Notes From The Editor: The Business Cycle

July 22, 2014

The majority of people who became locksmiths have some things in common; we understand mechanical things and enjoy working with our hands. As a 12-year-old, I was already the neighborhood bicycle repair guy and freely fixed any bike that came along. My own bicycle had self-installed directional signals, a spring front fork, a special paint job and sundry other non-original items.

An interest in repairing things carried right through to my career as a locksmith. However, there are more things to worry about in business. To be a successful businessman, every job requires a complete business cycle. First, a customer calls you to do a job. Second, you do the work. Third, you collect payment. The first two parts are usually easy; the third part is sometimes not so easy.

The topic of collections was mentioned recently during a conversation with a Canadian locksmith. He owns a one-man locksmith business. He will not accept checks or credit cards for payment from residential customers. Apparently he will allow charging by commercial customers and residential customers who cannot immediately pay. Gas in Canada is over $5 per gallon. He stated that travelling around to personally collect unpaid bills has become very costly, but personal visits seem to be the only way he can get his money.

The solution is to find ways to depend on other companies who are in business to worry about collections. Many people don't carry large amounts of cash with them, but they usually do have a credit card. Payment by credit card has become the system of choice for a majority of the population. If you are not accepting credit card payments, then you are probably losing some important business to competitors. Paying a small percentage to the credit card company can be a lot better than forever carrying deadbeat customers on your books.

Non sufficient fund (NSF) checks can also be a problem. There are check validation services that will immediately approve a check over your cell phone. If the check bounces, it is their worry. You already have your payment. Credit cards and check cashing services are an added cost, but it is a cost of doing business. Consider raising your prices a little to offset the added cost.

Finally, ask your customer during the initial conversation whether they will be paying by cash, check or credit card. This leaves nothing to chance and seals a mutual understanding for payment before you even accept the job. With good preparation, bill collecting can become the most satisfying part of doing business.