From $0 Profit to Doubling Revenue: The Business Plan That Changed Everything

0:10Hey, welcome to Shopify Masters. I'm Shuang Astor Shan, and this is your companion for starting and scaling a business. Eight years. That's how long it took Stephanie Ibbison to turn her passion for designing leather accessories into a success. All the pieces that I made for other people didn't do well. And the pieces that I actually made that I really liked were the pieces that performed best. The beloved handbag brand Sonia Lee is known for its modern designs and refined craftsmanship. Being a transparent brand, I wanted to prove definitively, yes, this is exactly where it's made. Stephanie credits the mental shift from simply being a maker to business planner for the growth of Sonya Lee.

0:52I basically gave myself a year to figure it out. I never had a business plan and I really needed that. And we're chatting all about production, unit economics and profitability today. We've had amazing growth over the last three years. Once I had the plan, we were almost doubling year over year. If you feel like you're stuck in survival mode, you are in luck. This episode is for you. So happy to have you here, Stephanie. I know designing came to you out of a personal need. What was missing in the handbag space that you wanted to see? I think I was just missing something that fit my aesthetic and the price point that I was at when I started the brand.

1:30I was working in advertising and like Michael Kors was really big at that time. And that was just something that didn't resonate with me. So that's how I started making bags for myself. I think we were in like logo land for such a long time. And it felt like everyone was kind of carrying the same one or two bags. Yeah. So I think there's also that function element, right, that you wanted to incorporate into something that was also fashionable and to your taste. Basically, like my industrial design background helped me like formulate the designs that I have today. I don't have hardware that doesn't have like a purpose to it.

2:07So when I was designing pieces, it wasn't just about the aesthetic for me and having like silver hardware and it being black. It also had to fulfill a purpose. And I think as like the modern working individual, we have a lot of needs. There are laptops involved, maybe a lunch, maybe some water bottles. How do the like day to day operations of life go into the design aspect? I basically create a design brief for myself and that helps me sort of like confine my creativity in a way. Like I flourish in that sort of confinement. So I sort of like look at the collection and I look at like sort of what we're missing.

2:45So it might be like a work bag. So like it has to fit a laptop, has to fit like a water bottle. And that sizing informs a design brief. And then I sort of like go from there. When I first started, it was similar. It was like I wanted a work bag. So I wanted it to fit my laptop and like a book and those sort of like daily things that we use. Yeah. As the tech person in me, I was like, you were thinking about the user experience from day one. Yeah. Yeah, exactly. And I think that's why it's so different than someone who comes from a fashion background where a lot of it is aesthetic driven. And I think that's really important.

3:22But for me, it was like form first. Yeah. So you noticed like things were missing. You wanted to create something. What was the first step you took to go on this creative journey? Not the step I would advise for anybody, which was quit my job in advertising without having any backup plan. I worked like two other jobs to sustain my creative lifestyle doing Sonya Lee. but it started from a walk home from where I was working. I was working on King Street West and my walk home along King Street passed by Perfect Leather. I went in there just randomly one day and started like looking at hides and thinking about just making a piece for myself.

4:03And then I gave my two weeks notice like maybe a month or two after that. So yeah, probably not the best approach and certainly not how I would advise doing it today, but that's sort of how it began. Sometimes callings work like that. Other people can't see what is pulling you towards this decision, but you just felt like this is something that you wanted to do. So you start at perfect leather, you pick out a few of the, you know, cuts of leather you like, you start making pieces. And then what keeps you going? Like, what is some of the first sign of interest that you're like, okay, there might be interest beyond just what I need?

4:44I feel like what kept me going was just knowing that I had something not like it wasn't fully resolved. It wasn't fully understood. It was certainly not planned out on the way that it should have been. But looking at the other options that I had, I certainly did not want to go back to advertising. There was no job in Canada at that time that I wanted. And not coming from a fashion background, it didn't really make sense for me to apply to fashion jobs either. I've always been a self-starter. So I kind of just continued doing it because it was the thing that I was most passionate about and most excited about.

