59. Rules You Haven’t Heard About Business Debt

Episode Transcript

Alisa Manjarrez:
Ladies, I have to tell you that I am recording this podcast from my parents’ house today. As you can see, for people on YouTube, you see a totally different setup. There’s guitars in the background. There’s a Viper phone, also called the Vibes. There’s something else. Some electronic contraption. I don’t know what it is, but I can tell you that working from my parents’ house has been amazing. Yesterday morning, right before my first call, my dad walked in with a cup of coffee, and then after that call, he took me to breakfast and then three calls later my mom walked in with a smoothie, and then afterwards we went to dinner. I was like, “Why have I been working from my house this whole time?” It’s amazing.

Dr. Merary Simeon:
I love it. I love it. I have a friend like that. Well, actually it’s my sister-in-law. She loves… I think I might have told you, Alisa, she came to our house one time and I had some friends over and we woke up, coffee was made, breakfast was made. She has the music on. She’s like dancing. My friends is like, “We need her in our lives whenever we get together,” because we’re like, “Oh, I need coffee.” And she’s just like upbeat, and the breakfast, it’s not like just any breakfast. She loves to cook and I’m like, “God bless her,” because I don’t have that spirit. That is definitely not my strength.

Alisa Manjarrez:
When I have guests, I’m like, “Here’s the Nespresso, press a button whenever you’re ready. Go at your own rate.

Dr. Merary Simeon:
Exactly. “There’s the fridge. You’re family. Just make yourself at home.”

Alisa Manjarrez:
How are you as a hostess, Christina?

Christina Sjahli:
Oh, me? “Take care of yourself.”

Dr. Merary Simeon:
Yes.

Christina Sjahli:
Okay. It’s a different story where I came from, obviously, somebody help with the house and take care of everything. I find in North America, you just have to be independent. So when somebody spoil you like your dad and your mom, Alisa, and Dr. Merary, I’m, “Wow, I’m jealous. I wish.” No. And then me as a host, I’m like, “Please take care of yourself. Here’s the spoon. Here’s the plate. Here’s the food. Take whatever you one. And here’s the coffee maker. You can make your own coffee.” So, totally.

Dr. Merary Simeon:
I am the same way. Totally the same way. So, don’t feel bad. I just love when people serve.

Christina Sjahli:
Oh, yeah, of course. Me, too. Oh, it’s always nice.

Alisa Manjarrez:
We’re going to just have an edit of Merary saying, “I just love when people serve me.”

Dr. Merary Simeon:
Hey, that could become a famous meme.

Alisa Manjarrez:
It could, it could. Right here. There are no rules on the What Rules!? podcast.

Dr. Merary Simeon:
That’s right.

Alisa Manjarrez:
Well, speaking of no rules, today is our entrepreneurship and money episode. That’s probably not going to be our official title, but we do have an amazing guest today who knows all about helping female entrepreneurs, multicultural women do their best with their money in a very methodical, logical way.

Alisa Manjarrez:
This is the What Rules!? podcast. We are here to help women outsmart the game to advance their careers, whether they’re heavy in their jobs, whether they have a side hustle, or if they’re starting a business themselves, or if they have an existing multimillion dollar business, there are strategies that anybody can use at any level. We all need reminders of just how to keep going. And so today my co-host is Dr. Merary Simeon. And she is a Motivational Speaker and a Leadership Expert. She is an HR Executive. She’s worked in Latin America. I’m just giving all your credentials right now.

Alisa Manjarrez:
My name is Alisa Manjarrez. I’m an Executive Coach, Podcaster, Vision Producer at The Happy Cactus, and I’m here to learn today because as a fairly new entrepreneur myself, I have realized that the money piece of entrepreneurship is critical. You don’t have a business if you’re not really making money. However, because this is the What Rules!? podcast, we’re going to talk about rules that we might think are necessary, but maybe, or not. So with us today is Christina Sjahli. Tell us who you are, tell us what you do, but also give us a little background on the hats that you wear every day.

