Small Business

Small-Biz Talks: Using Capital One Rewards for Growth

Pooling business expenses on a business credit card and earning rewards is often a no brainer. However, there aren’t many businesses that use those rewards strategically to grow its business. Happy Howie's took advantage of its rewards to expand and we sat down with David Collado, president of Happy Howie’s, to talk about the thought process of doing so.

We typically recommend business credit cards for smaller daily expenditures, since they’re so liquid and often have smaller credit limits than say a business line of credit. Many business credit cards come with rewards of varying types, and it makes sense to earn some money back on expenses you’re already purchasing.

However, few business owners can say that they strategically generate and spend rewards points to grow their business. Many business owners likely don’t even think about maximizing their credit card rewards.

David Collado, president of Happy Howie’s, a dog treats company based out of Detroit, has actually used his own Capital One rewards points to help expand his business by purchasing equipment. Capital One’s Spark Business Card is a useful tool that generates 2% cash back on every purchase made with the card. While most business owners likely use the card as an easy way to generate some level of return on every purchase, David actually took the time to think through how to maximize the rewards and grow his business.

Can you tell me a bit about Happy Howie’s and how you started?

The history of Happy Howie’s all natural dog treats actually goes back more than 20 years! Like a lot of businesses in Detroit, it was hit really hard by the recession, and I happened to work for an investor who bought the company and wanted to revive it. It was 2011, I was working as an accountant and had very little practical experience, but he asked me if I’d be willing to take the reins and try it out. It took a lot of hard work and learning the ropes quickly, but now Happy Howie’s is growing steadily year over year. I have become very passionate about this industry in the process of growing this business, and have really come to appreciate the amazing role that pets play in our lives!

It seems like you’ve been looking at expanding — what are some of the biggest challenges there?

We hit a point last year where we could barely keep up with demand, which is a great problem to have. At that point, purchasing new equipment was really the only way that we could expand our production and keep up with existing orders while continuing to expand. Investing in new equipment — oftentimes a six figure purchase — is a huge decision, but that helped us hit our recent milestone of being sold in more than 4,000 stores nationwide.

Next up, we want to build out our facility to have more space — which means more employees, more dog treats and more happy pets and pet parents! It’s great for the team to have that “big crazy goal” to work towards a little bit every day. But that will definitely require a bit capital investment and a lot of laying the groundwork along the way.

How has Capital One played a role in your expansion?

When I was just starting out at Happy Howie’s, a friend who was a business owner recommended that I get the Capital One Spark Cash card. He said that putting expenses on a business credit card was a good way to keep track of purchases and also to earn rewards. As an accountant, it made sense to me, and I wasn’t worried about getting into a situation where I was overspending or being irresponsible. We signed up for the card and have stuck with it ever since!

What sort of expenses did you put on your card in order to get those rewards?

We put everything that we can on the card! For us, that means a lot of equipment to actually transform raw ingredients into dog treats, as well as packaging materials and shipping. It’s also a lot of everyday running-the-business type purchases, like team lunches, office supplies and travel expenses like rental cars or flights.

What was your thought process when you were deciding what to use those rewards for?

I viewed the credit card rewards as an opportunity to build up money to make a major capital investment. Since we didn’t need the money to keep our day to day operations going, I let it build up until the time came that we were ready to make a major purchase. Having $21,000 in rewards accumulated to put towards the new equipment really helped soften the blow of making that purchase.

Looking back, would you have rather gone with another form of small business financing, like a traditional business line of credit or a term loan?

I was in a unique position when I started at Happy Howie’s, so I didn’t have the need to take out more traditional financing to turn the company around. I was really focused on identifying problems and finding ways to fix them, and the investor who is now my business partner was able to provide an influx of capital that helped solve for those issues. About eight months after I started, we were able to start turning a profit, which really built all of our confidence for future growth. That being said, we have definitely made some large investments and have financed some of our equipment purchases along the way.

Were you concerned at all with the amount of expenses you’d be putting on the card?

I was actually never concerned about it! In the normal course of running Happy Howie’s, I pay bills once a week, so I just made it part of my routine to pay off the credit card bill once a week as well. That makes the number much less daunting, and also helps to make sure that we never carry a balance on the card.

Any other benefits besides the rewards that you found to be particularly useful?

Fraud protection is huge for me. I buy a lot of equipment and tools from vendors that may not have the best security for their e-commerce, and it gives me real peace of mind to know that Capital One has my back in case of fraudulent charges.

We also use the free employee cards: our sales manager uses his for travel, and our operations manager uses the card for getting supplies, paying for equipment repair and other needs. I actually get notifications if they are approaching their individual credit limits, so that is also really helpful so I can adjust their limits or pay off the balance.

Do you have a specific plan on what you’ll use your rewards on next?

I don’t have anything specific planned out right now, but I’m really excited to let them rack up until I find a good opportunity to make a big purchase that will help drive the growth of Happy Howie’s.

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.