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.
In 2010, Fiona Sahakian was a hairdresser and new mom working long hours and daydreaming of spending more time with her growing family when a client introduced her to Etsy. “I was so intrigued by working from home and using my creativity to generate income through a platform,” Sahakian tells Create & Cultivate. Less than a year later, she launched the first iteration of Posh Peanut, a line of handmade accessories that eventually evolved into the beloved children’s clothing brand that it is today.
Fast forward to 2021 and Posh Peanut is a favorite among celebrity moms by the likes of Chrissy Teigen, Gabrielle Union, and Eva Longoria, to name just a few. If you’re not an A-lister you can still add the brand’s coveted pieces to cart—but you’ll have to act fast. Last year, Posh Peanut launched at Nordstrom and Saks Fifth Avenue, and the brand’s weekly collection drops have been known to sell out within five minutes (!). But the business wasn’t an overnight success. “I funded my business one sale at a time,” the founder explains. “I spent $500 from my own account for my first ‘big’ inventory purchase. Every sale and every dollar went back into inventory.”
Ahead, Sahakian talks about what it takes to slowly but surely build a successful brand and why hiring an accountant ASAP will save you money in the long run.
Take us back to the beginning—What was the “lightbulb moment” for Posh Peanut? What inspired you to launch your business and pursue this path?
I really wanted to stay home with my growing family. I was a hairdresser working crazy hours over the weekends. When I had my son in 2010, a customer turned me onto Etsy and I was so intrigued by working from home and using my creativity to generate income through a platform. Posh Peanut has evolved over the years from handmade accessories to the softest essentials you can imagine. Although I now work more than ever, it has given me the opportunity to also work on my own terms and around my kids’ schedules.
Today, Posh Peanut is beloved by celebrities including Chrissy Teigen, Gabrielle Union, Mindy Kaling, Eva Longoria, and more. How did you create buzz around your business in the beginning?
In the beginning, we had no marketing budget but we used social media outlets to rally up fans and our community. Our community built the buzz surrounding our coveted designs with lots of hashtags and resharing.
Last year, Posh Peanut launched on Nordstrom and Saks Fifth Avenue. Congratulations! What has been the biggest challenge in scaling your business and what lessons have you learned along the way? What advice can you share on how to scale a business sustainably?
Our biggest challenge has been keeping up with demand and diversifying our supply chain. Our collections are known to sell out in 5 minutes and our production lead time is 8-12 months out on the calendar. We have had exponential growth in the past two years. Finding new supply chains to meet our growth and finance the business has been our biggest hurdle. We are 100% bootstrapped, and in order to scale to our projected numbers, we need capital.
We have been lucky to have great relationships with our suppliers and banks, and have learned that it is better to grow slow and sustain that growth rather than raising a bunch of capital. We don’t put ourselves in a corner or bite off more than we can chew. I suggest negotiating with your suppliers, banks, and find funding yourself if you do not want investors. There are many great lending programs in the e-comm space.
How did you fund Posh Peanut? What were the challenges and what would you change? Would you recommend that route to other entrepreneurs?
Don’t run, walk. I funded my business one sale at a time. I spent $500 from my own account for my first “big” inventory purchase. Every sale and every dollar went back into inventory. I didn’t pay myself out until many years later. I was lucky enough to have a supportive husband. I also kept my job as a hairstylist until I was able to save enough to focus 100% on Posh Peanut. I didn’t take any loans out or seek investors.
This path of course is a slow growth, but I wanted to be self-funded. I think many entrepreneurs seek out funding very early on without getting their feet wet. As we scaled, it did become more difficult and with larger inventory purchases we needed more capital. I don’t think I would change the way we funded the business. Although it took us a bit longer to scale, I think it taught us a great lesson of not over-investing in products, growing too quickly, and then figuring out how to sell them. Slowly growing taught us to invest in the correct places.
Where do you think is the most important area for a business owner to focus their financial energy and why?
Payroll. I think you can add tons of people to your team who don’t add value, making your financials top-heavy every month.
What was your first big expense as a business owner and how should small business owners prepare for that now?
Inventory. Inventory was our biggest investment but also the only way to sell. Negotiate. Negotiate. Negotiate. If you are a product-based company, your inventory will always be the biggest expense. Ask vendors for terms, don’t bite off more than you can chew. You can always buy more and replenish when you see demand.
What are your top three largest expenses every month?
Payroll. Inventory. Paid media.
Do you pay yourself, and if so, how did you know what to pay yourself?
I started paying myself four years ago. I didn’t pay myself in the beginning as I used all the money to fund the business. However, every time I hit a goal of X I would take a little bit of the revenue and spend it on myself on something I really wanted. I believe in setting goals and rewarding yourself with a gift, trip, or whatever that thing is that really motivates you to get to that next step.
Would you recommend other small business owners pay themselves?
If you can, yes! I was lucky because my husband had a good job and paid for the necessities and I was able to save all of Posh Peanut’s earnings to pay for the business expenses. I was able to put every dollar made back in the business. I don’t see a wrong or right answer. It’s how your personal financials pencil out while sustaining the growth of the business.
Did you hire an accountant? Who helped you with the financial decisions and setup? Are there any tools or programs you recommend for bookkeeping?
We did hire an accountant early on. He helped set up our corporations and made sure our finances were aligned. I did not do any accounting or financials in-house. We did hire a controller a few years ago as the company was scaling quickly. I think hiring an accountant or financial advisor is very important as soon as you see traction in your business. You’ll save more money outsourcing finances than trying to do it all yourself. I know how to make the money but I would never have been able to scale without the guidance of professionals.
What apps or software are you using for finances? What’s worked and what hasn’t?
We currently use Avalara for all of our e-comm state taxes and our controller does all the other finances through our ERP system.
How did you know you were ready to hire and what advice can you share on preparing for this stage of your business?
Jack of all trades, master of none. When you get to the point of, “Oh, shit,” you need to hire someone ASAP. You have to spend money to make money. Unless you have a degree in finance or lived in this space, don’t try to carry everything on your shoulders. Having a great accountant, CPA, etc. will save you a lot of money in the long run.
Do you think women should talk about money and business more? Why?
Yes! Yes! Yes! Why not? Women need to start sharing their experiences more and talk about capital. In a male-dominated space, it is incredibly nice to find other women you can relate to. Hopping on a call to get advice from another woman that understands the struggles is refreshing. You don’t feel alone. Women are often more reserved or don’t want to ask questions. I wish more women would find confidence and open up with what they are doing in their space.
You’re a mom of two and a founder! How has being a mother changed your priorities and your focus in terms of your career? Do you think motherhood has made you a better business person?
I always say I have three babies, my two kids, and my business. I love what I do. I love my kids to death but I also love working, building teams, and creating community. My career has made me a better mother. My schedule is always run, run, run, but my kids understand why I am doing it, and in the end, it’s for them. When I am not working, I am 100% with my family. My career has taught me to slow down and do everything 100% with intention. Especially with my kids.
Do you have a financial mentor, and do you think business owners need one?
Yes, we have consultants for finance. I think when you become seasoned in your industry it’s great to have different eyes and mentors in all aspects of your business.
What is your best piece of financial advice for new entrepreneurs?
Know your numbers.