Business Constraints

An internal monologue concerning the needs of the business and personal needs.

CEO: MONEY, MONEY, MONEY - We need more money to reinvest into the business. Once we are at three to four thousand dollars in sales a month, we should immediately seek to scale to a warehouse and produce five to ten times as much mushrooms as we can.

Employee: Yes, that's the goal, but let's not get ahead of ourselves. The first farmers market will be starting two Wednesdays from now on the May 28. Remember that we haven't refined production to consistently high quality just yet and need to get to our first thousand or two thousand before dreaming larger.

CEO: We know that the macro-economic headwinds are favorable - our largest local competitor, King Mushrooms, sells at dozens of farmers market with minimal competition. He likely produces thousands of pounds weekly and generates comfortable profit margins. It is almost guaranteed that once we break the mediocre mushroom barrier and consistently produce high quality produce, that we will be able to sell what we produce.

Employee: Yes, we may be able to do that. The headwinds are favorable and I am feeling good about the company as well. What do you think our most immediate priorities should be?

CEO: Well obviously as you mentioned, we start the farmers market on the 28th. Therefore, we should focus on refining the quality of our producing, creating acceptable packaging, coming up with some potential derivative products, making sure we're compliant with all necessary farmers market and local and state regulations. I know that we haven't even set up credit card payments through square, so we should probably get that set up soon.

Employee: Yeah, as much as I understand our vision for scaling to a warehouse and more, I think we should focus at the immediate tasks on hands. I've also been meaning to ask at what point I would be getting a regular salary. As you know, I've been working free of charge and pulling from my own funds to support you. Are there any updates on that?

CEO: Well, as you know our sales have been very... limited. We have had difficulty converting our friends and family members into regular customers, which is fair because maybe I shouldn't have expected that in the first place. It depends on how business goes at the farmers market, once we have enough to cover the monthly business costs, we'll likely be giving you enough to live on. How much was that again?

Employee: Well, the monthly business costs are likely to be around 600 to 700 dollars for now. So are you saying that everything after that will go to me? And I currently need about ~$2000 a month to stay a float.

CEO: Don't be ridiculous, there will need be a reasonable split between reinvestment in the business and labor costs.

Employee: Well, I won't be able to work if I can't pay my mortgage and eat... you know that I'm very frugal.

CEO: Yes, yes, yes... If we are able to get to around 3,000 to 4,000 in sales, then the first 500 will likely cover monthly business expenses - we're going to start making the spawn inhouse soon - 1,500 can go to you, and then anything in excess will likely go back into the business. So if we can get to 3,000, then that will be 1,000 in profit that can be saved/re-invested into the business. I know that you said you need 2,000 but times are tough and that'll have to do. Ask your family members for a loan. I can pay you more once we start making more money.

Employee: How much more? Would I get a percentage of sales.

CEO: If we get to the point where we're making around 4,000 to 5,000 a month, then that'll allow for a monthly operating cost of 1,000, maybe 2,500 to you, and then 1,500 of savings to go towards the future warehouse lease. I can't imagine that sales will be much higher than that even if things go very well very soon. I would need to sell at least 300 - 400 lbs of mushroom a month to get there, which will be quite difficult.

Employee: Yeah, all of this is kind of moot I guess unless we can sell at least 30 - 40 lbs a week at the farmers market. That'll at least bring us to break even where we can invest 500 a month in the business and I can take the 1,500 dollars needed to survive. Then we can go from there.

CEO: Correct, we can revisit this topic at a later time.