How successful startups made the most of a credit card

How successful startups made the most of a credit card

  • One of Australia’s most successful startups, Atlassian, stayed afloat with business credit cards.
  • Australia is ripe for entrepreneurs, with room for “dozens of billion-dollar companies” in every industry.
  • Credit cards can keep small businesses in the black, covering unpaid customer invoices and carrying them through tough times.

Australia’s remarkable startup culture

People working in a co-working space

To succeed in business, entrepreneurs need more than just a great idea and enough capital to survive in the early months. They need an inherent strength to push on through the seemingly impossible – a never-give-up attitude is essential. It’s that ‘battler’ mentality that permeates all facets of Australian culture. And for budding entrepreneurs, there’s plenty of evidence to suggest Australia is the ideal location for startups to blossom.

Despite fear-mongering statistics urging the inexperienced to be more conservative with their new business investments, Australia has some of the greatest startup success stories in recent decades.

Yes, the startup failure rate is lingering around the 42% mark, with the vast majority of those shutting up shop within their initial two years. But flying in the face of a potential crash-and-burn scenario, some experts are urging young Australians to throw their hat in the ring and “turn their ideas into innovative profit-making startup companies”, according to the ABC.

The University of Melbourne has dedicated entrepreneurship courses; investor group Melbourne Angels focuses strictly on propping up businesses founded by student entrepreneurs, and there’s a new notion that “abject failure isn’t viewed as such a bad thing”. In fact, the Silicon Valley catch-cry “fail fast, fail often” has not only reached our shores but become a mantra for young entrepreneurs seeking to become the next big thing.

Startups aren’t always ‘small’ businesses

Business meeting

Whether you’re an entrepreneur or an established business owner, companies – much like success – come in all shapes and sizes. As do their budgets. But in Australia there’s a growing sense that we are one of the best places in the world to create a startup.

We’ve got a GDP at 80% of India’s, and on a per-capita basis we’re the second-wealthiest country in the world – trailing only Switzerland. It’s why so many budding businesspeople are flocking to our shores. Ruwin Perera, who moved from San Francisco back to Australia to start up his full-service property management company, :Different, believes “in every major industry there’s room for dozens of billion-dollar companies”.

That might sound like the ramblings of an inexperienced entrepreneur riding high on a wave of first-year success, but you only need to look at the evidence provided by examples of Australian startups to realise how truly anomalous our startup culture is compared to most of the Western world.


Founders of Atlassian Mike Cannon-Brookes and Scott Farquhar

Arguably – or perhaps not so arguably, depending on who you ask – the most well-known startup success story from Australia is software firm Atlassian. The story of how founders Mike Cannon-Brookes and Scott Farquhar turned personal debt into a US$3 billion company is a must-read for anyone even considering starting their own business.

Kicking things off in 2002 – just after the dot-com bubble began deflating – may not have been the ideal time to invest in software, but it just goes to show the resilience of Cannon-Brookes and Farquhar to soldier on despite there not really being a place for them in the early days.

Farquhar described how “there was no technology industry in Australia at the time, nor a startup industry”. So how did they turn a two-man party into a corporation that employs more than 3,000 people and generated $874 million in revenue over 2017-18?

Credit cards.

At least, that’s how they got the ball rolling when they were truly in the startup phase. After turning down an office job with PwC, Farquhar convinced Cannon-Brookes to jump head-first into entrepreneurship. But they didn’t rely on investment rounds and VC funding to stay afloat.

Instead, they used business credit cards to bootstrap the company – turning $10,000 of credit card debt into the multi-award-winning company you see today.

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Cash flow is the oxygen of every business

Business men handing a card to each other

Farquhar and Cannon-Brookes were definitely pioneers at the time of Atlassian’s inception. While it wasn't the most common way to start a business, their decision to shun investors and instead fund themselves via business credit cards would become more popular over the subsequent years.

Today, that method is recognised as a way to take advantage of fast funding and low interest rates – while not having to answer to critical investors who hold all the playing cards.

Cash flow is the oxygen of all businesses, so it makes sense that startups want control over their most vital asset. And it’s not all sunshine and roses in the Aussie startup market. For every Atlassian there are dozens of small businesses that go under due to any number of reasons: lack of cash flow, poor penetration, failed due diligence.

But owners are starting to recognise the importance of credit cards to their everyday activities. Not just a way to inject a startup with much-needed funds, business credit cards can be employed to keep the business afloat, especially when times are tight.

