Hundreds of thousands of companies got their start with a little help from LegalZoom. Founded in 2000, LegalZoom has steadily grown to become one of the largest legal document and filing service companies in the country, with more than 300 employees. And they’ve been fairly resistant to the recession: they had a 19% jump in LLC formations in the fourth quarter of 2008 (compared to 2007).
Given LegalZoom’s own success story and its connection to so many start-ups, John Suh, the company’s CEO, seemed like the perfect person to speak to what small businesses should look for in a credit card partner. Like many new ventures, LegalZoom had boot-strapped its start. “We had two cards in the beginning, one of which was an American Express business card,” John said. He cited the benefits of rewards points early on, as they used the points to purchase travel and gifts to reward top employees. A couple of years ago, though, they realized that they could benefit even more from the discount offered on early payments when using the Plum Card.
“When you talk about saving one and a half cents on every dollar, it becomes almost irresponsible not to take advantage of that offer. Every little bit counts, and as your business grows, those dollars really add up. And in these times, nothing is more useful than cash.”
John said switching cards helped him recognize another important consideration for entrepreneurs – finding a partner that can scale with your business. “You need a partner that not only has different products for each stage of your company’s growth, but also the systems that can handle transitions seamlessly. We had to shift millions of dollars in annual purchases over from one card to another. The transition had to be seamless or our customers would suffer. ”
He said reporting systems are also critical, especially in the beginning: “A lot of small businesses don’t have time to code every transaction. We have so much on our plate building teams, creating products, and acquiring customers that the back-end is often an afterthought. You need a partner that can turn data into actionable information. They have flexible reporting that makes decision-making easier.”
He then offered the following three tips that he often shares with LegalZoom’s many entrepreneurs:
1. Put as much as of your expenses on a separate business credit card as you can. It makes tracking and trending so much easier, and it avoids commingling personal and business accounts.
2. Use a card that offers cash savings benefits. If you take a look at all your credit card expenditures and see what you could have earned gotten back, you’ll be sorry you didn’t make the switch sooner; and
3. Find a partner that offers scalability. When you are a smaller business, it’s very helpful to be able to tap into those kinds of programs OPEN offers. They have aggregated the purchasing power of thousands of small businesses to obtain discounts you wouldn’t get on your own. We’re now at a size where we can negotiate our own trade terms and savings with vendors, so we take advantage of increased cash back instead. ”