our ISO is thriving. By building a healthy residual stream and an impressive list of satisfied clients, you have the beginnings of a strong business.

But this is an industry that's heavily dependent on annuity-based income: residuals. A power portfolio can become useless overnight if you don't have the necessary foundation to service and retain merchants.

Strong sales growth in the first few years might drop off dramatically if you don't have plans in place to hire, compensate and satisfy sales reps.

The decision to start an ISO was a major leap of faith, but having a thorough plan for long-term growth and a foundation for success are crucial. Without a safety net, you set yourself up for a major fall. Following are some tips for building a successful business.

Step 1: Choose the Correct Processing Partner

Far too many people choose a processor based on price. Of course, price is an important component of a processing relationship, but don't be fooled by recruiting ads that focus only on income opportunities.

Processors that sell themselves entirely on the promise of getting rich quick might help in the short-term, but in the long run, you'll be happier and more profitable with a partner that backs up robust income-generating opportunities with service, support, technology and training. This will keep reps succeeding (and merchants processing happily) for years down the road.

Word-of-mouth is important here; people in this industry love to share stories about one another's businesses, both good and bad. To check out the responsiveness of processors' customer service departments, call their 800 number. If they put you on hold for 45 minutes, cross these prospective processors off the list.

Another important caveat: Have a lawyer review the contract with the processor before signing it. Some requests are universal among ISOs: You want lifetime residuals, you don't want the processor to hire away your employees, you don't want reps to have the option of going direct and cutting you out of the loop.

However, a "standard agreement" that's a perfect fit for every ISO does not exist. It's well worth the time and investment to have a lawyer review the contract line by line. A clause that seems unimportant at the time of signing might become a major obstacle as your business grows.

Step 2: Make a Plan for Acquiring Capital

If you're happy with your current processor, it's time to get back to the basics of fundraising. Some doors might close on you because many established financial institutions are not comfortable giving loans for our industry.

Instead, use your network to raise capital to launch and sustain the business. Decide whether borrowing (pros: autonomy and relative ease; cons: locked into debt) or an equity partnership (pros: upfront cash, collaboration; cons: you're gaining a partner and the compromises that can come with him) is the better choice.

Try not to get so bogged down in fundraising that you lose sight of the main goal. A budget that plans for long-term growth is far more important than starting out with a huge capital reserve.

Plan carefully and classify possible expenditures as either an expense or an investment. Expenses cost money, so avoid them whenever possible. Investments cost money but offer long-term benefits.

An administrative employee who quits after three weeks is a pointless expense, but a dedicated admin who makes your job easier for years is a great investment.

Step 3: Create a Detailed Business Plan

Once you know where the money's coming from, plan other areas of the business. What is your sales niche? Do you thrive on building lifetime relationships with smaller merchants? (If you're a salesperson who receives holiday cards from merchants, you do.)

Or do you work best in the boardroom, selling larger businesses and impressing decision-making committees with polished presentations?

Other steps include hiring reps (if you want them to last longer than a week, compensate them properly) and deciding whether to trim your geographic focus or spread out nationwide.

Don't forget the basics: an office space with some desks, phones and a meeting space or two. It's always better to start small and expand; the strongest companies were built from strong foundations. If you have patience, starting small and planning for growth will pay tremendous dividends.

Step 4: Decide on Merchant Acquisition Targets and Techniques

What's your focus? Trying to be all things to all merchants is a great way to exhaust resources chasing sales. This is not a recipe for long-term success.

While a successful portfolio absolutely includes merchants of varying sizes and types, specialize by catering to specific vertical markets that you can serve well. (This has the added bonus of creating a built-in referral program. Payment processing isn't the only industry where word-of-mouth travels fast.) Remember that while high-volume merchants bring in high-volume residuals, if you lack the capability to serve them well, you might be better off targeting a large number of smaller businesses.

The largest merchants are also the quickest to switch processors if they're unhappy. Think in terms of merchant satisfaction: A strong core competency wins out over a hunt-and-peck power portfolio any day.

When you know what to focus on, it's time to start going after merchants. Knock on doors, get lists, make calls, offer referral bonuses and track them carefully. My advice is do not even attempt to poach "your" merchants from your current processor. This industry is small enough that you will suffer repercussions for any unethical behavior down the road.

Step 5: Build an Infrastructure

With plans in place and a small portfolio processing profitably, continue building a foundation for growth. Review the rep compensation plan. However it's set up, it almost goes without saying that the plan should contain two essential components: accurate reporting (it should be easy for reps to know how much they have earned) and timely payouts.

Develop plans to support sales reps. New reps need training, and even the most experienced ones need someone to call when an unfamiliar question or emergency arises. Another great investment to make is hiring a full-time assistant to enter applications for reps so they can devote time to selling.

Consider taking on underwriting, risk, customer service and technical support down the road. It's almost never a good idea to take on too much at the outset. These departments are expensive and highly specialized, and access to their services is the reason you pay the processor.

Let the processor do the heavy lifting until your ISO has grown successful enough that the additional control of having these departments in-house outweighs the substantial financial and time investments required.

Follow my guidelines to plan for long-term success, and you'll find that sustaining growth in your ISO is a much less intimidating task, as long as you know where to look.

Mitchell D. Levy is the Executive Vice President and Director of Business Development for Cynergy Data, a merchant acquirer that provides a wide array of electronic payment processing services while continually striving to develop new solutions that meet the needs of its agents and merchants. In addition to offering all forms of credit, debit, EBT and gift card processing, the company offers its ISOs free training, technology, marketing and guaranteed service levels. Founded in 1995 by Marcelo Paladini and John Martillo, Cynergy Data strives to be a new kind of acquirer with a unique mission: to constantly explore, understand and develop the products its ISOs and merchants need to be successful, and to back it up with honest, reliable and supportive service.