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BEST Small Business POS Systems: How to Choose a Small Business POS System

Tyler MartinezAuthor

In the hustle and bustle of commerce, small businesses serve as the backbone of economic vitality, driving innovation, and propelling growth. They not only offer employment opportunities to nearly half of the American workforce but also contribute significantly to the nation's GDP, accounting for a substantial 43.5%. Over the past two decades, these enterprises have consistently showcased their resilience, constituting approximately 40% of the United States' gross domestic output (GDP), translating to trillions of dollars of economic activity according to the US Chamber of Commerce.

In today's digital age, small businesses face a myriad of challenges and opportunities. One such opportunity lies in the realm of point of sale (POS) systems, which have become indispensable tools for modern-day business operations. A small business POS system serves as the command center for transactions, inventory management, and customer relations, streamlining operations and boosting efficiency. It seamlessly integrates hardware and software to facilitate smooth transactions, track sales, manage inventory, and analyze customer data, empowering entrepreneurs to make informed decisions and drive growth in their offline operations.

Moreover, the right POS system doesn't just stop at brick-and-mortar transactions; it seamlessly bridges the gap between offline and online operations. In an increasingly interconnected world, small businesses must have a robust online presence to stay competitive. A modern POS system can sync inventory across both physical and digital storefronts, providing customers with a consistent experience whether they're shopping in-store or online. This integration not only enhances operational efficiency but also expands the reach of small businesses, tapping into a wider audience and driving sales.

Embracing technology isn't just about staying ahead; it's about survival in today's market landscape. Small businesses that leverage the right POS system gain a competitive edge, not only in their offline operations but also in their online endeavors. By seamlessly connecting both spheres, these businesses can enhance productivity, optimize resources, and deliver exceptional customer experiences, setting themselves apart in the market and paving the way for sustained growth and success.

How to Choose and Evaluate a Small Business POS System

Selecting the perfect Point of Sale (POS) system for your small business is a critical decision that can significantly impact your operations and bottom line. With a myriad of options available in the market, it's essential to approach the evaluation process systematically. Here's a structured approach, enriched with detailed considerations, to help you assess and choose the ideal POS system tailored to the specific needs of your small business:

1. Features and Functionality:

  • Inventory Management: Look for features that allow you to track inventory levels in real-time, set up automatic reorder points, and manage stock across multiple locations efficiently. Advanced inventory features such as batch tracking, serialized inventory management, and vendor management can be crucial for businesses with complex inventory needs.

  • Sales Reporting: Evaluate reporting capabilities such as customizable sales reports, performance analytics, and dashboard visualization tools. Look for features that provide insights into sales trends, top-selling items, and customer purchasing behavior analysis to make data-driven decisions and identify growth opportunities.

  • Customer Management: Consider features for building comprehensive customer profiles, managing loyalty programs, and generating targeted marketing campaigns. Look for integration with customer relationship management (CRM) software to centralize customer data and personalize interactions across all touchpoints.

  • Employee Management: Assess functionalities for employee time tracking, shift scheduling, and performance monitoring. Look for role-based permissions, customizable access levels, and built-in payroll integration to streamline workforce management and ensure compliance with labor regulations.

  • Ease of Use: Opt for an intuitive interface with user-friendly navigation, customizable settings, and responsive customer support. Look for features such as drag-and-drop menu customization, touchscreen compatibility, and built-in tutorials or training resources to minimize training time and maximize productivity.

2. Integration Capabilities:

  • E-commerce Integration: Ensure compatibility with popular e-commerce platforms such as Shopify, WooCommerce, or Magento to synchronize inventory, orders, and customer data seamlessly between your online and offline channels. Look for features such as automatic inventory syncing, order management, and omnichannel reporting to provide a unified shopping experience for your customers.

  • Accounting Software Integration: Look for integration with accounting software like QuickBooks, Xero, or FreshBooks for streamlined financial reporting, bookkeeping, and tax preparation processes. Ensure seamless data syncing between your POS system and accounting software to eliminate manual data entry and reduce errors.

  • Third-party Apps: Assess compatibility with third-party apps and services for additional functionalities such as email marketing, social media management, or inventory forecasting. Look for an open API or app marketplace that offers a wide range of integrations to extend the capabilities of your POS system and adapt to evolving business needs.

3. Hardware Requirements:

  • Compatibility: Verify hardware compatibility with the POS software to ensure seamless integration and optimal performance. Consider factors such as operating system compatibility (Windows, iOS, Android), device compatibility (desktop, tablet, mobile), and peripheral compatibility (barcode scanners, receipt printers, cash drawers).

  • Scalability: Choose hardware solutions that can scale with your business growth, whether it's adding additional registers, peripherals, or integrating with new technologies. Look for modular hardware options, flexible configuration settings, and cloud-based solutions that offer scalability and future-proofing capabilities.

