‘My plan failed spectacularly’: This 28-year-old from New Jersey gambled her $30K in savings on an idea and managed to turn it into a $9-million business — plus how to bag your own business

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Jenny Lei was motivated to create her own line of handbags after a difficult experience of not being able to find the perfect accessory for a job interview.

She ended up carrying a canvas tote. And no, she didn't get the job.

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At 28 years old, Lei says this experience made her realize there was a void in the market that she believed she could fill with her own product. She invested thousands of her own dollars in her dream work bag, searching for the right materials and continually refining her design.

However, four weeks after the launch, she had only sold 20 of the totes. The rest were stacked in a towering pile of cardboard boxes in her home in New Jersey.

I made a huge mistake," Lei said to CNBC. "I couldn't afford to see it fall through. A lot of my savings were literally sitting in boxes in my living room.

She didn't give up, and it ultimately paid off. Her brand, Freja, generated over $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 difficult beginning into a successful business.

Saving money to achieve a long-term goal or aspiration

Lei's path to success wasn't easy and straightforward. Despite knowing she had a solid idea, she encountered obstacles from the very beginning, and her commitment to delivering high-quality results made things even more difficult.

Initially, she had difficulty finding a sample designer who could bring her idea to life as a prototype. Her first bag sample cost $2,000, and she was thoroughly unimpressed. However, she took responsibility for the outcome, admitting she hadn't provided clear enough guidance and made a plan to move forward.

When she returned to the table for the second time, she found a design that brought her much more joy. Meanwhile, she was without a job and was financially supported by the savings she had accumulated from a dropshipping business she had been running.

According to data from the U.S. Bureau of Labor Statistics, as reported by LendingTree, nearly a quarter (23.2%) of new businesses fail to survive their first year.

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Learning from mistakes

Although Lei was able to overcome the challenges, making mistakes is a normal part of starting any new business. But Lei viewed every misstep as a chance to refine her approach, whether it was budgeting, improving the product or rethinking her customer acquisition strategy.

At the beginning, Lei ran a Facebook ad campaign, collected 2,000 email addresses and was ready to sell her 300-bag inventory. Feeling confident, she sent out a mass email campaign - only to find out that not a single bag was sold.

Lei was determined to turn things around, so she concentrated on attracting customers. However, the process was very slow for the first two years. From her $300,000 in savings, $100,000 went to covering living expenses, enabling her to pay for necessities such as splitting her $1,200 rent with her partner at the time and living a relatively modest lifestyle.

If you're confident in your business idea but uneasy about relying solely on your savings, there are alternative ways to fund your dream. A good starting point is investigating a loan or line of credit from your bank.

A more budget-friendly option might be to try to get funding through a traditional lender that's partnered with the U.S. Small Business Administration (SBA). The SBA provides various programs, including small loans, bigger loans, and assistance for certain non-profit organizations, making it a valuable resource for people who want to start a business.

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This information is for general purposes only and should not be taken as advice. It is made available without any guarantee.