My Advice to a 20-Year-Old Starting Out in Merchant Services
I had a great phone call recently with a twenty-year-old young man. We talked for about twenty-five minutes, after which I decided to share the advice I gave him. He was just starting in the merchant services industry and asked my advice on a processor, among other things. I advised him to discover whether […]
I had a great phone call recently with a twenty-year-old young man. We talked for about twenty-five minutes, after which I decided to share the advice I gave him. He was just starting in the merchant services industry and asked my advice on a processor, among other things. I advised him to discover whether he was designed for merchant services by the following series of thoughts and actions. This episode will teach the process of identifying assumptions and proving them.
By launching into merchant services, this young man was making four assumptions which may or may not be true.
That he can prospect and get people to like him.
That he has enough sales ability to close people if he gains their trust and approval.
That the processor is going to approve his clients and service them in a way which works.
If all those things happen, that the processor is going to pay enough for him and his new bride to live comfortably.
The key to business is not research, analysis, and deep contemplative thought. Rather, these four simple steps are the key.
#1. Get an idea. I could sell you on any idea. For instance, someone has an idea to sell ice to Eskimos. Think how inconvenient chopping their own ice is for Eskimos. They probably need a distributor just to sell them ice. Doesn’t that make sense? There are assumptions being made here as to the value of ice to the Eskimos! Any idea can sound good, but ultimately an idea is based on a set of assumptions.
#2. Reveal the underlying assumptions. Those who are successful in business can break down a good idea into compartments of assumptions which are being made. If any of the assumptions are not true, the idea will not work. No money will be made.
The example of Apple creating Itunes might help illustrate this principle. One assumption was that people are willing to keep a device on their person and walk around with headphones in their ears. Walkman had already proven this assumption to be true. Another assumption was that people are interested in buying songs one at a time rather than an entire album. Nobody had previously offered that. The question, then, was whether people would be willing to abandon illegal free downloads to pay for legal downloads. That was a big leap for Apple. They did many kinds of customer focus groups and surveys to test the assumption. Deciding underlying assumptions to an idea is the vital second step in this process.
#3. Find the shortest path to proving the assumptions. They will be proven true or false. In the case of my phone call, I gave this challenge to my caller:
“Do you have pen and paper? Here is the survey pitch:
‘Hi, my name is James Shepherd. I’m starting a new business here in town. If you have just a couple minutes, I’m doing a little survey to learn more about doing business in this community. I have two or three quick questions for existing business owners. I’d like to get your thoughts on what I’m doing and whether you think it will work. Do you have like a minute or two for me to ask you these three questions?’ [That’s a great pitch.] Question #1 – ‘How did you get into business and how long have you been here?’ [a little small talk] Question #2 – ‘Are you currently processing credit card electronic payments? If so, who do you use and are you happy with them?’ Question #3 – ‘Once I get this business launched in a week or two, would you mind if I come back to drop off free marketing materials now that I know your situation here?’
[To my caller] Now, here is what you need to do. As soon as we hang up the phone, put on your shoes and get your keys. Drive to the closest business. Walk in and tell them that pitch. When you finish, drive to the next closest business and repeat it. In the next ten business days, go into 200 or 300 businesses and repeat that pitch. By doing that you’re going to prove your first two assumptions. Can you prospect in a way that makes people like you? If not, I can’t help you. Get another sales job where you have a manager or coach. If you now have two hundred interested people, how many of them are ready to buy from you? The processor you’re with doesn’t matter until you’ve proven the first two assumptions – (1) Can you prospect merchant services and (2) Can you sell merchant services?”
My advice to someone just starting in the industry is not to worry about the processor or the paperwork. Get some business cards which say, “payment consultant” or “sole proprietor.” Walk into businesses and have conversations. Do you know how to convince people to buy from you? If you do, then the processor becomes really important. Then get answers to question such as, “What’s their paperwork like? What is the application process?” Now you’ll prove the last two assumptions.
By proving the assumptions, you’ll know whether you’re designed for merchant services or should move on to another career. You can either start making money in merchant services or move on to something more profitable for you.