Toast, Clover, Square – How University of Michigan Students are Using FinTech to Support Detroit Small Businesses

by Simone Turner (UMSI ’22)

The Congregation Detroit is a perfect melding of a coffee shop, bar, restaurant, and community space located in a historic church on the west side of Detroit. When renovating the long-abandoned space, co-owner Betsy Murdoch and partners focused on preserving the integrity, historical detail, and finishes of the place to keep its structure the same as it was in 1924. Pews were repurposed into a bar. The old pipe organ is still in the back. Comfortable antique furniture abounds. The Congregation opened in March of 2020, just before the pandemic. The timing was unfortunate, but they survived the first year of working through glitches. Their point of sale system was one of the initial steps in opening their doors — and that’s where I enter the business’ story.

For the last nine weeks, I have been interning with a team of students from across the University of Michigan to support Detroit small businesses through the Detroit Neighborhood Entrepreneurs Project’s (DNEP’s) +Impact Studio for Local Business. I’m on the point of sale team, which is focused on using financial technology, or “fintech,” to analyze and optimize small business owners’ payment systems and inventory management systems. Most small business owners don’t have the time, knowledge, resources, or staffing to take on the tasks of performing a cost analysis, researching the various payment system platforms, and then making the switch to a new platform. If they do have extra time, most would rather spend it on marketing.

Fortunately for our DNEP clients, my colleagues and I find it fascinating. Fintech sits at the intersection of the skills and knowledge I have gained through my classes at the School of Information. This internship has given me a chance to use my skills to meet an unmet need. 

Point of sale systems are now essential for businesses of every size. While the most-established companies (Square, Toast, Clover, Lightspeed, and Shopify) all offer similar products and services, they each serve different business volumes, have varying billing structures, and offer differing features that best fit assorted sale models. DNEP faculty and staff observed that many business owners were paying high fees for features they were not using, imposing unnecessary costs on small business owners. 

The Congregation Detroit was one such example. It has been using a Clover point of sale system, but was paying for features they were not using. Clover offers an add-on inventory management system, but it was time consuming to set up and master, so like many other small business owners we have worked with this summer, the company was paying for the electronic inventory management subscription–and then managing their inventory manually in an excel spreadsheet. This meant that small business owners were spending lots of time manually tracking and managing their stock, missing the opportunity for advanced inventory data and freed up time that is better spent elsewhere. After analyzing the sales data, our team recommended that the business move its inventory management to the Clover system, and subscribe to a built-in Stock app to fully digitize its inventory management system. The business owners will spend less time on inventory, and should save money through streamlining and standardization of vendor orders. What’s more, The Congregation Detroit will only be paying for features they use.

Detroit Sip is another local business that needed a point of sale system overhaul. This Six Mile coffee shop temporarily closed during the pandemic, and sales revenue has not yet regained pre-COVID rates. What’s worse, however, is that the business was still under contract with Shopkeep, paying high monthly and transaction fee rates for unneeded features that didn’t add value to the business. As a busy entrepreneur and attorney, owner Jevona Watson did not have the resources or time to do research, make phone calls, and then go through a new system set-up on her own. So we did the research for her. My team provided Jevona with a personalized cost analysis spreadsheet for her business so she could compare subscription costs between top companies based on her business’ monthly transactions and average revenue per transaction. While the decision to take a leap and try something new is difficult, especially as a small business owner, Jevona made the decision to switch with the resources we provided. With IOS hardware in place, my team was able to help Detroit Sip make the switch to Square, which should save the business $1000 per year. We also moved over her menu, inventory, and customer data to ease the process. 

Throughout this summer internship with DNEP’s +Impact Studio for Local Business, I have learned project management skills, developed some expertise in the top point of sale systems and related hardware and software, and learned a lot about point of sale integrations. It feels great to be helping businesses use fintech to improve their operations and profitability, and has opened up new career possibilities for me. Overall, this experience has been invaluable and I feel honored to have worked with these inspiring Detroit small business owners. 

Simone Turner is a rising senior at the University of Michigan’s School of Information, majoring in information analytics. She thanks the businesses profiled for allowing her to share information about their operations to benefit others for this story.