How cards provided the steam for DeCicco's Celebration Saunas startup

Small Business Credit Profiles with Eric Sandberg

Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Small Business Credit Profiles,” a weekly column featuring small business owners' journey with credit and credit cards for CreditCards.com.


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As a pre-med college student toiling away in a hospital, Katie DeCicco became intrigued by the many health benefits of infrared saunas, such as detoxxing, improving heart health, pain relief, boosted immunity and weight loss, and she began to rethink her career choice.

As a result, Celebration Saunas was born, an online retailer that distributes infrared saunas to individuals, medical facilities, health clubs and spas. 

The cost of an in-home sauna can range from $1,000 to $6,000 or more.

Katie DeCicco

Katie DeCicco

Although it cost only $1,000 to start the company with a website and a basic internet Adwords campaign, what DeCicco needed was a steady stream of capital with which to purchase the merchandise and continue her advertising campaign. Loans weren’t an option for her, but plastic was. Here’s how DeCicco leveraged one line of credit into a steamy hot company.

How did you get your business off the ground?

All I had was a simple bank credit card with a $7,500 limit.  My advertising budget was $200 per week, and without that there was no hope for sales. If I had to wait for my first sale to cover my advertising, I wouldn't have been able to get started. So, I used my credit card. Every time I made a sale, I’d pay for the advertising, the supplier and my credit card bill. After nine months of doing that, the bank increased my credit line to $18,000 and it has since doubled. 

Then I got two more card accounts, the SimplyCash® Plus Business Credit Card from American Express and the Discover it® Cash Back card. Both had $10,000 credit lines to start, but each quickly went up to $20,000 and are now $30,000. In my first year, I did $900,000 in sales, but had $70,000 in credit card debt. It was so stressful. I was constantly wondering how I was going to make it, but building the brand and company took precedence. At one point, there was a come-to-Jesus moment when I woke up saying the Lord’s Prayer – and I’m not even religious!

"If it weren't for credit cards, I would never have gotten my company off the ground! Credit card companies don't look at a business plan. Not that I had one, but even if I did, I would have been turned down for a loan."

It took two years to become profitable after investing and implementing the framework of our branding and overall customer experience.  

Why did you turn to credit cards and not loans?

If you don’t own your own products, have inventory, or something the bank can take as collateral in case you go under, there will be no financing. If it weren’t for credit cards, I would never have gotten my company off the ground! Credit card companies don’t look at a business plan. Not that I had one, but even if I did, I would have been turned down for a loan. I’m really grateful I could get the cards and use them.

See related: Best Small Business Credit Cards of 2018

Did you discover any hidden benefits to using credit cards?

Yes, I got into cash back rewards totally by surprise. I also have a couple of Wells Fargo accounts, including the Wells Fargo Visa Signature Card, and use them the most. The saunas and advertising are very expensive, so I was charging a lot. By accident I found out that when I charged, say, $100,000, I would get $1,000 to $1,250 back. My webmaster asked me, “What are you planning on doing with all these cash back rewards?” I didn’t even know I had that money, so it was a happy discovery! 

After that I began paying myself with those rewards. These days my company is profitable, so I always zero out my debt. I make nearly $6,000 a year with my cash back credit card rewards. 

Any credit mistakes or advice you’d like to share?

When I maxed out my credit, I mortgaged my house. That forced me to take a long look at what I was doing. So, I refocused. I’m still paying that loan down, but it’s under control. When the credit card debt scared me, it motivated me to evaluate where I was spending money. It’s very exciting and easy to get caught up in the dream, but trust me, you don’t need to buy as much as you think and definitely not what salespeople will say you do.

See related: 5 loan options to fund your small business

Katie DeCicco

The Comet 2-person corner sauna

Credit cards can fill the gap when sales are slow. You will need them to build your business and your credit profile. But if you’re going to keep debt, make sure to move your limits up (to protect your credit rating, you don’t want to owe too much compared to the amount you can charge).

Get the cards that give you the lowest interest rate possible, plus the rewards you want. Annual fees are OK in the beginning, but when your credit gets good that’s not required.

There are lots of cards with no annual fees. Now I get at least three to five offers for new credit cards all the time. If a bank won’t lower my APR, it won’t be my credit card company anymore. There are so many others. Because I love the cash, I’ll be looking for another offering at least 2 percent cash back! 

 


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Updated: 11-16-2018