A POS system is a business tool used for facilitating transactions between a business and consumers. POS is short for point of sale, also sometimes referred to as a point of service and point of purchase or POP. A POS system is used when a consumer decides to purchase a product or service, such as in a supermarket when an attendant scans your items and rings up your total bill. An item’s price and other information can be accessed using barcodes and a barcode scanner or manually entering product code into the system. After the item has been paid for, the system then deducts that item from its inventory in its database; so, if you had 100 pieces of that item before the sale, you would have 99 left. This real-time information can be extremely useful to a business as one might imagine, but this is just one aspect of a POS system is used for. In this article, we will dive into the many functions and uses of a POS system and explore the great benefits of using such a system in your business, whether big or small.
Point of sale systems has been around since the early 1970s, with just a few companies pioneering the use of the technology. One of the first companies to use a POS system is the mega fast food chain, McDonald’s. Could the early adoption of a POS system be a contributory factor to the success of this fast food empire? Most will say yes, but regardless, today we see the proliferation of POS systems in just about any industry you can imagine, from retail, consumer services, restaurants, hospitality, and so on. This is a testament to the value a POS system can provide and how it has evolved into an essential tool that often goes hand in hand with the success of a business.
Some notable brands of POS systems are QuickBook Point of Sale and a long list of other brands. With growth projections for the industry to be worth over 110 billion by 2025, there’s no doubt that we can look forward to a lot of innovation towards helping businesses operate better. This is great news for business owners because more competition does not just create better features, it also fosters more competitive pricing for the end user.
So why would a small business consider using a POS system? Is it something more suited for big-business that costs many tens of thousands of dollars?
The good news is POS systems do not cost nearly that much for small business, as the pricing often varies depending on the scale of the business. Some vendors offer great deals for small businesses, ranging from about $800 for a basic POS starter package to about $2,500 for a good set-up including touch screen capabilities. The best thing is it is scalable, so you can build off the POS system you start with as your business grows.
A POS system saves you a lot of time! The importance of time cannot be understated, especially with new and small businesses. Most small businesses only have a few employees, and resources need to be allocated efficiently. For example, as a small business owner, you are probably spending a chunk of your day putting out small fires and do not have the bandwidth to be constantly checking the accuracy of your stock. A POS will really come in handy in helping your everyday operations run smoothly. With all that saved time, you can focus on other things, whether it’s work towards growing your business or more time to relax after work hours.
Better Reports and Accounting
Gone are the days where you need to sit down for hours for consolidating sales to find out how your business performed the day before. Because your assets and materials are in the POS system from the moment they are ordered (even before delivery), you get more visibility on how your business is performing through reports. Therefore, with a POS system, you have access to instant sales reporting and real-time inventory reports which makes for much simpler and accurate accounting as opposed to doing things manually. Access to instant reporting also means you can deal with suppliers quicker to replenish your inventory and even make decisions about what isn’t selling.
Increased Accuracy and Efficiency
A POS system tells you exactly what you have in stock with a few clicks of the mouse. So, you can say goodbye to the time-consuming manual stock takes. Of course, occasional manual stock takes are still a good way to ensure your POS system’s data is on point and being used properly, but exclusively relying on this method for managing your inventory is not only tedious, but it is also unreliable. When it comes to transactions, POS systems are designed to facilitate a more seamless exchange between the business and the consumer, as opposed to the use of an old cash register, which means the potential to process more transactions with greater accuracy. Lastly, a POS system allows for a more diverse set of payment methods, which not only makes transactions more efficient, you avoid the scenario of losing sales because of a lack of payment facilities. This also promotes greater customer satisfaction.
POS systems allow for more visibility of what your employees are doing and how they are performing. The system can be used as a clock-in and clock-out tool to keep track of employee hours. It can also be used to get an idea of your employee’s performance, in terms of average sales, basket size, and cross-selling. These insights allow you to reward your hard workers better as well as find out which employees might need a bit of a nudge towards stepping up their game. Not to mention, a POS system will typically reduce employee theft, which is a crushing problem for some businesses.
Taking all the benefits mentioned above into account, the cost of investing in a point of sale system can quite easily pay for itself, and that is, in fact, the idea behind it. That being said, one of the most common reasons why a small business decides not to use a POS system is the hesitation to invest upfront, and that’s where the consideration stops. The biggest factor to think about is the amount of money that can be saved and generated from the many benefits of using one. Some small businesses think they need to wait to grow to a certain size before investing in a POS system, as if it is a luxury item or a flashy ornament for a business to show off, not realizing the reality that a POS system may actually be what empowers and facilitates the growth of the business. Knowing how a POS system helps businesses improve their operations and grow can be a big step in the decision-making process and in almost every case, it’s an excellent decision to make.