Christina Sjahli:
I wear winter hat, I wear summer hat, that’s what I wear. I’m just joking. So, I’m Christina Sjahli. Like Alisa said, I am the Founder and CEO of Profit Reimagined, and we at Profit Reimagined are helping female founders who are trying to make a difference in this world to be successful. And success does not equal to the dollar sign. However, success does means that you need to build a profitable business, and the hat that I’m wearing, I guess, the mother hat, the wife hat, the sister hat, the summer hat and the winter hat that is about to come because we’re going to have snow in seven days. I’m in Toronto, Canada.

Dr. Merary Simeon:
Wow. Already snow.

Christina Sjahli:
Yeah, I know. All of you are in the West Coast. I’m jealous with all the sun and there is no snow, but I’m trying to love it. It’s been 20 years here since I moved to Canada and I have to get used to it. I’m trying. Still trying. So those are just a little bit about me.

Dr. Merary Simeon:
It’s funny, Christina, because yesterday I was at a soccer game for my daughter and it was 70 degrees and really windy, and I had a jacket, coat, socks, and I’m like, “If my friends from the East Coast see me right now, they would disown me.” I grew up in New Jersey, but it was so cold.

Alisa Manjarrez:
At 70 degrees.

Dr. Merary Simeon:
At 70 degrees. So, hearing you, I’m like, “I don’t know if I could survive. I don’t know if I could do it.”

Christina Sjahli:
You have to. You have no choice, but 70 degrees, I consider that cold. I’m wearing my jacket at 70 degrees, not my boots, but at least my jacket, my winter jacket. That’s like bad.

Dr. Merary Simeon:
Okay, I don’t feel bad then.

Alisa Manjarrez:
You’ve been there 20 years in Toronto and you moved there from Indonesia, right?

Christina Sjahli:
Mm-hmm (affirmative). I did.

Alisa Manjarrez:
What brought you to Canada from Indonesia?

Christina Sjahli:
A better life? No. Okay. So, here’s a little bit of story. Indonesia is a Third World country, but what really bring me to North America, even for my school and then later on moved to Canada, is because I feel that gender equality wasn’t there. And I think the country and the environment are still really fighting for it. So, that’s one. And the other thing is that I also felt that when you live in Asian countries and you probably heard this often for many of your guests that come from Asian countries, there are a lot of pressure over there to always compare to others, right? The materialistic pressure, the wealth pressure. It’s a lot. And I didn’t want my life to be in that space. I really want to have freedom. I really don’t want to feel like I am in this box and then I have to be like everybody else.

Christina Sjahli:
So my road to freedom started when I was in high school. I basically left home when I was 16, and then I moved to Oregon. So I live in Oregon for about six years, from high school and university. And then after that, I thought, “Okay, I going to give it a try again,” and I went back home. And then I did. I went back home and then I started my career in Indonesia, but it didn’t feel right. I felt like I continue feeling I was in this box and then I cannot feel free and I cannot be who I am. There’s so many rules there in that culture. So, 20 years ago, I basically decided, like, “This is not for me,” and the next best of the United States is actually Canada. I didn’t know anything about Canada to tell you the truth when I moved here. I just know it’s a neighboring country of the United States. It looks cool. It sounds cool. I just going to move over there. So I did, all by myself, and then I restarted my career.

Dr. Merary Simeon:
Dang.

Christina Sjahli:
Yeah. I restarted my career in Canada, and here I am.

Dr. Merary Simeon:
Talk about rule breaking.

Christina Sjahli:
Yeah. I decided, “You know what? I need to break the rules again and then branch out and then feel free again.” So, I started Profit Reimagined to break free.

Dr. Merary Simeon:
I love that. Now you said a few key words, right? There were a lot of rules, and one of the reasons why you decided to move and you restarted your career. So that alone is setting your own rules. This is what I’m doing. But you said something that intrigued me. You said, “To be set free, again.” Can you tell me a little bit more about what does that mean to you? That free that you were looking for, and that you’re looking for again?

