“Follow The Leader: Raising Money with Umber Ahmad” Transcript

Kerry Diamond: Hi, Bombesquad! This is Kerry Diamond, host of Radio Cherry Bombe and Editor in Chief of Cherry Bombe Magazine. Welcome to our new miniseries, Follow the Leader. These days everyone is hungry for more advice, especially about being an entrepreneur or finding smarter ways to run a business. For this series, we're talking to four women at different stages of their careers about how they handle key aspects of their business. First up, raising money. We know that's not an easy road to navigate. That's why we've asked Umber Ahmad, the founder of Mah-Ze-Dahr and a former finance executive to share her wealth of knowledge. And yes, pun intended. Cherry Bombe would like to thank Uber Eats for supporting Follow the Leader. Here's my conversation with Umber Ahmad.

Umber Ahmad: So much of business is I wish I had known or if only I had known something that I would have learned six months sooner or a year sooner. If I had just met this other person, I would have been able to do X, Y, Z. I feel so much of my life is that way.

Kerry Diamond: Yeah, that's the long title of my life's story. Basically. All right. So tell us who you are and where you're from.

Umber Ahmad: My name is Umber Ahmad, I'm the founder of Mah-Ze-Dahr Bakery here in New York City.

Kerry Diamond: Umber, we're so excited to have you on the show.

Umber Ahmad: I'm so happy to be here. Thank you.

Kerry Diamond: We are doing this special series to save everybody who's out there, who is getting into business, who needs a little advice. And anybody who reads your resume or anything about you probably just passes out because they can't believe it.

Umber Ahmad: I certainly hope that.

Kerry Diamond: I wrote down a lot of it. I mean, you went to MIT.

Umber Ahmad: I did.

Kerry Diamond: You went to the University of Pennsylvania.

Umber Ahmad: The Wharton School for my MBA, yeah.

Kerry Diamond: You fly planes.

Umber Ahmad: I do.

Kerry Diamond: You play violin.

Umber Ahmad: I do.

Kerry Diamond: You worked at Morgan Stanley and Goldman Sachs.

Umber Ahmad: I did, yeah.

Kerry Diamond: You could be like your own episode of Billions or Succession or something, right?

Umber Ahmad: Maybe without the cocaine and the hookers, yes.

Kerry Diamond: Exactly. So it begs the question, why the hell did you get into baking?

Umber Ahmad: Oh, my goodness. I often joke that my mother used to say that I blacked out one day and took the N out of my title from banker to baker. But the honest answer is, I always wanted to do something for myself, and I really thought through everything that I learned how to do throughout my career. I started as a business consultant, started helping operational businesses, went and got my MBA, went on to Wall Street, learned about finance, learned about how to advise businesses to become the next great heritage brand, presence in a market, whatever it was. And finally, one day I decided that I wanted to become my own client, that I wanted to create the next great heritage brand, and at some point you have to stop doing for others and start doing for yourself.

Kerry Diamond: Was that a scary moment? I'm scared ... I know you've been doing this for years and I'm sitting here just sort of like-

Umber Ahmad: It's the heart palpitations.

Kerry Diamond: Yes.

Umber Ahmad: It was and it wasn't. I mean, it's one of those things where I'm a firm believer in that life is what happens to you when you're making other plans. So I had never really intended to be a business owner, I certainly never intended to make food, I always thought that I was going to do something different. But it was sort of a confluence of events that led me to an opportunity to be aligned with a very well-known chef who gave me sort of the stamp of approval, if you will, to say that there's actually something here, there's an opportunity here. And then it kind of drew on all of my previous business experience to say, all right, how do we actually create a brand and a market around it?

Kerry Diamond: So had something been stirring in you at that time where you wanted to have your own business?

Umber Ahmad: Something absolutely stirred in me that I wanted to have my own business. I actually had my own business. I left Goldman Sachs and started a consultancy, an investment advisory firm with some friends of mine. So we were in business for ourselves, but we were still working for other people. And I didn't mind it and I still do it. We still work with other clients and I'm still involved in the firm. But there just comes a moment in time when you have this sort of aha moment. And I really hate that term. But that's kind of what it is where you just sort of look at your life and say, gosh, I've been working so hard to make other people wealthy, to create a name for other people, to create a legacy for other people. And why couldn't I try to do that for myself?

Kerry Diamond: So you didn't know that when you open a bakery, you work for every single person in your neighborhood?

Umber Ahmad: It's funny because people always laughing like, oh, my gosh, you must be so excited. You get to work for yourself. I was like, "I work for everybody else." I often tell my team, when sometimes you'll get frustrated with the guest or something happens. And I said, "You know, my name is on the bottom of your checks, but I don't write those checks. The people who pay your salaries, who keep you employed and keep me in business, are the people that walk through that front door every day. So they're the people you work for."

Kerry Diamond: So you didn't start with a brick and mortar?

