Building a Business: One Entrepreneur’s Journey and Tips for Success
Yasameen Sajady, the CEO of Maazah located in St. Paul, Minnesota, is on an exciting journey as she navigates the challenges of growing her business. Maazah specializes in Afghani-style chutneys, aioli, and lentil dips, and this year, it is expanding its presence in major retailers like Target, Whole Foods, and Costco.
This growth presents a significant opportunity, but it also comes with challenges. Before Maazah can start selling its products in these new stores, it needs to ramp up production. This means investing in more supplies and ingredients while continuing to meet the demands of over 100 existing locations, including Kroger and Central Market. For a small business like Maazah, this can lead to a tight cash flow situation, often making it difficult for owners to pay themselves.
"When you work with larger retailers, the purchase orders are huge. You need to spend a lot of money upfront for supplies. The profits don’t come in immediately," Sajady explained. "It can take up to 90 days to see any returns."
Sajady hopes to reach $2 million in revenue this year, which would allow both her and her sister, co-founder Sheilla Sajady, to pay themselves adequately. For now, Yasameen’s salary only covers her daycare expenses. “My goal is to create a sustainable salary for myself. I believe this year will bring that, or if not, definitely next year,” she stated.
So, how can entrepreneurs ensure they can pay themselves while prioritizing their business? Here are some key strategies outlined by experts and experienced business owners.
1. Manage Your Finances Wisely
Budgeting is critical for any business owner. Ahmed Mohidin, a business consultant, emphasizes the importance of understanding profitability, expenses, and keeping accurate records right from the start. He notes that disorganization often leads to issues down the line.
"Unexpected expenses are the number one problem I’ve seen in businesses. Organizing finances better equips owners for success," Mohidin remarked. He suggests that new business owners create a separate bank account for their business to help track expenses clearly. Ideally, having enough savings to cover at least six months’ worth of living expenses is recommended.
2. Set Reasonable Compensation
When it comes to paying themselves, business owners should aim to set aside 30% to 50% of their profits. However, this can vary based on the business size and industry. According to Alex West Steinman, co-founder of The Coven, it’s also important to consider what the market pays for similar roles and what the business can maintain.
3. Avoid Unnecessary Spending
Keeping expenses low is crucial. Shelisa Demuth, founder of a communication services firm, warns against extravagant spending, especially when funds are tight. She advises entrepreneurs to remain focused and disciplined to manage risks effectively.
4. Explore Additional Income Streams
Zoe Levin, the founder of a plant-based toilet paper company, suggests that taking on a side job during difficult times can help alleviate cash flow issues. “There’s only one way to fix cash flow: Get more cash,” she said. Entrepreneurs should assess their circumstances and consider part-time work until their business can support them fully.
5. Seek Support from Family
When Terace Johnson launched her staffing company, she discussed her plans with her fiancé, who was willing to support them financially while she got the business off the ground. Having a supportive partner can significantly ease the financial burden during the initial phases of building a business.
In conclusion, while the journey of entrepreneurship can be challenging and often requires sacrifices, careful financial planning, smart decision-making, and support from loved ones can help business owners navigate their path to success. With dedication and the right strategies, they can find a way to balance their personal needs with their business goals.
