Now and then I see opportunities and notice a pattern with consulting clients. Right now, there’s an underlying need in the marketplace which can produce extra money for those who fill it: financing hardware.
This has been extremely effective for some processors. If you have access to capital, buy the hardware and rent to businesses.
Renting hardware is a great model. If there are problems, the equipment is returned. By renting more advanced POS hardware, you would have very low attrition. Nobody wants to cancel if that results in losing the POS. When a business closes and must cancel, equipment can be refurbished and rented to someone else.
Here is the pitch: “We offer great software for $99 a month. Obviously, you need the hardware. You can buy it for about $7,000. Then, of course, you would pay for service and repairs if anything should go wrong. But we offer another option – a hardware software bundle for $297 a month, which includes that $99 software AND the hardware. The great thing about that, Mr. Jones, is you’re only renting the hardware. If there are any problems whatsoever, those are not your problems. We’re like the landlord of your POS system. Now, that also obviously means if you cancel, we get our equipment back. We guarantee you’ll get new or totally refurbished equipment. If it breaks down, we’re the ones that have to fix it.”
Rent smaller equipment (smart terminals, smaller POS systems, tablet POS systems) and still get recurring revenue by making a one-time investment and then refurbishing as needed.
Small business owners ARE leery of borrowing money. Thus, I think this option puts up an unnecessary barrier to entry; why not just rent?
If a business stops paying, the owner will more likely send back a rental. However, if there’s a debt involved, the owner will default and may not want you to find his/her location. This option doesn’t offer an orderly transition.
Don’t have any access to capital? Find companies who offer capital options. This isn’t the same as a terminal lease. Go online and look up “equipment financing options.” There are definitely companies who will do minimum $3000 financing type arrangements. They will pay you the money up front and collect payments directly from the merchant if they are approved.
If you’re trying to sell something involving technology to business owners right now, make sure you’re giving them access to capital. Otherwise, you’re probably not going to sell very many of them.
Do you already have experience with some of these solutions? We all want to hear your thoughts and feedback in the comments section! Have an awesome day!
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