Earning

Twin entrepreneurs in Kansas who started a business during Covid: 'Don't be scared' of taking a risk

Overall, 2020 was a banner year for starting new businesses.

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Twin sisters Kate Wise and Rachel Malay work on garments at a table in the sewing shop they opened last fall in Beloit, Kansas.
Photo courtesy Kate Wise

Kate Wise, 39, quit her job as a library consultant in 2020 and, together with her twin sister Rachel Malay, took a leap of faith: She became a small-business owner during the pandemic. In September 2020, the sisters opened a sewing shop, The Harried Hen, in a small rural town in central Kansas.

Wise and Malay are part of a national trend, one that may seem counterintuitive: Instead of shying away from risk after a challenging year, they're embracing it — specifically by going into business for themselves.

The coronavirus pandemic has been a lesson in unexpected economic outcomes. The U.S. gross domestic product shrank by almost 33% in spring 2020 but mostly rebounded by year's end. Unemployment soared, but so did Americans' personal savings rate. Many entrepreneurs have also benefited in unexpected ways. While small businesses like restaurants were devastated in 2020, data from the Census Bureau shows that, overall, 2020 was a banner year for starting new businesses.

According to the Census Bureau, the number of new business applications in the U.S. in 2020 was the highest in recorded memory: up almost 25% from 2019. That trend has continued into 2021. Applications for new businesses are more than 50% higher in the first quarter than they were in the same period in 2019.

'I wanted to be working in something that was what I wanted to do'

Prior to the pandemic, Wise had been on the go as a library consultant, working with some 67 libraries across 15 counties. The transition to remote work allowed her to move closer to family, which in turn "started me thinking down this path of quitting my reasonably successful librarian career and making the slight change to start a business," Wise says. "I wanted to be working in something that was what I wanted to do."

"I started looking at my finances, and I started thinking about this. I thought, 'I can't wait any longer because if I try this and it's a flop, I still have time to financially recover before retirement. If I wait any longer, I won't have time to recover.'"

Wise and Malay spent months researching and planning their business, thinking hard about the niche they could fill in a tiny town of about 4,000 people. They realized their neighbors didn't want to drive hours to the next big town to shop for clothes, and would prefer to have them mended locally instead.

"If we don't have to go to the big city, and we don't have to wear masks and worry about sanitizing your hands every time and get in and out of the car, then we're going to spend our dollars locally," customers told Wise. "I heard that over and over again."

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Now, the Harried Hen is "here to do all the little sewing things that most of society has forgotten how to do," Wise says.

Her sister adds, "We are the only place to buy decent thread for an hour in any direction."

Provide 'a service you feel good about and your customer feels good about'

One in four Americans plans to quit their job after the pandemic subsides, and that number goes up to 1 in 3 for millennials, according to a recent Prudential survey. Working for yourself can feel like a way to reset by trying something exciting and new.

Becoming an entrepreneur is about "finding meaning, finding purpose, and providing a service you feel good about and your customer feels good about," Lewis Goldstein, president of Blue Wind Marketing, told Grow last year. "It's really important not to be in business just to make money."

In his work helping entrepreneurs attract more customers and increase their profitability, Goldstein encourages them to consider the following key questions:

  • Who are your customers? In addition to deciding whether your product or service is targeted to consumers or businesses, ask yourself: "What sort of customer would bring a lot of joy?" Goldstein says. "If you work with someone, a type of customer, that you really don't like, it's going to be a huge headache."
  • Where do those customers spend their time? Immerse yourself into the social media platforms or online forums where your customers are, or even talk to them one-on-one, so you can better understand their needs and wants. 
  • What's the best product for your customers? With a good understanding of who your customers are and what they need, you can fine-tune the product or service you intend to offer. That includes homing in on your pricing, defining what makes you different, and a unique selling proposition like a guarantee, bonus, premium, or exclusive element, Goldstein says.

"There's a lot of opportunities in the market to provide products and services that people are looking for," Goldstein says.

Build a financial cushion before taking the leap

Aspiring entrepreneurs should consider how they plan to support themselves before they get their business off the ground — and be realistic about how long it might take to make money.

Instead of taking on new debt, Wise and Malay financed their business using their savings, and created an LLC to insulate themselves if it doesn't work out.

"It really is OK to continue to fly around with your pants on fire even nine months after you've opened a business," Malay says. But "make sure that financially, you're not going to have it tied to anything that ruins your personal life."

Both sisters are working other jobs to support themselves. Malay works full time in the town's library, as she did pre-pandemic, and Wise has a part-time job at a local hardware store. For now, they run The Harried Hen a few hours in the evening three nights a week.

"I don't think either of us expected to have the business turn a profit even in this first year," Wise says. "We hope within two years, but [it will] probably be three years before we see a real profit."

I thought, 'I can't wait any longer.'
Kate Wise
owner, The Harried Hen

In addition to the importance of understanding her customers' needs, Wise learned that "it's also OK to kind of change what your business does."

Many of their customers expressed an interest in sewing classes, which the sisters plan to offer soon. They may partner with local schools' extension programs to reintroduce sewing to the home economics curriculum. Wise is also considering getting certified in sewing machine repair.

"The key to turning a profit is going to be diversifying for what our community specifically needs," she notes.

'Do it, don't put it off: Follow your dreams'

Becoming an entrepreneur isn't always easy, and it's required a certain amount of sacrifice.

"It's still a pretty drastic change of lifestyle for me, going from the salary of someone with a master's degree who has 10 years of experience" to an entry-level retail job, Wise says. "But the point is not working at the hardware store. The hardware store is just the tool I'm using to be able to do the thing that I came here to do, which is open a business with Rachel."

Despite the setbacks, Wise has no regrets, and she'd encourage other aspiring entrepreneurs to take the leap.

"Do it. Don't put it off. Follow your dreams," she says. "Don't be scared of the hard work, and always have a clear vision, because there's going to be times when you're going to think, 'Did I make a big mistake?' And you didn't."

Grow is published by Acorns + CNBC. Acorns helps you invest spare change automatically into diversified portfolios. Download the app today or learn more at Acorns.com.

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