Bonus case 5-1 1154 Lill Studio: You Still Going Around with that Old Bag?

(Video Case)

(NOTE: This case can be used with the Video on DVD for this chapter.)

Entrepreneurs provide 80% of entry-level jobs and contribute almost half to the Gross Domestic Product. However, many people are reluctant to start their own businesses because there is too much risk and uncertainty. One person who did assume the risk is Jennifer Velarde. Like all entrepreneurs, Velarde saw a marketing opportunity—in her case, accessories for women. Velarde thinks that one of the most important accessories is the handbag a woman carries. It can make a statement, show her taste. Velarde made sketches of unusual bags while she was still employed elsewhere, but didn’t feel that she had full freedom of expression where she worked. Eventually she decided to go out on her own and make customized handbags.

Velarde made 20 finished bags and took them to a street fair in Chicago. It occurred to her that if she sold the bags quickly she would have no inventory left to sell to others. Therefore, she began taking orders and produced the bags later. That became the model for the company: learn what people want first, and make the bags later.

Imagine this. You want a handbag that says YOU. You want it to be original, different, exciting, new, and eye-catching. You have some idea in mind of what it should look like, but can’t find anything that meets your needs. And then you step into Velarde’s store called 1154 Lill. (Why that name? Because that was the address of Velarde’s first home of her own in Chicago where she sewed her first customized handbags.) You see about 20 handbag designs to choose from, and a few look interesting, but you would just love to make some personal changes to have the handbag meet your exact specifications. You’re in luck because that’s exactly what you can do at 1154 Lill. You can choose the lining color, the external fabric, and the handle you want. In short, you can have a handbag that is just the way you want it.

You don’t have to go to a 1154 Lill store to design your own bag. Velarde learned the value of handbag home parties early on. A Lill associate will come to your home or office armed with fabrics and bag samples. Velarde believes her customized handbags are not her only product. Her product offer is the full “Lill Experience” that is created when you visit one of her stores, attend a handbag party, or order online. The Lill experience is now available in 25 cities across the country.

Getting started in business is one thing. Learning how to grow is quite another. One place to turn for help is the Small Business Administration. For example, the SBA led Velarde to an accountant to do payroll taxes. Naturally, you will need employees to help grow the business. Velarde started with a childhood friend. But the two of them couldn’t make the bags fast enough, so they had to outsource that task to others. Eventually, Velarde had to hire more artists and salespeople to help market the bags. In some ways, such employees are mini-entrepreneurs because they too have to take the risk of working for a small firm. However, they too enjoy the freedom and opportunity that goes along with such work.

One soon learns, when starting a small business, that there is technology out there that can make the job a lot easier; things like computers, the Internet, and Web pages. There are also people with marketing skills who can take such products to unexpected places—like in the home—and make the business grow. “Bag parties,” like many home-based selling ideas, have become a big success.

What can you learn from Velarde? First, you need a business plan that outlines the money you will need, the personnel you will need, and so forth. Second, you need to establish upfront how much time you will spend with the business. It could be 24/7 if you let it. You must build in time for family, friends, travel, and self. There are many reasons to start a small business; that is, to become an entrepreneur. They include the freedom to do your own thing and see it to completion, to follow your passion, to do what’s fun for you, and, of course, you can make a lot of money.

She is likely to go overseas to sell. It is so easy with the Internet. You may want to discuss this issue in more depth after the video.

Her experience sounds rather easy and fun. You might need the help of a designer, a lawyer, and an accountant. This question is also good for discussing entrepreneurship in general.