3 Things Millennial Women Can Do Right Now to Set Up an Effective Financial Retirement Plan
Take matters into your own hands by planning ahead.
Photo: Color Joy Stock
Retirement. It’s usually thought of as a life milestone that we all reach at age 65. But recent generations are less prepared for retirement than their parents.
Most of the disadvantages facing millennials are circumstantial due to multiple factors, including changes in the economy, rising healthcare costs, student loan debt, and predictable reductions in social security benefits. These are just some of the reasons why retirement might not be as easy as it once was at the age of 65. Some reports have estimated that the new age for retirement is closer to 73 for millennials.
You can forget the traditional ideas of saving minimally and hoping it lasts while relying on your pension. Instead, take matters into your own hands by planning ahead. Finance expert Ashley M. Fox is the founder and CEO at Empify, a social enterprise with the fundamental mission to educate, empower, and modify the mindset of every individual, inspiring them to achieve career, life, and financial success. Ahead, Fox shares her top three tips on how millennial women can effectively set a financial retirement plant.
1. Pick your financial freedom number.
Most people think retirement is an age when, in reality, retirement is a dollar amount. You need to come up with a number that allows you to live the life you want to feel financially free, and the amount you need to feel freedom from attachment, freedom from the obligation of having to go out and make money, and freedom to live life on your terms.
While it’s great to have an age, the focus needs to be on a dollar amount, because even if you hit a certain age, say 65 or now 70, if you don’t have a specific dollar amount, you will struggle and stress through retirement. Only 40 percent of Americans calculate their retirement needs, so it’s critical to have a destination.
Below are three simple steps to calculate your financial freedom number.
Step 1: Think about how much money you want coming in and have coming in every single month to put you in a position where you are comfortable, and not scared or living in survival mode. Think about what amount of money you need to have to think to yourself, “I'm free, I can think, I have clarity and I can do some of the things I have always dreamt of doing.”
Step 2: Reverse engineer your life. Think about what age you want to start living your dream life with your financial freedom number. Of course, we all want to start living that life today, but you want to think about how much time you will need to have that amount of money coming in. Knowing that the life expectancy of the average person in the U.S. is 80 years old, you are typically in retirement for 20 to 25 years. You want to work backward to see how much money you will need on a monthly basis to live the life you want to live. You have to take your monthly financial freedom number times 12 times the number of years you expect to be in retirement.
Step 3: Create your destination. In order to build a roadmap, you must have a destination. It’s important to determine how much you need and then put in place a clear destination of your retirement path. Once you know your destination, you can create a strategy of the best ways for you to reach your financial freedom number. Everyone’s lifestyle and freedom are unique to them, and it should not be based on the government's standards but on personal goals and standards.
2. Look at what you already have.
It is easy for us to think about all the things we have not done, or how far behind we may be, but it’s important to know how far we have come and how close we are to what we actually need to live our financial freedom life. Look at your company’s retirement plan. Most people never review their company's retirement plans but continue to contribute to it every month. It’s important to know what it consists of and how much is in it. You can do this by contacting your HR department or your HR system, and download your quarterly statements for your retirement plan—whether it’s a 401k, 403b, TSP, 457, etc.
You want to know the type of mutual funds and what investments are in the mutual funds. Analyze the performance of the stocks you are investing in. If your employer offers a matching plan. Also, analyze the performance of the stocks you are investing in. If your employer offers a matching plan, and they match up to five percent, definitely take advantage of that and match it. If you put in less, you are leaving free money on the table! When you decide to leave the company then remember to take that money with you. You can always contact HR to find out if your employer matches your investment.
3. Automate your personal savings and investments.
While it’s great to have a retirement plan with your employer, you want to also consider opening up an account yourself. Consider opening up an IRA account, a brokerage, and an online savings account, and be aware of the investments that will go inside those accounts. While retirement may be in the distant future, it’s so important to have a plan. Typically when we make money, we go and pay everyone else first, and that needs to change.
You should have automatic contributions that are taken out every month in a separate account that is not connected to your checking account. If you have an online account you’re in a position to get a higher interest rate. When you have different buckets of money, they are taxed differently. So when it comes time for you to hit your financial freedom number and retire, you’ll have the funds available to live the life you want to live, on your terms.
Overall, diversify your money and have automatic investments set up to ensure you live the retirement you deserve.
“Most people think retirement is an age when, in reality, retirement is a dollar amount.”
—Ashley M. Fox, Founder of Empify
About the Expert: Ashley M. Fox is a former Wall Street analyst based in Philadelphia, PA. She graduated Magna Cum Laude from Howard University, receiving her Bachelor of Business Administration in Finance. After helping manage money for millionaires and billionaires during her career on Wall Street, Ashley developed the urge to want to financially empower the women, men, and families that were oftentimes overlooked, and founded Emplify in October 2013. Ashley is a highly-sought-after international speaker who has been featured on empowerment tours, college campuses, and keynote speaking platforms. She was a financial journalist at Black Enterprise Magazine and currently a contributor at Forbes. Ashley has also been featured in various publications which include the Huffington Post, Glamour, and The Street.
About Empify: Founded in 2013 by Ashley M. Fox, Empify has a fundamental mission to educate, empower, and modify the mindset of every individual, inspiring them to achieve career, life, and financial success. There is often a pattern of generational poverty in our communities when instead, there should be a pattern of generational wealth in all communities. Through the creation of life-altering curricula, informative digital content, and interactive events, Empify teaches basic wealth fundamentals to both adults and children by pouring belief into communities through financial education, inspiration, and implementation.
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How Brown Girl Jane's Co-Founder Turned Burnout Into a Six-Figure Wellness Brand Beyoncé Loves
She’s driving change and revenue.
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.
Photo: Courtesy of Tai Beauchamp
Tai Beauchamp knows a thing or two about burnout. Before she became the wellness entrepreneur she is today, she built an impressive résumé in publishing, including stints at Harper’s Bazaar, O, The Oprah Magazine, and Seventeen, where she made history as the publications youngest and first Black beauty director. But there are drawbacks to reaching the top at 25 years old. After just a year at the helm, burnout quickly set in, and she left her post at the magazine with the intention of pursuing a more meaningful and socially impactful path. After launching her own media company and consulting with Fortune 500 companies by the likes of P&G, Walmart, and Estée Lauder, her continued experience with burnout ultimately led her to co-found the CBD-based beauty and wellness brand Brown Girl Jane.
As Brown Girl Jane’s co-founder and chief brand officer, it’s safe to say Beauchamp is driving the meaningful change she always aspired to. In the wake of last year’s protests against police brutality and systemic racism, the brand launched their Brown Girl Swap campaign to encourage consumers to swap five mainstream brands they use daily for Black women-owned brands instead. The campaign caught on, garnering the attention of Halle Berry and sparking a partnership with Birchbox to support Black-owned, women-led brands. And that was just the beginning. In less than a year, the company has experienced six-figure monthly sales, been recognized by Beyoncé’s Black Parade Route, and named Refinery29’s Beauty Innovator of the Year.
Ahead, Brown Girl Jane’s co-founder and chief brand officer share her best financial advice for new entrepreneurs and explains why women should talk about money and business more.
How did you know it was time to strike out on your own and what advice do you have for people who want to take the leap to start their own business but are worried about the financial risk?
