Running any business is never easy, but it can be especially challenging if you’re a high-risk merchant. Not only will funding from conventional sources like banks and investors be near-impossible to come by, but payment processing companies and insurers will also be reluctant to offer you their services. Moreover, you will be required to adhere strictly to any compliance requirements set by the state and federal governments, along with other regulatory bodies, failure to which may cost you dearly.
And, as if that’s not already too much, there’s also the risk factor that got you labeled “high-risk” in the first place, be it a high rate of chargebacks, bad credit, or bad history with previous financiers.
So, what do you do to ensure your business stays afloat when you have all these challenges weighing you down? Well, here are a few reasonable pointers.
- Choose an Ideal Business Structure
Although all structures have their ups and downs, choosing one that minimizes your personal liability, such as a corporation, limited liability company (LLC), or limited liability partnership (LLP) can work better if you run a high-risk business. High-risk entrepreneurs often avoid sole proprietorship, as that would leave them open to personal liability for any debts or lost lawsuits the business incurs.
- High-Risk Financiers
Getting funded by traditional financial institutions will hardly be an option if you’re a high-risk merchant. If your business needs an injection of funds, therefore, don’t waste your time with typical banks. Instead, consider applying to financiers that are known to deal with high-risk businesses. High-risk loans and merchant cash advances can be great funding solutions if you find the right lender.
- High-Risk Merchant Accounts
Any high-risk business that wants to accept cashless payments from its customers will need to sign up for high-risk credit card processing from a reputable provider. Companies that specialize in high-risk enterprises will be more likely to approve your application than traditional payment processors like banks. Moreover, because of their experience in servicing your type of business, they will be a lot more equipped to handle your specific needs and issues.
- A Good Insurance Plan
If your business is involved in high-risk activities, it is essential that you sign up for an insurance cover. Insurance will shield you from liability in the event of an accident or problem. Most insurance companies charge a higher premium than usual to high-risk merchants, and some even exclude certain industries. Therefore, do some research to find out the firms that can provide cover to your type of business, and whose rates make sense for you.
- Legal Help
As a high-risk merchant, you will probably have too much on your plate to deal with lawsuits, chargeback disputes, and regulatory transgressions. A good attorney will give you proper advice on how to comply with all laws and regulations, and will help you deal with any legal problems that may arise in the future.
It may be hard to succeed as a high-risk merchant, but nobody said it’s impossible. Following the advice above will undoubtedly set you on the right course.