Justifying Point Of Sale For Your Business

Budgeting for, choosing, and implementing your new point of sale (POS) process is not a trivial exercise. You need a well conceived and well executed plan. Choosing the wrong POS for your business can be a business killer. Choosing the right one can help make your business grow to the next level.

When you make the decision to use POS, you have essentially decided to change the way you do business. POS is not simply another piece of hardware and software. Think of POS as a process, not a system. The POS process effects your transaction flow, your recordkeeping, your employee management, your ordering and receiving process, your accounting - in other words, every facet of your business.

You should approach the decision of when and if to use POS with the care and due diligence it deserves. How you go about deciding says a lot about whether POS will work for you. If you do not have the discipline to undertake a formal decision-making process, you may not have the discipline that POS requires. POS requires disciplined business decisions. It imposes formality onto your business. That’s one of its greatest strengths.

Part of the decision to use POS is a financial one. Can I afford it? Can I afford not to? How long will it take me to get a return on my investment? These are questions you need answers to before you make the final decision. Waiting until after you made your hardware and software purchases may ultimately result in failure.

Step by Step Approach

Successfully inplementing POS in your business requires a plan which outlines the necessary steps you need to take. Any good plan should include the following steps.

* Understand your business
* Identify the problem
* Identify the solutions
* Understand the benefits
* Calculate your return on investment
* Choose a POS vendor.

Understand your business

The first step requires you to get a handle on the workings of your business. You may think you know everything about your operation already, but if your business is large enough to benefit from a POS system, you probably don’t know as much as you think you do.

Identify the problem

You might ask yourself "Why am I doing this? Why do I need POS?" The answer should be this "Because I have a business problem I’m trying to fix." If you do not have specific problems in mind then you may be choosing the wrong solution. The POS you choose may be perfect for a problem you don’t have. This step involves identifying the problem(s) you want to address and solve with your POS.

Identify the solutions

Once you’ve identified the problem(s) you’re trying to solve, the next step is to understand how to fix them. Create a Needs Fulfillment document listing your problems and potential solutions. List as many potential solutions for each problem that you can think of. There’s usually more than one way to skin a cat. The more possible solutions you can think of increases your chances of finding a POS vendor who has a total solution. Of course, you will need some idea of what’s available out there in the POS marketplace. There are several ways to get this kind of information. One is to use resources like Google to find POS suppliers and become familiar with their capabilities. Another is to hire a POS consultant. Talk to a business aquaintance who is already using POS. The Small Business Depot’s downloadable eBook POS for Beginners is also a good place to start. (http://www.barsnstripes.com).

Understand the benefits

In order to calculate your return on investment you need to compare the cost of doing business the way you do it now with the cost of doing business with a POS solution in place. We’ve identified three classifications of benefits derived from POS: Cost benefits, Revenue benefits, and other (intangable benefits).

Calculate your return on investment

The first step in calculating your ROI is to calculate the impact a POS will have on your costs. For example, POS can help reduce your business expenses. Now it is time to quantify those savings. Now that you’ve calculated your cost savings and revenue gains, you can estimate your return on investment. Your return on investment is simply your cost savings plus your revenue gains minus your cost of POS.

ROI = Net cost savings + net revenue gains - POS cost

Of course this is just an estimate. The influence of POS on your business will depend on these and a lot of other factors. But if you do your homework and choose your POS vendor wisely there is a very good possibility that your POS will provide a handsome return on your investment.

Choose a POS vendor.

Once you’ve determined that POS is justified, and you have determined what problems you need fixing, only then should you go about the task of selecting a vendor and acquiring POS products.