5:28But I think if I was going to do it now, I would do it very differently. Yeah, I mean, I think it's like hindsight is with so much of this experience. But to your point, at that timeline, there weren't fashion labels that were focused in the way that you are in leather goods and accessories. So you did have to carve out your own path and see where it leads. Yeah. So for kind of the pieces that you created, they were fitting towards the life that you were leading. How did you then branch out to see if like friends or friends or friends or maybe even strangers were also interested? It was just like my friends stopping me and being like, where'd you get this bag from?

6:08And I'm like, I made it. And then them asking me to make it for them. So I started that. I started doing like the Parkdale flea and like little flea markets and stuff like that and doing like little leather goods here and there, like mostly just like leather totes. I had a dog at the time. I even did like little dog collars and leashes and like belts. And so it started off with like the smaller, easier to approach leather goods that didn't require a lot of like machinery. I grew up sewing, but I didn't know a lot about sewing handbags. So that took me a lot of years to work that craft component to understand how to produce something, produce it well.

6:49So it looks good. So it lasts a long time. So in the infancy of the brand, I was doing things that were like sort of easier to approach. I bet also it's like you're trying to scale up on the craft side. You're also interacting with customers at different flea markets. How are you kind of like taking the new knowledge, taking customer feedback and then incorporating that into design as well? For a lot of years, I feel like I took a lot of that feedback and tried to design pieces to the specs that people said that they wanted. And then actually through doing my business plan and looking at the pieces that were most successful for me over the last eight years, I realized that all the pieces that I made for other people didn't do well.

7:36And in the pieces that I actually made that I really liked and that I thought were really great were the pieces that performed best. So I actually started being like, okay, these comments are not helpful. And to trust my own instinct as like an art director and a designer to design pieces that I think people want that nobody else is doing. And those pieces have been the best performers for us, like the Maya bag or the Francesca. Like these are really bags that were inspired by like the Maya's named after my little sister. It's inspired by her. And like the Francesca is inspired by a summer I spent in Italy, which was like one of my early memories of handbags was like going to Italy and like going to Florence and like seeing the leather shops there and the handbags there.

8:29And like, that was the first time that I saw like Gucci. I didn't know what Gucci was before I had that trip. So it's like the past and memories and like my life experiences that form the work and sort of what I'm attracted to and how I design today outside of the design briefs that I create for myself. Following your own creative intuition. And it's to your point, like sometimes it's hard, right? You do want to incorporate feedback because you are also learning and growing, but harnessing your own voice is what makes Sonia Lee different. And it's like hard to kind of like hold on to that and also listen to that as well.

9:08Especially when you're really struggling with what you're doing. Like you just want to make something that is going to sell well. So when people are like, if you make a bag that looks like this and is this color and then you're like, oh, I should do that. When in reality, it wasn't filling anything in the market that wasn't already there. So trusting my gut more with sort of the aesthetic. But then when it comes to the functionality, when customers are like, this strap really needs to be longer. I wish this had a crossbody or I wish this had a zipper closure. Like those are things that I'm definitely listening to.

9:41I think that's super important. But then when it comes to the overall like style, that's something that is informed by myself and my past and like my creative work. So you're balancing a lot of hats. Maker, you're also a founder now and you're trying to make this business profitable. What was the breaking point that you realized you needed a reset and start thinking about a business plan? Well, I've been doing it for eight years. It was sort of like a hamster wheel. Like it was just like enough to sustain the studio, but it was just like not enough for me to live off of. My husband Lee was supporting us for like the last several years.

10:18Like Sonya Lee was taking up enough of my time that I couldn't work elsewhere. But it also was not enough to like pay rent and like groceries and stuff like that. Lee was working like 12 to 14 hour days. He was like working on weekends to help me pursue my dream. And it got to the point where he was like, you don't have to quit. But he was like, we really need to like take some financial stress off of our life. And I agreed. I was like depressed. I was like not in the happiest of places. So I basically gave myself a year to figure it out. And that pressure cooker had me re-examining the whole business, realizing I never had a business plan and I really needed that.