Umber Ahmad: I didn't. No. I started as an online business because one of the first things that I wanted to make sure was that this wasn't just a flash in the pan, that this was something that people would care about, that there would be an opportunity for somebody to want to buy what I made and come back and buy it again. So there's a lot of sort of one off, sort of one hit wonders out there. And I had to make sure if I was going to put the money behind my business, that it wasn't a one hit wonder.

Kerry Diamond: Now, I did not go to business school, but do you call that proof of concept?

Umber Ahmad: Yes. We do call it proof of concept.

Kerry Diamond: Okay. Talk to me about proof of concept. Everybody has a great idea, but not if your great idea should become a business.

Umber Ahmad: And that's exactly right. One of the things that always amazed me about a lot of businesses that had food as their focus is it wasn't necessarily great food, and it wasn't necessarily the best product, but it was a really successful business. So I kept thinking, how do I take a really great product and have it be a really successful business? Why are those two things very often not the same? And so I said, well, let me at least figure out if I have the product, and then let me see if I can build a great business around that. So for the ability to prove the proof of concept, I started online. And what I did is I went to all of my friends, I left investment banking, I went to all my investment banker friends, private equity friends and said, give me the list of your clients. I will pay for the food, just pay for the shipping.

Umber Ahmad: Like, give me your corporate FedEx account or whatever it is, and I will send gifts out to all of your clients on behalf of you free of charge. And let's see what happens. And so you know bankers were all like economic animals, and they were free of charge, I'm in. And I just started sending things out to people. And that was my first sort of test to see if anybody would care. And I started to get inbound phone calls, and saying, I got this pastry. It's fantastic. Where do you sell it? Where more can I buy? And that's basically how I started a business.

Kerry Diamond: So you started online?

Umber Ahmad: I did.

Kerry Diamond: What are some other ways to test proof of concept?

Umber Ahmad: So another way, I think, to test proof of concept is to do like a pop-up. I think pop-ups are now very sort of commonplace. It's also a really lovely way to align yourself with another brand. That's one of the things that I think successful brands do really well, is finding other people that they either want to be like, want to be aligned with, want to have access to their customers, and then they say, okay, let's do a pop up or let's do a collaboration or something like that. Those tend to be I think pretty successful. Finding somebody who will endorse you in some way and allow you to present your food, be it at an event or in some other sort of venue can also be kind of an interesting opportunity. The challenge with those is they're all one-offs, and you need to know that you're going to get somebody to come back day, after day, after day.

Kerry Diamond: So when you decided you were going to launch Mah-Ze-Dahr, how did you think you were going to finance it?

Umber Ahmad: When I started Mah-Ze-Dahr, I knew that I would have to finance it myself to start, and that's why I wanted to keep the overhead as low as possible. Very often people who have food concepts or food ideas, they want to build a store, they want to build a kitchen, they want to build a beautiful place, they want it to be a destination, and all that's really great. But if you don't have built in customers, then you're just kind of standing in the door, kind of peeking around hoping somebody comes in. And that's basically why 95% of restaurants fail in their first year.

Kerry Diamond: That's a crushing number.

Umber Ahmad: It's a crushing number.

Kerry Diamond: So wait, why did you say you knew you had to finance it yourself? You could have gone out and gotten money?.

Umber Ahmad: Who's going to give me money?

Kerry Diamond: I don't know.

Umber Ahmad: No one. No one. And why would anybody give me money? At that point, you think, okay, I've got this great, these products. And I've got this one chef who says that I'm good. He wasn't giving me money. I had to be able to prove that there's a reason why there's a value to what I do.

Kerry Diamond: But I think we hear and read about and see on television all these people who come up with ideas, and they're literally just ideas and they pitch them and they get money for them. Is that fantastical thinking, magical thinking?

Umber Ahmad: You can pitch and raise money at any point in time in a concept. The question and the balance to that is, if you're going to raise money, you have to be able to give something up for that. So if I come and say I'm raising money to develop my company, then the next question from an investor would be like, great, how much of my company am I going to get for that money? The earlier you are in your concept phase, the earlier you are in the development of your company, the more you're going to have to give up for any little bit of money.

Umber Ahmad: The longer you can go without raising money or the bigger that you can build a company before you take outside money, the more valuable you have it as a total entity and the less you're going to have to sell. Because at the end of the day, you're not doing everything you're doing to own 5% of a company. You're doing it so that you have meaningful value that ultimately wherever it is you end up, if you sell it, if you merge it, whatever it is that you decide to do, that you have enough of the control and the financial ownership that makes it worth doing what we do every day, which is absolutely brutal.

Kerry Diamond: Why wasn't alone an option for you?

Umber Ahmad: Loans are really difficult to get. People often say go to the SBA, go to the Small Business Administration, they really want to support you. And this is not a knock on the SBA, it's a very well established organization. They have very specific parameters around how big a business needs to be before they'll be willing to give you money. And my thing with them is always like, if I could get that big, I wouldn't need your money. And they also need you to be cash flow positive, which basically means you make more money than you spend. Which is-

Kerry Diamond: Repeat that.

