What to consider when selecting a POS system for your business

Understanding the role of a POS system

A POS system is a combination of hardware and software that businesses use to complete sales transactions at the point of sale.

The system typically includes a cash register, a computer, a receipt printer and software that helps manage sales, inventory and employees. Alternatively, a POS system can simply be a card reader that enables the business to accept credit and debit card payments.

A POS system can help streamline the sales process, enhance customer experience and provide valuable insights into business operations. When conducting point-of-sale research, business owners may come across several different acronyms. These may include:

• POS (point-of-sale): This is the general term used to describe the system to complete a transaction. The point-of-sale is where a customer pays for goods or services, such as a checkout in a retail outlet.
• ePOS (electronic point-of-sale): An ePOS is a digital version of the traditional POS system. It includes electronic hardware and software to facilitate sales transactions and other business operations. An example of an ePOS may be a till in a restaurant.
• mPOS (mobile point-of-sale): This refers to a system that uses mobile devices like tablets or smartphones as the primary interface for processing transactions, alongside external card-reading devices. It's particularly useful for businesses on the go or those with limited space. For example, mobile hairdressers or food vans.

There are different types of POS systems available, each offering different features. It is therefore crucial that business owners select the right POS system for their needs.

For example, if a mobile hairdresser needs a system that enables them to take card payments from customers, a mPOS card reader may be suitable. But if a chain of restaurants wants to manage inventory, bookings, and employees’ shifts, then a full ePOS system may be the right choice.

Benefits of a POS system for small business

The benefits of a POS system for small business include:

• Cost-effective: Many modern POS systems offer subscription-based models, which can help reduce upfront costs and spreads payments over a number of months. Others claim a small percentage from each transaction they facilitate.
• Inventory management: The right POS system may help small businesses keep track of inventory levels in real-time, preventing overstocking or stock shortages.
• Customer relationship management (CRM): Small businesses can build stronger relationships with customers with a POS system. Some POS systems can collect and analyse customer data that may be used for personalised marketing and loyalty programs. Many also feature customer loyalty programmes.
• Operational insights: Small business owners can access detailed reports from their POS system to gain insights into sales trends, peak hours and popular products. Having this information could help them make informed business decisions to drive growth.
• Enhanced security: Many modern POS systems come with robust security features that help safeguard sensitive customer information and protect businesses from potential cyber threats.

Downsides of a POS system

The downsides of a POS system for small business include:

• Space: POS systems can take up a lot of space and may not be suitable for some small businesses where space is limited. However, mPOS systems may be better suited in these scenarios.
• Requires constant internet connection: Many POS systems require a constant and reliable internet connection to keep them operational. Disruptions to internet connection may mean that merchants are unable to process payments or view booking information.
• Can be a target for cyber criminals: Cyber attackers may target POS systems to gain malicious access to credit or debit card numbers, and other sensitive data.

Assessing the need for a POS system

To help business owners make informed choices when choosing a POS system, it’s vital to choose a system that accommodates the needs of their business type, as well as their cost and scalability considerations.

These could breakdown into:

• Retail - A fixed premise with one or more employees.
• Restaurants - Fixed premises with several employees.
• Service-based businesses - Including barbers and beauty parlours
• Mobile businesses - Such as mobile hairdressers, tradespeople or artisan market stall holders.

Once an owner has identified their business type, it can be useful to look at the specific business requirements of a POS system to help them make an informed choice. Taking the business types above, here are some considerations when selecting a POS system:

• Retail: Retail businesses often require robust inventory management, barcode scanning and customer relationship features.
• Restaurants: Restaurants need features for order management, table tracking and kitchen communication.
• Service-based businesses: Service-based businesses may focus on appointment scheduling, client management and payment processing.
• Mobile businesses: Mobile businesses require flexibility, quick transactions and possibly inventory tracking.

Beyond the immediate needs of the business, small business owners may also want to consider:

• Payment processing: Some businesses may want to accept multiple payment methods such as credit cards, mobile payments and online transactions.
• Integration: Consider if the POS system needs to integrate with accounting software, CRM systems or e-commerce platforms.
• Customisation: What level of customisation is needed will depend on the business but could include the customisation of receipts or menus to align with the brand.

When choosing the right POS system for small business use, another factor to think about in the decision-making process is the future of the business. If the business owner has plans for business growth, they should take into account the scalability of a POS system when reviewing their options.

