Continued: Stash laptop in a bag with panache

Tracy Arnold and Tracy Dyer had what they thought was a great idea for a new product: leather laptop-computer bags and handbags, handmade in Italy, that would suit the fashion sense and the functional demands of busy, style-conscious women. They knew there would be demand, because they had heard women complain about the lack of cool, trendy laptop bags in the marketplace.

They were confident that they could reach those potential customers, having helped launch a number of products and services as marketing executives at Best Buy Co. Inc. Leaving the corporate world, Dyer and Arnold in 2005 formed Urban Junket, setting up the Minneapolis company to design and distribute their high-end product line.

Urban Junket bags range in price from $200 to $695 for a laptop model that comes with a smaller, detachable handbag. The bags are available at Urban Junket's website and from more than 200 boutiques in the Twin Cities and around the country.

Revenue this year is projected to approach $500,000, and has been growing at 30 percent a year or more. Their marketing savvy and business experience gave the new entrepreneurs a head start.

But Arnold and Dyer also realized that, for the first time, they would be responsible for making products and getting them into stores. And for coming up with the money to do so.

"We weren't actually manufacturing the televisions, we weren't actually shipping them," Dyer said. "They were just in the stores. It was our job to get people to come in and buy them. We didn't have to worry about how the TVs got there."

"The budget was something you went and presented and fought for, but essentially it was just kind of given over to you," Arnold said. "You didn't think about where that budget was coming from." All that would be different after they left Best Buy, where Dyer said consumer complaints about the dearth of stylish laptop bags often arose at focus-group meetings about unrelated subjects.

Dyer and Arnold did freelance consulting and other independent work during the nine months they spent doing research for their company. Their homework included trips to Italy to visit boutiques, meet designers and find manufacturers who could hand-stitch their designs. They also sought out experts who could help them figure out options for shipping and paying import duties.

Working with WomenVenture

They partly self-financed their start-up, another advantage of their corporate experience. They also got outside financing that included a loan from the Small Business Administration (SBA). The bank they worked with, U.S. Bank, referred them to WomenVenture.

The St. Paul-based nonprofit economic development agency, marking its 30th anniversary this year, helps women -- as well as men -- start or expand businesses, change or develop career paths and gain financial literacy skills. At WomenVenture, Arnold and Dyer met with business consultant Maliha Husain to review their business plan and financial aspects of their business.

"They're both bright young professionals, and they had all the basics they needed to start their business," Husain said. "They did a very good job of researching their product and doing their business plan." WomenVenture has a partnership with U.S. Bank to provide technical assistance to clients seeking loans from the SBA's Community Express program, designed for small businesses owned by women, minorities or veterans, or small businesses in low- and moderate-income areas.

One point Arnold and Dyer were certain of was that their initial product lines would be high-end handbags and laptop bags.

To reach a broader market, the women also expect to introduce more moderately priced product lines. They had planned on doing that from the start, but they said it makes even more sense now, given the weakening dollar and soaring transportation costs.

The dollar's slide against the euro has made imports much more expensive, and raised production costs substantially, adding to rising costs that businesses already face. Urban Junket raised its prices, but Arnold said retailers have not balked, because other suppliers are, too. Dyer and Arnold are looking at material and design options, as well as factories closer to home, in Southern California or in Mexico, to produce its moderate-price and value-oriented lines. They have had meetings with potential customers interested in those products.

The challenge, they said, will be to maintain the brand integrity of their handbags.

"It's the vessel in which you carry all the stuff of your life," Arnold said. "Whether it's your work or diapers or gym shoes or things like that. It's not only close to the body, but ... it's close to your heart and close to your mind. Having the right stuff with you and carrying it in a way that's expressive is important to a lot of women. So from that standpoint, it's an investment in yourself."

The workmanship and distinctive colors of Urban Junket's bags have appealed to Larissa Larson and her customers at Ensemble, the boutique she owns in the Linden Hills neighborhood of Minneapolis.

"The quality is amazing; they're made in Italy," Larson said. "Another thing people respond to is the colors. They're kind of a departure from the standard black or brown, although you can get that if you want it."

The expert says: Husain, of WomenVenture, also connected Dyer and Arnold with the Minnesota chapter of the Turnaround Management Association, a Chicago-based nonprofit made up of professionals who help starting or existing businesses grow or address challenges. The association does not charge WomenVenture clients for its services.

WomenVenture is working with the association to provide Urban Junket guidance concerning financial issues. "When businesses grow, strategic financial planning and cash-flow projections are very important," Husain said.

"A lot of businesses, when they grow fast, they come down very fast also. Managing their cash flow at this point is extremely critical.

"If they can project realistically, they can manage all the expenses they will be incurring to support that growth."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is: todd_nelson@mac.com.