Truth be told, I am an accidental entrepreneur. I left my role at Seventeen magazine at 26 years old due to burnout after being named the first Black and the youngest beauty director in the history of the publication when I was 25. It was an amazing but exhausting experience. As a result of burnout, I was intentional about wanting to do something meaningful and socially impactful. I went on to work with my mentor’s family foundation where I immersed myself in youth development and global health. While I was consulting with the foundation, I was asked to become the editor of Vibe Vixen Magazine. Because I was consulting, I was able to negotiate with the foundation and magazine to split my time between the two places. So I worked for the foundation two days a week and the magazine three. This was ultimately the beginning of my journey as an entrepreneur. I began my consulting company that same year.
Fortunately, I had two clients simultaneously, so that provided me with some financial stability. To that end, I advise new entrepreneurs to leverage where you are to get to where you want to go. Having to stress about finances while starting a business adds to the complex stress of being an entrepreneur. If possible, I encourage people to alleviate as much of the financial stress as possible.
A couple of ways to do this:
Be willing to begin your business not as a side hustle, but as a Twice Hustle. If you are working a full-time job elsewhere, consider starting your business simultaneously. Not only does it allow you to benefit from some financial security, but it also allows you the opportunity to benefit from additional tax benefits if you start a home-based business.
Be intentional about using your savings and earnings to support your business. If you know you intend to start a business, begin saving immediately, the same way you would for a vacation or investment, and set aside resources for the business.
Another strategy is to consider partnering with someone. You may be the person who has more time to invest while your partner has more financial resources or vice versa. Obviously, aligning with the best partner also takes time.
How have you approached marketing and messaging on social to resonate with consumers but also sell products and keep the business alive during COVID-19?
The most important thing in marketing today is authentic storytelling. Consumers and the public are wiser than ever before. They understand and know when brands are “selling” versus “sharing” and genuinely inviting them to either be part of a community or purchase to their benefit. For Brown Girl Jane, we truly center our community, or Tribe as we call them. Our marketing and brand strategy includes powerful storytelling that centers our brand’s ethos around sisterhood, wholeness (our take on wellness), the power of the plant, and empowerment.
On social media we tell stories, we include our Tribe in those narratives and we engage her. As an example, we host a twice-weekly IG Live show called “You Good, Sis? The Check-in with Brown Girl Jane.” I host this show and speak to women in entertainment, business, beauty, and wellness about how they are, understanding their wholeness practices, how they balance life and work, and why/how CBD is part of their wholeness toolkit. By seamlessly integrating our brand story as well as our collection, our Tribe is able to effortlessly understand how and why BGj should be part of her life.
During COVID, we’ve been fortunate. Our collection is all about helping our Tribe feel more centered, balanced, healthier, and well-rested. That’s who Brown Girl Jane is. So we’ve been part of the solution during these strange times. Everyone wants to feel less anxious. And because our collection is highly efficacious and supportive of wellness as a whole, we are able to boldly share that with the public. Our testimonials truly speak for themselves.
We also recently announced a partnership with Unilever and Shea Moisture. It’s quite a gift to have such a dynamic partnership. This partnership affords us a unique opportunity to leverage shared reach as well. And last but not least, we’ve been fortunate to have quite a bit of earned media. We’ve become a cult-favorite among editors and influencers! That support is priceless.
What percentage of your budget is currently going toward marketing and are you seeing a return on that investment?
We are grateful to have grown our business organically without the use of paid advertisements and don’t currently have a paid media budget. Because of the extensive love from earned media, people are learning about our brand through storytelling and the stamp-of-approvals given by trusted insiders and industry editors.
A portion of all Brown Girl Jane sales goes toward a non-profit organization aligned with your mission to better the lives and wellness of Women of Color. Why is giving back such a crucial part of your business model and how do you balance paying it forward with turning a profit?
We knew that giving back was always going to be a central focus of our business model, both in terms of supporting our community through a collective sisterhood and philanthropy. We are true to our word about serving as a support system in more ways than one, and find that businesses thrive when approached from a holistic perspective, versus only focusing on commerce. We give a portion of all sales, so our donations are supported by the purchasing power of our Tribe. It’s a win-win for everyone.
How much did you pay yourself in the beginning and what do you recommend to female founders starting out now? Why?
We’re bootstrapping and self-funded, and my co-founders and I do not pay ourselves, preferring to reinvest profits back into the business and our amazing talented employees who help drive our business. Although most start-ups are not profitable for three to five years, we’ve been profitable almost immediately, so we are on track to begin paying ourselves within the year.
Where do you think is the most important area for a business owner to focus their financial energy?
Financial planning and bookkeeping! With a rapidly growing business such as ours, it’s easy to let finances take a backseat to driving growth. We spend a lot of time focusing on which opportunities make financial sense, in the short and long term, and making sure we are staying on top of the many banking and reporting guidelines that can overwhelm small business operations.
What was your first big expense as a business owner?
Research and development, cultivation sourcing, product formulation, and inventory. Our collection is expertly-crafted, and we spend a ton of time researching and working with the very best cultivators and scientists when designing our product offerings. Once the products were formulated, we needed to have enough inventory to support the demand, which requires a lot of cash management and planning.
What are your top three largest expenses every month and were you prepared for those expenses when you first started?
We’re a product-based company, so the top three include inventory, payroll for employees, and insurance/legal/web costs. Each of our founders was an entrepreneur prior to this launch, so we were prepared that these expenses would be necessary to support our rapid growth.
What percentage of business revenue is spent on employee salaries?
Our employee and consultant salaries are equal to about 50% of our business revenue.
How much of the business revenue should new entrepreneurs be saving, if possible, and why?
This is such a personal question that entrepreneurs truly have to answer themselves, but savings should be able to support worst-case scenarios for at least three to six months, if possible. We recognize that this is difficult for new brands and businesses because they typically are not immediately profitable, but savings are extremely important in this increasingly competitive and unpredictable environment.
Did you hire an accountant when you first started out? Who helped you with the financial decisions and set up?
Yes, we have both an accountant/bookkeeper and a CFO. We also integrate services such as Quickbooks that can aggregate your financials into one master headquarters.
What are some of the tools you use to stay on top of your business financials?
Back-end website integrations, Quickbooks.
What do you wish you’d done differently in your financial journey as a business owner and why?
We assumed that automations would capture all necessary financial analytics and recordings, and we’ve learned that an accurate and comprehensive download of financial health needs a combination of an expert and technological integrations.
Do you think women should talk about money and business more? Why? How will it improve financial outcomes for female founders?
Absolutely! Men do it, and they do so unapologetically. We should be sharing tips, best practices, salaries… everything! The more we can each pull from the experience and expertise of others in our industries, the better. It should not be taboo to talk about finances. With more information, we’re able to demand more money, advocate for better business opportunities, and begin to lay the foundation for the most successful business possible. It does no one any good to operate in a silo.
Do you have a financial mentor? Do you think business owners need one?
I didn’t for a long time, but I have friends who are seasoned executives and entrepreneurs and they have helped immensely. The biggest hurdle was getting over my own issues with asking questions about money and finance. But after making a lot of mistakes earlier in my career, I became more open about sharing my challenges and asking for advice. I made costly mistakes. Ego is often a deciding factor in asking for financial mentorship, but I think founders will find that other successful women are eager to share advice and want you to succeed. I also have a built-in benefit of having a co-founder, Malaika Jones Kebede, who comes from the financial services industry.
