These Founders Are Bringing Fair Labor Practices, Artisanal Jobs, and Economic Development to Tunisia

August 3, 2021
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You asked for more content around business finances, so we’re delivering. Welcome to Money Matters where we give you an inside look at the pocketbooks of CEOs and entrepreneurs. In this series, you’ll learn what successful women in business spend on office spaces and employee salaries, how they knew it was time to hire someone to manage their finances, and their best advice for talking about money.

When Alia Mahmoud and Lamia Hatira met, they felt an immediate kinship. “We each have a Tunisian father and an American mother and our lives were sort of mirror images,” says Mahmoud. “Lamia was born and raised in Tunis and spent time in Seattle growing up, while I grew up in New York City and spent summers in Mahdia, Tunisia,” she elaborates. Although both women live abroad today—Mahmoud in Miami and Hatira in São Paulo—their families still live in Tunisia, and the textile brand Mahmoud and Hatira founded, Fouta Harissa, is their way of investing in their “tiny but mighty Mediterranean country,” Mahmoud tells Create & Cultivate. But they’re not just investing capital, they’re investing in fair labor practices for the country’s artisanal community.

By working with Tunisian artisans to craft high-quality, hand-loomed textiles, the brand is dedicated to preserving artisanal weaving in Tunisia while also contributing to the country’s economic development. “Unfortunately, Tunisian artisans are generally undervalued and underpaid as the custodians of our cultural heritage,” explains Mahmoud. “We want to change that by bringing the world a modern take on handmade artisanal products that also support fair labor practices, use sustainably sourced materials, and contribute to economic development in Tunisia,” she notes. Not only that but each of the artisans they work with is employed in a full-time position at the brand’s partner workshop and paid an above-market rate that exceeds the living wage.

Ahead, Create & Cultivate asks the co-founders all about how they self-funded the socially-driven brand, why they recommend hiring an accountant ASAP, and what money mistake has taught them the biggest lesson.

How did you fund Fouta Harissa? What were the challenges and what would you change? Would you recommend your route to other entrepreneurs? 

Lamia Hatira: We started with a small friends-and-family investment of $20,000 which helped us start our entities in both Brazil and the U.S.A. We are definitely still working on a small budget. It’s challenging because you don’t have the resources to do everything you want to do right off the bat, but it’s also kind of wonderful because you learn what really matters for your business and how to make the most of what you have. 

Each experience is definitely unique, but if you have an opportunity to get seed investment from friends and family at the initial stages, embrace it. Just make sure you’re on the same page with your investors about how active a role they will play and get in writing in your operating agreement.

The most important thing is to do what you’re comfortable with. We knew we weren’t ready to take out a huge loan or ask for a larger amount at the beginning because we didn’t want to owe anyone money or give away too much equity before we knew more about the intricacies of our business.

Three years later, we are now ready to take on more investment because of everything we’ve learned and because we know what works and doesn’t work for Fouta Harissa at this stage. 

What was your first big expense as business owners and how should small business owners prepare for that now?

Alia: Legal fees to register our business and write an operating agreement, as well as placing our first major product orders with our manufacturer were definitely our first big expenses. I would advise taking the time to build a business plan in order to price out these early costs to the best of your ability, from there figure out where that money is coming from. A great way to generate some early cash flow is to do a friends-and-family sale before your product launches officially. This can help you raise some money and generate buzz.

Lamia: Beyond your most basic costs, make sure to include the other expenses that will ensure that your first customers get the experience you want them to have when they receive their product. This not only includes the product itself and its shipping, but the packaging, the marketing, the communications—they add up. 

What are your top three biggest business expenses every month?

Alia: Beyond paying for production, our biggest monthly expenses include the shipping costs to send our Foutas to customers, digital ads on Facebook and Instagram, and investing in regular digital marketing and PR.

Do you pay yourselves, and if so, how did you know what to pay yourselves?

Lamia: Not yet! We’re working on it.