Businesses that are planning to grow should look at a POS system that can grow with them. If they are planning on opening more than one premises they should factor in the centralised control and reporting capabilities of a POS system. Finally, they should evaluate whether an on-premise or cloud-based system is better suited to their business needs now and in the future.

Key features to look for in a POS system

When reviewing the options for a POS system for small business, it’s crucial to look at the POS features. Some of the key features a small business owner may wish to look for include:

Payment options

• Acceptance of major credit and debit cards
• Support for mobile payment options (e.g. Apple Pay, Google Pay)
• Integration with contactless payment methods
• Ability to split payments or process refunds

Inventory management

• Real-time tracking of stock levels
• Automated alerts for low-stock items
• SKU/barcode scanning for quick and accurate inventory updates
• Categorisation and organisation of products

Sales reporting and analytics

• Detailed sales reports for various time periods
• Insights into popular products and trends
• Analysis of customer buying behaviour
• Performance tracking of promotions and discounts

Integration with accounting software

• Seamless integration with popular accounting software
• Automatic syncing of sales data for streamlined financial management
• Reduction of manual data entry errors

Employee management

• User permissions and access controls
• Time tracking and attendance features
• Performance metrics and sales tracking for individual employees
• Payroll integration for accurate compensation

E-commerce integration

• Synchronisation with online sales platforms
• Unified inventory management for in-store and online sales
• Consistent product information and pricing across channels
• Order processing and fulfilment coordination

Security

• Secure payment processing with encryption
• User authentication and access controls
• Regular software updates for security patches
• Compliance with industry standards

CRM integration

• Capture and storage of customer information
• Loyalty programmes and rewards management
• Purchase history tracking for personalised customer interactions
• Email or SMS notifications for promotions or events

Ease of use

• Intuitive and user-friendly interface
• Quick training for staff
• Responsive customer support for troubleshooting

Scalability

• Ability to handle increased transaction volumes
• Support for multiple locations
• Additional features or modules for growing business needs
• Affordable, transparent pricing

Customisation

• Tailoring of receipts, menus and interfaces to match the brand
• Flexible pricing options and discount structures
• Adjustable settings to accommodate unique business processes

Mobility

• Support for mobile devices for on-the-go transactions
• Mobile POS options for flexibility in service (e.g. table ordering)

It’s important to note, that not all of these features will be necessary and will depend on the nature of the business and its unique requirements.

Budget considerations for an appropriate POS system

Beyond the initial price or monthly subscription for a POS system, business owners should factor in the total cost of ownership and any hidden costs that could be incurred further down the line.

When it comes to the total cost of ownership, small businesses should factor in software costs such as licensing fees and any additional charges for software updates. They should also consider the hardware costs, for example the terminals and card readers.

Other factors to think about include the costs of training staff to use the new system and any fees that may be applicable for integrating with a CRM or accounting software. While many of the costs will be transparent, there are some potential hidden costs small business owners should be aware of.

These include:

• Hardware costs: Adding additional devices may incur extra costs and future hardware upgrades should be factored in.
• Installation and set-up fees: Are there any costs for data migration or installations?
• Local tax and regulation changes: Ensure the system complies with data protection and privacy laws to avoid penalties and factor in that regulatory changes could require a software update that may potentially incur extra fees.
• Support and maintenance: Check the subscription renewal costs, evaluate the cost of technical support and whether the POS system has a recurring maintenance fee.

Some of the more affordable options for small businesses include cloud-based solutions that often have lower upfront costs and work on a subscription model to help spread the cost.

Another option is a basic POS system that can scale. Small businesses can begin the transition to a POS system with the essential features they need and expand as the needs of the business change. This can potentially help keep costs lower as unnecessary features may inflate the costs.

Small business owners in the UK may also wish to explore lease options, where they lease the hardware to reduce the initial investment.

Types of POS systems

When it comes to the types of POS systems there are two different types. These are cloud-based systems and traditional POS systems. A cloud-based POS system works on remote servers that are accessed over the Internet. The data collected from the system is then stored and processed in the cloud.

A traditional POS system works on on-site services and does not need constant internet access. The data collected is stored and processed on-site.