11:02And going through the business plan process and especially like my markups and looking at the finances, I was like, wow, this business will never grow with the margins that I have currently. in order for this business to grow, I need to design more pieces like this, which was the Maya, affordable luxury, like those were selling well, design more pieces like that where my margins were better. And that's kind of how I started that process. I had to ask for a lot of help, which was not something that I was used to doing. I've basically been a very like lone wolf type of person my entire life, but I realized that I just had that last year.

11:44So I was just like, okay, I have to like contact everybody I know that could potentially help me fulfill this business plan so that I could actually get a loan from Vancity and put the business in a better position than it was then. I mean, obviously this is like a tough task for any business and business plans look very different for anyone who's starting out though. What would you say are some of the key things they should think about and include in a business plan? Knowing your market, knowing where your niche is, then figuring out how you're going to reach people within that niche. Like where are they consuming media?

12:24Where do they shop? What do they like? What do they dislike? So knowing that portion. And then lastly, knowing your numbers, just knowing how much my product costs, how much I need to market up. And I think the mistake that a lot of people make, especially in fashion, is that you have like a traditional markup, but that's not applicable necessarily to every type of business model. So I had a markup that worked really well for maybe a larger brand that was making things overseas at a much lower rate than what I was. Like I make everything here in Canada. The wages are higher. Cost of material is more because I'm using top grain leather, so on and so forth.

13:06So figuring out those number components and realizing what I needed was important for growth because then I had money to invest into machinery and marketing and making bulk orders of material. So like just economies of scale and stuff like that. It's incredible because I know that this is just like two components we're touching on. But knowing where you fit into the market, knowing your unit economics is so important. I also think for Sonia Lee, you're in a really interesting part of the market because you're mentioning affordable luxury. I also think it's where the consumers are the most intelligent and conscious because I think they understand they want something that's durable, but they don't kind of maybe see the value of something that's luxury because they know that the value isn't quite there because so much has gone into the brand and marketing.

13:59so you're targeting actually a group of people that are quite educated quite smart does that make it a little bit harder because you do have to be more transparent you have to share so much more and showcase the brand in different ways to make sure that it reaches whoever is looking for you no I like really love how transparent we are I love talking about the work that we do I love connecting with our clients and having them see the studio. I feel like that's so important. I think the lack of transparency from brands over the last several decades has really hurt those brands. I think these clients have had the experience of purchasing something from a luxury brand and it not delivering in the way that they hoped it would.

14:45Because the idea is when you're buying luxury that you're purchasing something that's going to last a lifetime, that it's going to be durable. That's not always the case. So I love that we're able to show that off and talk about it. And I feel like that's one of the best parts of the brand. Like I really enjoy it. Transparency is so important for the end consumer and also for other founders who are trying to build a good online presence. Yeah. What's your advice there to make content that resonates? I think just making something that you would actually want to watch. I find when like brands jump on social, it's so product driven that it's like, this is really boring.

15:26So I just try to think about what I think is interesting about the brand or maybe questions that I would have for the brand and then have that dictate our content. I love all the new TikTok content and like getting to see the studio and more about your design process. And then in terms of unit economics, I think it is also so smart to think about how that relates to even the way that you source and design. Black is your signature color, but I also kind of understand that sourcing one type of color, one type of leather also helps you to scale the business and think about unit economics in that way.

16:03Yeah, exactly. So that was another part of the business plan that I realized that black was my best seller. So I was like, I'm just going to focus on just doing black bags. That's what people want anyways. And then that way I could use the capital that I had to purchase larger bulk orders of leather and to remove the wholesaler too. I was working with wholesalers in Toronto and I realized if I went directly to the tannery, number one, I could get an accurate certificate of origin, which is really important to me because a lot of wholesalers will be like, oh yeah, it's made here when in fact it's not.

