Owning half of a cheese factory (with the other half belonging to their parents), Sheree and Saul decided to embark on another business: the Udder Delights Cheese Cellar, in the Adelaide Hills town of Hahndorf. Wanting to be debt-free (besides the business, of course), the then 27-year-old Sheree and her 25-year-old husband, Saul, made the ultimate sacrifice to fulfil their business dreams – they sold their home. Sheree was used to hard work as part owner of the family cheese factory that opened in 1999.
“When we first started the cheese factory, I worked crazy hours in the business, but hardly drew a wage. I lived rent-free on my parent’s property; my parents worked full-time elsewhere and their salary supplemented all business loss. We only made a small profit in our fifth year – we had to continue for this long as there was no financial back-up plan.”
In 2006, things were about to get a whole lot harder. Figuring they needed $100,000 to set the cheese cellar up, they were hoping for $20,000 left over. Following the sale and setup, Sheree was left with “$2K and a very nervous heart!”
Here’s what happened on their business journey.
What financial situation were you in before selling your home?
We bought the home with the intention of it funding our next investment, so we knew it was a stepping stone and we weren’t too emotionally connected to the home for that reason. We were only young – Saul was 25 and I was 27 – when we decided to start our next business. We already owned half of our cheese factory; the other half was owned by my parents. So we had a mortgage, with equity in the home (because we had spent some time and money renovating it and had a large deposit at the start). Ideally we wanted to be debt free, with the only financial obligation being the new business that we were embarking upon. We also sold one of our two cars to put towards the new business too.
What was the conversation like when you spoke about selling your home? What different opinions did the two of you have and what sort of issues did you discuss?
We had no differences, as it was always our intention from the start that our house was going to be a stepping stone to the next thing (we had read Rich Dad Poor Dad [by Robert Kiyosaki and Sharon Lechter] and wanted to apply the philosophy). The main issue we discussed was, “What could possibly go wrong?” The most obvious being that the business didn’t work and we’d lose everything in the process. We figured we were young enough to start again should that happen. It has definitely proven true in our experience that when you don’t have a lot to lose, it’s easier to risk. It’s harder for us now, as we also have children to consider, and we have built up an asset portfolio.
What were some of the positives and negatives of moving into the same space that you ran your business?
It meant we could amortise our business and living expenses. I worked really long hours, and it didn’t feel like I spent hours away from home because I was at home. It also meant [I could achieve] simple things like being able to put washing on, and dinner on to cook, even though I was “at work”.
I now have two girls, who are seven and six. Living at our business has meant that their life has been very settled, even though they’ve had a busy working mum. They’ve always been at home, even if I’ve been at work. I’ve had the help of a nanny two days a week too – this was of great help.
[It was also a] much cheaper option than paying for another site to live in. This really took the financial pressure off us while setting up a new business, and while having children.
[The negatives were that] we’re always on. We are really only fully away from work when we are not at home. We don’t really have much privacy during the day – our business operates seven days a week and due to the configuration of our building, the staff have to access our main living area. (I’m sure our new staff always find it quite confronting, however we are just so used to it.) Our children haven’t known anything different and have definitely been raised by a community.
What challenges have you faced from needing to sell your home?
The main challenge has really been emotional – just wanting more space to entertain our guests (as our house really is a bed and breakfast) or space for a garden. I remember when my second daughter was born, I had a bit of an emotional meltdown and I just wanted to be in a normal house. I was crying, as most new mothers do, and my dad said to me, “Sheree, we had to sacrifice so much when you were young – we hardly had any money. And if your sacrifice is to live where you do, it’s really not that bad.” And, in an instant, I changed my mind, and have always had that perspective moving forward. Because, honestly, we live in a beautiful place, and have had the privilege of establishing and running successful businesses whist also having a family.
What’s your advice to other entrepreneurs who have a mortgage, but also want to start a business?
I don’t think it matters whether you have a mortgage. What really matters is where the money’s going to come from to pay living expenses, whether that be a mortgage or rent.
You definitely need to be realistic as to just how long it takes to not only cut even, but how long you will be running at a loss. If you can have a plan for it, and work out how you’re going to pay for it, I believe you can focus your energy on where you’re going.