How to start a business without any money, the difference between American and Canadian shoppers, and what's in Lori's own handbag
Age: 30
Location: Toronto, Canada
Why we care: Just before the global economy went to hell, Lori Chalmers created Cha Cha handbags, her own handbag and accessories company. Good timing? Actually, not so bad: Chalmers' creations have since been worn by celebrities including Lady Gaga, Fergie, and Audrina Patridge.
Becoming a self-employed accessories designer isn't exactly a safe career move. How did you decide to take the plunge?
I had worked as a freelance graphic designer since college, and one day not long before Christmas in 2007 I found myself unemployed with no job leads in sight. I remember sitting on the stairs outside of my basement apartment—I had locked myself out by accident the day I realized I didn't have a job—trying to think of what other marketable skills I had. I had spent a lot of my spare time sewing, so I thought I should explore that.
Did you make a business plan when you created Cha Cha?
I didn't have any specific business plan—I wish I'd had one—and I didn't have any investors, either. That was the biggest business-type mistake I have made so far. Looking back, it's clear that I definitely should have had a plan, a map, going into something like this. And since I was out of work at the time, I didn't have much money saved up, either.
Without a business plan or investors, how did you launch your business?
When I first started, I would make a few handbags, post them on my blog, and when those sold I would take that money and buy more supplies for more products. Before I could afford to make a full website, I created a blog for free and tried to use that to gain an audience. I did giveaways and tried to add shots of designs that were in the works—anything to keep people coming back. Every day I would pick individual fashion bloggers I liked and try to pitch my product to them. Although I never gave away products for stories, I would try to write interesting newsletters and make my own lookbooks. There is a lot of promotion that you can do without spending tons of money. All these things just take a lot more work.
How do you determine how much to charge for your handbags?
My typical markup is the industry standard, often 100% of the cost of the materials that were used. So I end up selling my bags for from $35 to just under $400. Luckily I am able to keep prices a little lower than other brands since I sell the products directly to the consumers. With a lot of these companies, there are so many middlemen involved that by the time a purse reaches the consumer the price is really, really inflated.
What else makes bags so expensive?
A lot of times when you buy a handbag, you pay extra for the label and the marketing. But from handbag to handbag, what makes a product more expensive usually has to do with one of two things—either it's made out of a higher-end leather and has more hardware, or it's a bag that took a lot longer to make. The more pockets, the more rivets, and the more details on a bag, the longer it takes to make and the more expensive it is probably going to be.
Have your own spending habits changed since becoming a business owner?
Absolutely. I have actually become more responsible with money since becoming self-employed. Maybe I understand the value of money more now that I work so hard for it. When I had a steady paycheck I lived paycheck to paycheck. Now I have savings, investments and an emergency stash.
What do you think is too much to spend on a handbag?
The most I ever spent on a handbag was $1,000. I was having a moment of insanity. To be honest, I actually really love that bag and I still use it all the time. My other bags are ones that I have made, and those are higher quality than that $1,000 bag and they have lasted longer, anyway. So nowadays, I don't spend any money on handbags because when I want a new one, I just make it. My big splurge now is on vacations and shoes.
What are women looking for when they search for a new handbag?
I'm still trying to figure this one out. I think most women are looking for style, quality and functionality. When I come up with new design ideas, though, I usually think of what I would want in a bag and then I just go from there.
What do you keep in your own purse?
In addition to the basic things like keys and my wallet, in my own purse I always keep my calendar—I would be lost without it—lip balm, a cell phone, water, and usually an apple, too.
Are you rich now? And other invasive questions for notable folks, in previous episodes of Other People's Money:- Learning how to shop: The Sound of Young America radio host Jesse Thorn
- Starting out in Hollywood with only $13,000: Hollywood movie producer Scott Goldman
- Life as a street musician: New Orleans swing revivalist Ingrid Lucia
- A high-tech job and a low-cost lifestyle: Metafilter moderator and technologist Jessamyn West
- Selling your clothes and giving to charity: Media blogger Rachel Sklar