16:37And when you ask for the certificate of origin, they'll just be like, oh, I don't know if I have that or da da da. And I really did not like that being a transparent brand. I wanted to be able to prove definitively to our clients, like, yes, this is exactly where it's made. This is how it's made. So I was able to reach out to a tannery in Argentina. We've been working with them for a while now. They have a silver certificate from the Leathers Workers Group, which is a company that independently goes into tanneries and rates them based off of how they treat their employees, the environmental component of how they deal with water and all the different processes and then the traceability of the leather.

17:19So like our leather can actually be traced to the farm that it came from in Argentina all the way to the tannery and then to us. But when you're working with a tannery, they want a larger minimum order quantity that requires a lot of money. So being able to just move away from doing a bunch of different colors and doing, you know, fashion seasons was another thing that I moved away from because that's a part of the color component, I was able to just put our capital towards just the black. And then now recently we've done like a limited colorway, but we're just doing that once a year. And then we do one order.

17:54And then once that order is done from the tannery, then it's done for the year. I think having that business model also stays true to your like dedication to being sustainable. And also the fact that these are classic pieces that integrate into your life in every day. So taking out that seasonality aspect is also fitting to what you want to do as well. Yeah, exactly. I feel like it's just timeless. I want the pieces to last in somebody's closet. And I feel like when you invest in a certain colorway, it does look really dated after a couple of years. And I feel like that's a nice thing about black.

18:29It's like, it's always going to be popular. And I want to talk about the impact of having this business plan, right? It really helped the business to grow going from a couple orders from back in November 2021 to orders growing and also just the way that you're able to have a team, have a showroom. Talk to us about that impact. If it wasn't for the business plan, I would have never gotten a loan from Vancity. And getting a loan from a bank is incredibly difficult, especially being in fashion. So I really had to know exactly what I was doing. And even the loan manager was like, we typically don't invest in fashion because it's so risky.

19:13But he's like, it seems like you have a really thought out plan. And he was like, worst case scenario, I think we could sell off all your assets and make our money back. So I was like, okay, great. So if it wasn't for that business plan, I would have never gotten the loan. And then with the loan, I was able to invest in my marketing, doing the bulk order. Through that marketing and doing the bulk order, we just started getting more followers. I can invest more time into like our social media plan. Then I moved back to Toronto and then I hired three people over the last 10 months. So we've had amazing growth over the last three years just from that plan.

19:54It was like once I had the plan, then we were almost doubling year over year since then. And you are now like the fashion brand that you wish it existed that you can work for. And now you are supporting the local economy and also local culture because I think brands like this need to exist for us to thrive in both departments. Yeah, I agree. I'm so thrilled that I get to do production in Toronto because it just like wasn't an opportunity for me when I graduated from OCAD. So being able to do it here is really important to me. I want to continue to do it here. I don't want to move my production elsewhere.

20:31Well, you know, you were someone who was making all of the pieces, couple orders a month, now to hundreds. Yeah. Yeah. How are you optimizing production and still maintaining that Sonia Lee essence? I try to work as closely as I can with my staff. I just had a baby, so I'm not there as often as I would like to be. But when I moved back to Toronto, I was six months pregnant. So when I was hiring my staff, I was like, okay, I'm obviously very pregnant. So I don't know what this is going to look like, but we can work really closely together. and I just really trust them. And I think they do such an amazing job even when I'm not there that I know the brand's in the right hands.

21:15And with my guidance, they've been able to jump through these hurdles as we've continued to grow. And when you're a business owner, it's a lot of new things that are happening constantly that there's really no way for you to prepare for fully. I think just like communication and trusting each other. And I really like having their input too as well when we're like making decisions about next steps for the brand to hear what they think. It's interesting to run a creative brand because you also have this team that you can trust and lean on. But what's important here is there's uniformity that you seek in your end products.

