All retailers with physical locations need a POS system to accept payments and keep accurate sales records. However, a furniture store with 50 locations will have different needs from a small jewelry business running its first pop-up shop.
When you’re deciding on the best POS system for your small business, it’s important to think about which features match your current needs and future goals.
This post is designed to help you find out what features a small business POS system should have, and how to choose the right POS system for your business.
Table of Contents
Why does a small business need a POS system?
Small businesses that want to accept payments in-person, track sales, and manage inventory need a point of sale (POS) system.
Although you could accept only cash payments and manually track your sales on a spreadsheet, it would be hard to satisfy customer payment preferences and challenging to accurately manage your inventory.
Retail POS systems let your small business accept multiple payment methods in-store. Depending on the POS software and hardware you choose, you may be able to take and record payment from mobile or tablet devices, as well as traditional checkout counters.
Track sales and manage inventory
The best POS systems automatically track all sales. They also store key product information like:
- Wholesale price
- Retail price
- Gross profit
- Net profit
Your POS system automatically updates inventory and sales data anytime you buy, sell, return, or exchange a product, in-store or online.
Manage inventory from one back office
Shopify POS comes with tools to help you manage warehouse and store inventory in one place. Forecast demand, set low stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.
💳 Shopify POS recommendations
What features should a POS system have for small businesses?
- Accept multiple types of payments
- Inventory tracking
- Customer profiles
- Sales reports
- Staff management
A solid POS system for small businesses lets you process payments securely and comes with software to help you handle administrative tasks more easily.
The kind of business you manage and the types of sales you make will help you determine which features your POS system needs to have. For example, a small business POS system that works well for a brick-and-mortar florist may not work so well for an online beauty retailer running their first physical pop-up shop.
Here are the top five POS system features you should look out for:
Accept multiple types of payments
A McKinsey study found that only 28% of transactions in the US were using cash in 2020. As a result of the COVID-19 pandemic and increasing payment options like mobile wallets, customers want the convenience of choosing from multiple payment types.
Your POS system should make accepting in-person and online payments simple. Most modern POS systems let you accept popular payment types like:
- Contactless payments: These can include mobile wallet payments using Apple Pay or Google Pay and chip cards.
- Cash: Which you deposit into your cash register.
- Chip cards: Credit or debit cards with a near field communication (NFC) chip to allow tap to pay.
- Magstripe cards: Which let customers swipe their card in your card reader.
- Card not present transactions: When a shopper pays with their card without the card being physically present. These payments usually take place when a customer makes a purchase over the phone.
- Gift cards: Digital or physical cards that can be redeemed for online or in-person purchases.
- Amazon and Facebook pay options: This allows customers to pay using their Amazon or Facebook accounts.
📌 GET STARTED: Shopify Payments is the fastest way to start accepting payments in-person, online, and on-the-go. It’s included in all Shopify POS plans, so you can skip lengthy third-party activations and go from setup to selling faster.
Justyna Sylwia, a Shopify Merchant and owner of jewelry and accessories brand Isle Wilde, says that by accepting multiple payment types she improves her customers’ shopping experience and lets them make payments quickly.
My customers love getting to the finish line quickly with the least amount of clicks and effort. They rave about the Amazon and Facebook pay options because it makes their shopping experience easy; it uses their stored payment and address data without needing them to enter it manually.
Many POS systems help track and manage in-store inventory, but the majority don’t let retailers track inventory across multiple channels like their online store, physical locations, and storage units.
US retailers are sitting on an average of $1.50 in inventory for every dollar of sales they make. Successfully tracking and managing inventory can help lower these costs and ensure you’re not tying too much capital in inventory.
Using POS systems that track your inventory across multiple channels will help you order enough stock to meet customer demand, while preventing frustrating stockouts, expensive overstocks, and inventory shortages.
💡 PRO TIP: Want to take the guesswork out of restocking? Set reorder points in Shopify Admin to get low stock notifications and ensure you have enough lead time to replenish inventory of a product before quantities reach zero.
As Maggie Owens, a Shopify Merchant and owner of party supply and gifts shop, Presley Paige says, using a POS system that seamlessly communicates between her online store and physical location helps her know exactly how much stock she has, so she can help customers find the product they’re looking for in-store.
"Offering store pick-up for online purchases and managing them through our POS has been extremely helpful. Being able to track inventory in-store and send saved carts to customers who call in and want to put something on hold is useful too. This allows our in-store team to send customers items they didn't purchase in-store, but mentioned wanting to purchase at a later date.
💡 PRO TIP: Encourage store staff to send the carts they save by email at the end of their shift. This is an accessible way to recover abandoned store sales and attribute more revenue to your store–even if the transaction happened online.
Justyna Sylwia, the owner of Isle Wilde, adds that a POS system that takes care of inventory tracking is one less thing to worry about and lets her focus on other priorities.
When selling numerous small items, it's difficult to keep track of what's available and how much of it. Having a system that does inventory for you allows you to focus on the more creative parts of running a business.
According to a 2021 survey run by Twilio Segment, 60% of consumers say they will become repeat buyers after a personalized shopping experience with a retailer. By personalizing your offering to customers, you can improve brand loyalty and revenue.
A POS system that’s connected to your online store will help you gather, track, and manage customer data more easily.
For example, with Shopify POS you can create customer profiles and view their entire purchase history, including details like:
- Everything they’ve bought at your store or online
- How much they’ve spent to date
- The number of times they’ve ordered
- How long they’ve been a customer
All of this customer data updates in real time and is in one place. This helps customers, since your staff has more context and can serve them better. You can also use data to segment customer profiles and build email lists to keep customers engaged and increase repeat purchases.
Look for POS systems that compile sales reports from data collected at both your physical locations and online. That way you get a complete picture of how your business is performing.