Christina Sjahli:
When I move from Indonesia to Canada, when I said I want to be set free, I didn’t want to be put in a box and then being looked at if you are successful or not, in terms of your dollars. How much you have in the bank? What kind of car you have? What kind of brand are you wearing? I didn’t want that. I felt I was being looked at on the brand that I’m wearing, the car that I drive, the big house that I have. I don’t want that. I want to live where the purpose of my life here is more important than what I own. That’s what I meant.

Christina Sjahli:
So when I break free again, three years ago, that is more about gender equality. I was in a environment where female are not being appreciated, right? I would stand in a room in a meeting, on a table where it’s all male, and then I could felt it. They respected me, don’t get me wrong. However, I felt like I had to work a hundred times harder before they notice me. And I didn’t want to continue feeling like that. I felt my life purpose is not to continue proving myself because I already know who I am, what I’m worth, and there is really nothing to prove. That’s what I meant by breaking free again.

Dr. Merary Simeon:
Wow. Powerful.

Alisa Manjarrez:
I feel like that’s our whole podcast. We could just keep talking about this. It is impressive.

Dr. Merary Simeon:
Well, number one, I love that you figure it out and that you had the courage, right, to start over again, because I think that’s definitely one of the things that a lot of women struggle with. But I also love what you’re doing and the company that you started because it’s a gift that you have that you’re sharing now with other women, other entrepreneurs. So, thank you for recognizing that and being courageous and taking the risk and being here with us today.

Christina Sjahli:
Thank you for having me here. I truly appreciate it. This is a fun conversation. I love it.

Alisa Manjarrez:
Well, let’s get to business. Let’s talk business now. It’s interesting hearing your story, Christina, because one of our guiding principles is all about owning your power and that’s what you did. You recognized when you didn’t have power and you put yourself in a new situation where you could really own it, from moving to another country to starting your own business, and then also to giving back and empowering others. If there was a way for female entrepreneurs and founders to really own their power in an unconventional way, what would you say is something that you’re seeing or a trend that women are or not following?

Christina Sjahli:
I would say that in my line of work, obviously Profit Reimagined is really helping female founders with their finances. I think one of the biggest misconception out there, or the rules that needs to be break, it’s about debt financing to grow your business. I have been taught and I don’t know about you, Alisa and Dr. Merary, but let me tell you this. When I was growing up in a Third World country, that is something is considered sinful, okay? It’s something that is a mistake if you go to a bank and then borrow money because the mentality out there is that, what about if you cannot pay back that loan, right? You’re going to lose your house. You’re going to lose your car. Your family is going to live on a street. And in a multicultural environment, especially for a female, I heard this story over and over again, especially from my podcast guests.

Christina Sjahli:
A majority are female founders and then we talk about that, and that is one of the scariest thing. And that’s why, if you listen to all the news, majority of female founders are looking for equity, right? And then, yes, one side of it, you do need equity because equity is normally does not require you yet to have a regular cash flow to the business, but then you’re giving up a portion of your control. But let’s say that you already, at a certain point of your business, you receive equity or you’re growing your business to a certain level and you want to grow more, there is that fear on going to the bank or going to other lenders and then finding the growth capital through debt financing. Even for me, and I’m going to be truthful to you, being transparent here, it’s scary. It’s scary for me to go out there and then get a debt financing.

Christina Sjahli:
And then the reason is that it’s always been drill into my head that borrowing money is bad. Like, my parents didn’t have a credit card. Imagine that. And a credit card is a form of debt, right? And it is not bad as long you manage to pay it back. My parents didn’t have a credit card. So when I moved to the US at the age of 16, and then I started university after high school, I saw all this tables around campus offering you to get credit card. You would go to the mall and then they all offer everybody with credit card. “Oh, do you want this credit card because you’re buying so much? So why don’t you have this credit card?” And me, who-

Alisa Manjarrez:
Get a discount.

