However, just because you’ve heard of something, doesn’t necessarily mean you know everything there is to know about it — especially if your source is less than reliable or you’re a first-time business owner.
We’d like to do you a solid and help you learn everything there is to know about point of sale systems. They’re such a critical part of your business operations, whether you own a small retail shop or a five-star restaurant; POS systems not only get you through your day-to-day operations but also help propel you into the future.
Simply put, POS systems are a combination of software and hardware built to streamline business operations at the point of purchase (POP). They’re quickly replacing cash registers because they can do more than take payments. To help you see what we mean, let’s take a closer look at point of sale systems. We’ll cover what exactly they are, why you need one, and where you can buy one.
What is POS Software?
Point of sale software is a cash register, but smarter. It’s the focal point of your checkout, allowing you to ring up sales, process returns, and tally your daily revenue — just like a cash register. But, that’s where the similarities end. POS software does more, much more.
When it comes to a POS system, the software is really the driving force behind providing you with the right functionality and features to run your business. If we were talking in terms of vehicles, the software would be the engine. Without a working engine to make the car go and power all the other parts, you just have a useless heap of metal — aka POS hardware, but more on that next.
POS software has changed significantly over the last 10–15 years from something that was only available as an on-premise solution for large enterprises with a dedicated IT staff and deep pockets. Nowadays, you have cloud-based solutions that operate on tablets like iPad cash registers and POS systems that are pretty much plug-and-play right out of the box or download. For retailers and other small businesses like restaurants, it doesn’t get much better than that.
POS Software for My Business: What to Look For?
When it comes to choosing the right POS software for your small business, you don’t have to buy the most expensive one or the most popular one, you just have to buy the one that works best for your unique business. All businesses are going to operate a little differently than the next, even within the same industry. Therefore, what might work for your restaurant or retail shop won’t work for the one down the street.
We LOVE our new iPad POS system! After 9 years with an ok but antiquated POS system, we researched everything (literally) that is out there — for several weeks (months) to find a system that would meet our list of 22 requirements (somewhat quirky needs for a unique business model). iPad POS was the only one that fulfilled virtually every requirement!
Here are some general features you’ll want to look for when vetting POS software solutions. We’ll talk about some of the more industry-specific features later, so stay tuned.
One of the fundamental functions of POS software is to manage inventory for retailers. In fact, a lot of POS software started out as merely that — inventory management software.
In today’s fast-paced, world where customers will just as soon buy an item online if they can’t find it in your store, it’s crucial that you have tight inventory control. Too little inventory can result in missed sales and revenue. Too much inventory can result in suppressed cash flow.
Keeping track of your employees can be a business in itself. Who can only work evenings? Who only works days? What are my labor costs so far this week? Can I put another person on the schedule this weekend? It’s like a game of Who’s On First, retail edition. It’s enough to make your head spin.
Luckily for you, many point of sale systems can help alleviate those headaches. You can create employee profiles to store their contact information and their credentials to access the POS system.
Reporting and Analytics
If your POS software can give you a variety of reports, great. If it can provide you with the right reports, even better. Reports and analytics can provide insights and help you track Key Performance Indicators (KPI) about your business, allowing you to make smarter, data-driven decisions.
Some report of these reports are:
- Sales by item
- Sales by employee
- Shift reports
- Sales by product type and tag
- Sales by customer
- Sales by discount
- Sales by payment type
- Inventory value
- Product reorder reports
- Cash drawer activity such as pay-ins and payouts
Customer Management and Loyalty Programs
Most POS software will have either a customer database, customer relationship management function (CRM), a customer loyalty program, or all of the above. Engaging with your customers either through email marketing or loyalty programs is an effective weapon to get customers back into your shop — don’t be afraid to use it.
In fact, 58 percent of consumers are comfortable with retailers using their purchase history to customize a future shopping experience. The key is, finding the right customers (audience) and sending the right message.
While POS software is certainly the hub of your retail business, it’s usually not the only thing working behind the scenes to ensure a smooth operation. Many point of sale systems integrate with third-party providers for email marketing solutions, ecommerce platforms for selling online, and accounting software for bookkeeping.
POS software should be able to handle all of your payment types or tenders, not just some of them. The most common tender types include, cash, credit cards and debit cards, gift cards, checks, coupons, and NFC payments like Apple Pay and Samsung Pay. We aren’t saying you need to accept every tender type, but your POS system should offer you the option to so you have the most flexibility.
If a point of sale system has integrated payment processing, not only will you be able to accept all types, but you’ll be able to see the breakdown of the tenders and accurate records on ones that are reported on as liabilities such as gift cards.
Whether you’re a food truck and your whole operation is mobile, or you own a retail store with a traditional brick and mortar storefront, it’s always a good idea to think mobile when it comes to your point of sale system. In fact, in 2018 mobile POS (mPOS) is forecasted to surpass standard POS terminals.
Any retailer can attest that regardless of how much square footage you have, there is never enough space. Retailers in metropolises such as Singapore where space is at a premium and a minimum, know these pains all too well.
A mPOS solution like an iPad cash register not only gives you a smaller footprint at your checkout area, but it also gives you the opportunity to take the checkout to your customers on the floor. The industry term for the latter is line busting, and it’s an excellent way to provide a faster, more efficient checkout process and a positive customer service experience.
Now that you have a good handle on what POS software is and the features you need for your business, let’s talk about the hardware.