4. Payment Processing:

  • Payment Options: Ensure support for various payment methods, including credit/debit cards, mobile payments (Apple Pay, Google Pay), contactless payments (NFC), and digital wallets (PayPal). Look for features such as split payments, partial payments, and tip adjustments to accommodate diverse customer preferences and increase transaction flexibility.

  • Transaction Fees: Compare transaction fees and processing rates of different payment processors to minimize costs and maximize profitability. Consider factors such as interchange fees, flat-rate pricing, monthly minimums, and chargeback protection when evaluating payment processing providers.

Practical Tips for Evaluation:

  1. Define Your Requirements: Begin by conducting an in-depth analysis of your business operations, identifying pain points, specific needs, and long-term goals. Consider factors such as your industry, transaction volume, inventory complexity, and budget constraints. By defining your requirements upfront, you can narrow down your options effectively and focus on solutions that align with your business objectives.

  2. Request Demos and Trials: Take advantage of free trials or request live demonstrations from POS providers to get a hands-on experience of the software's capabilities. During the demo, simulate real-world scenarios relevant to your business, such as processing transactions, managing inventory, and generating reports. Pay close attention to the user interface, workflow efficiency, and customization options to assess whether the POS system meets your operational needs and aligns with your team's workflow.

  3. Seek User Feedback: Tap into the wealth of knowledge and experience within your industry network or online communities to gather insights and recommendations from other small business owners. Reach out to peers who are using or have previously used the POS systems you're considering and ask about their experiences, including the pros and cons, challenges encountered, and overall satisfaction with the software. Their firsthand feedback can provide valuable insights and help you make a more informed decision.

  4. Consider Long-term Viability: Evaluate the reputation, track record, and financial stability of POS vendors to ensure long-term viability and support for your business. Research customer reviews, testimonials, and case studies to gauge the vendor's reliability, responsiveness to customer needs, and commitment to product innovation. Additionally, inquire about the vendor's roadmap for future updates and enhancements to ensure that the POS system can adapt and grow with your business over time.

  5. Assess Customer Support Services: Responsive and reliable customer support is crucial for resolving technical issues, troubleshooting problems, and maximizing the value of your POS investment. Evaluate the quality and availability of customer support services offered by POS vendors, including phone support, email assistance, online resources, and training materials. Reach out to the vendor's support team with questions or concerns during the evaluation process to gauge their responsiveness and expertise in addressing your inquiries.

  6. Evaluate Total Cost of Ownership (TCO): Beyond the initial upfront cost of the POS system, consider the total cost of ownership over the long term, including software subscription fees, hardware expenses, payment processing fees, and any additional costs for integrations or customizations. Compare pricing plans, transaction fees, and contract terms across different vendors to ensure that you're getting the best value for your investment while staying within your budget constraints.

By following these practical tips and taking a thorough, holistic approach to evaluating POS systems, you can make a well-informed decision that empowers your small business with the right technology solution to drive growth, streamline operations, and enhance customer experiences.

How to Future-Proof Your Small Business POS System

To ensure your small business POS system remains valuable as technology and consumer trends evolve, consider these practical strategies and features for staying ahead:

1. Cloud-Based Solutions

  • Scalability: Easily expand your operations as your business grows without needing significant hardware upgrades.

  • Remote Access: Manage your business from anywhere, with real-time access to data and reports.

  • Automatic Updates: Enjoy continuous software updates and improvements without manual intervention.

2. Connected Customer Profiles

  • Unified Customer Data: Keep comprehensive customer profiles that track both online and offline interactions.

  • Personalized Experience: Use connected profiles to offer personalized recommendations, promotions, and customer service.

  • Efficient Service: Quickly access customer histories to provide faster and more effective service.

  • Loyalty Programs: Seamlessly integrate loyalty programs across all sales channels.

  • Targeted Marketing: Develop precise marketing campaigns based on detailed customer data.

3. The Promise of AI

  • Predictive Analytics: Analyze sales data to forecast trends, improving inventory management and strategic planning.

  • Personalized Recommendations: Implement AI to suggest products based on customer behavior, boosting sales.

  • Automated Customer Service: Use AI chatbots and virtual assistants to handle routine inquiries, freeing up staff.

  • Fraud Detection: Identify potential fraudulent activities in real-time with AI's advanced pattern recognition.

  • Operational Efficiency: Optimize operations like staff scheduling and restocking with AI-driven insights.

  • Enhanced Marketing: Use AI to analyze customer data for more targeted and effective marketing campaigns.

Trend Identification: Identify emerging trends in your data, allowing you to adjust strategies and capitalize on new opportunities.

Best Options for Small Business POS Systems

When choosing a small business POS system for your retail business, consider key factors such as built-in payment processing and processing fees. Below are some popular options:

Toast

  • Description: An all-in-one POS system designed for restaurants and food service businesses, offering credit card processing, order management, inventory tracking, and employee management.

  • Payment Processor: Built-in.

  • Processing Fees: 2.49% + $0.15 per in-person transaction; 3.5% + $0.15 per keyed-in transaction. Pay-as-you-go option available.

