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How Square can help you sell more cupcakes

With its analytics tools, Square is making it possible for even the smallest merchants to understand patterns in their sales -- and to make decisions based on what they learn. For free.

Square's analytics tools are helpful for small merchants, like Sweet Avenue Bakeshop in Rutherford, N.J., that want to better understand their sales patterns.
Illustration by James Martin/CNET

With the holiday season bearing down on the calendar, Jake Vance needs to know how many cupcakes he should make every day. Make too many, and the rats that frequent his dumpsters are happy. Don't make enough, and customers walk away without getting to enjoy their favorite treat.

Vance runs Sweet Avenue, a small bakery in Rutherford, N.J. So small, in fact, that it doesn't make sense to spend hundreds and hundreds of dollars on point-of-sale software or professional cash registers that are routinely used by larger businesses to generate smart data on sales patterns.

Until even a year ago, that might have been an impediment to Sweet Avenue making accurate predictions about how many themed cupcakes to make for, say, Thanksgiving. But now, thanks to the mobile payments service Square, and the free analytics tools it offers its users, Vance seems optimistic about making it through the holidays without having to contribute too much to those rats' weight problems.

"We used to do it all on paper. We wrote down everything we did in a given day, how many cupcakes we sold, and it was a huge hassle," Vance said. "We'd forget, and we had incomplete paper records. Now that we've been using a glance, within a few seconds, we can pull a report on how much we made on any given day last year. What cupcakes sold." And of course, which ones didn't.

Twitter and Square founder Jack Dorsey at TechCrunch Disrupt in San Francisco in September. Daniel Terdiman/CNET

By now, most people are aware that Square, founded by Twitter co-founder Jack Dorsey, created a system designed to let almost anyone, from a garage sale host to a fancy restauranteur, accept credit cards by utilizing the company's little plug-in dongle.

But lost in the shuffle of publicity Square has gotten for its streamlined payment system -- which will soon be rolling out at Starbucks outlets around the country -- is Square Register, a system that lets businesses use an iPad instead of a cash register, and an accompanying set of analytics tools that leaves many users gushing.

"If I want to know how much we made on Halloween last year, I can [use the analytics tool to] pull up October 31, 2011, and I can add to that that I want to know how much [of the sales] was a particular Halloween flavor," Vance said. "It'll bring that up immediately."

Matt Jeffryes, who runs Crescent Moon Coffee in Houston, is also an evangelist for all that Square offers. To him, the combination of Square Register and its analytics means that anything from seeing the details of a transaction immediately to comparing sales on different days of the week to changing the price of an item is all just a few iPad taps away. And designed to help him understand how even the smallest change in sales or customer behavior can affect his bottom line.

For example, Jeffryes explained, he can start offering a new kind of sandwich and can immediately start tracking how it's moving, based on the data Square records each time he rings up a sale. If it's in high demand, the data will show it. And if no one's buying, that's also easy to see. "I can make the decision that maybe the price is too high," Jeffryes said. "Or maybe it's selling better than similar items, so maybe I'm leaving money on the table" by not raising the price.

Many merchants have regular customers who make requests for new items, and Square's tools can provide an ideal way to measure whether those items sell. Sometimes the regulars are on to something, and the vegetarian sandwich they ask for becomes a big seller. But the flip side is possible as well: The only buyer is the regular.

At the tools' core is a simple proposition, and one that plenty of merchants know well: If you have detailed information on all your sales, you have the data that can help you make the best decisions about planning inventory, hours, staffing, and so on, or even if it makes sense to run promotions at certain times.

But Square knows that many young businesses operate at such small margins that spending even a few hundred dollars on point-of-sale software can seem unmanageable. Especially if that software is bloated with features that will never be useful to a single shop slinging cupcakes or coffee.

"As we grow, we want to continue to offer smaller businesses tools that are typically only available to big-box retailers," said Square spokeswoman Lindsay Wiese. "We look at the tools these bigger businesses have and figure out how we can bring them to every business and sole proprietor."

Square began offering analytics through its dashboard tool last March, and according to the company, user engagement with the tool has increased 74 percent since then. Tens of thousands of times a week, merchants download spreadsheets spelling out detailed transaction summaries from the analytics tool.

Last month, Square added a new feature to the dashboard: the ability to create items -- say, a new sandwich, or a new coffee drink -- on the Web and then see them instantly on the iPad being used as the register. Or, for example, to change item pricing in the same way. This is an essential new arrow in merchants' quivers because it lets them react quickly to customer behavior. Even if they're not in their shops.

For Jeremy Lampel, who runs Companion Bakeshop in Santa Cruz, Calif., being able to check sales any time, from any device, and from anywhere is a boon for having the best sense of how his business is operating. "It's great, especially because we are a bakery," Lampel said. "We bake every day, and everything needs to be fresh, and waste is something we don't do well with. If I'm not in the bakery for a day, it's easy to check out what sales are and look at trends."

For many small-business owners, tools like this can be invaluable. But until those tools existed, many merchants probably wouldn't have even known to ask for them. That's where Square thinks it is making everyday life for merchants better. We're "creating features that merchants didn't even know they wanted," Wiese said, "but once they use it, it gives them amazing insights into their business."

That's something Vance clearly agreed with.

Square's analytics tools "show us exactly what we sold on any given day, and we get a feel for what our business will be like in the future, so we can plan accordingly," Vance said. "Getting a good read for what the day will be like so we don't overprepare and have a lot of wasted product [is a big improvement over] going in blind every day."