21:55But you also wanted the creatives to enjoy their process of working at Sonya Lee. So how do you balance the two? So we have guides for all of our pieces. We use a hydraulic clicker press. So a lot of the machinery that we use, plus the guides. And before I had my baby, we had a lot of discussions about what our tolerances were. Even when some of my staff started, they were really shocked that I have everything to the millimeter when it comes to sewing. and that's the way that we create consistency. There's no guessing how something comes together. It's just a known fact of how it comes together.

22:36We have all our crucial alignments in our guides and that keeps things really consistent. In terms of creativity, because we are a smaller brand, I allow everyone to sort of jump in and to contribute and I try to give as many creative tasks to my staff as possible because I realized that their happiness at Sonya Lee is really important to me. I want them to stay with me long term. Like that would be a dream of mine. So I had one of our staff doing the styling for the last shoot because she previously had experience in film. Another one of my staff wears belts a lot. So then she's helping me with a new belt design that we're doing.

23:19Another one of my staff is helping me with a new bag that we're releasing in fall. So it's like I try to share these creative pieces with everyone so they feel like they're a part of the brand because they are. It's not just about me now. It's about us and us collectively doing it together. Yeah. Building the brand together. Yeah. Yeah. I mean, at the top of the show, you mentioned a few times about, you know, if I were to start over, this was not how I would envision starting or things like that. I guess if you could go back and talk to your younger self, what are some things you would prep yourself for?

23:57I would probably work for another brand for a while to see what the inner workings were like. I would definitely do a business plan. Yes. I probably wouldn't quit my full-time job. Not having financial stability for eight years was not the highlight of my life, and it was pretty tough. So I wouldn't advise doing that. I think you being so candid about that is so important because for me, I see all of the beautiful magazine roundups of like designers that they're showcasing. So from the outside, I was like, wow, Sonia Lee is so cool. It's like such a stellar Canadian brand, but there's so much that happens behind the scenes that you don't see and struggles that founders are dealing with.

24:41Exactly. Basically, Sonia Lee, previous to me doing the business plan, was making all my life decisions for me. I was living in Vancouver at the time. My family's in Toronto. I really wanted to go home more often. I just couldn't afford to do it. So that, like, I don't want to cry, but like, that was a really like tough point in my life. And I think that's what like pushed me to be like, I need to figure this out and I need to make a change. So yeah, if I was going to do it again, I would probably not go through all that turmoil. But maybe that's the reason why I was so successful that I had all those years of knowledge and I was able to make it into something great.

25:19You were figuring it out as you were going. And I think I like the concept, right? Like of how you mentioned you were trying to fit your life into the business because it was kind of dictating how you had to live. But now you've gotten into a place where Sonya Lee can fit into your life where you can take a break for Matt leave and have a team that you trust and have it flow. So yeah, exactly. You've gone from a couple orders a month to hundreds and you're balancing so much of looking after operations and still being the creative force for Sonya Lee. So how are you refueling creativity and also staying balanced?

25:57I think I've just like always been a creative person. When I was like a little kid, I tried to sell my paintings at the end of my street when I was like eight. I love it. No lemonade, just paintings. No, no, no. I was like Like, lemonade, that's for the other people. This is for me, my paintings. And I think I always have that sort of creative mindset. And I'm always thinking about what the next steps are. So something that may have excited me about the brand years ago, I'm not as excited about maybe. But I'm looking towards the future. And the way that we can build Sonya Lee is not just like a bag brand, but a community.

26:32So having sort of touch points that are more community-driven rather than like sales-driven has been something that I've been more interested in lately. You've hosted events within the showroom. They don't even have to shop the brand, but just to be there and interact with the brand. Yeah, yeah, exactly. I think a lot of the fashion brands that I love most, you don't actually have to like purchase the product in order to be like that person. And I would like that to be true for Sonia Lee. You don't have to like have a Sonia Lee bag to be like a Sonia Lee person necessarily. Yeah, you can be a part of the Sonia...