Small Business Credit Profile: The Cottage

Find out how this couple launched a business during the pandemic and built success


Hargobind Sahota and his wife Heather have built a breakfast and lunch destination in Jersey City, New Jersey. Find out how they use credit cards and their strong credit to finance their business.

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Hargobind and Heather Sahota, founders of The Cottage

Need a delicious, nutritious bite to eat while in Jersey City, New Jersey? Head over to The Cottage, a breakfast and lunch spot that Hargobind Sahota and his wife Heather opened in October 2020. They launched the cafe during the thick of the pandemic, so it started in the pick-up and to-go phase rather than dine-in. Later, they became a hybrid model with a patio. Customers can now order at the counter, then take their items and enjoy them in the beautiful outdoor setting.

“We had a wonderful response from the community,” says Sahota. “It’s a traditional area, a little off the river, and there aren’t many healthy places to eat. There are chains and bodegas, but regardless of your socio-economic situation, people want to eat healthfully.

“In Jersey City, food like ours is almost exclusively in super nice neighborhoods. Corporations think everyone in places like The Cottage’s neighborhood wants fried, highly processed foods, so we went against the grain. Almost everything we offer is organic and locally sourced. The community loved it right away and we have a huge number of regulars.”

Opening a business in such a stressful, unpredictable economic environment was a risk, but Sahota was prepared. He graduated with a finance degree and spent seven years on the trading floor. Wanting to spend more time with his wife and two young children, he had already begun to work remotely a year before COVID-19 hit. His primary role is to stay on top of the money and run the business efficiently.

“I’m a little bit of a nerd,” says Sahota. “I love going to the store and checking out the price of eggs!” And when he shops, he makes sure their credit card is working for, not against, the business.

Check out all the answers from our credit card experts.

Ask Erica a question.

Did you experience any special challenges in opening a cafe during a pandemic?

Absolutely. Just getting the equipment, like mixers, was quite an adventure. Some things were hard to find. Then we had to get everything wired up and go through a bunch of electricians. It was all trial and error.

And then there was staffing. Since it was the pandemic, the applicant pool was very small. We’d get people in, train them, get them up to speed and they would just ghost us! We found that you don’t know how an employee will act. Someone who is great at making beautiful café lattes but doesn’t show up, that’s a problem. There were many, many mornings where we would get a text from a barista saying she couldn’t come in.

What about costs—did any blow your budget?

Decorations cost a lot more because Heather had a vision for the look of The Cottage. She’s really into antiques, like cast iron stoves from the 1920s. Even the lighting is antique. Sourcing it all cost way more than we had budgeted. But in the end, it gave us a personality and made us different.

Now, inflation is a factor. Avocados used to be $1, and they nearly doubled in price. It’s shocking. Butter has gone up massively. All the raw ingredients prices have increased, so we’re keeping a close eye on them.

We really haven’t passed the higher costs on to our customers at this point because we’ve found other ways to save, but it’s stressful.

How are you using credit cards for the business?

For the café, we put everything on Costco Anywhere Visa® Card by Citi. We wanted rewards for groceries and gas, and a Costco opened really close to us. The things we needed were much cheaper than anywhere else with member pricing. They have a ridiculous, almost crazy, selection of organic stuff!

I’m mathematically inclined, so I figured out how much we’d get back in rewards. After I did, identifying the right card was an easy decision. We get rewards wherever we use the card. It offers 4% cash back for gas, 3% on restaurant purchases, 2% on Costco items and 1% on everything else. It’s easy to know how much we will get in rewards. If we charge $10,000 at Costco, that’s $200 in cash back. The rewards come through in the app, so when I go to the store, I get the gift receipt and scan it at check out.

The rewards add up. As a café, we need $15,000 to $20,000 per month for necessary products. This card also has a high limit. I don’t know exactly what the line is, but we’ve never been rejected!

Can you describe your financial strategy, including credit cards?

We don’t revolve credit card debt. No matter what the bill is, we pay in full once a month. We have a pretty good idea of what our revenue is, so we know we can handle the bill. Heather and I manage the finances together, but I do more of the macro work and the financial analysis. After a year’s worth of data, we have the context of what to expect.

However, there are some things you can’t predict. That’s one of the reasons we don’t carry over debt. The cost would be too high because a high rate of interest would apply. Loans with low interest rates –not credit cards – are for paying over time. It’s a paramount rule for business success.

What’s your perspective on building good credit?

For us, it happens on its own, so we don’t pay too much attention to it. We have a great credit rating, but we’re not actively using it. What’s important is to have access to credit in case we need it. If you have terrible credit and suddenly have an Armageddon issue with your business, you won’t have the luxury to borrow at low rates. They will be astronomical, and you can get into deeper trouble.

Both of us had a good understanding of financial literacy when we started. That helped. So we don’t consciously build or keep good credit. It just happens because we use it well.

Any plans for The Cottage?

We love our little business. It’s tight and nimble. In one day, we can transform the look from winter wonderland to Easter and pastels. Heather takes the decorations very seriously!

But the major thing on the horizon is expansion. We don’t want to overcommit, but at the same time, we can’t help but think about opening another café. A year in, we’re settled, and we know what things cost. The situational changes around COVID are a factor, though. Should we stay more grab-and-go? That we don’t know quite yet.

Looking back, would you do anything differently?

Heather wanted to give everyone a chance, and she is very forgiving. We paid people for training who had no intention of taking the job. We gave a lot of people too much leeway and were too accommodating. It’s a tough labor market, and we could have handled it better.

If you were to give entrepreneurs who are just starting out advice about money and credit cards, what would it be?

It’s easy to get the catalog for shiny, new equipment and be seduced to splurge. Don’t. We were in the penny-pinching mentality from the beginning. We bought things from restaurants that closed. We bartered and negotiated. We bought an ice machine for a few hundred dollars that usually costs thousands and then did a simple repair so it would work perfectly. Because of that, we didn’t overspend and get into debt. We used the rewards on our Costco card to pay less for the things we needed, and it cost us nothing in financing.

Always keep your financial health in good standing because a hair trigger can cause your business to go under. People have great ideas, but it’s all about the execution. The small business owner who thinks about saving money and keeping their credit good is the small business owner who survives.

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