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Gift Cards- Is your Business Missing Out?

January 21st, 2011

As the owner of a small business, there is one important question you should always ask yourself; am I doing everything I can to maximize my sales? By asking this simple question, you ensure that your business never gets stagnant, and you might just find some hidden income you were overlooking.

Maybe at first you only accepted cash, only to realize that accepting credit cards increased the amount your customers would spend. Perhaps you were stuck on a wired terminal, and discovered that going wireless was what your business needed. (See our post on wireless terminals)

Cash, checks, and credit are no longer the only forms of payment available. If you are looking for a quick and cost-effective way to expand your business, I may have your answer.

Gift cards.

Though often overlooked as just a holiday gimmick or something that only large chain stores can afford, gift cards may just hold that extra sales punch your business needs. The logic behind adding a gift card program is simple; take in more sales revenue today, for future redemption that may not even occur. Typically, anywhere from 17-25% of gift cards are never redeemed. According to a Consumer Reports study, those that do use their gift cards perceive the card as a significant discount and often spend considerably more than the value of the card.

As if increasing your sales weren’t reason enough, there are tax benefits as well. Did you know that the “income” from gift card sales is reported on your taxes as a liability? That’s right—you could sell thousands and thousands of dollars in gift cards and your accountant will not record them as income until (and *IF*) they are redeemed (check your state’s escheatment laws for further details).

On top of the sales benefits of gift cards, they also can help to increase customer loyalty, serve as further branding and advertising for your company, and can even be used as store credit for merchandise returns.

With all that said, can your small business afford to miss out on gift cards?

WEMSK Short URL: http://bit.ly/mHW7lA

Entry Filed under: Advice

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