Christine Schmidt; photo by Ana Homonnay.
Did you start with any sort of financial investment? Saving? Money from family? Loans or credit cards?
Evan had a full-time job and we actually managed to find a somewhat affordable place to live in the city, so Christine was able to develop her work and the business for awhile without generating much income. There wasn’t a real need for financing because Christine taught herself basic web development and built her own (somewhat janky) website, and because the early focus of the work was on handmade paper products, all it took was about $1,000 for a few screen printing screens, a used wash out booth, and a power washer. As the business started to make a little money (at first, mostly from custom wedding invitations) we were able to use that income to buy more equipment (like our drying rack), hire a professional to help with the website, and also expand into other manufactured products — like the rubber stamps.
Yellow Owl stamp selection; photo by Ana Homonnay.
In the beginning, did you do everything step by step before jumping in? Did you register your business, get the resale license, get insurance, etc.? How did you decide what kind of entity you would be? Or did you start working on the actual products and as it started taking off decide to get serious with the business? For someone just starting out, would you suggest getting all the legal business stuff in order before working on the product development?
Once the website was up and people started to express interest, Christine did all the research on how to start the business and took care of all the registrations and what not. Because there was no real income at first, and because the focus was on paper products, we just set it up as a sole proprietorship at first. No need to spend the time and money on all the legal work until you really need to! A lot of it happened pretty organically — we would be lying if we said we had any of this planned ahead of time. As the business grew, and as more opportunities came up, we would assess what changes needed to be made and then eventually make them. Of course, some took longer than others, because one thing about being a small business is that YOU NEVER HAVE TIME FOR ANYTHING. There’s always something more you could be doing. And on top of that, all the legal/technical stuff is so boring that you often find yourself pushing it off as long as possible. We didn’t convert the company to a corporation until 3 years after the business started selling wholesale. So with all of that in mind, we would say that it’s probably okay to wait to do all the legal/business until after you’ve gotten your designs out there, but once the business starts to generate some real revenue, you should start that process sooner rather than later, because once you get busy, it’s hard to catch up!
How many pieces did you first start out with and when did you make the decision to start approaching stores? Or do you sell directly to your customers? Or both? If you do sell to stores, did you start out by emailing line sheets to select stores? Did you ever do consignment or just wholesale?
Again, a lot of this happened organically. Yellow Owl Workshop was really more of a concept at first, and the idea of selling to stores didn’t really occur to Christine until stores started to contact her. At first, it was custom wedding invitations and personal stationery, and then selling some screen printed cards directly through our website. The first inquiry came from Reform School in L.A., which was the most awesomest thing ever both because it was amazing to get interest from a store and because those ladies are rad and have amazing taste. Then an inquiry came from Little Otsu here in San Francisco. When two incredibly cool stores like that show interest in your work, it is an encouraging sign that maybe this could appeal to others as well.
At that point Evan suggested that we apply for a booth at the National Stationery Show, because why not? It was expensive and time consuming, but since the business was still in its infancy at that point, we could afford to take the time to design a booth and get new products together. And we figured if it went well there, then it would mean this really could be a wholesale business. In preparation for the show, Evan researched shops across the country, and we put together an email and mailing list to send a promo mailer in advance. We got some orders just from those mailers, so after the show, Evan started emailing more shops with our website link and line sheets. He would do this unsolicited, but he was always very careful to only email stores where it looked like our products would be a good fit.
We think that it’s really important, especially when starting out, to do your research ahead of time and only send emails or information to shops that clearly fit with what you are offering. There’s a temptation to cast as wide a net as possible, and just try to get your goods out to anyone and everyone as fast as you can, but in our opinion it’s much better to focus on the stores that fit with your aesthetic because that is where your products will do best. There is nothing more depressing in this business than getting an exciting new account and then never hearing from them again because your goods just didn’t sell well for them. It’s cliche to say, but it’s all about quality, not quantity!
As for consignment, early on we would agree to it for a few shops that we really thought were a good fit (Renegade Handmade in Chicago, Paper Boat Boutique in Milwaukee) and we think it’s a useful option when starting out, but at some point it just becomes too hard to manage and more trouble than it’s worth. We found that for shops that relied mostly on consignment, if they wanted our products strongly enough, they would agree to just buy them outright anyway.
When I had a clothing line, I came into some trouble with stores not paying us or bouncing checks. Did you ever have problems like that and if so, how did you resolve them and change the way you did business?
It’s a constant problem, and probably the worst part about this business. A lot of shops insist on only paying on Net 30 credit terms (meaning they pay 30 days after their order is received), so you have to be willing to agree to that in order to get their business. Most shops are really good about paying on time, but there are definitely a handful that don’t pay unless you hassle them multiple times. Most of the time it’s just because they, like us, are small business owners and are just really busy, but sometimes it’s because they don’t have the cash flow — and that’s when things get scary! Luckily we have only had two shops go out of business while they still owed us money, which really is lucky considering that the entire lifetime of this business has been during the recession! The best way to protect yourself is to push for credit card payment up front whenever you can, and if that doesn’t work, check their credit references. And for shops that don’t pay you on time, the next time they try to order, you have to just insist that they pay you up front.