Umber Ahmad: You have to repeat it to yourself every day and if you have a business usually you're like, wait, what? How much should I make? And how much should I spend? Those food businesses take at least three to four years to be cash flow positive. And that's actually a very, very, I think telling concept when you're trying to talk about how to make a food business successful.

Kerry Diamond: Yeah. Do you hear that everybody? Three to four years, that's a little scary.

Umber Ahmad: Three or four years. It's a little scary because you start to think, okay, I'm going to need to hunker down, and maybe I'm raising money, we have what's called in the beginning, friends and family. So you can say I raised friends and family money, which is you go to your friends and you go to your family, and you say, I have this idea. This is what I want to do. And this is how much I think that I'm going to need in order to get myself to this point. And usually that means how much do I need to set up an LLC? How much do I need to buy the ingredients? How much do I need to do the marketing? What does packaging look like? Is anyone going to help me? How am I going to get the food where it's going to go? And you know all these things and you take that number, you double it and that's what you asked for.

Kerry Diamond: So is that called working capital?

Umber Ahmad: It's called working capital. So working capital is essentially the money that you need in order to operate your business. And it is never what you think it's going to be. It's always going to be, and I always say in all seriousness, double that number, and then you'll be just about right, and you might just run out of money. So go to friends and family. And so usually what happens, it'll be done in a couple of ways. It can be done as a friendly loan. It can be done as like I promised to give you X or something like that in the beginning, or it can be done is what we call a convertible note. And a convertible note is actually a very interesting opportunity for people who are trying to raise money in a business that they don't just yet know what it's worth.

Umber Ahmad: So when you raise equity, so there's different forms of money, there is something called equity, which is basically ownership into a company. So if I owned stock in Procter & Gamble, I own a piece of that company. I own equity in that company. If I lend Procter & Gamble money, then I've given them debt. So debt is an instrument that gets paid back, so Procter & Gamble will pay me the money back. But in equity, they don't pay back to me. But now I own a piece of their company. And if something happens and it gains value, then my piece is worth more. If it loses value, my piece is worth less. If you don't know how to assign a value to the company and say, I don't know how much this is worth. Maybe my company's worth a million dollars, maybe it's worth $10,000, maybe it's worth nothing. I don't know.

Umber Ahmad: What you do is you say, I will go to people and say I'd love to raise the debt, which is money that I would have to pay back to you. But I'm going to give you the option at the end to say either I pay you back or you can convert it into equity. Which means in three years, since I don't really know what my company's worth today, I'll know in three years. We'll together assign a value and then whatever money you gave me, we can convert it and say, you gave me $100, my company's worth $1,000, now you get 10% of my company. But I don't know that today, so you and I are going to agree that we're going to figure that out in three years. That's called a convertible note.

Kerry Diamond: That is the best explanation I have ever heard of a convertible note. Thank you for that Professor Umber.

Umber Ahmad: Of course.

Kerry Diamond: So at what point during all this should you write a business plan? I'm guessing it's way before you get to this point.

Umber Ahmad: You write a business plan in the very beginning. And then you acknowledge that it's going to change 85% for what you think it's going to be. But you have to think it through in order to make anyone else believe that you are the person that they want to invest in. You have to be the reason why they want to give you the money and not someone else.

Kerry Diamond: If you've never written a business plan, never even seen a business plan, where do you start?

Umber Ahmad: If you've never written a business plan, if you've never seen a business plan, you can go online and Google business plans and see sort of different examples. Business plans essentially have like four or five sections? So the first section is an introduction. You want to tell people who you are and what you're doing. And then you want to go into kind of like the specifics of what it is, what's your growth plan? What's your strategy? What's your exit plan? So that's something that's really important because a lot of people get into a business, not really knowing where they want it to end up. And that's where I think you can run into a lot of problems and you can also spend a lot more money than you need to.

Umber Ahmad: As a business person, as an advisor in financial services, whenever we would meet a client, the first question we ask them is, what is your goal? What is your objective? Ultimately down the road, be at 3 years, 5 years, 10 years down the road, where do you want to be? Where do you see yourself? And then they'll tell you like, and I'll tell you, if anyone asks me that, and I ask myself that, I ask myself that a lot, what's my objective? My objective for Mah-Ze-Dahr Bakery is to grow it, and to ultimately become part of a larger brand story, a larger luxury story. I'm a firm believer that luxury starts from the inside-out. And one of the most intimate, nourishing things you can do for yourself is to put food into it that has been made with intention, and purpose and value. So that's what we do. And I believe that we can become part of a larger conversation for LVMH or Kering or Reeshma when they think about food and luxury being inextricably linked.

Kerry Diamond: I would love to see you be one of their first ... Probably the first big good brand that they have.

