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Your ‘Minimum Purchase’ Credit Card Policy Is Dumb

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(This post originally appeared on Entrepreneur)

The other day I went into a convenience store to buy a bag of Blazin’ Buffalo and Ranch Doritos. The cost was $0.99. I didn’t have cash because…well…who carries cash anymore, right?

When I went to pay for the Blazin’ Buffalo and Ranch Doritos I was told there is a $10 minimum on credit card purchases. I told the cashier — who did not make this policy and was just doing her job — that I didn’t have any cash. She told me the minimum on credit card purchases is $10. Hoping the young lady was also a fan of Blazin’ Buffalo and Ranch Doritos, I asked if she could perhaps make an exception. She told me the minimum on credit card purchases is $10. Clearly, a Fritos fan.

So,I left.

The convenience store business is a tough business. There’s a ton of competition. The hours are brutal. Finding reliable people can be impossible. Net profit margins are shockingly low. According to industry data, a typical convenience store has revenues of around $650,000 and at the end of the day, after product costs and overheads, the owner pockets only about two percent or $66,000. It’s a living. But it ain’t great. Every penny counts.

Including the pennies the convenience store owner would’ve made from the purchase of my Blazin’ Buffalo and Ranch Doritos. Not to mention the hundreds, if not thousands, of dollars the convenience store owner is ignoring every year by denying people purchases under $10 who want to use a credit card.

My failed Blazin’ Buffalo and Ranch Doritos purchase made me wonder. Does this policy really make sense? Are you also requiring a minimum purchase for customers to use their credit cards? If so, don’t you think you’re losing business because so many people are like me and don’t carry cash? I know you don’t like to pay the credit card fees. But, in an effort to avoid these fees on smaller purchases aren’t you also hurting your profits in the long run? Isn’t this dumb?

Maybe there’s a better way. Actually, there is.

Let’s do the math. The convenience store charges $0.99 for a bag of Blazin’ Buffalo and Ranch Doritos. The convenience store owner makes around a 20-30 percent gross margin on that bag. The credit card company’s fees on this transaction would have been three percent or $.03. Which means that, even in the worst coast scenario, the owner is giving up $0.17 gross profit on each bag of Blazin’ Buffalo and Ranch Doritos that go unpurchased.

But here’s a question: instead of denying me the purchase, if the owner simply had a policy that charged me three percent more for credit card purchases under $10 would I have still gone for it? Would I have paid the additional three cents? Yes, I would pay three freaking cents more for my Blazin’ Buffalo and Ranch Doritos if that’s what it would’ve freaking took to use my credit card!

Let’s say I lived in a state where recreational marijuana is legal. As such, I buy ten bags of Blazin’ Buffalo and Ranch Doritos. My total bill would be $9.90. Would I have paid the additional $0.30 to use my credit card? Uh…I’m going to say yes. And yes, I’m going to take a giant leap of faith and assume that the typical customer would also part with that whopping thirty cents for a ten-dollar order.

So, why does that convenience store — or any retailer for that matter — have a minimum credit card policy? Simple answer: they’re dumb and it’s costing them money. The fact is that people are using less cash and more credit cards. Customers do it for convenience. There is an added cost for this convenience. It is a tiny, tiny cost. Charge them if necessary. Don’t lose the sale.

Regardless of whether you’re earning $66,000 a year as a convenience store owner or $600,000 a year running a tech company you can never afford to pass up a customer who’s ready and willing to pay a small surcharge — especially for a bag of Blazin’ Buffalo and Ranch Doritos.


Why Middle-Aged-Men Are Such Lousy Sales Prospects

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(This post originally appeared on Entrepreneur)

The other day I was responding to a prospective customer who inquired about our products online. The minute he answered the phone I knew I was in trouble: he is a middle aged man. Middle aged men tend to be lousy customers. I know this. I’m a middle-aged man.

Am I generalizing? Absolutely not.

Every man in business has a similar arc. In their 20’s and 30’s they’re eager, full of energy and willing to do whatever’s necessary to conquer the world of opportunities and riches which lays before them. By the time they hit their forties they’ve become either settled or unsettled with the professional life they have chosen. They know they have limited time left, and maybe no time at all, for making any drastic changes. By the time they get to their fifties — middle aged — it all comes to a head. Read More…

How To Tell If Your Small Business Will Be a Success – In 5 Minutes

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(This post originally appeared on Entrepreneur)

This is going to sound a little harsh, but I can pretty much tell whether you’re going to succeed as a business person within five minutes of meeting you. I learned this from Little League baseball.

For years, I coached both of my two sons’ Little League baseball teams. I’m a good ballplayer and have been since I was a kid. Never, ever good enough to play at a college or pro level because I’m way too small. But, I’ve always been athletic and fortunate enough to have some innate hand-eye coordination skills that help me track a fly ball, pick-up a ground ball and hit a ball pretty well. My two sons, also cursed with my physical stature, were never going to play pro ball. But they were always pretty good too, and I loved coaching them. Read More…

These Are 3 Little-Known Metrics That May Tell Us if a Recession Is Coming

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(This post originally appeared on Entrepreneur)

Is a recession coming? Absolutely, positively yes. When? Who the heck knows?