What is the biggest money mistake you made and learned from along the way?
Early on, it was not only about saving properly but also understanding taxes and bookkeeping.
What is your best piece of financial advice for new entrepreneurs?
Set aside a portion of revenue whenever you can. It’s inevitable that unexpected expenses will arise, from tax bills to a quick need to increase inventory. Being conservative from the beginning will help when you require a quick influx of funds.
What is one financial thing you didn’t do at the beginning of your business that you urge founders to do now and why?
Establish a clear plan for the financial side of your business in the same way you do for strategy, marketing, or production. It sometimes seems like the most burdensome and least sexy component of running a brand, but trust me, it’s the most important.
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How to Heal Your Relationship With Money
What limiting beliefs are you ready to let go of?
Money is emotional.
Think about how excited you were as a kid when someone gave you money to buy a treat from the ice cream truck or how rich you felt when you started your first job in high school.
How does money make you feel today?
If money talk makes your palms sweat, you are not alone. Our relationship with money is incredibly personal and rooted in our upbringing. No matter how you grew up, beliefs about money are ingrained in you.
Most people struggle with their relationship with money, but when that money feels directly tied to our business success, it can be even more challenging to heal. As an entrepreneur, you not only have to think about your finances, but also what money means for your business.
Entrepreneurs just starting out may fall into two camps when it comes to their relationship with money: The “you gotta spend money to make money” camp, or “I’m afraid of spending and losing what I have” camp. Both are common setbacks for entrepreneurs.
And the thing is, both may be limiting you. It limits growth in your business, limits your wealth, and limits the success—however it means to you—of your business.
When I started my business, I was so nervous about outsourcing because I didn’t want to say goodbye to a chunk of revenue. With my corporate mentality, I was accustomed to making a certain amount of money and keeping a portion of that money. As an entrepreneur, I had to overcome the fear of investing in order to grow my business.
As a financial and investing coach, I work with powerful corporate women and bad*ss women entrepreneurs. They know how powerful money, as a tool, is and understand that it is vital to their success in business. However, like many of us, they have a natural inclination toward feelings of scarcity around money.
But that doesn’t mean that they (nor you) don’t have the power to shift their mindset to a place of abundance.
Beyond the numbers in their bank accounts, the women in my program walk away feeling confident when it comes to money and investing.
This is the ultimate goal: Getting to this abundance mindset and confidence level, and it takes real work which goes beyond reading books or listening to speakers. It takes a lot of unpacking.
Like anything, our relationship with money is directly tied to our behavior. Whatever your money mindset is currently, it is influencing your actions, and those actions lead to both good and bad results.
If you feel like money is running your life, you are struggling to generate more income, or just feel overwhelmed with finances, here are some steps to heal your relationship with money and turn that intimidating, confusing topic into one that empowers you.
1. Explore your limiting beliefs.
A limiting belief is a false belief that you learn by making an incorrect assumption about something in life.
When we are children, we are like human sponges. We absorb everything we see and hear from the adults in our lives. What we learn gets stored in our unconscious mind and our brain recalls the information when needed. The important thing to remember is that your thoughts and beliefs may not be things that YOU believe at all, they’ve just stuck with you into adulthood.
If you see a couple in a Ferrari and think, “Ugh, that’s so flashy and greedy,” ask yourself what makes you think those people are greedy? Do you know them? What if they’re philanthropists that donate a quarter of their income to charity and you’ve falsely labeled them as greedy. Half of the battle with money is becoming aware of your existing beliefs and understanding where they came from.
Some of the limiting beliefs I see surrounding money are, “I’ll never have enough money,” “I could never afford that,” “Wealthy people are greedy,” or “I will always have debt.” While you may not realize that these thoughts are impacting you, they determine your relationship with money.
Sit down with a notebook and a pen, grab your beverage of choice, and settle in. Now, think about how you think about money and write those thoughts down. Then, ask yourself where that thought came from. Is it a belief of your own? Was it adopted? Then ask yourself if you believe that thought to be true or false.
2. Reframe and create new beliefs.
When a piece of information or a thought comes to us, we either disregard, question, or hold onto it as a belief. This step is all about deciding what YOU believe and what beliefs you are ready to let go of.
Find evidence contrary to the false beliefs you have identified. For example, instead of thinking, “I’ll never have $10,000-revenue months in my business,” what if you told yourself, “I’m not yet hitting $10,000 revenue months, but I’m on my way.” Notice the difference in how that feels? Reflect on what you actually believe, and write the reimagined thought down next to the old limiting belief.
Another tip is to come up with supportive money mantras that will help you feel more positive and less stuck when it comes to money. Some examples are, "I am WILDLY worthy of MASSIVE abundance!" or “The more money I make, the more it magically flows into my life!”
3. Gain clarity and direction.
Once you really have a chance to sit with your limiting beliefs about money and revisit them, it’s time to take action. Without goals or a direction, you won’t have milestones to celebrate with a dance party or know where you should be directing your energy.
Let’s say you’re an entrepreneur, and you decide, “I want to have consistent $10,000-revenue months.” That’s a great start, but that goal should be clearer and more specific. Visualize the path you need to take to get to that larger goal. Do you need additional support? If so, what type? Do you need to set aside money for marketing? A mentor? A new offer?
Consider the concrete steps you will need to take to achieve that financial goal along with the costs (including time, mental labor, overhead costs, etc.) associated with each step.
Getting clarity on your goals will allow for more celebration and less stress. After all, finances are a lot more fun with a celebratory glass of Champagne in hand.
4. Build your confidence.
You are a bad*ss boss lady who is an industry leader, and you’re a force to be reckoned with. That confidence you bring to sales calls and speaking events should be the same confidence you bring to your finances. It just takes some practice.
The most important step to healing your relationship with money is letting go and stepping into your confidence when it comes to your business and your money. You have to jump in. It’s time to put your CEO hat on, feel inspired by your new money story, and be fearless in making money decisions. Your business will skyrocket and so will your confidence.
“That confidence you bring to sales calls and speaking events should be the same confidence you bring to your finances.”
—Lisa Seery, Money & Investing Coach
About the Author: Lisa Seery is a money and investing coach for entrepreneurs and high-powered corporate women. She leverages her 15-year career in investment management and her education as a health coach to educate and empower women to become confident investors, own their money story, and heal their relationship with money.
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This Founder Walked Away From a Steady Wall Street Job to Bootstrap a Clean Beauty Brand
And the risk paid off.
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.
Photo: Courtesy of Cocokind
Leaving a steady job and switching lanes isn’t easy.
Just ask Priscilla Tsai, who was climbing the Wall Street corporate ladder when she decided to shift gears and launch Cocokind, a clean, conscious, sustainable skincare brand. "The first years were tough,” the founder and CEO tells Create & Cultivate. “I was only 25, considered successful in my career, and about to leave it all behind to start a company in an industry that I had very little experience in."
Disappointed by the lack of transparency in the beauty industry and sparked by her own struggles with hormonal acne, Tsai felt compelled to ditch her high-paying job in finance to launch an accessible clean-skincare company. Of course, it’s safe to say that Tsai’s risk has more than paid off—Cocokind is now stocked in every Whole Foods store in the U.S.—but all that success didn’t come without hard work and determination.