Umber Ahmad: Yeah. I would love that. Because a lot of luxury, now we're diverging a little bit, but a lot of luxury companies are really investing in food internally. So Prada bought Pasticceria Marchesi, which is the oldest Pasticceria in Milan and has now just expanded into London. Ralph Lauren's business is most profitable arm is the Polo Bar, and he's got Ralph's Coffee. So all of these people, even Restoration Hardware when they reinvented themselves into our age, they really made hospitality sort of a focal point for the experience. They have the restaurants on the roofs, they've worked with Chef Brendan Sodikoff. All these other people that say, we recognize that food is the gateway into a broader luxury and spending experience.

Kerry Diamond: It's so interesting, isn't it? Nordstrom, the new Nordstrom in New York, seven restaurants. Saks Fifth Avenue restaurant is wonderful. And then a place like La Masseri down in Soho that combines commerce and beautiful food. It's very interesting trend.

Umber Ahmad: It's a very interesting trend because food is the only thing that every single person if we are granted by the universe and enough to be able to have the wherewithal to eat every day, we get to eat at least once, twice, three times a day. So we get a reset. And as a food brand, we get so many opportunities to sell to you to become a part of your life and become a part of your story. No one else gets to do that. You don't buy playing shoes every day, you're not investing, buying a house every day, you're not doing any of these things every day. You may not even be drinking wine every day. I mean, some of us are.

Umber Ahmad: But food you're eating every single day. And that's one of the things where there's such a huge opportunity around that. So when I said to myself, where is this going to go? I said, that's my objective. When you assign an objective to your business and end goal, finding the path to that's much easier than just saying, I make really good brownies and I think I should share them with the world.

Kerry Diamond: Which I think a lot of us do. We get into this business. I mean, I know for myself when I started my businesses, you just want to open a nice business and do nice things for your community, and you're not necessarily thinking that many steps ahead.

Umber Ahmad: And that's okay if that is your objective, and that is some people's objective to say, I just really want to have a coffee shop. I want to be a part of my neighborhood and my community and I want to support local makers, and that's what I want to do. And if that's your objective, that's perfect, and we can get you there. But if your objective is to do something different, don't operate a local coffee shop thinking it's going to turn into a global brand.

Kerry Diamond: All right, I'm going to throw some other fundraising schemes at you and I want you to tell me what you think.

Umber Ahmad: Schemes, I love it.

Kerry Diamond: Okay. Is it ever okay to start your business using your credit cards?

Umber Ahmad: Yes, it is.

Kerry Diamond: Okay, why?

Umber Ahmad: All of a sudden, I saw your face was like, no.

Kerry Diamond: I thought you were going to give us the big smackdown, the big Umber smackdown on that one.

Umber Ahmad: So I would say that I have used my credit cards in order to finance certain things about our business. When I look at the total amount of actual available cash that we have, and say, okay, I know I need this cash in order to pay my immediate expenses. But I need a new $17,000 espresso machine and that I'm going to be able to put on to a car that I don't have to pay in a year and sort of like do the math around that. But if it's to pay for your everyday expenses, then it becomes very dangerous because you're going to run out of rope very, very fast. So I'd say use them as a way to leverage the cash that you have, but don't use it in lieu of cash.

Kerry Diamond: We've definitely had a lot of women come on Radio Cherry Bombe and tell us that they entirely finance their business on their credit cards. No one would give them money, no one would lend the money, and that was their only option.

Umber Ahmad: And if it's your only option, then it's your only option. Reid Hoffman, who started LinkedIn will tell you the story that he did that, he maxed out every one of his credit cards to start his business and it worked. The downside of the danger is that it doesn't work and you don't have any recourse. You don't know where to go from there. But it's, you know, we've all been there. I spent about almost a year, I ate nothing but apples and peanut butter. I put every single penny that I had and I literally I found out about this website called The RealReal and I sold all of my banking like my Armani suits and my Gucci handbags and everything because I was like, I need to figure out, you know, I need more money.

Umber Ahmad: I used to literally walk around the city with IKEA totes on my shoulders. I have dents and bent shoulders from the weight of these totes, carrying my product all over the city. But that was the way that I was like, okay, but I need to conserve this cash and continue to use credit cards and all that kind of thing. But you make game-time decisions in ways you never think you will, but you all should always know that you have an out of some kind.

Kerry Diamond: What's your thought on crowdfunding, things like Kickstarter?

Umber Ahmad: We did Kickstarter very early on. We did Kickstarter, to be honest, more for awareness than for money. One of the challenges about crowdfunding is you don't realize until you get into it is you are 100% responsible to raise that money. So it's a great platform for a lot of your friends and family and people that you might know to say I'd love to support you. I can give you $25, $50, that kind of a thing. But it's not a way for you necessarily to be exposed to a lot of people that don't know you because you are responsible to promote your own campaign. So if you get lucky, Kickstarter might feature you as the daily campaign or they somebody might sort of make note of you or that kind of thing, but it's a very crowded market. It's a great way if you think you have a lot of people in your world who'd be able to give you sort of bips and bobs of money, and some good way to kind of aggregate that.