Would you recommend other small business owners pay themselves? 

Alia: Absolutely. When it’s your business, you’ll work harder than you’ve ever worked on anything else before. Your time is valuable. Your effort is valuable. Build it in from the beginning. One thing we didn’t take into consideration, that we wish we had, is the employee taxes a business incurs in order to draw a salary. Even as founders! So until you’re making enough profit to distribute in those early years, build a small salary into your costs plus taxes.

How did you know you were ready to hire and what advice can you share on preparing for this stage of your business? 

Lamia: You don’t have to go from being a founding team to hiring a staff of full-time employees. We work with a lot of brilliant people, mostly as independent contractors. At this early stage in our business, it gives us the flexibility we need to try new things, learn, and try again. We’re so grateful to the talented people who believe in Fouta Harissa enough to devote their time to growing this business with us. 

I think you know when you’re ready when you realize you don’t know how to do everything, and that’s okay! We’re still in the process of learning exactly what our strengths are as co-founders and when and where it makes the most sense to invest in a new skill versus finding an expert who can help. We look forward to the day when we can have full-time staff on the team. 

Did you hire an accountant, and if so, would you recommend hiring an accountant to other small business owners? 

Alia: 100%. We recommend hiring an accountant as one of the first things you do. They can even advise you when you’re registering your business. We asked around and got recommendations from other female business owners until we found ours.

What are some of the tools or programs you use to stay on top of your business finances? 

Alia: Quickbooks has been a lifesaver. It’s a worthwhile investment and makes your accountant’s life a lot easier come tax time. We also use Square for offline payments and inventory tracking. And of course, Excel—a classic—where all the planning and projections happen.

Where do you think is the most important area for a business owner to focus their financial energy on and why?

Lamia: I’d say focus your energy on product quality and your people. Your product has to be the best possible thing you can put out into the world. At the end of the day, if you don’t have a great product, you don’t have a business. Just as importantly, invest in relationships. They are everything, especially at the beginning. You might not always be able to pay everyone you want to but be creative. Find ways to uplift them, involve them in decisions, consult them, and barter with them.

Do you think women should talk about money and business more? 

Alia: Definitely. We’re always worried about speaking up because we think everyone else has it all figured out. When you’re a small startup, you think there’s no way others have made the same mistakes that you have. But if we can talk about it more openly, with no shame or pretense, then we can really support each other to make the best and most savvy money decisions. 

The reality is, without good finances, there is no good business, and some of us can really use all the help we can get. 

Do you have a financial mentor, and do you think business owners should have one?

Lamia: We have two. One on the more day-to-day financial management who helps us build spreadsheets, come up with pricing strategies, and analyze reports; and another one who advises more on visionary planning and fundraising. Both are women and both are total badasses.

Business owners definitely need a financial mentor, or more. Find as many quality mentors who care about you as possible, and cultivate those relationships.

What is the biggest money mistake you’ve made and learned from along the way?

Alia: Underestimating the cost of digital marketing. As an e-commerce brand, we definitely did not anticipate the challenge of competing with companies putting in $10,000+ into social media advertising every month. When you’re just starting out with limited budgets for digital ads, it can be hard to compete. This became even more acute during the pandemic because everyone became an e-commerce brand and doubled down on digital. My advice would be, plan for a bigger budget for ads early on or find creative ways to not rely on them like collaborations, partnerships with brick and mortar stores, and investments into your most loyal customer base to encourage repeat buys.

What is your best piece of financial advice for new entrepreneurs?

Alia: Whatever price you’ve determined for your product, double it. Seriously, there are so many costs you don’t even know exist, beyond your COGS, when you launch a new product. All of those should be built into your MSRP. And do as solid a financial plan as you can. 

Anything else to add?

Lamia: If finance is your thing, use it to your full advantage and help others out. If financial matters don’t come naturally to you, make sure you learn the basics of your business finances to always know what’s going on, and surround yourself with people who know what they’re doing and who you can learn from.

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