The 2018 Scottish Pacific SME Growth Index interviewed more than 1,200 small to mid-sized businesses across Australia and found just how severe the cash flow issue is in our country. A whopping 79% said cash flow – or lack thereof – keeps them up at night (up 10% from 2016), while 92% cited “a lack of cash flow” as preventing them from generating more revenue.

Startup success means using everything to your advantage

Business presentation

Invoicing and debt collection is one of the most common reasons why cash flow issues arise. This is compounded by the fact that our Small Business Ombudsman called out Australia as having the worst payment times in the world, with invoices paid on average 26.4 days late and $26 million currently owed in unpaid invoices. The 12 days the average business owner spends chasing those unpaid invoices could be the difference between staying afloat and giving up on their dream.

Despite this, the outlook isn’t so dire. In fact, taking Atlassian’s lead can not only alleviate common cash-flow issues for small businesses, it can also deliver additional perks and ultimately help them better manage their finances.

Having a business credit card means you can take care of supplier payments and cover for delayed invoices, and also simplify the expense-tracking process. 

Compared to a personal credit card, business cards often have higher limits, allowing you to inject cash flow during the slower times.

Perhaps most enticing – especially for business owners who want to get more bang for their credit card buck – are the rewards. Something like the American Express Platinum Business Card can earn you 120,000 reward points just by spending $5,000 in the first two months – a relative drop in the ocean for many small businesses that need to cover invoices and expenses.

Alternatively, a low-rate card like the NAB Low Rate Business Card can help startups out of a bind with 0% interest for 12 months on purchases, and no annual fee for the first year.

There are also business credit cards for frequent flyers and a range of other benefits where you earn for every dollar you spend.

Our business credit card story

David and Andrew in a business meeting

It’s hard to run a business like Credit Card Compare and not use credit cards on a daily basis, which is why we reckon we’re the ideal poster child for business credit card use.

For many people, using a credit card may be little more than an afterthought – a piece of plastic to make payments without too much hassle. But for us, something as simple as credit card use has allowed our business to grow and develop in a number of exciting ways.

First – and most obvious – business credit cards mean we can always pay our bills on time. That keeps us in good stead with our suppliers, but more importantly, it helps us maintain a solid cash flow. We take advantage of credit cards with interest-free days that allow us to pay off the card balance at a later date without incurring interest.

Then we have the rewards – this is a biggie for us. We love our credit card rewards and we make sure we’re able to leverage the best possible benefits from every card. So just by paying bills, we’re able to earn rewards and frequent-flyer points. These can then be used towards business travel expenses like flights and hotel bookings, and we can also utilise the card’s complimentary insurance cover to lower our total business insurance expenses.

Because our operation is continually growing, we need supplementary cards connected to our business credit card account. This makes life so much easier for our finance department when tracking employee expenses – not to mention it means our team can easily take care of business expenses no matter where they are.

Finally, we get to enjoy a whole range of complimentary card benefits depending on which business card we use. Some of these include hotel group memberships, subscriptions to major digital news outlets, fraud guarantees and much more. And when we need to, we can use B2B platforms to make payments to anyone who doesn’t accept cards, especially American Express cards.

All in all, it’s clear that credit cards are at the heart of everything we do – not just comparing credit cards to match your unique needs, but all the behind-the-scenes stuff that has helped make Credit Card Compare a fast-growing and innovative company. From one business owner to another, it’s definitely worth checking out whether a business credit card could help your company reach the next level – with all the added benefits that come with it.

Common cash flow issues

Man with empty pockets

So what are some of the most common cash flow issues for businesses, and how can a business credit card solve them?

  • Spending too much early on: Yes, you have to spend money to make money, especially during the startup phase – but there is a limit, and it will fluctuate depending on your business type, the current market and your access to funding. A business credit card that carries a spending limit can keep you honest and help you avoid going overboard with spending in the early days.
  • Lack of cash flow budget: Business owners need to stay on top of what’s going out as well as what’s coming in. A business credit card is a way to consolidate all your information on outgoings in one place. From there you can know exactly what you’re spending and then create a cash-flow plan that changes as you grow.
  • Outstanding invoices: As we already know, Australia is the worst country for paying invoices late – or not at all. A business credit card can keep your small business afloat during those rough patches.
  • Placing too much confidence in growth: It’s all well and good to invest in predictive analytics to get an idea of future growth, but it can also be the death knell of your startup should things not go to plan. A business credit card doesn’t fluctuate with market conditions and can carry you through choppy waters in the event that business isn’t as booming as you anticipated.

If Atlassian and Credit Card Compare can make credit cards work for their business, so can you.