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 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.

Are you comfortable talking about money? It can be a difficult conversation to tackle in our personal lives let alone our professional finances. But in our opinion, having an honest dialogue about cash flow is an important part of empowering other soon-to-be-founders in their journey and to learn from each other’s mistakes, too. Sarah Brown is all about knowledge sharing and didn’t shy away from answering our questions about money and what she’s learned during the process of building Pai Skincare.

We’re in awe of what this talented entrepreneur has been able to achieve since its launch in 2006 but even after 13 years Brown is still learning and growing. So in honor of our continual evolution, we are delighted to share Brown’s insight, and she doesn’t hold back!

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

Focus on productivity. A really easy trap for start-up businesses to fall into as sales grow is to bring in more and more resources to meet demand. This can quickly fall out of step and you can find yourself with decent revenues but little to no profit and an inflated headcount that takes up a lot of management team’s time. Failure to plan for growth can quickly send you into a tailspin and ‘busy fools’ terrain.

What was your first big expense as a business owner?

A pallet of glass bottles. The minimum order quantity was 5,000 units which took me about two years to get through, layer by layer. I was operating out of a tiny garage so they took up a huge amount of space. I was entirely self-funded at the beginning (I started the business with £15,000 (about $19K U.S.) of my own money—that makes you very resourceful).

Instead of purchasing new manufacturing equipment, we asked suppliers about second hand equipment and found a factory that was closing down. We persuaded them to let us walk away with £30,000 (about $38K U.S.) worth of high sheer mixers in return for a modest charity donation.

“Don’t do anything that doesn’t make you money and stay focused.”

How did you decide what to pay yourself?

For three years I didn’t pay myself and life was pretty hand to mouth. Pai has never been a lifestyle business. Whenever there has been profit, it has been funneled back into the business to hire someone or launch a new product. Even now my co-director (who is also my husband) and I pay ourselves less than our senior managers.

How did you decide what to pay employees?

After the 2008 financial crash, we were in the fortunate position where we could hire really good people at very reasonable salaries. Ten years on that changed a lot for us, but we are now proud to be London Living Wage certified and we do regular market rate exercises to ensure we are paying our staff fairly.

What are your top three largest expenses every month?

1. Payroll
2. Raw materials
3. Marketing

How much do you spend on an office space?

We have a factory in West London and pay c. £100k (about $127 U.S.) per year in rent.

How much do you spend on employee salaries?

Approximately £1.8m (about $2.3 million U.S.) per year.

How much are you saving? When did you start being able to save some of your income?

I don’t! We have two young children so have quite a lot of household expenses. We’re still renting, but it’s a choice to keep optimum money in order to grow the business.

What apps or software are you using for finances? How did you decide when to hire a financial advisor (if you have one)?

We are currently using Xero but are moving to Netsuite later this year. We hired our first senior finance person after we completed our first major fundraising round in 2017.

Do you wish you’d done anything differently in your financial journey as a business owner?

I would have put in an ERP system on day one. This is enterprise resource planning system that allows a company to fully manage the manufacturing process (to be able to hold on to less inventory and obtain more data to better manage the situation).

Why should women talk about money?

Running a business is a lot about money so you need to really understand the finance piece and be confident about it. In my personal experience, and meeting many other female entrepreneurs, we can be risk averse when it comes to raising debt. I really wrestled with the notion but talking about it really helped. I started to see it in a less fearful way and viewed it instead as just a cost of doing business. It really freed me to grow the business more boldly.

Do you have a financial mentor?

Not at the moment but we have a great consultant FD who provides a lot of invaluable counsel.

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

Don’t do anything that doesn’t make you money and stay focused. I love the Warren Buffett quote:

“The difference between successful people and really successful people is that really successful people say no to almost everything. — Warren Buffett”

It reminds me of a conversation I had in the very early days with my bank manager. I was relaying all the retail opportunities cropping up thinking he would be really impressed. He said to me: “That’s great Sarah, which 9 of those 10 opportunities are you going to turn down?”

It was a really salient lesson learned. You can’t do everything well, so focus your time and financial resource on just a few big bets.

What was the biggest money lesson you learned since starting Pai?

To do my due diligence when it comes to recruitment. Hiring the wrong people can be an extremely expensive mistake. The old adage, hire slow and fail fast really rings true.

What other questions do you have about money in business? Share them with us below and we’ll include them in our next story!