Small Business Credit Profile: Erin Pelicano Jewelry
To meet a sudden demand for her designs, owner Erin Pelicano says credit cards came to the rescue
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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Erin Pelicano abandoned her civil engineering career after enrolling in silversmithing classes and after some heavy soul-searching. In 2011, she took a leap of faith and launched her company: Erin Pelicano Jewelry. Her modern heirloom pieces are designed to honor life’s milestones.
“The heart behind our brand is jewelry that connects us to the people and times in our life we cherish,” says Pelicano. The company’s best sellers are those catering to mothers and daughters, and people celebrating watershed moments.
According to Pelicano, credit cards were integral to her achieving business success.
When did you integrate credit cards into your venture?
Credit cards became immediately important when we knew that extra cashflow was needed. We had such rapid growth, and wanted to avoid long-term loans. At that time, we were a young family with three small children and a mortgage. The decision to leverage our credit cards to launch the company was a great decision.
As we grew, we knew we had to make the change from cards we used for our personal expenses to ones for the business. Currently we have two, and we use them to fund our materials. We have a PNC Cash Rewards Visa Signature Business card and a Capital One Venture Rewards Credit Card. We’re a husband and wife team, so we are each owners and are the only two that access the credit cards for business.
Our two busiest times of year are coming up, Christmas and Mother’s Day, and these cards have no annual fees. We like the PNC card for the cash back feature, because that is a tangible reward, and we reinvest the money we earn into the business. The Capital One card offers a rewards point system and every year we cash the points in for gift cards that we use for the holiday season.
I don’t track how much money or rewards we’ve made with the cards. It’s nice to have it as a surprise so I check our earnings about twice a year. Right now, we are averaging about $1,000 in cash back a year and another $1,000 in gift cards. The gift cards are great; we use them a lot. As a small business owner, you have to network and give back. I host events with snacks and drinks, and we’ll give out gift cards. It’s a way to recognize all the people who helped us get to where we are.
How do your cards play into your business strategy?
In a creative business like ours, credit cards are essential to purchasing ahead for our busy seasons. They give us the cash flow we need to purchase supplies to boost up our inventory.
Over a short period of time, due to tremendous sales growth as a result of social media, our jewelry line expanded rapidly. Someone posted my designs on Pinterest and it rocked our world. Suddenly, we had to come up with all the merchandise to meet demand. I didn’t even have the stuff to make it with, so I charged it all to the credit cards. Honestly, these cards saved us because we didn’t have to say no, and we kept the traction up.
It was incredibly exciting! And exhausting. My husband would come home from his full-time job, and we’d get the kids to bed and stay up late assembling and packaging each piece of jewelry. Having our hands on each piece is important to me. We put love and care and meaning in everything we send out.
We work in sterling silver, 14 karat gold, pearls and gems. Being able to always have the credit available to buy such expensive raw materials is important. As we’ve grown, our credit needs have, too. In the beginning, we had to spread the purchases over two cards and that was stressful. But our credit lines have expanded and now each card has a limit of about $18,000. We do $10,000 to 15,000 worth of purchase orders at a time, so we can handle the charges now. Since we get paid quickly, we can turn around and pay off the entire credit card bill by the due date. Every once in a while, we will pay in two installments, but that’s rare.
Another benefit of using the cards is that we can buy in bulk, so everything is at a better price point. That saves us money. I am a numbers person with an engineering background, so I quickly found the right balance of purchasing that gave us bulk pricing without overcommitting. To keep everything in order, we use Quickbooks. It automatically pulls the data from all our credit cards and checking accounts, and we provide that information to our accountant. Everything is easy this way.
See related: How much can you really make with a cash back card?
What lessons about borrowing money have you gleaned along the way?
As a mom with children growing quickly and college not that far away, it’s important for our family not to acquire any unnecessary debt. That might not work for everyone, but as we continue to grow our jewelry business, our long-term plan always comes back to lowering risky business choices. Entrepreneurship is enough of a risk! Making smart borrowing decisions, and asking for advice when we need it makes us confident in our growth.
I want to tell other small business owners that it's OK not to know everything. Ask for help and guidance from the experts when you need to. I actually tell my children all the time that knowledge is power. Making informed decisions when it comes to choosing credit cards and leveraging debt is extremely valuable when you understand what you are doing. Be prepared with credit cards. You never know when a surge will happen. If someone spreads the word about you and your business over social media, having enough credit to fulfill all those orders will be a huge relief.