Dubai: The first lesson on financial planning for Tahany Taher, co-founder of Dubai-based health food supplier HAYAWIIA, started as a teenager when she was given a small monthly allowance to meet her expenses.
An accounting and economics graduate, UAE citizen Taher started her career in banking 16 years ago, and this is when her financial planning skills were sharpened further. What started as mindful upbringing by her grandparents continued to deepen as Taher worked with bankers and credit analysts learning the mechanics of financial planning spanning multiple industries.
Taher decided to launch her business, supplying healthy food and natural beauty care products at affordable prices, along with her husband and business co-founder Akram Oomer. Trained to control risks, when she began her venture she budgeted finances carefully, consciously steering away from aggressive growth plans.
“To keep margins low and make better quality products affordable, we source the products directly from the manufacturers in developing countries. We pay the manufacturers 100 per cent upfront as well as ship, stock and market the products and this significantly reduces risks for the manufacturers, and they are more amenable to pricing negotiations. It is a win-win proposition as we can pass on pricing benefits to the customers,” Taher explained.
Here is how the interview with Taher unfolded, wherein she details how she went about it at first, what were the challenges she faced, how much it cost her, and what were her most important takeaways.
What were your first steps when launching your business?
Being a banker by profession, I am quite risk averse unlike entrepreneurs. I try to control costs and risks as much as possible. Cash is king is one principle that I strictly follow. As a start-up, we have created a budget and set aside funds to grow. But until we meet a few projections and milestones, we will not pursue further growth. Having been raised outside of the UAE, my upbringing, education, life experiences and circumstances have helped me to get better at managing money. For me, the essence of cash flow management lies in creating and sticking to a financial projection, tweaking it along the way if required. Careful cash flow management helps me not be aggressive and neither pessimistic.
What was your initial investment to launch your business? What are your operating expenses?
After the initial projections, we realised that the business would require 12 to 18 months of ‘runway’.
So, we have set aside $1 million (Dh3.67 million) for the business’ capital expenditures (long-term expenses made for major purchases) and operating expenses (day-to-day expenses a company incurs). These included signing up vendors, storage and logistics, website and mobile app development, visas and salaries, Dubai Municipality approvals, label assessments, PR and quarterly rent, among other things. In any given month, we spend approximately Dh100,000 as operating expenses, excluding inventory and quarterly rent.
How did you save money to launch your own business?
As an individual I prefer to put my money in bonds and other investments over buying an expensive handbag or use it to make down payment for a property than spending on expensive vacations. So, when we decided to launch the business, I diligently started putting aside a percentage of my monthly salary to fund a portion of the initial investment. Since I have continued with my full-time job while managing the business, now I put aside 25-30 per cent of my monthly salary to reinvest in the business until it becomes self-sustaining. Having said that while doing our financial planning, I was aggressive at budgeting for the business. As a result, we now have decent financial runway.
Have you received financial support or raised financing for your start-up?
We have not sought any financial support yet. However, being part of the Mohammed Bin Rashid Al Maktoum Foundation (MBRF) we have received significant exposure with the Dubai SME, the agency of Dubai Economy mandated to develop the small and medium enterprise (SME) sector. We want to first test the proof of concept, become profitable and then raise funding for future expansion in the GCC countries to achieve economies of scale.
Your top tips to financially manage a start-up.
Financial planning is the most critical part. Having years of experience in auditing financial statements was a strong advantage in my case, as I could plan capital expenditures, operating expenses and estimate the ratios we needed to achieve. Now I look after financial planning, strategy and growth for the business. Expertise based division of labour among a close group of like-minded people who are aligned with your vision can be a huge plus. A group of our friends were keen to be part of the business and volunteered to manage our inventory. We have also saved on marketing budget, which is another critical piece for any business, as my husband is a creative person and handles that side of the business. As a result, we were able to invest money to develop our website and app as well as on PR for brand exposure.
Finally, why did you decide to launch a new brand amid the pandemic?
The COVID-19 pandemic was in fact a driver that led to the birth of the business idea. Me and my husband regularly heard about our friends losing jobs last year and there was an instance where a friend could not afford to buy gluten-free products for his son after his salary got cut. Even though a lot of variety is available in the UAE, pricing tends to be an issue and we wanted to change that with our business. We wanted to collaborate with our friends and partners from different parts of the world to source healthy food products and price it affordably for our consumers.