Justyna Sylwia, the owner of Isle Wilde, says, “Having sales reports is extremely helpful and makes tax season a literal breeze. You can download reports in just a few seconds. Also, it's a great tool to understand how your business is doing and when you need to pump up the marketing.”
💡 PRO TIP: With Shopify, it’s straightforward to track sales by channel, store location, or product over time. To get started, view Sales reports in Shopify admin.
Your POS system should help you manage your team members as you grow and scale your business.
Look for management features like permissions and staff roles to make it easier to manage your staff. Using these features you can set boundaries for what actions team members can do without supervisor permission, for example, refunding a customer or applying a discount to a product.
It’s also helpful to have visibility on staff’s performance like their average transaction values, median units per transaction, and daily sales.
💡 PRO TIP: With Shopify POS, you can assign different roles and permissions and set boundaries on what store staff can do in your POS system without manager approval—like changing a product’s price or applying a custom discount to a sale.
Best POS systems for small businesses
As your small business grows, so will your need for a POS system that can handle increasingly complex retail operations and systems.
Here are three different types of POS systems for small businesses:
Retail POS system
Retail POS systems let you accept payments in-person, monitor inventory, track sales, and manage team members. They’re usually anchored to a checkout counter and are designed for merchants who sell from physical locations like pop-up shops, events, festivals, and permanent brick-and-mortar stores.
They do the hard work for you, including maintaining accurate sales and inventory data. Whenever you buy, sell, return, or exchange a product, your sales data and inventory levels are updated in real-time.
Omnichannel POS system
32% of brands we surveyed said they’d be establishing or expanding their use of pop-up and in-person experiences in the next year, while 31% said they planned on establishing or expanding their physical retail footprint.
Omnichannel POS systems can help unify your online and offline sales.
I prefer an omnichannel POS system because we are able to use our website to sell online, as well as drive traffic to our brick-and-mortar store. I like the various options that omnichannel POS systems provide.
💡 PRO TIP: Only Shopify POS unifies your online and retail store data into one back office–customer data, inventory, sales, and more. View easy to understand reports to spot trends faster, capitalize on opportunities, and jumpstart your brand’s growth.
Mobile POS system
A mobile POS system is a handy hardware and software system that processes payments. It’s similar to a traditional retail POS system but it doesn’t need to be attached to one checkout counter.
Using a mobile POS system, you can download POS software onto your mobile device and process payments wherever your customers are. That means your physical location doesn’t need to have one fixed checkout counter, which is helpful if you’re selling at festivals and events.
When there are jewelry festivals or events, it's great to be armed with a tool where I can accept mobile payments in person," explains Justyna.
Having a system that turns your phone into a POS register is a godsend. Shoppers feel more secure purchasing products via professional tools. They give customers more confidence in who they're buying from.
How to choose a point of sale system for your small business
- Review cost
- Account for inventory management
- Consider online and in-person selling
When you’re choosing the right POS system for your business, it’s important to consider the features you need to effectively manage your business now and in the future.
For any business, the cost of a POS system will be a determining factor. The POS system you choose needs to match your budget.
When reviewing the cost of POS systems, there are three factors to consider:
- POS software fees: There are usually monthly or annual fees, with different plan tiers and corresponding prices. Higher-tier plans usually come with more advanced features like advanced reporting and analytics.
- Hardware costs: These depend on the payment types you want to accept, the number of stores and staff you have, and the overall functionality you need.
- Payment processing fees: Every time you process a sale, your payment processor charges a fee. This fee is usually charged per transaction and taken as a percentage of the overall transaction amount. Sometimes the amount you pay per transaction depends on the credit card the customer uses.
Account for inventory management
Effective inventory management usually starts with a POS system that automatically updates your inventory levels as you sell, return, or exchange products in both physical and online retail settings.
When you manage inventory from one platform, you can ensure accurate inventory reporting and simplify your overall management system. That way you’ll spend less time manually counting and reconciling inventory, as well as reduce the likelihood of human error.
💡 PRO TIP: When you use different platforms to run your online and retail stores, inventory discrepancies are more likely to happen. This can lead to more frequent inventory counts to reconcile differences and ensure stock levels are accurate.
Consider online and in-person selling
Close to 50% of brands say that unifying online and in-store operations and data is their biggest challenge.
But the best POS systems unify online and in-person selling; they don’t just connect to your online store via an API but collaborate with it and have built-in omnichannel selling features.
Even if you sell exclusively in online or physical settings today, you may want to give customers the option of both shopping channels in the future. Ensure tyhe POS system you choose can support your business as it evolves.
Get started with a small business POS system
A small business POS system helps you accept more payment methods, accurately manage inventory, run sales reports, and more. Consider your unique needs as a growing small business. What might suit some retailers might not be right for you. So think about which POS system features are most important to have, your budget, and your future business goals.
Sell the way your customers shop
Only Shopify POS unifies online and in-store sales and makes checkout seamless. Get all the tools you need to break free from the counter and sell wherever your customers are without worrying about your tech stack, integrations, or fragmented sales reports.
POS systems for small business FAQ
What should be included in a POS system?
- Point of Sale (POS) terminal: This is the main computer that connects to the payment processor and maintains the inventory and sales records.
- Barcode scanner: This is used to read barcodes on items and quickly enter them into the system.
- Credit card reader: This is used to process credit and debit card payments.
- Receipt printer: This prints customers' receipts.
- Cash drawer: This is used to store and secure cash payments.
- Inventory management software: This is used to manage the inventory and keep track of sales.
- Customer display: This is used to show customers the items they are purchasing and their total cost.
- Security measures: These may include cameras, motion detectors, and other measures to protect against theft.