Nov 27, 2024
Jenny Lei was inspired to start her own line of handbags after a frustrating time trying to find the right accessory to bring along with her for a long day of job interviews.
As she told CNBC, she ended up bringing a canvas tote. And no, she didn’t get the job.
Advertisement
But Lei, 28, says the experience helped her realize there was a gap in the market — one she felt she could fill well. She poured $30,000 of her $300,000 in savings into her vision of the perfect work bag, searching for the right suppliers and refining her design.
However, four weeks after launching, she’d only managed to sell 20 totes. The rest were sitting in a towering stack of cardboard boxes in her New Jersey home.
“My plan failed spectacularly,” Lei told CNBC. “I couldn’t afford to not make it work. [A lot] of my savings were sitting in boxes in my living room.”
Still, she didn’t give up. And it paid off. Her brand, Freja, generated more than $9 million in revenue in 2023, including $2 million in profit. Here’s how Lei took a leap of faith with her savings and turned a rocky start into a successful business.
Saving to fund a dream
The path to success wasn’t a straight line for Lei. While she knew she had a good idea, she faced obstacles from the get-go. And because focusing on quality was important to Lei, that made the process even more challenging.
At first, she struggled to find a sample designer who could translate her vision into a prototype. Her first bag sample cost $2,000 and she was immediately disappointed. But she also took ownership, acknowledging that she didn’t give the designer enough direction and regrouped.
When she came back to the table the second time, she landed on a design she was much happier with. All the while, she was unemployed and funding herself from savings she’d earned from a dropshipping business she ran.
Advertisement
Relying on personal savings to fund a new business can be a gamble. According to an analysis by LendingTree based on data from the U.S. Bureau of Labor Statistics, about one in four (23.2%) new businesses don’t survive their first year.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Learning from mistakes
While Lei was able to survive the odds, making mistakes comes with starting any new business. But Lei took every misstep as an opportunity to refine her approach — whether it was budgeting, improving the product or rethinking her customer acquisition strategy.
Early on, Lei ran a Facebook ad campaign, collected 2,000 email addresses and was prepared to sell her 300 bag inventory. Feeling confident, she sent out an email blast — only to realize no one purchased a single bag.
Determined to turn things around, Lei focused on acquiring customers. But the process was painstakingly slow for the first two years. From her $300,000 in savings, $100,000 went to living expenses, allowing her to cover essentials like splitting $1,200 rent with her partner at the time and sticking to a frugal lifestyle.
If you’re confident in your business idea but hesitant to rely solely on your savings, there are other ways to fund your dream. A good starting point is exploring a loan or line of credit from your bank.
A more affordable route could be to seek financing through a traditional lender backed by the U.S. Small Business Administration (SBA). The SBA offers various programs, including microloans, larger loans, and support for certain nonprofits, making it a valuable resource for aspiring entrepreneurs.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Victoria Vesovski is a Toronto-based Staff Reporter at Moneywise, where she covers the intersection of personal finance, lifestyle and trending news. She holds an Honours Bachelor of Arts from the University of Toronto, a postgraduate certificate in Publishing from Toronto Metropolitan University and a Master’s degree in American Journalism from New York University’s Arthur L. Carter Journalism Institute. Her work has been featured in publications including Apple News, Yahoo Finance, MSN Money, Her Campus Media and The Click.