Kerry Diamond: Yeah, it is a lot of work, especially when you figure out all the rewards that you're doing. We did a Kickstarter to get Cherry Bombe off the ground, and I think we overdid it a little bit on the rewards. You know, like the eight-year subscription, things like that. I think we still have some people whose eight-year subscriptions will be coming to a close in a few years from now.

Umber Ahmad: Goodness.

Kerry Diamond: So yeah, so think about the rewards, too. Did you have a lot of rewards?

Umber Ahmad: We did. Actually, we did this reward that I was very excited about and it was called a black card. And it's a beautiful little brass fob that it has a unique identifier number on the back. So if you purchased it, it was $300 and it gave you one free pastry a day for a year. So we did the math, I mean, it was absolutely a no-brainer, was a slam dunk if you were going to purchase it. The reason why I did it is my Hope was you would come in for your free pastry, and that you would then buy some other things along with it. We ended up selling I think $12,600 worth of those fobs in the first year of our business. It ended up costing us $17,000 worth of pastry. So it ended up not working for us. But it was a great way to kind of garner attention and get people to be excited and things like that. So, yeah, we actually thought a lot about it. We were like, how many free pastries are we going to give out for these things?

Kerry Diamond: It sounds super chic.

Umber Ahmad: I was very chic. And it's lovely. We're going to bring it back, but I think we're going to have put some parameters around it this time.

Kerry Diamond: Got it? How about something like emptying your 401(k), when is that ever okay?

Umber Ahmad: I would say, it's one of those things where people will often tell you, you should put a stake in the ground and say, after I've gone through X amount of money, or I've done these three things or whatever it is, then I'm done. Like that's where I'm done and I have to sort of stop. The challenge with doing that, and I'm being completely honest, I'm probably not the right person to say this. But when you get to that point, you know like, I'm so close, I'm so close. If I just do this much more, if I just do this much more, I can't stop now. But there comes a point at which you do have to stop. I did liquidate probably about 75% of my portfolio in doing that. It was partly due to the fact that my contractor who was building my space ran away with half a million dollars of our money.

Kerry Diamond: I didn't know about that.

Umber Ahmad: Yeah, that's definitely another story. And it was also simultaneously when my mother was dying. I didn't have it in me to go and raise more money. But I knew it was in the midst of construction and I was like, I'm so close. I'm so close. So I had to liquidate part of my portfolio for that amount, and then I just did more because I was pretty sure something else was going to happen. I was like, well, I'm sure there's going to be another plane crash or train wreck someplace down the road and I decided to do that. I wouldn't necessarily recommend doing that, but I think in some instances, it's all very like kind of case by case, I think.

Kerry Diamond: Let's thank Uber Eats for supporting Follow the Leader. Hey, Bombesquad? Savvy food entrepreneurs are selective about their ingredients as they are about food delivery, which is one of many reasons why they partner with Uber Eats. In addition to the reliable delivery, Uber Eats is a delivery platform that allows users to discover new restaurants, so a smaller business gets reach and awareness benefits. If you're ready to learn more and to get started, visit ubereats.com\bombesquad for more information. That's ubereats.com\bombesquad. Let's return to my conversation with Umber Ahmad of Mah-Ze-Dahr Bakery. Have you looked into any of these crowd investing platforms like Wefunder?

Umber Ahmad: I have looked into them. I haven't actually utilized any of them, but I have looked into them. I think that they're very interesting. What's really lovely is there's a democratization around funding that's happening in the world, which I think is particularly meaningful. What's nice about that is it gives an opportunity to people who may otherwise not be able to avail themselves a funding an opportunity to present their case. It's also really good for these businesses because if they don't find anybody to take them or invest in them across three or four different platforms, it might be a message. It might be a sign that this might not be the right business model. Maybe you can tweak it, maybe you have to pivot. And on the flip side, if you're interested in investing, if you think that you have some extra capital and you want to be supportive of a business, these are great ways for you to be able to do that as well.

Kerry Diamond: Gage & Tollner, the new restaurant that's opening in downtown Brooklyn, did Wefunder and invested in it. So it's similar to Kickstarter, except you're actually investing-

Umber Ahmad: And you're getting equity for it.

Kerry Diamond: Right. So instead of getting some brownies, which is amazing also-

Umber Ahmad: Or eight years of Cherry Bombe.

Kerry Diamond: Equally amazing. You are a legit investor in this in whatever you've invested in.

Umber Ahmad: What's nice about that also is in order to become an investor on those platforms, you have to be an accredited investor, which sets parameters around how much money you have in salary or how much you have been saving. So you're getting relatively savvy people or people who can afford to lose the money. I always say-

Kerry Diamond: The Wefunder is not as strict as that.

Umber Ahmad: Really?

Kerry Diamond: It is, right.

Umber Ahmad: I dint know that.

Kerry Diamond: When you talked about the democratization of investing, it lets more people invest. You don't have to-

Umber Ahmad: Be an accredited investor.

