I received a good question from someone in my private Facebook group, CCSalesPro Community. If you aren’t a member, please join almost 1,000 other agents as we interact together about the credit card processing industry. Send your request to join; my staff will review and reply quickly.
The question I’m addressing today is, “If you had $50,000, what would you do with it to get more merchant accounts?”
This is a subject about which I am passionate! I feel there is not enough knowledge in our industry concerning the allocation of capital.
The first prerequisite to this topic is getting to the mental place where you realize you are in control of your business. You CAN build your business. I’m sorry to say that many 1099 contractors I know don’t treat their business like a business.
Unless you are a W2 employee at a processing company, you are probably a business owner. You have the ability to create new marketing programs, buy portfolios, and do all the things I’ll mention in this episode today.
Recently I had a conversation with a rep who had a big account on the hook. I suggested he buy two Clover stations and offer them free to the company in exchange for their signing a five-year agreement. Although this rep had the money necessary for that strategy, he replied, “My processor doesn’t offer that program.”
My reply was, “Who cares? Do it yourself!” You’ll get money from the deal. You can even ask to borrow money from your processor to clinch the deal.
Larger accounts offer bigger monthly profit margins. Decide how much investment you’re willing to make to get that return.
I’m hoping this episode will inspire 1099 agents to take more ownership. Realize you have control. You can hire a graphic designer on upwork.com or hire a video editor person. You can create social media posts. Be creative; take control!
The first step in answering the question today is how to get $50,000. When I was selling full time, I sold every business – small and large. I quickly discovered that businesses doing less than $10,000 in volume cancel more often than larger businesses.
Therefore, after I built up $2,000 residual from smaller volume merchants, I did a buyout. Some of you may think selling residual is stupid. However, that’s not always the case.
I might get $30,000 to $40,000 for that kind of buyout. I didn’t include my bigger accounts in the buyout, so I still kept several thousand dollars of residual from those. Use that buyout money to buy more residual / better residual.
A Compelling Pitch
After you have the buyout money, you can contact larger merchants or multi-location businesses in the area. The larger merchant accounts will sign a five-year agreement if you invest $5,000 to $15,000 to get the solutions they need.
Tell merchants, “We make capital investments in small businesses locally in exchange for getting their credit card processing revenue. We’ll swap your POS for a state-of-the-art new system and set up and integrate the system. And we’ll match your current credit card processing rates.”
That is a very compelling pitch. By doing that, I had many conversations with controllers, accountants, and CEOs. I looked at their system and suggested Mynt, Zuza, Clover, or whichever would be best.
Clinch the Deal
Then I brought back a retail price (not my cost, obviously) for the merchant:
“To purchase three Clover stations and two Clover flex units for line busting, the retail cost from one of our competitors would be about $23,000 [or whatever price is correct.] That includes everything: full installation, customization, and set-up.”
My actual cash cost would be about $8,000 or $9,000. With that information, you could ask your processor to get the items at cost. Remind the processor you’re buying for the merchant and will get a five-year contract and a super profitable deal. Get the lowest possible cost through your processor.
Those accounts usually brought me at least $400 per month. However, the average was closer to $700 per month. If selling cash discounting, the average is even higher. But you’ll be in the ballpark of $500 per month.
So, that was my strategy of upgrading from smaller accounts. I did that several times and was profitable EVERY time. Yes, this takes lots of work and extra time. But it is a very effective strategy.
There is one other way I recommend to leverage capital. Hire from a website like upwork.com.
- Hire a graphic designer and get new marketing materials to boost your confidence.
- Hire a professional telemarketer for $30 or $40 per hour. Have that telemarketer reach out to some big companies and get someone on the hook.
Buy big merchant accounts to get the best bang for your buck.