Even with the economy as strong as it is, some economists warn that it could be sometime in the next year. Others are not so pessimistic. The media reports that unemployment is low and that Gross Domestic Product is on the rise. But then “They” say that housing starts have stalled and that wages are stagnant. But then “they” say that small and consumer confidence is at an historical high. Is all this conflicting data really helpful?

I’ve learned, as a result of the Great Recession of 2009, to keep an eye on three little known metrics that helped me to gauge whether or not an economic slowdown is coming. Of course, they’re not completely foolproof. But they each have a reliable history of predicting downturns. Read More…

Thanks, But I Really Don’t Want Your ‘Help’

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(This post originally appeared on Entrepreneur)

If there’s one thing that drives me nuts in my business life is when some aspiring entrepreneur corners me and says: “Gene, how can I help you in your business?”

Wow, how sincere! This guy really wants to help little ol’ me and my business? That’s so sweet! He must really care!

Oh, please. Anyone who’s been in business long enough has heard this silly line. The most typical place I hear it is at a networking event or on LinkedIn. People want to “get to know me” and “have coffee” or “chat for a few minutes.” They want to “better understand my business” and determine “mutual interests” so that they can “help.” It’s annoying.

Why? Because I never, ever hear this from typical business owners, especially those who are successful. Nine out of 10 times it’s from someone who’s either unemployed, starting up or struggling in their own business. Successful and long-time business people could care less about “helping” me and my business. They’ve got their own problems. The fact is that when someone says “Gene, how can I help you in your business” it almost always means “Gene, how can you help ME in MY business.”

If you’re the person making this dopey, empty offer, then my advice is to stop. This is not a genuine statement, and it only makes experienced businesspeople like me wary. The best way you can “help” me, my…uh…”friend”…is to open up your checkbook and buy my products or services. Oh, that’s not the kind of “help” you can provide? Bye-bye.

But wait. Maybe you want to specifically sell me something. OK, I’m listening and I’m expecting that the “help” (i.e. your product or service) will cut my costs. Or increase my sales. Or boost productivity. Yes? Then you don’t have to offer to help. Just do it.

You sell industrial parts that make a piece of farm equipment run longer. You own a trucking company that ships products quicker than others. You provide raw textiles for clothing manufacturers at an affordable cost. You sell cleaning services that will make my office a better place to work. You are a great accountant who can cut my tax bill. You’re a safety expert who can help me avoid problems with OSHA. You’ve got something I really want that will help me make more money in my business. Now, that’s helping!

But if you’re not going to do any of those things, then you’re really not “helping” me. You’re just wasting my time and fishing for your own opportunities. Vague promises to introduce me to potential prospects or future opportunities aren’t going to cut it. Showing an interest in my business or my problems doesn’t interest me either — unless you’re going to specifically solve them with the products or services you provide.

Maybe you’re sincere. Maybe you truly want to “help” me and my business. It’s very nice of you to offer. But if you have to ask how you can “help” me, then you’re missing the point. You should already know that just by what you do. When someone says, “Gene, how can I help you?” my answer is always “buy my products.” Anything other than that and my interest rapidly declines.

Will Getting Rich Make You a Jerk?

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(This post originally appeared on Entrepreneur)

Wealthy people are dishonest. Wealthy people are corrupt. Wealthy people are selfish. Is that really true? Recent events seem to point to this. In the wake of the Paul Manafort trial and other documented misbehaviors newly uncovered by members of our political and business elite, some people are asking whether or not the wealthy can be trusted.

“There’s something about wealth and privilege that makes you feel like you’re above the law that allows you to treat others like they don’t exist,” Dacher Keltner, a psychologist at the University of California at Berkeley Keltner told the Washington Post. “To researchers who study wealth and power, it’s dismaying but not surprising, because it tracks so closely with our findings. The effect of power is sadly one of the most reliable laws of human behavior.” Read More…

This Entrepreneur Risked It All and Ended Up Homeless Handing Out Resumes on a Street Corner

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(This post originally appeared on Entrepreneur)

Want to start a business? Good for you. Just don’t make the mistakes that David Casarez made.

Casarez, a twenty-something software developer, made news this week when a passerby took a picture, which went viral, of him holding up a sign on a street corner in Mountain View, Calif., — Google’s home town — that read “Homeless hungry 4 success take a resume.”

“I told myself all I need is just one person out there to say ‘hey, this guy is worth giving a shot’,” he told Fox News.

Well, he’s certainly getting a shot. As a result of all the attention, he’s received hundreds of interview offers from tech firms (including Google. For the past year he’s been living in his car but is now living in into a hotel room, courtesy of a $500 Airbnb gift certificate provided to him by a nonprofit.

How did this young man wind up in this predicament? According to Business Insider, Casarez had quit his job as a software developer at General Motors last year so that he could launch his own tech startup. “Would I rather be on my deathbed knowing I didn’t take the risk or knowing that I did?” he asked himself. “That’s what really pushed me to leave the comfort of working at GM.”

I’m guessing the story struck a nerve with people because it’s not every day that you see a college-educated, skilled worker made homeless because he couldn’t afford the high price of living in Silicon Valley. But to me, I see something quite different: a young, naive entrepreneur who made two very huge mistakes that no one should make when starting up a business. Read More…