This Entrepreneur Shares How She Survived When the Money Ran Out
This is an episode of our podcast Problem Solvers. Each week, an entrepreneur reveals how they overcame an unexpected problem in their business -- and were happier and more successful as a result. The show is hosted by Entrepreneur’s editor in chief, Jason Feifer. Listen below, or subscribe on iTunes, Google Play, Stitcher, or wherever you get your podcasts.
Saima Khan had an epic string of luck. She was a banker in New York, and one day she ended up chatting with Warren Buffett at an airport. “We had a very personal conversation about love, loss, risk, home, and food,” she says. By the end, she’d offered to cook him a meal at her home. Buffett accepted, brought Bill Gates along, and ate well. Then the industry titans asked her to cook for their upcoming charity event, which she did—making large, shareable plates, harking back to how her Pakistani immigrant family fed guests.
The event was a hit. More invitations followed. Soon, Khan saw opportunity. “People who were quite well-traveled were always looking for new dining experiences,” she says. So in 2012, she moved back to her hometown of London and began a private dining business. Celebrities, royalty, and other big spenders could hire her team to serve sumptuous meals in their homes—at a cost of up to $5,000 per person. She named it The Hampstead Kitchen, and it thrived for five years…until a $200,000 tax bill almost ruined everything.
For all her success and financial savvy, Khan had a common vulnerability: Her business couldn’t absorb an unexpected financial hit. This one came in the form of a new United Kingdom law that retroactively taxed a lot of Khan’s old income. There was no way she could pay it off and still make payroll. “I was at a position where suddenly I’m going to be wiped out,” she says, “and I’m thinking, Will I be able to even live in the house I’m in?”
What does an entrepreneur do in this situation? Ideally, experts say, she should have already had an answer. “You should always stress-test your business,” says business consultant Adam Bornstein, founder of Pen Name Consulting. “When things are going well, run through your nightmare scenarios—you’re out of inventory, your customers have fled, and so on. Think through how to preemptively lessen that damage or avoid the situation entirely.”
Khan’s emergency fund could cover slow months and equipment failures but not this bill. However, she did have one form of preparation: a database of every request customers had made. It would turn out to be the key to her solution. She needed new lines of revenue—to make more money, make it faster, and diversify her offerings—and her database told her exactly what people wanted.
Two opportunities stood out. The first was consulting. Many people asked her for business advice, and she helped when she could. But now she formalized it—creating a new service where, for a fee, she’d help entrepreneurs flesh out their brand for a day or six months.
The second was a new kind of cooking experience: drop-off. Until now, Khan’s company prepared food in only one way—cooking, serving, and creating an in-home experience. But clients had also asked for a dialed-down version, for casual evenings that didn’t require waitstaff. She saw potential there. By delivering food at a lower cost (along with the dishware and table settings, all of which would be picked up later), she’d give her full-service London clients more opportunities to buy. It would boost repeat business.
Now she had a plan. To pay down the tax bill, she borrowed money from friends. Then she launched the consulting service and staffed up her drop-off business, creating a seasonal menu and a process for her team to follow. The impact was almost immediate. Today, only one year after her crisis, her two new lines of business form 45 percent of all Hampstead Kitchen revenue
“In a way,” she says now, “this was a blessing in disguise.” Not only is it bringing in more money, but it’s given her more freedom to travel to and set up high-end events—thereby earning even more. “It means that I’m working smarter.”