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

When Jasmine Lee and Victoria McAbee first launched their business, it looked very different than it does today. In 2018, the college friends turned co-founders pooled their cash, tapped their friends and family, and took on a small amount of credit card debt to jump-start a mobile matcha bar. “Picture two 23-year-old girls hauling around a 7x14 foot concession trailer hitched to a black Ram truck,” Lee and McAbee told Create & Cultivate. “It’s so crazy to think that used to be our lives! It’s actually laughable now.”

After just one year, their mobile matcha bar was so successful they finally had the funds to trade in the trailer for the brick-and-mortar café they’d initially envisioned for their enterprise. Then, COVID hit. In the wake of the pandemic, Lee and McAbee, like so many small business owners, made the tough decision to permanently shut their doors and pivot to digital instead. Now, they’ve turned Whimsy Official into a thriving e-commerce brand, offering their signature Ceremonial Grade Matcha and Glow Getter Collagen Blend, as well as their recently launched Halcyon Botanic Serum, which marks the wellness brand’s first foray into skin-care.

Ahead, the co-founders tell Create & Cultivate all about how the burgeoning wellness brand has pivoted its strategy due to COVID, why going DTC has been key to its success, and the pitfalls of investing too much money in social media marketing too soon.

How did you fund Whimsy Official? What were the challenges and what would you change? Would you recommend that route to other entrepreneurs? 

We’ve been bootstrapping since day one and we’re still bootstrapping now! If we were to find the right investor, we may consider giving up equity, but having full control has always been important to us. As we strive to really position our company the way we want it to be seen and understood, it makes all the financial logistics and planning well worth it.

When we first launched our enterprise, our business looked much different than it does now. For context, we launched in 2018 as a mobile matcha bar called Whimsy. Picture this: Two 23-year-old girls hauling around a 7x14 foot concession trailer hitched to a black Ram truck. It’s so crazy to think that used to be our lives! It’s actually laughable now. That initial concept cost us around $20,000 to start up, and the capital was raised between our own two bank accounts, family and friends, and a small amount of credit card debt.

We would absolutely recommend bootstrapping as plan A. Not only does it teach hands-on financial management skills and resourcefulness, but it also ensures that you’re building something scalable. Going too deep at once (especially for first-time entrepreneurs) can be detrimental for a number of reasons (i.e. too much going on without proper systems and infrastructure to manage it, lots of debt without any plan for ROI, etc.).

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

As of right now, we aren’t paying ourselves. We’re only five months into this business! Although we were fortunate to keep a large portion of our customer base from the mobile matcha bar, launching Whimsy Official has been equally as challenging as starting a brand new business. All of our profit is being pumped back into marketing. 

Would you recommend other small business owners pay themselves? 

It absolutely depends on the industry you’re in and what your overhead and sales look like. Also, it depends on how much money you have in your cash reservoir and whether or not you can budget a salary for yourself. For e-commerce brands, your overhead is typically a bit higher and your profit margin is lower as opposed to operating a service-based business where you keep the majority of your profit (if you play your cards right). So all things considered, it’s very contingent on the situation!

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

Before launching, branding and product development and/or testing. Brand identity is so crucial in order to visually connect with your audience and ensure that your brand experience is unique and compelling. If your brand doesn’t look the part, it can be harder to secure press, certain retailers, and more. Equally as important as branding is having thoughtful, well-researched products (and third-party tested if needed). Bad products never win the race, but great products always stand the test of time.

After launching, I think that hiring a publicist is an excellent investment, especially if you’re looking for longevity of brand exposure. A lot of brands sink money into Facebook and Instagram ads right away, but that can do more harm than good. Ads can definitely make you a quick buck, but each sale isn’t guaranteed to be recurring, nor is it helping to develop your community. Again, playing for longevity is key! 

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

Rent! We’ve had our own office space since late 2019, but we decided three months before launching Whimsy Official that we wanted to fulfill all of our own products. No labs, no shipping centers, no third-party manufacturers. It’s imperative to us that we maintain full quality control over sourcing, supply chain, fulfillment, and shipping. That way, we can say with certainty that our company is ethical and sustainable and that we know exactly what ingredients are being used in our products.

To be honest, there really is no way to prepare other than to define a clear plan and start saving money. Had we not had money in the bank, we wouldn’t have been able to move into a new office and buy the supplies we needed to build out our own production facility. Of course, loans and investments are both options, but from our experience, that’s what worked!

What are your top three largest expenses every month?

1. PR

2. Rent for our office and facility

3. Product samples/giftings (we send out crazy amounts of free products to retailers, editors/contributors, and influencers each month!) 

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

With our other business, we had several employees and we just weren’t ready for it! In most cases, over-preparation is valuable, but not when it comes to hiring. It’s best to scale and hire as you grow. Currently, we have no employees at Whimsy Official. It’s just us and our PR team who works as an independent contractor.

Did you hire an accountant? Who helped you with the financial decisions and set up? Are there any tools or programs you recommend for bookkeeping?

We have an annual accountant who helps us file our LLC taxes, as well as our personal taxes, but we do our own month-to-month accounting. We’re lucky to have a pretty manageable amount of expenses, so it doesn’t feel terribly overwhelming. We’re a big fan of spreadsheets! Or any Google document for that matter!

The best tool you can have for learning accounting is to watch YouTube videos on bookkeeping. Learning your way around a pro forma (and how to create one for yourself) is a valuable skill. It really makes you feel like you have all your numbers in check!

What apps or software are you using for finances? What’s worked and what hasn’t?

We originally began working with Quickbooks but decided that we much preferred creating our own pro forma via spreadsheets. It felt more flexible, plus it’s free!

What are some of the tools you use to stay on top of your business financials? What do you recommend for small business owners on a budget?

We like to practice planning for the future, but acting in the now. It’s okay to want to dream big and plan for new things, but sometimes, it’s not always the best thing financially. We encourage small business owners to focus on what you do have instead of what you don’t have. This means to really emphasize making your current offerings as best as they can be with the resources you have, then scaling as you grow. Timing is everything, and money should be treated with purpose! 

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

Absolutely! Money is—plain and simply put—just a part of life. There’s so much stigma surrounding the topic of money, but money is just a currency that comes and goes. We believe in using our money and knowledge to help other women rather than using it as an elitism tactic to put them down.

Do you have a financial mentor? Do you think business owners need one?

We don’t! But if we could go back to 2018 when we opened the first edition of our business, we totally would have. 

What money mistakes have you made and learned from along the way?

Well, for starters, when we hired those several employees that I mentioned earlier… huge mistake! Enormous mistake! Granted, we had a plan for all of those hires, but unfortunately, it didn’t pan out as we had hoped. Had we been more seasoned business owners, we do believe that that mistake would have avoided altogether.

What have been some of the hardest money lessons you've learned along the way?

1. Money spends quicker than you’d expect, and you always need a budget mapped out before you spend a single cent.

2. You have two choices: to take the risk or to not take the risk. Always take the risk if it feels right in your gut.

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

While it's important to be logical with your money, it’s also important to remember that money is no good just sitting around. It’s meant to be circulated. If you have a great idea and the funds to get it started, take the plunge! If you don’t, you may have a lump of cash sitting in the bank, but the “what ifs” may not be worth it. Listen to your intuition and practice staying in tune with it.

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