In this installment of Money Matters, Tsai shares the nitty-gritty financial details behind what it really takes to get a business off the ground.
CREATE & CULTIVATE: You walked away from a career on Wall Street before bootstrapping your business. What led you to leave a steady paycheck and switch lanes from finance to beauty?
PRISCILLA TSAI: I always knew I wanted to start my own company. My mom is an entrepreneur and watching her career progress definitely inspired me. Separately, my hormonal acne was my biggest insecurity, and I hated the harsh medications and pills that my dermatologist prescribed me. They kept my skin technically clear, but they also totally stripped it of moisture and gave me digestion issues. Ultimately, I decided to explore more holistic remedies for my skin and body, and when I’d created something that worked and that I was proud of, I knew I needed to share it. As a consumer, I was also disappointed at the lack of clean ingredients and transparency in the beauty industry, and I felt compelled to offer a better, more accessible option.
Can you explain what those founding years were like financially?
The first years were tough. I was only 25, considered successful in my career, and about to leave it all behind to start a company in an industry that I had very little experience in. I hustled in every way possible. I made full batches of products by myself. I created our first labels on Photoshop instead of hiring a designer.
I think many founders think that they need a ton of capital to start a company. Obviously, capital is important, but for me, time was almost as important as money. It took a lot of time for me to get Cocokind’s formulas to meet my standards, and it took a lot of energy and persistence to get our products into brick and mortar stores. I went door to door to Whole Foods’ in northern California to demo my products to the regional buyers, which led to building great relationships with them. Today, Whole Foods is one of our biggest retailers—we’re actually stocked in every single store in the United States.
“Knowledge is power. Knowing as much as you can about your financial situation is essential to feeling financially empowered and independent.”
Talk us through your bootstrapping process. How did you self-fund your business? Would you recommend that route to other entrepreneurs?
I really just tried to take things one step at a time, but I also worked quickly once I had a product concept and samples. I started going door to door to get my product out there and to start bringing in revenue as quickly as possible. Finding retail partners like Whole Foods helped me get Cocokind off the ground pretty immediately.
These days, it’s much more common to raise than to bootstrap and I think that either strategy can be effective. It’s really just about what the founder wants and which approach makes more sense for their work style and personality. I personally loved bootstrapping, but I definitely don’t think it’s for everyone.
How did you know the brand was ready to scale and introduce new products?
At Cocokind, we’ve always been big on social media because it makes it easy to build relationships with customers and hear their opinions and feedback. We’re able to use this feedback to decide what our community and what the market, in general, wants.
In the beginning especially, we funded new products by starting with really small batches—that way, we were never taking huge risks with inventory. On top of that, I thought it’d be better to sell out of a product and have a waitlist than it would be to overproduce a product and potentially run the risk of not selling enough of it.
I guess my main point here is that entrepreneurs should always recognize that their product will most likely change to improve, so over-investing in early iterations can be a bad idea.
“I hustled in every way possible. I made full batches of products by myself. I created our first labels on Photoshop instead of hiring a designer.
”
-Priscilla Tsai, CEO and founder of Cocokind
What was your first big expense as a business owner?
Either insurance or inventory!
How did you decide what to pay yourself?
I didn’t! I didn’t pay myself for the first two years of my business, but I was lucky enough to be able to live off of savings during that time.
How did you decide what to pay employees?
Research. I always want my employees to be paid fairly but as competitively as possible.
What are your top three largest expenses every month?
Payroll, inventory, and rent for our office and warehouse.
How much do you spend on office space?
We’ve always tried to spend 4% of our sales or less on rent. We did recently just relocate to a larger office space so we can continue to grow our staff.
How much are you saving? When did you start being able to save some of your income?
It varies. Saving has always been important to me, even more so when I had a regular job, before starting Cocokind. When I was in college, my parents helped me with my tuition and living expenses as long as I sent them an itemized list of all of my expenses every month. That experience helped me learn how to budget and it also taught me that when you know your numbers, you save more.
“Cash is everything. No matter how much profit your company is bringing in, you need to adhere to a tight cash flow model.”
What apps or software are you using for finances?
I actually just use Excel to track all of my expenses. I don’t have a financial advisor at this time.
Do you wish you’d done anything differently in your financial journey as a business owner?
Nope! I’m really proud of Cocokind and how far we’ve come, and I think we’ve always been responsible with capital.
Why should we all be talking about money?
I think everyone should talk about money. Knowledge is power. Knowing as much as you can about your financial situation is essential to feeling financially empowered and independent.
Do you have a financial mentor?
I don’t. But my parents did and do a great job of teaching me strong values when it comes to my finances and how I think about them, and I’m grateful for that.
What is your best piece of financial advice for new entrepreneurs?
Again, knowledge is power! Knowing your numbers and staying on top of them is crucially important to starting and running a sustainable business.
What is the biggest money lesson you've learned since starting Cocokind?
Cash is everything. No matter how much profit your company is bringing in, you need to adhere to a tight cash flow model. It’s something I’m still learning and always trying to improve upon.
Finances Have you Frustrated? Have No Fear, Podcasts Are Here!
Money matters.
Written by Jackie Sedley.
Money. It’s a short word that stands for one of the most nerve-wracking aspects of our day-to-day lives. There is no denying that some of us are more money-minded than others, but by no means should anyone feel guilty or ashamed for having trouble with their finances. Thankfully, those of us who are more financially educated and experienced have taken to the oh-so-convenient world of podcasting to share their tips and tricks. From financial advice to financial slip-ups, these podcasts can inspire and motivate you to feel less ashamed and more capable.
Photo: Courtesy of Create & Cultivate
The Podcast: The Real Female Entrepreneur
Why We Recommend It: This podcast really hones in on the less-glorifying aspects of the business. Host Lauren Frontiera brings about conversations of failures, fears, triumphs and struggles, all packed into hour-long episodes. This podcast is great for anyone who feels insecure about their financial struggles, as it brings about a sense that you are not alone.
Best Money Tip: Prioritize passion over a paycheck. On TRFE 218: Follow Your Passion, Not the Paycheck with JJ Anderson they discuss the consequences of putting money on too high of a pedestal. “People prioritize monetary gain over enjoyment… especially as entrepreneurs” she told TRFE. “ I know the end goal is to make money, and it will come if you’re consistent and you’re strong in what you’re doing. But if your sole focus is making money, it’s not going to get you out of bed. What’s going to get you out of bed is your passion and your happiness in what you’re doing.” But this is our favorite JJ Anderson quote from the episode: ”The amount you’re being paid does not validate you.” Preach.
The Podcast: WSJ Secrets of Wealthy Women
Why We Recommend It: Every Tuesday, host Veronica Dagher enlightens listeners with empowering conversations revolving around finance and professional success. This women-centric podcast brings up a wide array of female success-stories, from self-made entrepreneurs to philanthropic advocates. With such a diverse assortment of guests, it isn’t hard to find an episode that you can relate to.
