Starting a company at the tail end of a recession is a risky bet for any would-be entrepreneur. But for a single mother of three who is living in Section 8 housing and has been making ends meet by carefully rationing her (now exhausted) unemployment checks, it’s a high stakes gamble.
Jessica Nowlan, 32, prefers to call it “a leap of faith.” The single mom launched Hope Solutions last year—a company that equips small businesses with payments processing and e-commerce capabilities—despite having no savings, no business loan and just 6 months of experience in the merchant services industry. “This is not the ideal way to start a business,” said Nowlan.
Today, she has about 50 clients—mostly very small businesses—but said that she needs about 250 more to become financially healthy.
Hope Solutions grew out of Nowlan’s own short-lived experience as a sales agent for a national merchant processing company. Tasked with finding new clients and setting up their credit processing systems, Nowlan grew disenchanted with the nature of her job, which she said included misleading business owners into buying costly services they didn’t need—and, sometimes, couldn’t afford. Such practices, she later learned, were not particular to her own company, but endemic to the industry as a whole.
Merchant services is a part of the credit card industry that flies under the radar of most consumers, but it’s familiar to business owners. Before retailers can take credit cards or web developers can accept online billing, for example, they require a host of services and equipment: debit machines, e-commerce gateways, technical support and financial backing, among others. Big banks and credit processing firms like the one for which Nowlan worked deal with the set-up and administration of these payment systems—for a percentage fee that is lopped off the top of every transaction.
That’s where things tend to get muddy. Shop owners seeking merchant services deal with many of the same questionable business practices endured by consumers seeking credit cards: Banks may charge a host of dubious fees, agents may exploit customer naiveté to up-sell accounts and customers may buy into a sales pitch that may be much different than what’s detailed in the fine print of their contracts.
Over the last two years, as public trust has eroded and consumers have increasingly chosen to divest from corporate financial institutions, business owners have similarly looked for alternatives to big bank merchant services. Nowlan thought she could satisfy that demand by starting her own firm. “I thought, wouldn’t it be cool if I could create my own credit processing company that would really meet people’s needs,” she said.
In 2010, she launched Hope Solutions. She started small, taking on one client, then using that revenue to take on another, until she was able to rent a “smallish, kind of dumpy,” one-room office in the Laurel neighborhood of East Oakland, as well as hire a part time administrator.
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