There are a lot of different ways for entrepreneurs and business owners to deal with a recession. Whenever credit is harder to come by, or if a person has just had a hard time with returned checks before, they might consider the cash and carry business model as one that could suit their needs while helping to deal with the other issues that come up like canceled checks or continuously increasing fees for processing credit cards.
One of the major benefits of a cash and carry business is that obviously payments are made in cash. Why is this a benefit? It should be obvious: once payment is made the cash is in hand. There is no canceling of an invoice, there are no 10% or 12% fees skimming into your profit margins off the top. You know exactly how much you’ve brought in and it’s in hand as soon as the transaction is over.
Customer service is another potential benefit that comes with a cash and carry business. Many people will be quick to point out that not taking checks, credit cards, money orders, that sort of thing can result in losing a lot of customers. While that might be true it also will eliminate so called customers who can’t pay, who would rip you off or try to defraud you, and by focusing on the smaller number of customers willing to pay cash you can also give optimum attention and service to those individuals.
This reputation for top notch service and for really getting the job done will lead to more customers willing to pay in cash, and that can be an excellent business model.
Having a cash and carry model for a business can also often save you time and haggling. If a customer can’t use the “will you cut costs 10% if I pay in cash” line to barter, then you won’t have to spend time haggling for contracts. The cost will be the cost.
On top of all of this running a cash business means that there will be less fees and overhead. Running cash eliminates a wide range of issues from credit card charges and fees, checking and fees for returned checks, not to mention all the other time issues and hassles that come up from any type of payment other than cash. There are no authorization issues since cash is cash.
Finally when it comes to time savings, you never have to wait days for a check to clear or a credit card payment to be debited into your specific account. Sometimes that extra day or two can make a big difference and it’s almost always better to have it on hand than to be sitting and waiting for it to clear through.
You will also find it’s easier to save money because you don’t need the equipment to process other forms of payments. Do you know what many gas stations, convenient stores, and other businesses pay for those check scanners to make sure they can accept it? Any idea how much money gets siphoned off in a year from 8-12% credit card processing fees or more? All of that adds up quick and that’s not even talking about the software or tools to run credit cards, the back up equipment in case the computer systems go down, or the training to use said equipment and programs.
If you’re dealing in cash all the time, none of these things become and issue and that simplified set up also allows you to spend more time finding more customers and doing the things you need to in order to make more money.
The benefits of this business model have been so obvious that many of the benefits cross over to why many individuals are going more and more with the cash only model of living whenever possible. While you’re not likely to keep one hundred grand aside to buy a house in cash, there are plenty of other times where a cash and carry strategy works just fine.
A benefit of attracting these types of customers is knowing that any purchase they make will be instantly covered. They’re often among the best customers, as well.
Some of the benefits of a cash and carry business come from silver linings of what might at first seem like a disadvantage. While this might sound funny at first, a little bit of digging can go a long way towards figuring out these benefits. With a cash heavy business there’s no denying that security can be an issue depending on the location and the area.
Even if security is a necessary expense, having a security guard or store equivalent of a bouncer can go a long way towards reassuring customers of their safety while making large transactions in cash. At first glance having a security guard might seem like a problem because of the added expense, but it can actually be a good benefit and at a far less price than what credit card fees, bounced checks, and other similar expenses might add up to. In addition to this, you still have the time savings from not having to deal with the other hassles.
A cash and carry business isn’t going to be for everyone. There’s no arguing that certain goods like cars, motorcycles, homes, and other luxury goods aren’t conducive to being dealt with in a cash only set up. That being said, depending on the business you’re looking to set up and run a cash and carry set up might be the best possible option.
As with any type of business set up you must weigh the pros and cons before moving forward. For some businesses this set up will be ideal and can really help with how things are run. For others it won’t be a practical model to follow.
That being said, a good cash and carry set up can go a long way towards getting the right business back on track.
