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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Elizabeth Goodwin Welborn fell head over heels for horses after spending a summer in Scotland. After studying international business and Spanish at Spring Hill College in Mobile, Alabama, she lived and worked throughout Latin America and Asia, eventually settling in the San Francisco Bay Area, which is where she learned to play polo. It wasn’t long before Welborn was immersed in the area’s polo scene, hosting polo club charity benefits and dinners. And when the temperature dropped in the evening, she distributed ponchos to attendees to stay warm.
“Each year, guests would vie for the those ponchos, which at the time were great looking, but made of very itchy wool,” says Welborn. “I improved them with top quality alpaca fiber to make the pieces feel amazing and look a bit more Town and Country.”
Those ponchos became the foundation of her retail store, Stick & Ball, which opened in 2012. Welborn named it for a term polo players use when referencing a casual, friendly practice. She soon expanded her operation to include other products inspired by the sport, from jewelry to home goods.
Branching out, though, required a substantial investment. Welborn had to bankroll new merchandise and travel. With credit cards, she found she could quickly pony up the necessary capital.
At what point did you incorporate credit cards?
I used credit cards from the very beginning. Once I completed my first design and trunk show, we were featured in the San Francisco Chronicle style section. It was our first press piece, and the business was still operating from my dining room table! We immediately had orders coming in. With my credit cards, I was able to meet production to fulfill the orders.
Some suppliers required money by wire in advance, but I was able to find others who accepted credit card payments. I have always maintained great credit, so raising my credit limit to make the purchases was not a problem. A lot of our products are made in South America. When you’re working with another country, you usually have to send an international wire transfer, but that can get tricky. When I can use my credit card, I do. If something goes wrong, I know the consumer protections are there to help me.
Which cards do you have and why?
We use the Platinum Card® from American Express for most of our purchases due to the flexibility of transferring miles in its Membership Rewards program. The card also gives you a fee credit for Global Entry, covers some of our airline fees and has great customer service. We also use the Alaska Airlines Visa Signature card as not everyone takes American Express.
With so many card charges, I was able to accumulate points that funded my first airplane ticket to visit suppliers. I continue to use my airline points for our travel as frequently as possible. I recently went to Peru for business and it was totally covered.
How do you manage the accounts so they stay in good standing?
I have an amazing but small staff who work the front-end retail and back-end operations. My employees have access to the credit cards. The account numbers are all logged into office supply sites and Amazon, and sometimes they have to make purchases. I’ve set the accounts up so I get a notice of the purchase first, so it’s all pre-approved by me. I get to look at what’s being spent and why. I have apps for all my credit cards on my phone, which makes it easy to monitor everything.
To date, we have no debt. Although the more we grow, the more capital intensive the business becomes to produce inventory. We have only one brick-and-mortar store in Mill Valley, California, which also operates as our design studio and houses our inventory. I think being somewhat small in this ever-changing retail environment has been to our advantage. We can pivot quickly, are not overextended in overhead, and I have kept our inventory purchases as low as possible throughout the years.
In fact, the credit card companies are constantly offering us larger credit lines or new accounts because we always pay on time and don’t carry over debt. I’ve refused because I don’t want to be overextended and know that can happen, so I only have the credit I need.
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Have you ever made any credit errors?
We have made a few financial mistakes in the business; less to do with spending and more to do with collecting. My first major error was when I allowed our first retailer to convince me to do consignment. I had a hard time collecting from the business, which eventually closed; I was lucky to have recouped my inventory and sales. I had to be very persistent to collect.
Always remember to stop and pause. Understand your overhead. Budgeting is a really important step, so take the time to look at all your expenses all of the time. That’s where credit cards also come in because they make it easy. Everything you spend should be on the statements. It gives you a great snapshot. Use your credit cards to pay for the company’s fixed costs, and then get the points!