Small Business Profile: Psi Bands
Multiple award-winning founder Romy Taormina?s wise use of business credit cards has unlocked a wide array of funding opportunities
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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Nausea is miserable, especially when you’re trying to enjoy impending motherhood, discovered Romy Taormina. She suffered from debilitating morning sickness during her pregnancies and the only thing that helped was acupressure wristbands.
However, the existing products on the market fell short. “They were unattractive, weren’t waterproof and not adjustable so they would slip and slide up and down my wrists,” she said. So, Taormina invented a product that is both fashionable and functional: Psi Bands. The patented medical device is clinically proven to relieve nausea and has been cleared by the Food and Drug Administration.
To date, nearly 1 million of her bands have been sold since its inception 10 years ago. CVS, Target and REI are among the many retailers that stock Psi Bands. They were an Oprah “O” Pick, and Entrepreneur Magazine dubbed them “Strokes of Genius”.
Taormina is a National Association of Women Business Owners/Wells Fargo Trailblazer awardee, a Huggies MomInspired grant winner and the winner of the Make Mine a Million $ Business award. By any measure, Taormina’s business is successful – and her healthy use of credit cards has played a steady role.
What was your credit history like when you first launched the business and how have you maintained it?
I have always had a high credit score. When I turned 18, I opened a bank account and applied for and received a credit card. I started making minimal charges on a monthly basis and paid the balance in full each month. As I aged, I opened a couple more credit cards, and followed the same strategy. When I was able to make a down payment on a house, I paid that monthly statement on time as well.
I still pay all my bills on time, and most are set up for auto deduction. That means I never pay late fees and always have a good credit score. Those bills that are not set up for auto payment, I calendar in Outlook as a reminder.
Which credit cards do you have and use? Why did you choose them?
I have one primary credit card that I use for the business and it’s the Business Platinum® Card from American Express. I have a CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®, too, for the rare cases where merchants won’t accept American Express. I love the Business Platinum card because the benefits far outweigh the annual fee of $450. Those I use and appreciate the most include free access to airport lounges (which gives me major peace of mind and saves time and money) and valuable credits toward airline expenses such as checked luggage and in-flight meals. It also covers the cost of GoGo Inflight internet and gives me travel discounts on hotels and car rentals.
This card is great because I earn rewards points on things I purchase anyway. I do a lot of charging for the business; I use the card to pay for freight, marketing, annual fees (on things like maintaining licenses) and all kinds of necessary subscriptions such as domain. As a result, my monthly charges fluctuate.
For example, annual licenses are due at different times, marketing campaigns vary throughout the year and there are seasons when we ship more and less frequently. So that’s where the Business Platinum credit card comes in. It assists me with cash flow and helps make my travels more productive, affordable and tolerable.
Because I use the card on so many things, I earn a lot of rewards points. They offset other costs and I reinvest them back into the business. Money saved also means I don’t have the cash burden that would normally come out of my pocket. And I personally benefit because my travels are smoother and more enjoyable. That translates into better business decisions because I arrive to my destinations in a better headspace!
Tip: How can you find the right business credit card for you? See how these business owners chose their credit cards based on six key factors. From expense-tracking tools to your preferred spending categories, these insights will help you find a business card that fits your needs.
Do your employees have access to the business credit accounts, and if so, how do you manage that?
My employees have been issued their own credit cards, which are linked to my account. Their level of benefits varies from mine. I choose the spending limit and their charges are itemized on the credit card statement, so it’s clear who is spending what and with whom.
What lessons have you learned about borrowing money along the way? Any advice to other entrepreneurs?
Yes – pay off credit card balances monthly and in full, whenever possible. This is especially important on high-interest cards. In order for you to do this, collect payments from those who owe you as quickly as possible. You have to stay on top of any overdue accounts receivable.
To make yourself attractive to lenders and creditors, be willing to show that you have skin in the game by personally investing in the business. You have to keep your credit rating high so you can qualify for loans and lines of credit. That’s what I did, and it’s enabled our funding to come in many shapes and forms.
When shopping for a credit card (or if you already have one) familiarize yourself with the benefits so you can fully maximize them. If you find that they don’t match your spending habits, then find a different card that does!