Kerry Diamond: Exactly. Because I had done some research on that and you have to make a lot of money to invest in companies. And that makes sense, but it also cuts out a lot of people who maybe don't make that much, but want to start investing. Exactly.

Umber Ahmad: That's interesting.

Kerry Diamond: So we did our investment for just $1,000. So it lets you invest in much smaller increments.

Umber Ahmad: That's interesting.

Kerry Diamond: Than something else.

Umber Ahmad: I think that's a great idea.

Kerry Diamond: For any of you opening a restaurant project, it's definitely something ... And you don't want to do a Kickstarter because maybe you've already done a Kickstarter or you just feel like you've been in business for too long, you should look into things like that. It's a very interesting option for today.

Umber Ahmad: I'm going to get on that as soon as we get done with this.

Kerry Diamond: All right, tell me some common mistakes people make when getting their businesses off the ground.

Umber Ahmad: I think I would say truthfully, one of the most common mistakes is not calculating all of your real expenses. I mean, I think that a lot of people will sort of anticipate what I would say are the broader categories. So I need to pay for my ingredients, I need to pay for, you know, maybe I have to do a little bit of promotion, or I need to be able to deliver my products, I need to think about those things. But there's all this secondary costs and all sort of the hidden layers that become the things that you worry about the most. One of the things that I worry about the most is unemployment insurance, and workers comp, and healthcare for my team. There's all these things where you could say that you want to be a certain business, but to actually be that business becomes very, very expensive. So understanding sort of the hidden costs I think is really important.

Umber Ahmad: Another thing that I think is also important is to give yourself enough runway and by runway, I mean enough time and enough money in order to build the business that you're trying to build. Food businesses are very difficult, they're notoriously tough. You think about Gap, Gap's inventory doesn't expire. Gap makes a T-shirt, the T-shirt exists today, that T-shirt exists tomorrow, the T-shirt will exist in six months or a year from now. I make a brownie today, it doesn't exist tomorrow. So running a business that has an inventory that expires every 24 hours is one of the most difficult things anybody can possibly think to do. So when you're thinking about it that way, think about that.

Umber Ahmad: Like, I'm going to make 100 brownies and I'm going to sell them. You're probably not. You're going to make 100 brownies, you might sell 35 of them. What are you going to do with the other 65? So it's just sort of like kind of like thinking through, you know, everyone has best case scenario. I always recommend people to do what I call disaster planning. So what is the worst case that could happen? What's the absolute worst case that everything goes under, and then what will happen? And I think once you sort of resolve a path around worst case scenario, everything else sort of seems manageable around that.

Kerry Diamond: I always say when I got into this, I wish I had known to plan for the best and to plan for the worst. You don't necessarily go into a business thinking that or even wanting to acknowledge know what the worst could be?

Umber Ahmad: That's true. But that's also why prenups exist. So you go and get into a marriage thinking you're going to be so blissfully happy and it's amazing, and everything's going to be just wonderful. But you have to sort of recognize that there's a chance that it doesn't turn out that way. And you never want to think about that. But especially in a business, and then all of a sudden you have employees, and they're depending on you, and their families are depending on you. So you can't bury your head in the sand and just say, well, we'll figure it out. That's one of the challenges around business plans. Is the business plan is all about like, there's going to be puppies and daisies and cookies on weekends and it's going to be wonderful. But then at the end of the day, you have to also say, and if it doesn't work, this was what will happen.

Kerry Diamond: Right. And back to the prenup analogy, it's easier to do a prenup before the wedding.

Umber Ahmad: 100%.

Kerry Diamond: Hence the name prenup.

Umber Ahmad: Hence the name prenup. You're absolutely right.

Kerry Diamond: So before you get your business off the ground, it's really good to have those conversations.

Umber Ahmad: People often ask if it's better to start something with a partner or to start it alone. That's always a question that people will say, I've got this great thing but I'm not sure what to do, what not to do. There was a really interesting entrepreneurship study that was done at the University of Pennsylvania. And they said that the most successful entrepreneurs are either alone or in threes, which I thought was very interesting. That they said partnerships are oftentimes very difficult because there's no tiebreaker. And then you have sort of like two minds and they don't necessarily meet. And that third mind might be the mediator, might be some voice of reason or you get a two against one and that kind of works. Or you're alone. I started alone. You know, very often I'll sort of feel alone. But then you sort of backup and say, okay, but the benefit of that or the beauty of that is, I get to make these decisions and now I have to figure out how to make them work.

Kerry Diamond: That is maybe the most valuable piece of information you've given because I had partnerships all my businesses, but then you realize like you don't have that other person. When you're not in agreement, what do you do?

Umber Ahmad: What do you do? Unless you in the prenup say this is what our tie breaking sort of like process is going to be like. Or if we don't have agreement, are there ... One of the things that I found to be helpful is, these are things I really care about and these are the things you really care about, so when we're having these discussions, if it fall in the category of something that I really care about, and we don't agree, my vote is going to get a little bit of a heavier weight. And if it's something that you really care about, your vote gets a little heavier weight. But then that becomes difficult because you start fundamentally disagreeing on things, and then it becomes really tough.

