people's money.
*Never adopt the "I'll make this work if it kills me" attitude.
Instead of trying to avoid it, seek out risk. Weigh the possibilities for gains and losses. And when the odds seem to be in your favor, move boldly ahead.
Excerpted with permission from Roger Fritz's The Small Business Troubleshooter (Career Press, $16.99, 800-CAREER-1).
Q & A
By Melissa Giordano
Q: We're starting a fence-building company. The prices for our services will range from $200 to more than $10,000. The typical homeowner is not going to have ready cash to pay us, so how can we set up to accept credit cards from customers?
A: Provided by David McAlhaney, senior vice president of the credit card division of American National Bank in Rosemont, Illinois.
There are a number of events that occur before you can obtain credit card processing services. First, you must submit an application to a financial institution for credit card processing. There is usually a charge of $75 to $200 per application. The financial institution will inform you if you are approved within three to five business days.
The primary risk for a financial institution in providing credit processing services to merchants is chargeback losses if customers return items. If a customer disputes a charge with a merchant, he or she can contact the credit card issuer to request a credit to his or her account. Or if the merchant goes out of business, the financial institution is responsible for the charged amounts. To lower its risk, a financial institution considers several factors when evaluating your application:
- Will all credit cards be electronically authorized?
- What types of products or services are you selling?
- What is your financial condition and the financial condition of your business? Are there any current or past liens or bankruptcies against you or your business?
- How long have you been in business?
- What prior experience do you have in managing a business?
- What type of refund or return policy does your business have?
- What is your anticipated credit card volume?
After you're approved, you can purchase, rent or lease credit and debit card processing equipment from your financial institution. Prices vary depending on the type of equipment, but for a terminal, printer and debit PIN pad, prices range from $900 to $2,000. If you don't want to part with that much cash, consider leasing equipment with an option to buy.
After you choose your equipment and payment plan, your salesperson installs and downloads proprietary software into the terminal for credit and debit card processing. You will then be trained on the equipment and taught Visa and MasterCard operational rules and regulations.
Ongoing expenses include per-item costs, which typically run 20 to 35 cents per credit card transaction and 40 to 60 cents per debit card transaction. You may also pay $10 to $15 for your monthly statement and $10 to $20 for chargeback fees.
American National Bank, fax: (888) 640-4262, (847) 430-5018.
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