My desire is to provide helpful and thoughtful information about all aspects of doing business. Feel free to share your comments, experience and insight!

Friday, August 6, 2010

The Case For Cash

An important emphasis has been put on local, small business in the wake of the recent financial problems around the country. Here in Michigan, we are urged to "buy local", "support Michigan business" and put "Michigan first". I have always done my best to do that but I will admit I am doing it more often and with more focus than ever before. In considering how I can personally support local business, I am also trying to use cash as often as possible. Why am I making this case for cash? Let me share a few thoughts.

1) Using cash helps reduce small business costs.
The same purchase made with a debit or credit card costs the business more than if paid for with cash. The costs associated with the convenience of a business accepting debit/credit cards usually consists of a set transaction fee and a percentage of sales fee. Other bank and processing fees may also be applicable. Obviously none of those fees are incurred by the business when purchases are made with cash.

2) Cash can be withdrawn without cost to the consumer.
Many small businesses have the ability to accept debit/credit card payments but on certain sales (say those under $5) they have little or no chance to cover their costs. As a consumer, consider using cash as often as possible for purchases under $10. With ATM's on every corner, it is easier than ever to get cash conveniently. And with free cash withdrawals, it does not cost a dime to have cash in hand.

3) It is a win-win-win.
If the consumer supports small business through patronage and helping keep costs down, that small business has a chance to keep prices down and stay in profitable business. If that small business provides good products & services at good prices along with local expertise & service, consumers will want to support the business. The consumer wins, the business wins and the local economy wins.

It is obviously not rocket science, but the case for cash has clear benefits to local economies. So the next time you are at the ice cream shop, the fruit farm, the pizza place, etc., I urge you to support them with your patronage as well as your cash!