Going back to our vehicle analogy where the software is like the engine, this means the hardware is the shiny hunk of metal on the exterior. When technology companies develop software, they enable specific pieces of equipment to work with it. Some of the hardware components that are likely to be compatible with your POS software are:
- iPad or Android tablets and enclosures
- Barcode scanners
- Receipt printers
- Cash drawers
- Label printers
- Credit card terminal
Depending on the nature of your business, you may or may not need all of these components, but this gives you a great starting point.
Types of POS Systems: What Are My Options?
Speaking of the nature of your business, the type of business you operate will determine the right POS system for your needs. Up until this point, we’ve spoken in general terms that any storefront, whether restaurant or retail, needs a point of sale solution. And while this is all true, not all POS systems are created equal — nor is one solution designed to serve all industries.
Retail POS Systems
Retail businesses have a unique set of needs and requirements that differ from the requirements of restaurants and vice versa. While in some cases you might be able to use a retail POS system in a quick-service restaurant (QSR) environment, it won’t suffice in a full-service restaurant or bar.
Some unique retail POS requirements are:
- Label printing for items without UPC codes
- Employee commissions
- Product matrix and item variants to support different products sizes, colors, etc.
- Scales for weighted items
- Ecommerce integration to set up an online store
Restaurant POS Systems
Just like retailers, restaurateurs have their own set of unique needs when it comes to a POS system. How many fine-dining restaurants do you know that scan a UPC code on your filet mignon before they serve it to you? Precisely, none. Restaurant and bar POS systems don’t need a barcode scanner or label printer. However, here are some of the features they do need:
- Remote ticket printing to send orders from the POS to a kitchen printer or bar printer
- A custom table map to easily start checks and see what tables are occupied
- A way to keep numerous checks open simultaneously
- A way to split open checks, merge or transfer them
- The ability to assign order types such as dine-in or takeout
- Online ordering so customers can order from their smartphone or computer
Salon POS Systems
Last but not least, if you own a salon or spa and you’re trying to use a retail or restaurant POS system, you’re not doing yourself any favors. Although, like retail POS systems in QSR establishments, you might be able to use a retail POS solution in some capacity in your salon, but it’s not going to be your best fit. Like the other two industries we discussed, salons have their own particular needs such as:
- Online Booking — While walk-ins are welcome at most salons, the majority of customers make appointments to ensure they get the service they want at a time that’s convenient for them. Modern salons and spas use online appointment setting software so customers can easily book appointments without ringing the receptionist.
- Calendar Management — Going hand-in-hand with appointment setting, salons also need a way to manage their employees’ calendars, so they know who is booked and when.
- Memberships — Some spas charge membership fees for premium or specialty services, and they need a way to track all that. A way to securely store customer card data, process recurring transactions on a regular basis and have a card expiration report so they can proactively reach out to those customers whose card is set to expire.
How Much Do POS Systems Cost and Where Can I Buy One?
POS systems are no longer a luxury for small businesses, but rather table stakes if you want to stay competitive in the evolving business landscape. While it may be a requirement, the good news is that they no longer carry the luxurious price tag they once did more than a decade ago.
Cloud-computing, the Software-as-a-Service (SaaS) business model, and the development of consumer tablet devices like iPads have created the perfect storm in the point of sale industry. It has allowed software companies to develop robust POS solutions for small business owners and dramatically reduced cost as a barrier to entry to a fraction of what it once was.
Before tablet and cloud-based POS systems, it wasn’t uncommon for POS solutions to cost a few thousand to tens of thousands of dollars to install and maintain. For a small business owner, that’s a small fortune.
Nowadays, if you’re a small retail store, you can pay less than $1,000 to get started with an excellent POS system like Vend, which covers both hardware and software. That’s a big difference in price, and one cash-strapped business owners can get on board with.
Not only have point of sale solutions gone down in price, but they’re also much easier to get your hands on. A lot of POS companies offer a self-service model where you can download the app, set up your store, and order hardware without ever having to talk to someone. And that’s great if you’re a self-service kind of guy or gal.
However, in most cases, especially when it comes to such a critical piece of your business operations, you want to be able to pick up the phone and talk to someone. You’re going to have questions outside of what you’re able to figure out on your own. Or maybe you can’t figure it all out on your own, and you need a little guidance to set you on the right path.
When it comes to choosing a POS system, make sure you select a software provider that is there for you 24/7/365 by either chat, email, or phone call.
Another alternative to buying a POS system directly from the software company is to go through a certified reseller. Resellers act as the middleman between the software company and the end user. In some cases, they can offer in-person services (like tech support) that the software company cannot and that makes them an invaluable asset to not only the merchant but also the software company.
Why Should I Invest in a POS System?
Small business owners should invest in point of sale software because it’s just smart business. Running a company is hard. It’s long hours, often meaning weekends and holidays away from your family because those are your busiest days of the week or year.
Are you sick of spending all of your time at your shop, cafe, or restaurant without a break in sight? Don’t you want to make life easier and put more hours back into your week? The major benefits of a POS system are that it can do just that. In fact, businesses that are buying POS software for the first time report that improving efficiency is a top priority.
The Bottom Line
After reading this article, you should have a solid understanding of what is a POS system. But, more importantly, you should know the features and functionality you need from a point of sale to run your business efficiently, where to buy one and how much they cost. If you can walk away from this article in confidence about your POS need, then we’ve done our job.
The right point of sale system will change your business.