Best Money Tip: Stay true to you. In the episode Dr. Laura Forese: Changing the Future of Women’s Healthcare Dr. Forese advises, “Be true to your own brand. Be true to yourself. Don’t try and emulate anything else. I think having a distinct identity is very important when thinking of your brand, but ultimately making sure that your ethos makes sense and that it’s true to who you are. You’re not putting something out there just because you think people are going to love it, you’re putting it out there because you know it’s the right direction to go and it makes you happy.”
The Podcast: The Biz Chix Podcast: Female Entrepreneurs
Why We Recommend It: This podcast is less about learning from others’ stories, and more about uncovering your own methods to financial success. Host Natalie Eckdahl is a well-known author and coach and has used her background in business to promote the importance of growth, adaptability, and team-building.
Best Money Tip: Reset your mindset. According to Episode 360: Why We Create Our Own Glass Ceilings women are scared to charge more for their products due to fears of judgment and scarcity. In response to this issue, host Natalie Eckdahl feels as though, “our mindsets need to be continuously reset as we up-level and advance in our businesses.” She suggests that confidence is key in making a profit and continuing to know the worth of your project.
The Podcast: Inspired Money
Why We Recommend It: Hosted by financial advisor Andy Wang, this podcast brings inspiration and motivation into the financial success conversation. Aiming to shift listeners’ perspectives on money, the interviews that Wang conducts are both informative and captivating and will be sure to stick with you the next time you pull out your wallet.
Best Money Tip: Be thoughtful with your dollars. On Buy the Change You Want to See With Jane Mosbacher Morris, she emphasizes that “not only should there be alignment with your values and your purchasing decisions, but also knowing that how you spend your money and who you spend your money with can significantly impact the lives of others.”
What are your favorite money podcasts? Share the link below with your top money tip so we can all tune in!
Easy Money: How to Afford the Life You Want (Even If You Don't Have a 6-Figure Salary)
This app is a gamechanger.
This post is in partnership with YNAB.
Photo: Courtesy of Create & Cultivate
Are you familiar with the phrase “scroll head”? If not, here’s some slang 101: a scroll head is someone that aimlessly scrolls through social media, with no purpose at all. In the tech-driven world, we live in, it’s common to find ourselves subconsciously using apps that provide us with no beneficial outcome.
Some jaw-dropping data we found courtesy of Pew Research Center states that 81% of Americans own a smartphone and users between the ages of 18 to 29 are the most dependent on their devices. No real surprises there, but our question is, what are those young adults doing on their phones? Some likely guesses are scrolling through Instagram or texting their group chat. But what about budgeting their monthly income? Say, what? Well, after reading a recent survey that found most young millennials had less than $1,000 in their savings accounts—nearly half had nothing saved at all—we can only hope that they’re devoting some of that scroll time to getting their finances in order.
So, if this sounds like you and you haven’t yet implemented a money-saving strategy, then it’s high time you did. And for those who already have one (and want to up their game), this will interest you, too. Introducing the app that consciously sets you up for success—You Need A Budget (or YNAB for short).
Whether it’s a European vacation you’ve been postponing since graduation, a little more spending money to support your social life, or you simply want to start saving for the future—you need a budget. And it’s no mystery that budgeting can be a big monster to tackle. But, thankfully, YNAB is here to be your best money-saving friend and help you get to where you want to be, financially. It’s so easy.
To make matters even easier, we’re going to show you a break down of the YNAB app’s features with a visual guide below. Follow along to see why you need a budget (like right now!).
Be sure to read all the way to the end to take advantage of YNAB’s special offer for Create & Cultivater’s!
How to budget with YNAB:
We created a theoretical monthly budget for someone who would benefit greatly from YNAB. This person is a freelancer, who brings home $4,000 (after taxes) per month. With the rise of the gig economy, it’s been made prevalent that freelancers facilitating multiple streams of revenue have a more convoluted experience when managing money. So, we wanted to highlight what that might look like, in a way that is easy and beneficial to any and all potential users—freelance or not.
Download:
When you download the app, you are given the option for a trial month free. Once that month is over, they will charge your card info stored in the app store at the yearly rate of $83.99 to continue using. Note: While, at first, this might seem like a steep price to pay for an app, we can guarantee you, that when you see how much money you’re saving (and how much this app is doing to streamline your finances) you’ll understand why. Think about it, that’s just $6.99 a month to have a financial advisor in your pocket. Believe us, it’s worth it.
Link or unlink:
You’ll be given the option to link your bank account directly to the app or manually input your dollar amount to then start budgeting. This is up to your discretion. For the sake of our theoretical monthly budget for a freelancer, we chose to manually input the take-home of $4,000.
Your accounts:
You will see a screen with a list of your accounts. You can choose to add multiple budget plans here. For our example, there is one account titled “Monthly Budget”.
Your budget map:
Your budgeted amount inputted (or the amount reflecting your current bank account balance if you decided to link your bank account) will be highlighted in green at the top of the screen. And below that, you will see a list of expenses you wish to budget against. Your budget map is completely customizable and it’s up to you how you choose to label and allocate your spendings.
Expense categories and labeling:
You can change the names of the different expense categories along with the expense names themselves. We added “Hopeful Savings”, renamed some expense labels, and removed other default expenses that came with the app.
Allocating your preferred spending:
You choose how much you want to allocate to each expense. Below is what we came up with for our theoretical budget. You can edit these allocations as you go if things change for you and your money. The app will let you know when you are over budget by showing the negative amount at the top and highlighting it in red.
Other features:
Beyond the budgeting tactics and tools, there is also a help button that will provide you with any assistance and resources you might need on your way to budgeting. You can also view your “Age of Money” to see how long as well as how much you have been saving. The “Net Worth” function shows what your debts and assets amount to and for more insight into your money-saving success. For more help, check out their online resources and guidelines.
Conclusion:
Though you will have to invest some time (approximately 20 minutes) to input all of the figures, in the beginning, it will be worth your while. Once the setup is complete, it’s easy money. In this specific scenario, savings came out to $140 a month. Now, this might not sound like a lot of bills. But think about it, over a course of 12 months, that’s $1,680. And remember, your budget map is always adjustable. We just placed higher importance on the money for fun and clothing, rather than bigger savings. But, that is just one scenario. After seeing how much we had leftover after dividing up our money (the way we thought we should), we came to realize that maybe we should reset our budget map and reconsider how much we want to save each month. This was a blatant sign of why we should save!
This theoretical process was purely to show the capabilities and functionality of the app. It’s literally that easy to map out your spending on a monthly scale, and incredibly helpful to see what you think you should be spending on rather than the reality. The app allows for extensive customization and we couldn’t love it any more than we already do.
Saving money is incredibly important for a number of reasons, but as is treating yourself here and there. There is no passing of judgment on what you spend your money on, and the app reflects that entirely. Now get out there and start budgeting and don’t forget to make adjustments along the way!
SPECIAL OFFER:
YNAB is giving all Create & Cultivater’s the chance to try the game-changing app for 34 days FREE of charge. So, break the paycheck to paycheck cycle, get out of debt, and save more money to reach your goals. It’s your turn!
Money Matters: Why "Being Close to the Financials Is Key" for Every Entrepreneur
Tech CEO, angel investor, and bestselling author, Kim Perell gives us the 101.
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.
“Great people make great companies, so you need to invest in people first and foremost. No one is successful alone!”