Kerry Diamond: You know, we read about all these giant companies now, WeWork and Facebook and Uber, and they all come with their own complications, but they all have boards of directors. So is it crazy to think that a small business should have a board?

Umber Ahmad: No. I think a board of directors is wonderful. And you don't even have to call it a board of directors. It can just be like advisors or people that you can go to that you get advice from or people that you think can be helpful to you in any way. One of the things that's really difficult for a lot of people is asking. I think that most of us work for other people and we become really good at asking for others. I used to raise capital for Goldman Sachs and I could raise billions of dollars for them. And the first time I had to go out for myself, I'd be like, "Hi. So I got this thing, and you don't have to say yes." And I said, "Are you okay? Do you have to go? I'm so sorry, never mind." We're not good at asking for ourselves. And as an entrepreneur, you have to become amazingly good at that.

Umber Ahmad: You have to believe in yourself so much, that you're going to convince the person on the other side of the table, that they would be lucky to get to be a part of what you're doing. So there's that idea of asking. Like, how do I ask? How do I ask for what I need, and getting a board of directors together, even if it's just three people that you trust, call them aboard. Going to them, asking for help, saying, I don't know how to do this. As an entrepreneurial that really good at knowing what you know, and really good at knowing what you don't know. And then what the difference between a great entrepreneur and a struggling entrepreneur is that bridge of saying, I don't know how to do this. Let me find the person who does. And the board of directors can be really good in sort of helping you figure that out.

Kerry Diamond: Let's talk about the rest of the team that you need. Because I know when I started my food businesses, I was thinking PR, marketing, who were we hiring to staff the actual restaurants because that's so important. You know, who's client facing and customer facing. But I didn't really think about the accountants, who's doing the taxes, the lawyers, all of that. You need them as much as you need the PR and everything else, if not more.

Umber Ahmad: I think you need them more. I think one of the single most valuable people on your team, and on your team doesn't mean they're hired full-time to work with you exclusively. But somebody that you work with, that you have access to is an attorney. If you have a good attorney, and somebody who's going to give you great advice, it can be the difference between owning your business and losing your business. It can be the difference between having a great lease and having a lease that costs you millions of dollars. So having a good attorney, and that's part of where going to your friends and other people have got businesses say, who have you used, and every one of us will be able to tell you who not to use. Sometimes that's even more valuable than who to use, and then you kind of start to figure that out.

Umber Ahmad: I would recommend setting up a separate business account, setting up separate sort of like bank account, recommend setting up an LLC or whatever type of C corp or whatever it is that you want to set up from a legal entity standpoint. Sort of set up that structure so there's never any question about where the money comes from or where the money is going. That's always really important. And then find a good accountant. An accountant who'll be able to help you, help you with bookkeeping. Start with QuickBooks, it doesn't have to be expensive.

Umber Ahmad: Just make sure you're sort of tracking everything that you're doing. Because you'll be shocked at how much more money you're spending than you actually think. You're like, I didn't spend that much money this week. And then you realize that you had to pay for all these little things, and there was a repair, and then there was an extra postage, and there was something else and somebody needed something. And all of a sudden you've spent a lot more than you thought you have. So definitely set up those structures early on.

Kerry Diamond: You mentioned QuickBooks, but do you need an accountant in the beginning?

Umber Ahmad: You don't need an account in the beginning if you're comfortable sort of working through everything yourself. Having an accountant sort of help you as you get larger. If you start owning leases or real estate, you have equipment that has depreciation schedules, things like that, I think accountants become very helpful, because they'll also be able to help you from a tax standpoint. There's tax advantages that we as normal humans don't understand, and accountants will be able to sort of help you through all of that.

Kerry Diamond: I will say I wish the counting I had today was the accountant I had when started out.

Umber Ahmad: Me too.

Kerry Diamond: My life would have been so much easier.

Umber Ahmad: I agree with you 100%. My lawyers and my accountants and bookkeepers now that I have, are a completely different team than I started with. There was like two teams ago. I really wish I would have had them, but I wouldn't been able to afford them. So you kind of start out a little scrappy, but one of the things it's good is there are a fair number of people that want to work with entrepreneurs and startups so you can get good advice that's not necessarily that expensive.

Kerry Diamond: It's kind of a vicious circle though, if you have not great team in the beginning because that's what you can afford, but then that not great team doesn't-

Umber Ahmad: Costs you money.

Kerry Diamond: Costs you money and doesn't give you the best advice.

Umber Ahmad: I had a not great attorney negotiate my first lease on my space and it cost me more than a million dollars of extra work when we were building the space because of that. So had I had a better attorney, I would have spent on the attorney and not on that space. But hindsight is 2020.

Kerry Diamond: Knowing what I now know, I would say find the best lawyer and the best accountant you can afford or beg to work with you before you do anything.

