Pamela Barsky is an artist and owner of Pamela Barsky, Inc., a company that sells handmade bags, totes, and zippered pouches featuring original art and clever sayings. Celebrities like Reese Witherspoon and Lady Gaga have been spotted with Barsky’s bags, which she sells online and at retail stores in New York City.
Here’s her story of starting and growing her business, as told to Nav.
Starting Pamela Barsky, Inc.
I used to go and buy art on layaway when I was a kid. From the time I was in seventh grade, I always knew I wanted to own a store. I took a short sidestep into advertising for 10 years. When I stopped doing that, I opened a store. I loved doing that, but after a while it became very difficult to find unusual and interesting things to carry in the store. My solution to that was to start making things.
I’ve made a series of different things. I had a good long run with journals and photo albums. I did luggage tags. I moved to New York six years ago. I didn’t have a lot of space, and I didn’t want to carry heavy things anymore. The books weighed 2 lbs. each, and when we would ship a pallet off to a store, it would weigh like 3,000 lbs., and I didn’t want to do that anymore.
Many years ago, when I used to do wholesale, there was a really nice lady from Texas next to my booth at the New York gift show. She had a little table of pouches that she made from photo transfer stuff. I remember her looking at my books and saying, “You know, you should make pouches out of your sayings.” That sort of stuck in the back of my head for 10 years. When I was thinking of what I could make that didn’t weigh a lot, I said, “You know what? I think it’s time to make pouches.” I started with maybe a dozen in a church basement. The first day I went there and sold $300. My booth cost maybe $100, and I was like, “Yay!”
Having emergency cash on hand can be your key to managing cash flow.
Financing the Business
I finance the business completely on reinvestment. Due to a bunch of circumstances, I sold my house and came to New York with the money. That went to the landlord for my studio apartment. I talked my ex-husband into lending me some money. I used that to get started, and then any money I made I put back into the business. I was bartending a little bit, so that went into the business. I had some of my old luggage tag products left, so I still did some wholesale orders on that, which went into the pouches.
I had a short sale on my house, so I don’t even have a credit card. I pay for everything with cash. I actually prefer that. Some of my suppliers who I’ve been dealing with now for five or six years let me take Net 30, but I prefer not to do that. I find that it’s really easy to get yourself in trouble that way.
Over the years, I’ve said 50% of what I sell can be spent and 50% goes to rent and cost of goods. Now that I’m selling direct to customers, our margin is better, so it’s a little bit less so. We have a really funny technique for managing cash flow. We sell all year and we’re pretty popular all year, but we need to build inventory for Christmas all year. Every week, we sell about 1,000 bags, but we make 2,000 bags per week. Half go in the basement for Christmas and the other half go into the store. All year, every bit of extra money goes into bags for Christmas, so all the profit from Christmas we get to keep. It works for us!
My first big mistake was not understanding that when you’re sourcing materials, the same material is going to be available at a variety of prices. When I first started, I was making these books that were made out of really thick chipboard. I found this company that would cut the backs for me to size. They sold them to me for $1 each. In the end, when I really started knowing what I was doing, I was paying between $0.04 and $0.06 for the exact same thing. I’ve learned that you can’t jump too fast, because the price you pay for something is going to determine your selling price, which is going to determine your profit.
Another mistake was working with suppliers that didn’t have my success in mind. Somewhere halfway along the way, I realized that some suppliers were putting my jobs on the backburner or were not giving me good pricing. I’ve realized now that you have to have really good relationships with your suppliers. If they’re not serving you and servicing you, there are a million places to buy things, so you need to break those ties and move on.
Another mistake is not trusting my gut when I’ve hired people. I’ve sort of gotten screwed a couple of times that way. Moving forward, for important positions, we’re going to do background checks. My employees really represent me. I learned the hard way that it’s important to make sure that the people working for you and with you are honorable and good people.
A Smart Early Business Move
In the beginning, I tried to do something that was not really doable on a small scale. For example, the equipment to make spiral-bound books cost $100,000 for one machine. Really, it was out of reach for an average person starting a small business. But I found a guy who could take a different machine and sort of tinker with it to make a machine that did the same thing as the $100,000 machine. I think that gave me an advantage because for many years I was able to do something that nobody else could. What I learned is there’s always a way to do what you want to do if you are creative enough.
Business Challenges and Rewards
A while back, I would have said managing the people [is the most challenging thing about running a business]. But this month has been a little difficult because some ex-employees have opened up copycat businesses. So, right now, I would say it’s staying ahead of the trends. I always tend to be a trendsetter. People see we have this thing going on and they start copying.
When I look around at my employees and see that I am literally supporting the lives of 20 people, it feels really good. One of my sewers is a Chinese lady who doesn’t speak a word of English. Her kids have grown up since she’s been with me for six years. It feels really warm to know that I’m helping send her kids to college. On the flip side of that, it’s been a little bit of a soft Christmas because people are so confused about what’s going on in the world. We’re definitely feeling it. It’s one thing when you’re working for yourself, so you just cut back and don’t go out to dinner as much. But, when you have 20 people that you’re answering to for their pay, it’s a little stressful to know that if sales go down, it affects them.
Advice for Would-Be Business Owners
You really need to love what you’re going to do, because you’re going to be doing it a lot. For a while, you’re going to be way poorer than you think you’re going to be because everything costs more and you’re going to make way less money than you think you’re going to make at first.
If people are making something by hand, they often forget to include the cost of their labor in what they’re doing. When they get bigger and they need to pay people to make the same things, suddenly their pricing doesn’t make sense because there was never a labor cost put into the product. I’ve seen so many people get in trouble because of that. You need to take your costs, including your labor costs, and triple them to make a profit.
The Future of the Business
Because of the copycat things going on, I’m forced to make sure my product is really on-point and fantastic. We are working with some new materials. I’m starting to offer some new products. I’m going to be offering tea towels next year. And I’m starting to offer a new product that’s similar to the linen calendars people hung on the wall in the ‘60s. We’re going to do a very modern version of that with my writing. Also, I’m working on opening a soft serve ice cream shop. I’m trying to take my profits and invest it in some other things. Broadening and deepening is the plan for next year.
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