—Kim Perell
When Kim Perell sold her first company, the cash file was so big, it exceeded the space on the receipt at the ATM. But it took a lot of hard work and grit to get to that point. In fact, Perell’s first company actually went bankirupt and she fully self-funded her first startup so it’s humbling to know that not every success story has a fairytale beginning.
Now Perell is helping other women join the billion-dollar club as an angel investor but that doesn’t mean she has slowed down her own entrepreneurial pursuits. The reality is quite the opposite. A serial entrepreneur at heart, Perell is now a tech CEO, and author of the national best-seller, The Execution Factor which offers practical (and real) advice for the next generation of entrepreneurs.
In this edition of our popular Money Matters series, Perell gives all budding entrepreneurs a reality check with her best money advice and financial tips to get your passion project off the ground. Just be ready to dream big and hustle hard.
Where do you think is the most important area for a business owner to focus their financial energy?
“As my first company went bankrupt, and I self-funded my first startup, I relentlessly focused on the bottom line. As a business owner, you have to pay very close attention to all financials—incoming, outgoing, collections, cash flow—all the financial fundamentals, including growth and profitability.
What was your first big expense as a business owner?
“Great people make great companies, so you need to invest in people first and foremost. No one is successful alone! We all bring different strengths, talents, knowledge, and experience to the proverbial table. The more we can recognize, nurture, bridge, and leverage these differences, the more effective, productive, successful—and, ultimately, the happier we will be.”
How did you decide what to pay yourself?
“When I first started my company, I didn’t pay myself and I continued on that trend for a very long time, and continued to re-invest in the company.”
How did you decide what to pay employees?
“We would pay competitively based on market value in addition to equity, and I’m also a big believer in goals and paying on the achievement of goals. Setting specific financial goals for people and teams and the company creates a win/win. Everyone is successful and aligned.”
“As an entrepreneur, being close to the financials is key.”
What are your top three largest expenses every month?
1. People
2. Rent (we have 21 offices)
3. Technology infrastructure investment
How much do you spend on office space?
“My first office was my kitchen table and from there I moved up to a windowless storage room as our first official office. It’s a wonder anyone worked for us. We were extremely scrappy when we started. Big office leases have bankrupted many start-ups, so I encourage entrepreneurs to be conservative on big overhead commitments. Today, many years later, as a global tech company, the amount we spend on office space is significant, as we have 21 offices across the globe. Cost varies greatly by city and the number of people in a specific office. Our offices in the bay area, NYC, London, and Singapore are particularly expensive.”
How much do you spend on employee salaries?
“People make up the largest % of our overall budget.”
“For women to reach the highest levels of leadership, the ability to understand the numbers and metrics of a business (and the sector you operate in) is key, and women are generally exposed to this less. ”
How much are you saving? When did you start being able to save some of your income?
“I remember when I sold my first company in 2008. I was, ironically, in Vegas for a conference when the buyer wired the money into my account. I remember going to the ATM, and the cash file was so big, it exceeded the space on the receipt. I started jumping up and down just thinking, Oh, my gosh. I can’t believe this actually happened.’
“Then I went back to work. I worked so hard to get to that point and am so appreciative and grateful for the opportunity that I’ve been given, that I must ensure that I continue to live a very responsible lifestyle. That was really the biggest turning point in my life. Up until that day, I was investing every dollar back into my company and I was finally able to see the reward from all my hard work.”
What apps or software are you using for finances? How did you decide when to hire a financial advisor?
“When I first started the company in 2003, I used Quickbooks and I ran all the financials myself. As an entrepreneur, being close to the financials is key, and I was especially aware as the company I was with previously went bankrupt. The keen understanding of the business metrics is also what enabled me to successfully sell the company later.”
Do you wish you’d done anything differently in your financial journey as a business owner?
“Dream bigger. While caution can be a good thing, don’t let it stop you from reaching your full potential. Allow yourself to dream bigger and reach for greater success. Now I think bigger and dream bigger in every aspect of my life. When you dream, dream big!
“Follow the two by two rule: it’s going to take twice as long as you think to achieve your goals, it’s going to cost twice as much, and you are not the exception. ”
Why should women talk about money?
“Everyone should talk about money, and especially women who tend to talk about it less. I would encourage women to ask more. Often times, success starts with an opportunity, and then delivering great results leads to more opportunities. If you’re stuck and don’t know how to get that first opportunity, the best way to start is by asking for what you want.
“Ask for the promotion. Ask for the raise. Ask for the opportunity. If you don’t ask, you won’t get. The worst thing that will happen is you don’t get it, but I’ve found that most of the time just the simple act of asking opens up the door to even more possibilities.
“For women to reach the highest levels of leadership, the ability to understand the numbers and metrics of a business (and the sector you operate in) is key, and women are generally exposed to this less. Understanding the numbers lets you speak the same language as everyone else, especially in management and leadership.
“Objective metrics also reduce the potential of gender bias because they are data-driven. I would encourage women to run towards the opportunity to gain exposure and understand the P&L and the financial fundamentals of your business and the sector you want to work in. Focus on how to improve and impact it in your role and in your team. Every role has some financial or key metric impact—how are you helping to drive revenue/growth, or profitability, i.e. reducing cost or allowing the business to gain greater leverage or increase efficiency.”
Do you have a financial mentor?
“My Dad. My dad was an entrepreneur who often struggled and he taught me the concept of having “F YOU” money, which means you should strive to always have enough money (at least six months worth of savings) so that you never have to rely on a job that doesn’t suit you. If you are financially in a position where you are not dependent on each paycheck, it will allow you to make better life decisions that are more aligned with the vision you want for your life.”
What is your best piece of financial/money advice for new entrepreneurs?
“I’ve become an active angel investor and I tell all entrepreneurs and the companies I invest in to follow the two by two rule: it’s going to take twice as long as you think to achieve your goals, it’s going to cost twice as much, and you are not the exception. To this day, I continually remind myself of this in whatever I’m doing financially, professionally, and personally whether I’m going to remodel a house and it’s going to cost me twice as much and take twice as long. If I’m going to buy a business at a certain amount, it’s going to cost me twice as much. Just knowing that it is going to cost more and it is going to take more time than anticipated helps create both the financial framework and the mindset.”
What was the biggest money lesson you learned since starting your company?
“How true the 2x2 rule is. Everything is going to take twice as long and cost twice as much as you originally thought.”
This Month in Money Moves: The RealReal, Away Luggage, Revolve, Reformation, Madewell (and the U.S. Women's Soccer Team)
From raising capital to going public, these female-owned or led companies are showing us how it’s done.
In this monthly series, we take a look at the female-owned or led businesses that are making serious moves in the $$$ department. From raising funds to going public, these women are showing us how it’s done and giving us all serious inspo to finish out this week like a true boss.
#SupportFemaleOwnedBusiness
The Real Real
Within minutes of debuting its initial public offering on Friday, stock for the popular secondhand luxury retailer, The RealReal jumped 50% raising $300 million. But this isn’t Julie Wainright’s first rodeo. The founder and CEO of The RealReal took Pets.com public in 2000. What a boss.
The U.S. Women's Soccer Team
The headlines have been blazing this week with news that the U.S. women’s soccer team are suing for equal pay after their historic win. Sen. Joe Manchin proposed a bill that would withhold funding from the 2026 men's World Cup—jointly hosted by the U.S., Mexico, and Canada—until the two teams are paid equally.