Umber Ahmad: I agree with that. I agree with that. I would say that if you have a pot of money and you're making decisions, I would do that well before looking at PR or marketing. PR and marketing are really difficult because it's hard to quantify what gets spent. So you put somebody on a retainer, you're paying them $8,000 a month or something and they're getting you ... Whatever they're getting you, it's very hard to be able to quantify and link. I was in Harper's Bazaar and now I have this amount of revenue. They're important things to do. But I think in this world, you can find other ways to do marketing and PR outside of sort of the traditional paying somebody certain amount of money.

Kerry Diamond: I loved how you started that saying, if you have a pot of money, because I'm sure most of you are listening saying, you know what, I don't have a pot of money.

Umber Ahmad: I don't have a pot of money either.

Kerry Diamond: But back to what Umber just said, one of the nice things about the world today is you do have so many opportunities to do your own PR and marketing.Whether it's MailChimp, social media, you name it. There's so many tools out there for entrepreneurs today.

Umber Ahmad: There really are. And networks. Networks are extraordinarily important. I think that the Cherry Bombe network is one of the most valuable for people who want to expose kind of what they're doing or the products that they're developing to sort of like-minded people. So I think once you sort of get through the like-minded supporters, then you need to kind of go sort of the next level further and further. But there's a lot of opportunities to expose yourself and your product and your business to people.

Umber Ahmad: One of the challenges that I had and continue to have is, very often people will come to you and say, if you donate this, we will give you that. So if you donate your product or if you know participate in this event, it's a great opportunity for you to get in front of all these influencers or all these people are going to be there and everyone's going to love what you do. That's dangerous because very often that doesn't materialize into something that can substantially materially help you as a business person.

Umber Ahmad: So oftentimes people, especially with food, they expect you to gift it and give it away. And that actually even happened to me this past weekend. I was speaking at an event and like, could you bring some samples, I'm sure everybody would love to see what you do? And I was like, "Yeah, great. And the lawyers are giving out free legal advice?" And they said, "What?" And I said, "There's an attorney on one of the other panels, is he giving a free legal advice?" And they're like, "No. Why would he?" And I said, "Well, it's his product. He's going to bring samples?" And then somebody else was in medical devices and I was like, "Are they passing out samples of their med tech devices?" And it's like, no. Why?

Umber Ahmad: So this idea that it's just food is just anathema to me because there's ingredients, there's labor, there's rent, there's electricity, there's gas and all these other things. So don't ever undersell yourself. Don't think that just because I made it or I'm doing it, it's worth less than something else. And the more you value yourself, the more you value your business, the more other people respect and value you.

Kerry Diamond: Amen. All right, last question. If people want to come support you, where can they find you and what should they order?

Umber Ahmad: Oh, my goodness. I would love for all of you to support me. So we have a physical location. It's in New York City. It's at 28 Greenwich Avenue between West 10th and Charles, down in the West Village. So come see us. So you can come in and we're open seven days a week. You can also order from us online. And that's one of the beauties, again, as you think about a business, you want to make it as accessible as possible. You want to give everybody as many opportunities as possible to have you, experience you and share you. We are at mahzedahrbakery.com, M-A-H-Z-E-D-A-H-R-bakery.com. We ship anywhere in the US, we deliver in New York, and we'd love to feed you.

Kerry Diamond: What should we order?

Umber Ahmad: Oh, my gosh. Well,-

Kerry Diamond: What's a good starter order?

Umber Ahmad: A good starter order. If you're coming into the store, I would say definitely have our donuts. We do a brioche, an old-fashioned donut. They're just divine. And our chocolate cake is, and I don't say this much, it's the absolute best chocolate cake you'll ever have in your life. It's fudgy, but not wet. It's just got the perfect amount of chocolate and it just kind of ... You want to be alone with it on the sofa in sweatpants. That's the kind of cake that it is. So definitely have that. Our Mah-Ze-Dahr bars are amazing. It's our signature bar. It's oats and brown sugar and caramel and pecans and chocolate chips, and we ship those anywhere. So I would definitely start there.

Kerry Diamond: What ships the best?

Umber Ahmad: So anything that's on our site ships the best. So one of the beauties-

Kerry Diamond: Good answer, Umber.

Umber Ahmad: Because one of the beauties of the way I developed the recipes was things that would be able to ship and have longer shelf life. So if I say I'll ship it to you, it's going to be fantastic. So start with the bars, the brownies, definitely have the donuts and have some cake.

Kerry Diamond: Okay ladies, you know what you need to do next. That's it for this episode of Follow the Leader. Thank you to Umber Ahmad of Mah-Ze-Dahr Bakery for sharing her hard earned wisdom. And thank you to Uber Eats for supporting this Radio Cherry Bombe miniseries. Follow the Leader was produced and edited by Jess Zeidman of Cherry Bombe and recorded at CDM Sound Studios and Argo Studios in New York City. Thanks for listening everybody. You're the Bombe.