Christina Sjahli:
… yeah, exactly. There you go. Get a 10% discount. 20% discount. Me, the 17-years-old, never had a credit card. Never. I’m like, “Wow, this is opportunity. I can learn to have a credit card because it’s fancy.” And I did. I made so many mistakes. I really made that mistake. I didn’t realize what that mean, and I got a lot of credit card and then I went into debt. I went into debt, to tell you the truth, and then I have to climb myself back out. So I get it. I get it why a lot of female founders are scared in getting the loan. But to tell you the truth, there is a way that you don’t have to feel the fear because if you want to grow your business, the truth is sometime you need outside capital and it doesn’t always have to be equity.

Alisa Manjarrez:
Okay. So I’m thinking about for myself and just starting a business is scary, first of all. That’s just scary. You don’t know. There’s no certainty that your idea is the right idea, that your business model or plan is the right business model or plan. You go into it knowing that you could easily fail, and so when I think about it from that perspective, I’m already taking a risk on myself or on my idea, whatever that business is. And then now going into debt with this idea that may not work, that’s the scariest part for me.

Christina Sjahli:
You want to be able to take on debt with a purpose and a reason. Ideally, when you take on debt, you already have a certain level of cash flow coming in. I am not saying when you started your own business, go to the bank right away, and then even like normal financial institution, traditional financial institution going to say no anyway. We can talk about that. That’s a different story, right? But what I’m saying is that one of the thing to grow your business, don’t be scared. Go out there and figure out if you can get debt financing. You really need to understand why you need this debt financing because a lot of misconception out there, I need that financing because I have cash flow issue. Okay? But what type of cash flow issue are you talking about? Cash flow, there is two types. There is short-term cash flow. There is long-term cash flow.

Christina Sjahli:
And when I talk about short-term cash flow, anything that is less than 12 months, that is consider short-term. There is also long-term cash flow, which is above 12 months. Many businesses at some stage of their business will experience the short-term cash flow. Let me give you an example. So let’s say that you are a service-based business and then you are dealing with big clients, big enterprise, right? It looks fancy that you are dealing with bigger enterprise, but normally they have so many rules in their finance department and at the end of the day, they have so many approvals that they have to go through to get pay, that is impacting your cash flow, right? So it doesn’t mean that you’re not going to get pay, but it means it’s just going to take you longer to get paid. Normally, maybe, in a smaller business, if you don’t deal with big clients, you can get paid right away or get paid in 30 days.

Christina Sjahli:
But with a bigger business, maybe you’re going to get paid in 60 days or 90 days. So that is your short-term needs because your expenses keep going. Because your expenses keep going, you have that gap of 60 days to 30 days. What are you going to do? That’s why I said, what is the real reason of you needing this cash flow? If it’s short term, then maybe you can get a line of credit as your business grow, get a line of credit. Not a long-term debt, but a line of credit that you just need to cover for that short-term needs. The other thing is that you need to have a cash flow forecast. There is no reason business owner not having a cash flow forecast. It is one of the most critical things, and you can do it simply by using Excel. And the best thing you can do for yourself as a business owner when you are starting, create an Excel spreadsheet with 13 weeks of cash flow.

Christina Sjahli:
You just divide it. When is my cash is coming in? When is my cash is going out? And then you identify, when is that gap? Okay? And then, maybe, and I’m not saying that you have to do this, but if you only need like 30 days and then you know there is going to be a bigger paycheck coming in in 30 days, maybe you can ask friends and family. It could be embarrassing, but some friends or family say, “Okay, I just need it for 30 days. Can I get 30 days?” And then your support is that your cash flow projection, you show it to them. “Here, I know exactly, in 30 days, a big client is going to pay me, and then I will pay you back.” And then that is exactly the same approach to anyone, big or small, that you going to borrow money. You are creating that comfort, basically saying to them, “I have a plan,” and that will reduce the fear that you have within you because you understand what is going on in your business.

Alisa Manjarrez:
That makes so much sense.

Dr. Merary Simeon:
No, it does, because it also helps you plan.