Here’s what ESPN told Broadsheet:
“FIFA will award $30 million in prize money for the Women’s World Cup. The men received $400 million last year. [FIFA president Gianni Infantino] said this week he wants to double the prize money for the women’s tournament by the next edition in 2023, but the gap between the genders could actually grow with FIFA expected to award $440 million for the men’s tournament in 2022.”
Does that seem fair to you? Sound out in the comments below.
Away Luggage
The founders of Away luggage are on a roll. Co-founder Jen Rubio was featured on the cover of Inc. Magazine after the brand became a unicorn after being valued at $1.4 billion after raising $100 million (they were also named one of Forbe’s 2018 Next Billion-Dollar Startups). This week Rubio and her co-founder Steph Korey are featured on Fortune's 40 Under 40 list. Congratulations, girls!
Revolve
One of our favorite online retailers renowned for their impressive social media and influencer parties (and trips around the world) surprised everyone this month when they announced their IPO and raised $212 million in their initial public offering. Color me impressed.
Madewell
In the spirit of IPOs, Madewell is also (reportedly) on track to announce theirs. According to a Reuters report, three sources confirmed that “J. Crew has hired banks to prepare for the public offering of the denim-centric brand, pegged for after Labor Day, as part of a strategy to revive the larger retailer.” This would position Madewell CEO Libby Wadle at the head of her own public company.
Reformation
While founder and CEO, Yael Affalo of Los-Angeles based clothing line, Reformation will remain CEO, the company will soon be majority-owned by private equity firm Permira Advisers. The brand is on track to deliver $150 million in sales this year.
Did we miss something? Share the money moves you’ve seen this month so we can add it to the list!
Money Matters: Christina Stembel of Farmgirl Flowers
“Knowing your numbers personally and professionally is power.”
In today’s Money Matters series (see the others here!), we’re diving into the wallet of Christina Stembel, founder of the company we’ve all got our eyes on, Farmgirl Flowers! Christina is one of those rare gems who doesn’t just have a stellar eye for visuals, she’s got the left-brain financial smarts to make a successful company out of it. Read on to find out how she spends her company money—and her best advice for other business owners!
Where do you think is the most important area for a business owner to focus their financial energy?
Really knowing their numbers. Not the pie in the sky financial model that looks great if everything goes exactly as planned numbers, but the nitty-gritty do our unit economics truly work, where’s our money going, and how much is costing us to acquire a customer kind of numbers numbers.
What was your first big expense as a business owner?
My first website cost a little more than 10% of the total amount of savings I had to launch my business and get it to the point of being self-sustaining. That was super scary to spend that before I had any way of knowing if it was going to work.
How did you decide what to pay yourself?
I didn’t pay myself for the first five years. I could have earlier but chose to reinvest the money back into the company instead. This helped me to afford a tiny marketing budget long before I would have been able to if I had instead used the tiny profit we had to pay myself with.
How did you decide what to pay employees?
It’s always been based on what we can afford to pay them. Back at the beginning, this started at minimum wage and has grown. Offering benefits was also a goal early on, but it took a few years before I could afford to do it. Next came the 401K. As a bootstrapped company we add pay tiers and benefits as we can afford to financially.
What are your top three largest expenses every month?
Shipping (FedEx), which we actually subsidize by over a million dollars a year. It’s also our biggest customer complaint [shipping cost]. We often hear that we’re gouging them in shipping prices in order to make profit off the extra charges, but in truth, we pay FedEx much more than we can charge our customers.
Labor
Flowers
How much do you spend on office space (dollar amount or % of expenses)?
4% of expenses
How much do you spend on employee salaries (dollar amount or % of expenses)?
We separate out employee salaries into both COGS and expenses. Blended it’s 20%.
How much are you saving (dollar amount or % of expenses)? When did you start being able to save some of your income?
We intentionally run as close to 0 as possible and reinvest all margin back into growing the company. Being bootstrapped that’s what we’ve needed to do in order to grow our business.
“Knowing your numbers personally and professionally is power - it helps you to control what’s happening and take charge of where you’re going.”
What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)?
We use Bench for accounting.
Do you wish you’d done anything differently in your financial journey as a business owner?
I can’t wait until I can afford to hire a CFO or Director of Finance, but haven’t been able to yet due to budgets (#bootstrappedlife). I brought on a part-time CFO last year and it did not work well, so wish I hadn’t wasted the money.
Why should women talk about money?
To de-mystify it and make it less overwhelming. I think many times women think that they’re not good at finance just because they don’t understand it, but they probably are better at it then they give themselves credit for. Knowing your numbers personally and professionally is power - it helps you to control what’s happening to you (or you business) and take charge of where you’re going.
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Money Matters: Shannon McLay, Founder of The Financial Gym
“Every step, no matter how painful, presented an opportunity to learn, grow, get smarter and improve the business.”
In this month’s installment of our monthly Money Matters series, we’re sitting down with ShannonMcLay, the founder of The Financial Gym, a financial training program that offers one-on-one advice to help you reach your money goals. We got down to business, asking Shannon the nitty-gritty about her business, including how she saves, spends, and invests in her company’s future. Read on to see why Shannon should be your new BFF (best financial friend).
Where do you think is the most important area for a business owner to focus their financial energy?
I think the most important area for a business owner to focus on is expenses. It doesn’t matter how much money your business is making, if you’re not retaining most of the revenue because your expenses are under control, then it’s not a healthy business. I have a client whose business generates $1.2MM per year, but she’s only taking home $20,000 and she can barely afford the expenses around her business.
What was your first big expense as a business owner?
The first things I invested in was legal advice on how to set up my business properly and a designer to help me set up my first website.
How did you decide what to pay yourself?
Before I had any investor money, I didn’t pay myself anything, especially since the business was operating on losses. After I raised my first round of money, I paid myself $5,000 a month. It wasn’t enough to sustain my personal expenses, but it was a balance between what I could use personally and what I needed to leave in the business account to survive.
“Every step, no matter how painful, presented an opportunity to learn, grow, get smarter and improve the business. ”
How did you decide what to pay employees?
I offered my first employee $50,000 per year salary and she negotiated back with $70,000, but I told her I couldn’t pay her more than I was paying myself, so we settled on $60,000 and we both made $60,000 for the first year she worked for me.
What are your top three largest expenses every month?
Payroll, Rent, Office Supplies
How much do you spend on office space?
We have two gym locations, our HQ and our initial gym space and the two combined rents cost us $30,000 per month.
How much do you spend on employee salaries?
Our current payroll runs around $130,000 a month for full-time staff and $15,000 in contractors.
How much are you saving? When did you start being able to save some of your income?
We are not in a position to save money each month since we are actively growing our business and spending extra money on marketing to fuel our growth.
What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)?
We like using Quickbooks for our business and we wouldn’t hire a financial advisor since that’s what we do for a living.
Do you wish you’d done anything differently in your financial journey as a business owner?
I have certainly made some large financial mistakes where the business is concerned, but I wouldn’t change a single thing about my journey. Every step, no matter how painful, presented an opportunity to learn, grow, get smarter and improve the business.
Why should women talk about money?
Money is our lifeblood. Whether we feel connected to our money or not, we need it to operate in this world and more importantly, we need it to have power and authority and I truly believe that our financial situation prevents us from being and making the changes we want to see in the world.
