As a business owner, you face numerous challenges on a daily basis that range from financial and operations issues to finding and retaining talent. It can often feel like a lonely job. But you might be overlooking a valuable tool that can help you overcome those hurdles while growing your business—your credit card rewards.
The right credit card rewards program can provide flexible access to capital you need to take advantage of opportunities while also generating a return on that investment you can use inside your business. In other words, it's a different way to make your money work harder for you.
Here are four ways business owners can use credit card rewards to help grow and expand their ventures.
1. Make new investments.
Finding the capital to make new investments in your business can be difficult—especially for fast-growing companies. But this is an area where your rewards program can pay off. By picking the right rewards program, you can create opportunities to turn those rewards into new investments.
Consider the example of Akiva Goldstein, founder and CEO of Onsitein60, an 18-year-old IT services company headquartered in New York. Goldstein says that he ran his company for many years without a credit card because of some debt he ran up as a college student. But after some encouragement from another business owner, he researched credit card programs to try and find the best match for his business. What he learned was that by pairing a good rewards program with smart cash-flow management, he could then convert the cash rewards he received into new investments for his business, like purchasing a new CRM program and custom database development work. “We have been using the gains from our credit card program to improve our operations in ways that will benefit us long term that we might not otherwise be able to afford," Goldstein says. "It's sort of like reinvesting dividends into our business."
2. Cover overhead costs.
Every business faces an array of variable and overhead costs—which can be difficult to keep on top of. Ensuring that you have enough cash on hand to cover your bills can be a constant struggle. That's why Mike MacDonald, a business coach and social media marketer based in Minneapolis, pays the majority of his overheard bills using a cash-back or reward credit card. For example, MacDonald says he charges his social media advertising costs to his rewards card. “Not only does the advertising bring in more business," he says, “but by using a cash-back card, it can also help offset the cost of some of the advertising, making it more profitable."
MacDonald also suggests making other major purchases for your business using credit cards as a way to generate more rewards points, which you can then reinvest back into your business. “I am able to keep my cash in accounts that earn interest and then simply pay off the card in full before any interest charges apply against me," he says.
3. Create employee bonuses.
Most business owners look for ways to reward their employees when business is strong. That's especially true these days, with an increasingly tight labor market. Finding ways to attract and retain top talent has become a top priority for most businesses. Turning credit card rewards into a de facto bonus program can be a savvy strategy for motivating and recognizing employee performance in ways that also don't take money out of the business.
We have been using the gains from our credit card program to improve our operations in ways that will benefit us long term that we might not otherwise be able to afford.
—Akiva Goldstein, founder and CEO, Onsitein60
For example, Matthew Ross, the co-owner and COO of The Slumber Yard, a sleep and mattress-review site based in Reno, Nevada, says that he redeems the points he earns from his credit card for gift cards, which he hands out as perks to his 12 employees. “In my eyes, these gift cards take the place of cash bonuses," Ross says. “That way, I don't have to give as many small cash bonuses during the year, which saves me on employer taxes. The gift cards are essentially free on my end. It's great. It's a win-win situation all the way around." He also tries to customize the kinds of cards he hands out that might really benefit his employees. He gives gas cards to one employee, for instance, who drives to visit a girlfriend every weekend.
4. Cut travel costs.
While many consumers are drawn to certain rewards programs tied to airline miles, business owners can also use these kinds of rewards to their advantage—especially if they travel often for business or have a geographically dispersed workforce. After all, business travel expenses can add up quickly. But a good credit card rewards program can give you access to special perks like access to airline lounges or even co-working spaces once you reach your destination, while also freeing up dollars to reinvest in other areas of your business.
Jared Weitz, the founder and CEO of United Capital Source Inc., a small-business finance company based in Great Neck, New York, says that he used his credit card rewards strategically to maximize the number of miles the business can then use to subsidize its travel costs. "Traveling now feels hassle- and virtually cost-free," he says. “By cutting our costs on travel, we have more room to invest in technologies to increase our efficiency on a daily and long-term basis. We also have more room in the marketing budget."
Regardless of the challenges and opportunities you face in growing your business, finding the right credit card rewards program can actually serve as a great partner for helping you get where you want to go.
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