Square

  • Description: A popular choice for small businesses with affordable and user-friendly card readers and POS systems.

  • Payment Processor: Built-in.

  • Processing Fees: 2.6% + $0.10 per in-person transaction; 3.5% + $0.15 per keyed-in transaction.

Clover

  • Description: Offers a range of POS systems and credit card machines with features like inventory management and customer loyalty programs.

  • Payment Processor: Built-in.

  • Processing Fees: 2.6% + $0.10 per in-person transaction; 3.5% + $0.10 per keyed-in transaction.

Shopify

  • Description: An e-commerce platform that includes tools for managing an online store and mobile card readers for in-person payments.

  • Payment Processor: Built-in.

  • Processing Fees: 2.7% per in-person transaction; 2.9% + $0.30 per online transaction.

PayPal

  • Description: Offers mobile card readers and a virtual terminal for online payments.

  • Payment Processor: Built-in.

  • Processing Fees: 2.7% per in-person transaction; 3.5% + $0.15 per keyed-in transaction.

Stripe

  • Description: A payment processor with tools for online and in-person credit card payments.

  • Payment Processor: Built-in.

  • Processing Fees: 2.7% + $0.05 per in-person transaction; 2.9% + $0.30 per online transaction.

Toast Retail: A Perfect Fit for Small Businesses

Though initially tailored for restaurants, Toast's POS system seamlessly transitions into the retail sphere. Leveraging our hospitality-oriented foundation, we prioritize efficiency, smooth transactions, and top-notch customer service—essential components for retail success.

Our product offerings stem from extensive hospitality insight, providing comprehensive inventory management, insightful sales reporting, and effective customer relationship management. In the retail realm, this translates into a POS solution engineered to optimize operations and drive outstanding performance.

Best Toast Retail Features for Butcher POS Systems

Discover the exceptional features that set Toast Retail apart and empower businesses to thrive.

All-in-One Tech Platform

We provide operators with a comprehensive suite of tools to run their business seamlessly. From scanning to paying, scheduling to payroll, and back office to front of store, Toast Retail covers it all, catering to every aspect of business operations.

Modern Cloud-Based POS

Our modern cloud-based POS system offers integrated payments and robust offline capabilities, ensuring uninterrupted service even in areas with unreliable internet connectivity.

Hardware Options

Choose from a variety of hardware options, including handhelds and kiosks, to enhance operational efficiency and meet specific business needs.

Customer Experience and Loyalty

Our platform offers unmatched flexibility, allowing operators to create innovative customer experiences by blending foodservice and retail operations. Whether it's a wine bar doubling as a wine market or a convenience store with an embedded deli, Toast Retail enables unique and engaging experiences for customers.

Our payments integration enables seamless transitions between online and in-store purchases, allowing customers to add retail items to existing orders without additional payment. This flexibility, originally designed for the restaurant industry, is a game-changer for retail prospects.

Built-in loyalty rewards and personalized offers foster customer loyalty and engagement, a key differentiator in the retail world. Our integration with Shopify further enhances customer experiences by syncing online Shopify sales with in-store inventory, enabling efficient management of hybrid customers.

Modern Retail Management

We've transformed Toast into a first-class retail POS system by investing in inventory management and hardware support for scanners and scales. Our innovative, mobile-first tools, like Smart Scan, streamline inventory management, saving operators valuable time and increasing efficiency.

Perpetual inventory tracking ensures accurate stock counts at all times, empowering operators with real-time insights and control over their operations. With support for tens of thousands of items, our item library enables quick and intuitive changes, facilitating efficient inventory management for businesses of all sizes.

How much does Toast Retail cost?

Toast offers a range of pricing options tailored to meet the needs of different businesses, ensuring there's a plan for every business. With features like 24/7 support, flexible payment options, offline mode, and simple setup, Toast provides convenience and reliability. The Starter Kit, starting at $0/month, is ideal for single-location businesses needing 1-2 terminals, while the Point of Sale plan, starting at $69/month, is perfect for those looking for core functionality and flat-rate processing. For larger operations ready to optimize operations and drive revenue, the Build Your Own plan offers custom pricing, allowing businesses to choose features like online ordering, integrated payroll, automated inventory, and more. Contact sales for a personalized quote and to explore the full range of features available.

Why Is Toast the Right Fit for Small Businesses?

Toast POS is uniquely positioned to benefit retail businesses due to several key factors. With a foundation in the foodservice and hospitality industry, Toast understands the intricacies of complex POS use cases, making it well-equipped to address the needs of retail operations. Its modern, cloud-based platform offers a seamless and efficient experience, while its track record of enabling new revenue-generating opportunities demonstrates its commitment to business growth. 

Toast excels in creating operational efficiencies for small businesses and champions the integration of on-premises and off-premises guest experiences. Additionally, its in-person salesforce acts as true partners for customers, providing high-impact support and guidance, making it an ideal choice for retail businesses seeking a reliable and innovative POS solution.

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.