Christina Sjahli:
You need to have a debt schedule. You need to have a cash flow forecast. You need to understand what’s going on historically in your business before you really go out there. So at the very beginning, don’t go to a lender. If you can borrow from friends and family, it’s way better. I know it’s a hard ask. I know that.

Alisa Manjarrez:
Yeah. I ran into that situation at the middle of last year, and I needed $1,500. I had a check coming in for like 10,000. So I knew I was going to have it, but I didn’t have it in that moment. And so I had to ask a family member to cover me. And it was like, the minute that I needed it, it wasn’t 30 days. It was less than that. It was like a week. If you’re going to borrow, it needs to make sense and you need to have a plan to pay it back. Is that what you’re saying? Or you have to have a purpose as to why you’re borrowing.

Christina Sjahli:
You need to have a purpose. Let’s say, going back to the example that I brought up earlier about when is a client is going to pay, that is not an issue of cash flow that you really have to go out there and get a big loan. The first thing, when I said, why you need to borrow money, the first thing you really need to look at your cash flow forecast, nowhere else. Look at your cash flow forecast. There is one key thing that I want to brought up over here. Look at your cash flow conversion rate, okay? What that means is that, match up the number of days that you are paying for your vendor, for your accounts payable. If you are paying them in 30 days, you want to match collecting payments from your customers in 30 days as well. If you have a lack between receiving money from your client in 60 days, and then you have to pay for your vendor in 30 days, there is a gap, right?

Christina Sjahli:
So, what can you do? That’s mean you’re going to go out to the vendor and you’re going to negotiate a term with them. And then there is sometimes a vendor can basically say, “Okay, I can extend for another 30 days for X percentage.” And then normally the percentage, this is what you call credit borrowing from vendors, okay? And the interest that they’re going to charge you, it’s way lower that if you go to a bank and borrow money. That’s what I mean, understand your purpose. A lot of female founders mismatch their cash flow needs with a loan. What I mean is that, again, going back to that short term, if you only have a 30 days need, you only need it for short term. Don’t go out there borrow a loan for two years.

Christina Sjahli:
It’s not going to help you. It’s going to put more burden on you. However, if you have a business and then let’s say that you want to purchase a warehouse. A warehouse is an asset. It’s a long-term asset that going to last for 20 years, right? Then you can go out to the bank and then you going to say, “I need to purchase a warehouse here.” And then the warehouse, because the value is about 20 years, you want to borrow a loan that you can pay back within 20 years. You match up the benefit that you’re going to receive from that warehouse with the payment. It’s all about matching here.

Christina Sjahli:
It’s about understanding why, make a plan, understand what’s going on in your business, that’s mean you have to review your historical cash flow, and then make a plan on how are you going to repay back that loan. To me, a lot of female founders out there, when they are thinking about borrowing a loan, they’re not thinking far ahead. They’re just thinking in the moment. They were reacting. They were reactive to a situation right now at this moment. But you want to change that reactive into becoming proactive. That’s what I mean.

Dr. Merary Simeon:
So, what are some of those hidden costs that you’ve seen entrepreneurs get surprised by it?

Christina Sjahli:
It’s the prepayment penalty. That’s one. When you look at a clause for a loan, if you don’t read carefully, let’s say that you borrow for a long term, let’s say five years, and then suddenly you have money and then you want to get off from this debt, from this loan, and then you don’t want to pay any more interest. But a lot of financial institution out there, what they would do, they’re going to put a prepayment clause in there, which mean they don’t want to lose money from their interests, right? If the loan is for five years, and then now you cut it short for two years, you pay it off, they’re losing interest for three years. That’s one. And then there is also administrative fee. You receive a loan. Let’s say you borrow 500,000. Most of the time you don’t receive 500,000.

Christina Sjahli:
There is an admin fee being charged on your behalf because they are the one that processing the loan. So you need to be careful on those two things at a very minimum, right? I do want to say this, though. There has been a movement out there. There are different type of financial institution out there that really try to change the ecosystem of the lending game especially. They try to look at, how can a loan really benefit business owners, instead of taking advantage of them? Is that regenerative mentality or concept, instead of extractive, right? So, who knows? If you can find the right lender, you may not have those clauses.

