Business policies

How do small businesses create polices? It’s easy; they don’t. The customers do. I know, you are asking how that happens. Well in a nutshell, policies are created when something happens that’s outside of the business owner’s experience.

As small business owners, we try to anticipate everything that could happen that could affect us. It’s a herculean task, especially if the owner of a new business has never owned a business before or has little retail sales experience.

You can find guides online, similar to what you might find about disaster preparedness for hurricanes, you can ask other small business owners who have been around a while,  but you really don’t learn about this stuff until you are in the trenches.

There are many policies you need to create and follow in order for your business to run smoothly. Some may seem obvious such as a refund policy. Most would think it’s either yes, you accept returns and offer refunds, or you don’t. Well, do you sell new goods? Do you belong to a buying group or buy wholesale from a manufacturer and do they stand by their products and will they compensate you for returned products, or do you have to take the hit yourself? Will you offer cash back, or store credit? Some items just can’t be returned like some clothing, or if a package is destroyed or a receipt lost. As you can see, there are many variables to what started out as a yes/no question.

What payment methods do you accept? How often do you run sales and for how much? Do you deliver? Do you offer layaway? Do you have public bathrooms? Are you able to be handicap accessible? What’s your privacy and data collection policy? (This is a pretty recent one to come about) Do you allow service animals? What about shirts and shoes? What about masks?

One thing that a new business owner needs to remember when creating policies is, they have to put some thought into them to make sure they are reasonable and enforceable. Then they need to stick with them and not waiver. But remember, the “We reserve the right to refuse service to anyone for any reason” just doesn’t fly in today’s climate and can get you into hot water if you post it.

We sell new and vintage items at Five Katz. This means new items sell at a retail price and this price is hard to modify. We don’t have the buying power of a large corporate store, so for some items I pay more than someone like Amazon sells them for. I am just hoping my customers are more interested in helping to support a local shop, than giving an online giant more cash.

On our vintage items, we do our research, as well as rely on our experience and also consider what we pay for an item when we set a price. Sometimes I can offer a discount and sometimes I can’t as the margin is just too close.

These are both decisions that have been turned into a policy. New sells at retail and vintage has some flexibility.

To return to the opening point, how do customers set a store’s policy? Well they really don’t literally set them, but their actions force a business owner to reassess the way they are doing something due to a customer’s behavior. A couple examples…

Let’s say an out of state customer comes in looking for antique toys. They tell you they are a huge collector and tell you all about their collection. After their next sentence, they spot an item they like. This item is a sealed new old stock item that you are not likely to see again in this condition. As they are looking at it, the next words they speak are, “We are dealers, what’s your best price?” Um, wait. A minute ago, they were collectors, now they are dealers looking to buy low and sell high.

Okay, you try to keep a smile on your face, as you know there is a possible sale here, so you look at the price, $125. And you look up what you paid for the item. You decide that because you are new and want to get established, (or sometimes sales are slow, and you need the cash in the drawer) you decide to offer a 10% discount. That seems fair, $12.50 off just for asking.

It seems that’s not good enough, and they hit you with an offer of $100. That’s 20% off. Now if you decide to accept, that’s $25 off or one fifth of the price! You want to make the sale, so you say ok. Next words from the customer are “You’ll take check, right?” Okay this one’s easy, “No, I don’t take checks, especially from out of state accounts.” That’s a policy.

Okay, they don’t like that answer, so they hand you a credit card. Well now you are out another 3% for processing fees. Then they plop a sales tax exempt for on your counter from New York. When you say that’s not accepted here, they insist that all the other stores in town accepted it. So, you bite the bullet and do so as well. The transaction is complete, and you move on. 20% + 3% + 7% = Ouch.

Here is where the customer sets the policy based on their behavior. You keep thinking the sales tax thing isn’t right. So, you call the Florida Department of Revenue and ask them, “Do I have to accept out of state sales tax exempt forms?” the response you get confirms your suspicions. No, the state does not accept them, because when the item is resold in another state, Florida doesn’t get the tax! When you ask about all the other stores that accept them, and what would happen during an audit? You are told the store is responsible for paying all the out of state exempted tax to the state of Florida. YIKES!

Then you ask about Florida State Exempt Forms. You are then told that no, you are not required to accept them. There are large corporations who do not offer exempt sales due to the accounting involved. It’s your business, and your decision if you want to offer them. You thank the nice revenue person and your new policy is set.

Your business does not offer exempt sales to anyone whether in or out of state forms are offered.

A second example. Pets vs service animals. A service animal is a specially trained animal that is certified as such. It has a specific function and you cannot prohibit such an animal entry into your business. There is Federal law on this. Some pet owners carry/take their animals everywhere they go. Are you expected to let them all in your business? No, you can prohibit them because emotional support animals or pets do not qualify. Also, in case you are wondering, dogs are the only animals that qualify as service animals per the ADA (Americans with Disabilities Act).

To answer as to why is simple. Maybe someone’s adorable puppy left a present for you in your store. One you were forced to clean up, because the owner neglected to tell you before they left. Now you have an antique $1,000 Persian rug on the floor with a nice stain on it. It’s hard to enforce “you break it you bought it” nowadays. The other possible issue that could arise is if a customer’s pet bites another customer. The victim isn’t going to care if it was your animal or not, they are going to let the lawyers sort it out and you will probably be added to the lawsuit. It will take time and money you don’t have to try to extricate yourself from this mess. Another issue, allergies. Some people are highly allergic to dogs or cats and having them in the store can leave some people breathless, literally.

Voila~ a new policy is set – no pets, registered service animals only.

Some policies are store specific; others work globally. One thing you can be sure of is that sooner or later, someone will object to one of your policies. This is why they need to be well thought out and researched. They also should be posted for all to see so someone can’t say later, they didn’t know or didn’t see them. If you have to explain your policy to a customer, be polite and calm. Policies also help any staff you employ know what is expected and allowed and keeps things consistent.

Good business policies are necessary to help your business run smoothly, and also to protect it as well as your customers.

Published Vintage Finds Magazine October/November issue 2021