To Adam Sah, co-founder and CEO of Best Friend Wholesale & Mercantile, a San Francisco-based specialty grocery store chain, offering the digital currency bitcoin as an alternative payment solution for customers seemed like a no-brainer. Having started in Silicon Valley, where he once worked as a senior engineer at search giant Google, Sah is well-apprised of breaking trends in the tech world.
With this in mind, Sah began accepting bitcoin as a payment option to customers last spring. Though he freely acknowledges the deep ambivalence that greets bitcoin ("some people think it's a scam while others think it's the future of money"), Sah estimates that “two or three” customers per day make bitcoin transactions at one of his stores. Despite this low number, Sah hails bitcoin as a cost-effective alternative to cash and credit. And although bitcoin transactions can be slow due to its still nascent technology, it is free.
Sah is representative of a growing contingent of small business owners who, in an effort to drive customer traffic and pique interest in their respective companies, are thinking beyond the traditional payment methods. Though the verdict is still out on how well unorthodox payment choices, like bitcoin or barter, can benefit a company, some small business owners are experimenting with nontraditional offerings to build a customer base and forge relationships with vendors.
The latter has been key for Katherine Zeppos. As owner of the five-year-old, Lancaster, Pennsylvnia-based Katerina’s Finest, an olive oil importer and distributor, Zeppos says signing up with a barter network, comprised of local small business owners and companies that offer personal services, has been a godsend, particularly for financially-strapped startups like hers.
Services that Zeppos has accepted as barter usually depend on what she may need at a given moment, such as photography for her website. At the same time, she does concede a basic, non-negotiable maxim to her business operations: “I rely on normal business sales. My business cannot be based only on barter,” she says.
Still, offering barter has afforded Zeppos considerable benefits to her business. “I have been able to sell my products all over the U.S. through barter and to Canada, too,” says Zeppos. “It is a great form of networking.”
Though nontraditional, both barter and bitcoin transactions can be a good way of drawing in customers while mustering up excitement over its usage. For small business owners contemplating adding alternative payment solutions to their menu of legal tender, consider these tips:
Don't be intimidated
Just because the payment solution you're offering is not the tried-and-true standard exemplified by cash or credit, that doesn't mean its implementation will be difficult.
Says Sah: "It's easier to do than you might think."
First, tell your customers, by word of mouth, ads, or sticking notices on your storefront window, that you will be offering this alternative payment solution. And of course, make mention of it on your website. Also, Sah suggests registering with various websites (e.g. bitcoin.travel) that list which businesses accept bitcoin.
And for those interested in offering bitcoin, Sah says there is a plethora of websites that track where you can send bitcoin transactions. (They include: Bitcoin, BitcoinMining, UseBitcoins, and Howtobuybitcoins.)
Don’t expect an upsurge in business just because you’re accepting bitcoin or barter as a payment solution. Know what kind of benefits you want to achieve to your bottom line. Ask yourself how these nontraditional options will bring you closer to your business goals
Because Zeppos knows that her business cannot rely on barter as a principal source of revenue, she sets a benchmark amount that can be sold that year with barter. “The barter benefits I earn I try to invest into my business again,” she says.
Make sure your merchant system supports an alternative payment solution
As in the case of foreign currency relative to the U.S. dollar, bitcoin rates can fluctuate. Though it may not be much more than the euro or other foreign currencies, says Sah, small business owners who are considering adding bitcoin to their payment choices need to be aware of this and adapt to it accordingly.
"The good news is any cell phone or laptop computer will do the conversion for you," says Sah.
To avoid errors, small business owners need to make sure that whatever bitcoin site they sign up and register with gives them a specific bitcoin address to receive payment. The bitcoin address, which is a list of numbers, can then be converted into a QR (quick response) code that merchants can scan when processing a bitcoin transaction.
Also, make sure you find a way that will let you know that a bitcoin transaction has been processed. This can be a simple text alert or e-mail.
When in doubt, err on the side of simplicity
Because the technology of bitcoin is still very green, small business owners should think about designating an IT person on staff (or outside the company) who can troubleshoot problems as they arise. Having someone who can provide immediate technical assistance will also help reassure other personnel who are not as tech-savvy.
Small businesses wishing to offer unconventional payment solutions like bitcoin or barter might find a climate far more conducive to embracing these options than in the past. But be realistic and don’t expect your business to change radically overnight. Being a visionary and a maverick are great entrepreneurial traits but not when tempered by rash behavior and willful obliviousness.
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