Dr. Merary Simeon:
No, that’s a good point, because I’m thinking, as a new entrepreneur, you want to open your own business and you’re not making profit yet. So that was a really good watch out because if you want to get a loan for a certain amount of time and you start making money, but then, that’s a hidden cost that you probably didn’t know about. But how can an entrepreneur or somebody that wants to go into entrepreneurship and they’re not making money, what is the best thing or the move or the steps that they should be taking to really move the needle when it comes to investing your own money into your business? Because I think that’s the one piece sometimes I hear about, is like, “Oh, I don’t have enough money to invest in the business yet,” or, “I don’t have enough money to start a business.” So I guess my question is, how much is too much? How long should you wait? What is the best strategy, I guess, for somebody who’s thinking about becoming an entrepreneur?

Christina Sjahli:
That is a tough question to answer, because it really is going to depend on how comfortable you are in taking the risk to start a business. I cannot give advice on that, but I can share what I had done for myself. When I started thinking about doing my own business, I basically spoke with my spouse and then we created a plan. If I decided to leave my job, how much extra, it’s kind of putting him on pressure, but how much extra he needs to make? How much saving do we have that we can allocate to the business? And how long should I give it a try before I decided on a quit? Okay. And that was the plan that we put in place, and I started that about two years before I made a decision to go.

Christina Sjahli:
And then I know not everybody can do this. That’s why I said, it’s really hard for me to say, “Here’s what you should do,” because that is a really personal decision. You have to look at your financial situation. You have to look at how much saving you have. Are you willing to use your retirement plan to supply for your business? And put a timeline because building a business, we all know, the three of us here know this, it’s very, very difficult. Maybe for some people you started a business and then you get a client right away. For me, it wasn’t like that. It took time. It took patient, and I’m still figuring it out. I’m still building this business. One step at a time. So that’s my answer to that. I’m not going to give a tip. It’s just my personal experience.

Dr. Merary Simeon:
Thank you for sharing your experience. Just listening to you it’s helpful. You got to definitely take a look at your situation. What risks are you willing to take? And how long can I live with the savings or the investments that I’m willing to put into it? So, thank you for sharing your story.

Alisa Manjarrez:
I love that you said it’s so personal because it really is. For me, I got let go of my job and decided to become an entrepreneur a week later. So I didn’t have time to save or think or plan or anything. I just was like, “I’m going to go for it. I have no parachute.” I mean, I had family and if I really needed to go move back home, I mean, obviously, like I said at the beginning of the podcast, I would be taken care of with my coffee and my smoothies over here.

Christina Sjahli:
Not a bad arrangement.

Alisa Manjarrez:
No, not at all. Actually failure sounds pretty good right now. No, but there are so many rules that I heard, like, “Well, you need to save two years, and you need to get into the best shape of your life, and you need to have such and such money and savings.” And I just, frankly, didn’t have the time to get all of those things in order. I just had to move and go. And there were some times where I was hanging on by a thread, and there will probably continue to be times like that. So I just love that you’re talking about, how much can you take? And if you have a family or a spouse, involve them.

Christina Sjahli:
And I think it’s really important to do that because you got a support from your family, Alisa, when you need them, right? And then I think family, to me, is the biggest support. I wouldn’t be able to just quit and leave if I didn’t get the support from my husband. And then I know not everybody has that luxury, so I want to put it out there. My situation is different. Your situation is different. You have to feel comfortable with what you’re doing. Only you know what is right.

Alisa Manjarrez: (33:35)
Want to know how breaking the rules can help you level up your career game? So What Rules podcast on any social media platform and join our members-only group on LinkedIn, where we discuss rule-breaking strategies for multicultural women. What Rules is a production of Color Forward? The show is produced by me, Alisa Manjarrez, with editing and fabulous sound design by [Mather de Leon 00:33:58]. Visit colorforward.com for more stories, events, and of course, all the episodes of What Rules.