Advantages and disadvantages of a cloud-based POS system

The advantages of cloud-based POS can include:

• Accessibility from anywhere with internet connectivity
• Automatic updates and maintenance are usually handled by the provider
• May be more cost-effective, often with a subscription-based pricing model
• Real-time data syncing across multiple devices or locations

The disadvantages can include:

• Dependency on internet connectivity can lead to downtime
• Potential security concerns, although providers are likely to implement robust security measures
• May have limited customisation options

Advantages and disadvantages of a traditional POS system

The advantages can include:

• Operates without an internet connection
• Typically has a higher level of customisation and control over software
• May potentially be more robust for businesses with complex needs
• Potentially lower security risks as data is stored on-site

The disadvantages can include:

• May have higher upfront costs for hardware and software
• Manual updates and maintenance may be required
• Access is usually confined to the physical business location

Choosing between these two types of POS systems will depend upon the nature of the business, the requirements of the business and any budget constraints. Small businesses with a limited upfront budget, those with multiple locations or needing remote access may want to consider a cloud-based POS system.

Small businesses with complex requirements and in-house capabilities to manage and maintain on-site servers or those that have limited internet access may wish to look at a traditional POS system for their business.

Research and comparisons of POS systems

The importance of comparing POS systems for a small business lies in making an informed decision that aligns with the unique needs and goals of the business.

Some areas to look at include:

• Assessing functionality: Business owners can compare different systems to evaluate whether they meet their requirements. It can be useful to create a checklist of essential and nice-to-have features to help with the evaluation.
• Scalability considerations: Evaluating the POS systems' ability to scale can help small businesses ensure that the system can grow with their business.
• Costs: Reviewing the upfront, indirect and future costs can help business owners assess if the POS system is good for their business.
• Read reviews and testimonials: Reviews can help small businesses explore how the system works in the real world. It can help identify the pros and cons of different POS systems.
• Evaluate POS system providers: With many POS system providers to choose from in the UK, it’s crucial that business owners do their research. Look for a provider that has a good reputation, a strong focus on security, offers high-quality customer support, is transparent about costs and complies with relevant regulations.

Implementation and training

Successful POS integration is pivotal to its success. Business owners may wish to consider POS integration and how this will be implemented. Is this something the provider handles, or will the small business need to do this?

Businesses should also consider whether any data from the existing solution needs to be migrated and how this will be completed. Being clear on what is needed for integration can help a smooth installation.

Once the POS system is installed, business owners should then consider staff training to ensure they are proficient in using the system. Think about the different needs of staff and the areas in which they may require training.

For example in a restaurant, the restaurant manager may need to be trained on all aspects of the POS system. But waiting staff may only need training for the basic features they will use as part of their role.

As part of the training process, it’s also important to ensure staff are aware of how to report an issue and the available support channels. Knowing this process can help reducedowntime and increase efficiency. Business owners may also wish to develop a troubleshooting process for common errors to reduce disruption should an error occur.

As things change with the system as a result of updates or upgrades, business owners should schedule regular training sessions to ensure staff are familiar with best practices and new features.

Data security and compliance of POS systems

Ensuring the protection of customer data is not only a legal requirement in the UK but also a crucial factor in building trust and enhancing customer confidence. Small business owners should prioritize working with POS system providers that demonstrate a strong commitment to data protection standards, including adherence to relevant laws and guidelines. This commitment is essential, as highlighted by the UK Government's guidance on data protection¹.

While understanding data protection regulations like GDPR is important, the emphasis for small businesses should be on implementing practical measures to secure customer information. These measures may include:

• Implementing data encryption: This protects sensitive personal information from unauthorized access.
• Limiting data access: Use user roles and access controls within the POS system to minimize the risk of breaches.
• Regularly updating POS system software: Incorporate the latest security patches to address potential vulnerabilities.
• Securing network connections: Utilize strong passwords, especially for wireless connections, to prevent unauthorized access.
• Training staff on security protocols: Ensure employees are knowledgeable about handling personal data securely and aware of the importance of data protection.

With the application of these practices, small businesses could better manage data security and comply with legal obligations, reinforcing customer trust and confidence in their operations.

Choosing the right POS system for the path to success

In the pursuit of small business success, the choice of a suitable POS system is a crucial decision. To navigate this decision-making process, small business owners in the UK should consider their POS system requirements and evaluate the different types of POS systems and providers available.

Selecting the right POS system for small business can not only help manage transactions but can equip small businesses with the tools they need to streamline operations, customise marketing communications and simplify inventory management.

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