Since most production happens months before a customer pays for the shipment, how have you dealt with paying up front for all the materials and labor and waiting for payment? For me, when I could, I paid by credit card for materials and then saved money from the last payment for labor. It was always such a delicate process and can be super stressful.
It was less of a challenge at first when Christine was focused mostly on paper goods, and was screen printing them by hand. But as the product line grew to rubber stamps and pendants, there was definitely a little dance we’d have to do every time we’d have a new product. One of the things that we just decided early on is that whenever we have a new product, no matter how confident we are that it will sell, we do the minimum amount possible for the first production run, and get samples out to places as early on as possible — and hopefully that way you have some orders already placed before the production is even complete. Then in theory you can see whether there is a big enough interest to do another, larger run, and you have some money in your pocket to pay for it.
Do you have a rep? If so, do you find that is a good way to go as the business grows?
Well, I think this could be a whole blog post topic on its own! There’s no way to answer this question in a short space. We do have some reps, but we also operate without reps in certain parts of the country. Having a rep is definitely a great way to get exposure and new accounts when you are just starting out, though we would caution against being too quick to start working with one. Before you start, you have to make sure you are ready to produce on a larger scale, because otherwise you can really lose a lot of good will if you can’t deliver on orders. We’ve heard many a horror story (and have had a few of our own) where a line got too much attention too soon, and just totally failed to deliver on the orders placed. There definitely is such a thing as growing too fast for your own good. So we would suggest waiting until you know you can handle higher quantity orders before signing up with a rep. On the flip side, having reps can get expensive — there is the commission plus showroom fees, etc. Plus it’s really nice to have direct relationships with buyers, something you can’t do as much when you have reps. So I guess — as with anything in this crazy business — there are pluses and minuses to having a rep. How’s that for an answer?
How do you feel about trade shows? Do you think they are a good investment?
Yes. Absolutely. A necessary evil. We originally thought trade shows were an antiquated idea — I mean, can’t you find everything you need just on the Internet? But after doing a number of gift shows over the last few years, we have learned that a lot of buyers still love to see everything in person, and in the context of a larger display. It’s absolutely the #1 way to get exposure and grow your business, as sad as that is to say.
How have you found your materials? Did you find sourcing difficult?
When designing new products, Christine probably spends about half her time sourcing. It’s a lot of research and trial and error. Once you find a few people you can trust though, they often can recommend others that they know for other types of materials. But it’s very, very challenging to find good, reliable, and cheap sources, especially when you are focused on getting everything made in the U.S. Sadly, it’s extremely difficult to find manufacturers for certain raw materials here in the U.S., and even when you do, the price and/or quality is often an issue. A lot of times for new products, Christine will have the design done months before we can introduce it, because it takes us that long to find the right supplier for materials. It’s a constant struggle. At the same time, when you do find someone great (and they are out there), it’s like the best feeling in the world. Especially when it’s a fellow local small business. One of the best things about Yellow Owl is that it’s brought a lot of business to local printers, box makers, ink pad manufacturers, etc. It’s really exciting to know that your business helps support other local businesses.
Are you making everything yourself or do have people who help with production? If you do have people who help, when did you make that decision to hire?
For far too long, we were doing everything ourselves. That was one of those decisions we mentioned earlier where we waited and waited, to our own detriment, before acting. It’s such a hard decision to make — can we afford an employee? How do we even do it? Where do we look? What do we pay them? So stressful! So for far too long we would both be sitting on our couch late at night watching TV while making stamps and packaging cards. Fun times. We finally had enough, and started asking some friends to help out when we were desperate. That was our way of sort of avoiding the real decision to hire someone.
Eventually it became obvious that that was not going to work, mostly because we couldn’t rely on our friends to always be available when we needed them and we would still end up back on the couch making stamps late at night. We decided to take the leap and hire someone part time. As we started to see that the costs were not too bad, and that the business could support it, we added people as needed. Once you hire that first person, the decision to hire more becomes a lot less daunting. The biggest problem we have is the ebb and flow of the business — there are a few times of year where we are busier than others, so our biggest challenge has been finding the right balance so that we don’t have to let people go. It’s always something on our minds, unfortunately.
How do deal with copyright issues or people doing the same thing as you? Or is this ever something you have to deal with?
There are always going to be people who see your work and appropriate it for themselves. There’s nothing you can really do about it. Christine’s attitude is that, while those people are apeing her ideas, she’s already moved on to new ideas. You can’t fake originality. In the end, they lose anyway, so why let it get to you?
How do you keep everything organized monthly? I assume you have orders from a variety of different clients, stores and customers. How did you figure out a schedule to make sure everything happens in a timely manner?
We now have our operations manager who keeps track of all of the store orders using a Google calendar. She’s extremely organized. We wouldn’t know what to do without her. Evan used to have a system of post it notes, but then the post it notes would have post it notes, and things got ridiculous. Honestly, the way Christine keeps things organized now is just by not taking on too much stuff! Really learning to say no to things has been a huge organizational tool, as weird as that might sound.
Lastly, how do you find balance with work and life? All my passions, business and life merge in many ways, so I sometimes find it difficult to negotiate time away from the business. I also found that creating set hours for working was super helpful. If you can give any insight on how you have found balance or are attempting to find it, that would be great.
