A premium rewards business credit card has helped founder Ben Smith’s fund travel, maximize cash flow and manage employee expenses for his stem cell-infused beauty line.
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He is the CEO of BioXcellerator, which provides stem cell treatments for a wide range of health and cosmetic applications. His stem cell-infused beauty and anti-aging products are available at dermatologist offices, med-spas and online.
Smith, who has a background as a venture capitalist, in sales and marketing, and technology, officially kicked off the business in December 2017.
“As with all startups, cash is king but I didn’t have all of it on hand,” says Smith. “I needed a big credit line. For us it was critical because we had to get the products on shelves.”
With the help of a single credit card, Smith has been able to put BioXcellerator into the hands of people looking for a new skincare line.
How did your credit history affect the way you financed your venture? Any challenges with scores or access to credit?
I now have a great credit history, but that wasn’t always the case. After a prior business partner with bad credit ruined mine, I spent years re-establishing my credit so I could continue my entrepreneurial drive.
To restore my credit rating, I followed advice I found online. The problem was that different resources had conflicting information. ‘Open a lot of credit cards!’ ‘Don’t open any credit cards.’ It was all over the place, but I finally got the facts. I just had to make sure I was diligent on payments. Now I can say I have returned from the other side! I did have to put a credit monitoring service to work, too, though. Since my name is so common I had a few identity theft issues and had to clear those up as well.
With my past ventures, large purchases by a credit card were not an option, but because my scores are great today, I am able to get the credit I need to help with initial inventory, equipment and just day-to-day purchases. I pay all the company’s bills with the card, so I get the expense tracking mechanism and the other perks of the credit industry.
What is your card of choice – and why?
Because of my travel needs I opted for the Business Platinum Card® from American Express. The benefits outweigh the annual fee ($595) by far when I am on the road. It works great internationally. The TSA [Precheck] and Global Entry, free Wi-Fi on planes, and lounge access in airports are my favorite features.
This card also allows free employee cards for the office team that supports me. Our sales staff, when they’re out in the field, also have to have them.
The other nice part is the card’s mobile app. I can instantly snap a receipt within about a minute of a transaction and throw the paper receipt out. That saves the transaction information and transfers it into my accounting system at the office. No more pocket full of receipts after every trip to enter in!
How are credit cards helping you and your business achieve success?
The way we travel, we have lots of flight changes, most is international and the card increases our cash flow. We don’t have to pay for Wi-Fi and lounge access and all the perks add up, saving us a lot of money each month. Also, using the billing cycle on the card allows us to maximize our cash in the bank.
In the beauty business, it’s all about perception. Carrying the card and using it to pay for clients’ meals is a status thing, but using the points we earn on it to purchase things like necessary office supplies or client gifts on Amazon helps stretch our budget.
There’s always something that can go wrong and then does, like problems with boxing and packaging. If we didn’t have the card to pay for what we needed, production runs would slow down and negatively affect the business.
The other benefit of the rewards card is, as a newer company, we can reinvest the points into buying plane tickets, shop for office supplies on Amazon and offer certain employees incentives. I monitor the point balance and apply them to areas that will save us the most money.
Since some of your team members have access to the account, how do you handle the management?
I think it is natural to want to trust employees, and I did. In the beginning, I gave them all cards under my master account. I quickly learned that not everyone looks at their spend patterns the way you do if you are the one paying your bills. I took several cards back and destroyed them.
Today I do allow most of my staff to carry a card, as they can use it for sales expenses, to book travel, etc. But now I get a very detailed reporting and spend analysis. With the card’s app I monitor their activity, and I get emails and regular weekly statements with balances that show which employee bought what.
I also set threshold notifications to alert me via text when an employee reaches a certain spend level or buys outside of normal transaction value. Based on my past issues with rampant credit card abuse, I love the fact I can check up so easily with these tools.
Tip: It’s a dilemma most small-business owners face: deciding how to give your employees credit cards so they can pick up office supplies, embark on business trips and wine and dine prospective clients. See “5 business expense card options for employers” to learn more pros, cons and workarounds of the different options you may consider.
Any lessons you learned about credit use to pass on to other entrepreneurs?
I learned to only borrow what you are dead sure you can pay back. I make sure we do not overextend our repayment ability. Even if you have a large line ready to go that doesn’t mean you should use it all.
When shopping for card, don’t look away if it has annual fees. See if its other advantages will outweigh that cost. The account you get has to be right for you and your company. If you’re not sure about what a credit card company is offering and you want more information, just call them.
Whatever you get, be very careful with interest. If you’re going to float some purchases for more than a month, the fees you pay will erode your profits. Try not to do that, but if you have to, pay the debt off as quickly as you can.