By Barry Davis
Womply
For many small business owners, merchant-level salespeople (MLSs) are viewed as trusted advisors, not just salespeople. At Womply, we routinely hear stories of merchants asking their MLSs to help them with everything from setting up a business website to staying Payment Card Industry Data Security Standard compliant and everything in between. This consultative dynamic is ideal for building stickier relationships and increasing the lifetime value of every merchant account. To make it work, however, agents need to understand how a shifting business landscape affects small businesses and be prepared to offer actionable advice.
With that in mind, in The Green Sheet's Feb.12 issue, I wrote about the top concerns that keep small business owners up at night. In this article, I'll focus on a major industry shift in the types of threats facing merchants and what MLSs can do to help their merchants adapt to these changing times.
Imagine you're advising a small restaurant, a tire shop, a dental practice, a hotel or a nail salon in your area. In each of these cases, the business has a physical presence, including inventory or equipment. It stands to reason that the largest threats to that business – and, by extension, the merchant's livelihood – is physical damage to the property or a robbery resulting in lost cash, right?
On the contrary, a growing body of research suggests that online threats have a more immediate and dramatic impact on business revenue than physical ones. This matters because according to Womply's research, small businesses walk a razor's edge with regard to revenue: one in four would shut down within 30 days if sales stopped, and three in four wouldn't last six months.
It's easy to understand why a robbery, structure fire or hurricane would be viewed as a top threat by merchants running a physical store. Most business owners see their physical property as one of their most valuable assets, and damage to it is a traumatic thought. But that's not true in most cases.
Let's use a robbery to illustrate the reality of physical threats. According to data from Insureon, fewer than 9 percent of small businesses were victims of burglary or theft last year, so it's pretty uncommon. When burglaries do happen, the financial impact on the business averages $8,000. That's pretty significant, but a simple, inexpensive security system is all it takes to drastically reduce this risk. Insurance takes care of the rest.
What about a more dramatic physical threat? Coming off one of the most active hurricane seasons in memory, Womply's data science team analyzed transactions at businesses in affected areas of Houston and Florida last fall. We found that in general business revenue for merchants hit by hurricanes in both regions returned to normal revenue levels within a week after the storms hit. Surprised? So were we.
Of course, some businesses that experience a robbery or natural disaster will never bounce back, but most will very quickly. The main takeaway is that small businesses are surprisingly resistant and resilient to physical threats.
In the past few years, digital threats to small businesses have proliferated. And, the importance of having a digital presence – even for a physical business – continues to grow. In short, merchants can't afford to ignore online threats anymore.
For example, when someone posts a negative review about a merchant's business on Yelp or Google, it causes serious reputational harm. That's the costliest category of business damage, according to data from The Hartford, at $50,000 per incident. Reputational harm is six times more damaging than a burglary, three times more damaging than water damage, and twice as damaging as wind or hail.
Let's put that in the context of sales revenue. Studies show that a single negative review can cost a business up to 30 customers. On average, Womply's small business customers collect about $90 per customer transaction. So, a single bad review could mean the merchant loses $2,700.
Furthermore, some studies suggest a one-star rating change can affect business revenue by 39 percent. If a merchant does $5,000 in sales each month, a bump from three to four stars could mean making $7,000 if the rating goes up by one star or $3,000 if it goes down. That's a big swing, especially because business revenue and personal income are one and the same for small business owners.
Most small business owners are too busy running their companies to recognize and adapt to these subtle but significant shifts. They look to the few advisers they have to help them navigate changing times. That's a big opportunity for MLSs.
Every small business owner deserves to know that cyber breaches, negative online reviews and an outdated online business presence are the biggest threats to small businesses in today's environment. Educate your clients and build a solution set into your standard consultation. If you do, you'll make more money through value-added services, reduce attrition in your portfolio and, most importantly, protect your merchants' businesses. 
Barry Davis is vice president of business development at Womply, the top software partner to the payments industry and the top provider of front-office software to small businesses. For more tips or resources, reach out to the Womply team at partnerships@womply.com.
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