Have a Business Credit Card: Leverage the Power of Credit for Your Skate Business

Disclaimer: This blog is intended to share information and insights I’ve gained that may be helpful for you. My goal is to provide a starting point for your research, and I strongly encourage you to conduct your own due diligence before opening a credit card. My recommendations (both positive and negative) are based on my experience running a skate shop and park, and your individual situation might differ. Remember, credit cards should be used wisely and responsibly. Feel free to email me for any additional information. Enjoy the read!

This blog is specifically for skateboard business owners, including those who run skate shops, skateparks, skate programming, skate brands, and skate construction companies. It aims to help you understand the benefits of using a business credit card and guide you through the process of choosing the right one for your needs. Remember, establishing a separate business credit card is crucial for tax and accounting purposes.

Why Credit Cards Matter:

Many skaters have heard the negative connotations associated with credit cards. However, leveraging credit cards strategically can be a powerful tool for improving your finances. As a business owner, you constantly make purchases for equipment, products, services, etc. Why not earn rewards like free travel and meals while making these necessary expenses? Using a business credit card also helps you build your business credit in addition to your personal credit depending on the owner’s liability for the card’s debts.

Benefits of Business Credit Cards:

• Rewards Programs: Earn points, miles, and other rewards on your business purchases. These can be redeemed for travel, hotels, meals, and more, potentially saving you significant money.
• Expense Tracking: Business credit cards simplify expense tracking by keeping your business spending separate from personal expenses.
• Employee Cards: Issue cards to your employees for authorized purchases, streamlining the spending process.
• Business-Specific Benefits: Some cards offer specific perks like purchase protection and extended warranties.
• Travel Perks: Certain cards offer benefits like travel insurance and airport lounge access, valuable for business travel.
• Build Business Credit: Responsible use of a business credit card helps establish a strong credit history for your business, which is crucial for future loan applications, attracting investors, and securing better business opportunities.

Types of Business Credit Cards:

• Travel Rewards Cards: Ideal for businesses that require frequent travel, such as skate brands scouting manufacturers for hardgoods or attending industry events like Tampa Am, X-Games, or the Olympics. These cards typically have annual fees. This is my personal favorite and how I am able to visit skateparks/shops around the world.
  As a skate shop owner, myself, and ordering products in bulk from distributors, this was an easy way to earn rewards to travel.
  List of Travel Credit Cards
• Cash Back Cards: Offer a percentage of your spending back in cash, suitable for everyday business purchases. These cards often have no annual fees.
  List of Cash Back Credit Cards
• Gasoline Cards: Provide rewards on fuel purchases, particularly beneficial for mobile skate shops or businesses requiring extensive driving. Keep in mind that most cards are specific to certain gas station chains.
  List of Gasoline Credit Cards
• Hotel Cards: Offer benefits like free stays or upgrades at specific hotel chains, only worthwhile if your business requires frequent hotel stays.

Cards to Avoid:

• Retailer Credit Cards: Often have low credit limits, high interest rates, and limited use outside the specific store. The rewards are typically only beneficial for frequent shoppers at that particular store.
• Balance Transfer Cards: Can be tricky due to transfer fees and temporary low-interest rates that can quickly turn into high charges. Additionally, opening new cards can temporarily lower your credit score.
• Premium Credit Cards: These often come with high annual fees and are not suitable for most skate businesses.

Selecting the Right Card:

• Research:
  • Consider your credit score, spending habits, and business goals.
  • Compare rewards programs, annual fees, interest rates, and perks offered by different cards.
• Start with one card:
  • Choose either a travel rewards or cash back card based on your needs and likes. Travel rewards cards might be more suitable for skate businesses as they allow you to network and learn from other businesses worldwide.

The Importance of Good Credit:

Building good credit opens doors to various opportunities for your business, such as:

• Securing loans: This can be crucial for purchasing company vehicles, acquiring a physical location, or expanding your services.
• Attracting investors: Investors are more likely to consider businesses with strong credit history.
• Taking advantage of future opportunities: As your business grows, unforeseen opportunities may arise, and good credit will enable you to seize them.

Building Your Credit Score:

• Check your credit score: Knowing your current score is the first step to improvement. You can use Credit Karma, a free app which gives you a good sense of where your credit score is at. 
• Get a secured credit card: This requires a security deposit at your local bank but can help build your credit history. A typical investment is $200-$300 to get started.
• Make timely payments: Always pay your credit card bill on time to avoid late fees and negative impacts on your credit score.
• Start small: Begin with one card and manage it responsibly before applying for another with better rewards.

My Opinion

Having a business credit card offers numerous benefits for skate businesses. It helps with expense tracking, separates personal finances, improves cash flow, builds business credit, and allows you to earn rewards. Remember, building good credit takes time and responsible use of credit cards. Be patient, manage your credit wisely, and unlock the potential for future growth and success for your skate business.