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Money Matters: Katie Sturino, Founder of 12ish Style and Megababe
In today’s Money Matters feature, we sit down with Katie Sturino, founder of The 12ish Style, a plus-size fashion blog, and Megababe, a cult favorite anti-chafing stick. Below, Katie shares how she manages finances for two rapidly-growing brands—and what she wishes she’d known when she started it all.
Where do you think is the most important area for a business owner to focus their financial energy?
I think it is very important for business owners to invest their financial energy into making a high-quality, high-performance product. But the second place to place financial energy is PR. It doesn’t matter how much time or money you spend on a product if no one sees it.
What was your first big expense as a business owner?
Placing our first order for bottles for Megababe Thigh Rescue.
How did you decide what to pay yourself?
I don’t pay myself; everything we make goes back into the business.
What are your top three largest expenses every month?
Our top expenses per month are our PR department and our product. Currently, we only have hourly employees.
“I wish I would have stopped listening to other people sooner.”
How much are you saving? When did you start being able to save some of your income?
My income comes from my 12ish business—anything larger than a certain amount I put right into my savings account.
What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)?
We use Quickbooks for our finances.
Do you wish you’d done anything differently in your financial journey as a business owner?
I wish I would have stopped listening to other people sooner.
Why should women talk about money?
If we don’t talk about money, then financial conversations are always left up to someone else, usually a man in our life. Money is power and freedom. Sadly, I see so many women at the mercy of their partner financially, which means that a lot of the choices they make are not their own.
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Money Matters: Daina Trout, CEO of Health-Ade Kombucha
“There is no shame in wanting money. Money gives you freedom to live the life you want.”
You asked for more content around business finances, so we’re delivering! Welcome to the first installment of Money Matters, our newest series dedicated to giving you an inside look at the pocketbooks of some of your favorite CEOs and entrepreneurs. In this series, you’ll learn what successful women in business spend on offices 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.
Our first Money Matters guest is Daina Trout, CEO and co-founder of Health-Ade Kombucha. Daina is a huge advocate for being forward when talking numbers, so she’s an ideal woman to kick off the series. Below, she shares her financial story.
Where do you think is the most important area for a business owner to focus their financial energy?
First, you want to focus on growth; second, on profitability. On growth: It is very tough to get your company off the ground and to a place of increasing revenues from scratch, and it’s going to take every piece of your being to get it there (so you can’t be distracted by much else). Also, my experience has been that momentum is a real thing. The faster your company grows today, the faster it will grow tomorrow (at least in the beginning). It’s all hands on deck, full pedal-to-the-metal speed.
On profitability: You don’t want to wait too long for this, else you will be constantly raising money and diluting yourself, feeling like you’re in a never-ending rat race. But at the same time, nobody cares about a profitable business that isn’t growing, so you don’t want this to be your first #1 priority (unless you have one of those rare businesses that can do both from the start). You want to be an owner of a company that is growing and tightening at the same time. It’s important to strive for that balance.
“You want to be an owner of a company that is growing and tightening at the same time. It’s important to strive for that balance.”
What was your first big expense as a business owner?
Two things: People and manufacturing equipment. People do the work so you have to invest here to have a good business. I often wonder, though, if co-packing is better than manufacturing in-house. The capital intensity of owning your own manufacturing is seriously something to consider.
How did you decide what to pay yourself?
I talk about this all the time to fellow founders—it’s a major issue. And I think most are underpaying themselves. In the very beginning, this is hard, because you don’t usually have investment or profits, so you’re last on the list (we paid ourselves a meer $300 a month in the beginning, which covered basically nothing). Once you get investment or profits, though, it’s important to re-look at your compensation and your role. Think about what it would cost for the business to hire for this role in the marketplace. An experienced CEO in LA makes $250K+ on average. This probably doesn’t make sense for a business that has just received its first round of funding, and you hopefully have a ton of upside in equity, so you want to consider that. Also, you probably aren’t as experienced yet, so your salary would be below average. That said, I don’t think $30K makes sense either. Be careful not to be a sacrificial lamb for your company here. A sensible pay that considers your job requirements, your value, and your equity situation should be budgeted for the business. Each year, you should re-calibrate until you get to the average or your goal at a reasonable time.
“Be careful not to be a sacrificial lamb for your company. A sensible salary that considers your job requirements, your value, and your equity situation should be budgeted for the business.”
How did you decide what to pay employees?
In the beginning, you’re always looking for the “unicorns”: the people out there without the experience, but with ALL the talent and drive to be great. This can work in the beginning—it’s certainly cheaper to do it like this. The problem is, you’re constantly going to need more out of them, and they are going to constantly have to rise with the tide in fast growth. You will likely find in one year that it just doesn't work anymore. Rarely, our “unicorns” have made it all the way in seven years, but I can only think of a few who have. Just think about that when you hire these so-called unicorns: it’s likely a short-term cheap gain for a longer term termination and re-hire. At the end of the day, my opinion is you will get the best value from hiring a person that could easily do the job one to two years from now. But you have to pay those people what they’re worth, AKA market value. The one thing you do have is equity, and you can reduce someone’s salary in exchange for that. But at this point, everyone in my company makes market pay or higher, regardless of their equity status. The equity-exchange-for-lower-salary thing only kind of works in the beginning.
What are your top three largest expenses every month?
#1 People. #2. People. #3 Raw ingredients. Did I mention people?
How much do you spend on office space?
Strictly office space is about $10K for every 30 people. But also consider the cost of building out the space. You might be surprised to know that cubicles are $1000K+ per desk, and design is not cheap. Of course, your number could go up or down if you’re super scrappy or need something fancy, but this is the average spend.
How much do you spend on employee salaries?
Salaries right now are about 60% of our total expenses. We do a lot of things in-house, though, so this number could swing 30% down (total expenses here would likely go up) if we choose to outsource more.
How much are you saving? When did you start being able to save some of your income?
We will hit profitability this year, in our seventh year in business. For the beverage industry, it’s pretty typical to take five to 10 years before hitting profits. It will often be on the longer side if you manufacture. This is something to consider—in this industry, you will need cash solutions for five to 10 years to keep your business running.
What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)?
We started with just QuickBooks and Square, but now we use a ton of additional tools to help us, especially for manufacturing, such as Domo and Fishbowl.
“Money to a business is like air to humans. It’s not the reason
you exist, but you literally can’t live without it.
There is no shame in wanting money.”
Do you wish you’d done anything differently in your financial journey as a business owner?
The ONE ABSOLUTE THING I would do differently is hire out financial support earlier than I did. Now that I have my CFO, I literally wouldn’t start another business without him (or someone like him). He’s been critical in helping me build a strong business.
Why should women talk about money?
Women should talk about money all the time and every day. Money to a business is like air to humans. It’s not the reason you exist, but you literally can’t live without it. There is no shame in wanting money. Money gives you freedom to live the life you want. You can make more of an impact on the world. You deserve to live the life you want, right? If you agree, it’s time to start figuring out how you get the money to live the life you want. The same goes for your business, by the way: figure out how much money it needs to make in order to hit its goals. Once you define the life you want, and the money you need, you have a defined gap to work on: the now versus the desired. It’s a heck of a lot easier to get to your desired state if you know how far you have to go.
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