#13 Dale Donaldson & Kat McVeigh: Starting holiday planning early for their retail business

In this episode, Dale and Kat of Kitty Badhands discuss their journey as small business owners in the e-commerce retail space, focusing on their holiday planning and cash flow strategies. They share insights on avoiding overproduction, navigating inventory management, and the importance of planning ahead — for Small Business Saturday all the way through the holiday season.

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Chapters

• 0:00 Introduction to Kitty Badhands
• 3:50 Building a sustainable e-commerce business
• 5:45 Advice for running a business as a married couple
• 7:57 Helpful holiday planning strategies for retail businesses
• 12:02 Lessons learned on inventory management and sales forecasting
• 15:52 Their sales plan and market reach
• 17:39 Winning cash flow strategies for their business
• 21:34 The impact of tariffs on their retail business
• 24:07 Using holidays markets to impact local sales
• 29:59 Final words of wisdom for other small business owners

Transcript

Kat (00:00)

We did a great job selling the first holiday season, but it was insane amounts of production. We basically skipped our own holiday. So we thought we can't do that again. We need to have ready-mades, especially for the holidays, so that we're not relying on people buying things that we then need to make and get out to them.

Catherine (00:22)

Welcome to Main Street Makers, a bi-weekly podcast that features real local small business owners who have transformed their passions into profitable businesses. Learn from fellow small business owners on how they overcome challenges, find opportunities, and create thriving operations that make our neighborhoods more vibrant, connected places to live. I'm Catherine, and this podcast is brought to you by Nav, the business credit platform that believes every small business owner deserves the chance to succeed. Now let's get to this week's show.

Catherine (00:50)

Hey everyone and welcome to a special edition of Main Street Makers. Today we're going to talk about holiday prep. So we have two very special guests, Kat and Dale from Kitty Badhands. They're Nav customers. They were featured in our Nav holiday customer guide last year. So we're excited to welcome them to the podcast.

Kat (01:11)

Thank you so much.

Dale (01:13)

Yeah, thank you. Hi.

Catherine (01:15)

Well, to start off, I'd love for you to just tell me a little bit about your business. How did you start it? How's it going?

Kat (01:23)

Sure. We are a sustainable clothing business and we make one of a kind and small batch runs of sustainable clothing, we call them wearable works of art. We use a lot of vintage materials and when we don't for our small runs we run sustainable materials usually manufactured here in the US or somewhere else that does fair trade sustainable zero waste manufacturing.

And we unofficially started in 2020, just kind of for fun. We've always been creatives and it was a new kind of venture and a way to spend COVID time and it took off. So we officially started our business in 2021.

Dale (02:14)

Yeah, yeah, it was great. I was able to quit my job and join Kat, which was really fun.

Catherine (02:21)

That's really impressive. I do want to talk about that. But how did you kind of get into this? What are your individual roles in the business?

Kat (02:35)

Sure. So I got into this. I've always been an artist and I studied fiber art and textile design in college. And I've always been a real lover of vintage quilts. So actually our first product was a quilt coat. And ⁓ from there we've expanded to a wider range of wearables and accessories. But I do all of the designing and I still do most of the production.

Dale (03:02)

Yeah, and my background is in marketing and design. Graphic design and I. Yeah, I was a senior graphic designer for some Vermont breweries for like for a long time. So when I transitioned into Kitty Bad hands, you know I take care of all of the visuals. We do all our own photography. Like.

the website, all the kind of like marketing, even like marketing text copy. So yeah, it was a pretty good melding, you know, because just being able to do so many things, especially the photography, like has saved us a lot of money and it's a lot of fun too.

Catherine (03:46)

Yeah, I bet. Yeah, that's great. So it's really amazing too that you're both able to go full time in the business. Is that correct? You're both full time in the business? Yeah, that's super impressive.

Dale (03:56)

Yeah, I mean, we have some side hustles too, but you know.

Kat (03:59)

Yeah, we have a couple side hustles, but we're here every day, Monday through Friday all day.

Catherine (04:05)

Yeah, that's awesome, because just in five years, you were basically able to profit enough to bring both of you in full time. That's great.

Can I ask you two how you know each other?

Kat (04:16)

Yeah, when I started the business or started planning the business, we were friends. And Dale was helping me with my logo and things like that. And then we started dating. We went into business together. We got engaged. We got married. And now we have a 16-month-old son.

Dale (04:43)

Named Winn. 

Kat (04:44)

Named Winn.

Catherine (04:45)

That is so fun. It's a great name.

Dale (04:46)

Yeah, no, it was. I also convinced Kat not to call her business Kat McVeigh Quilts. I was like she had a nickname in college that she had told me about — Kitty Badhands — and I was like you gotta… you gotta call it Kitty Badhands. And yeah, and that was when we were just friends. Yeah.

We met each other at this kind of venue bar called the Radio Bean in Burlington, Vermont. And Kat had just moved here and she was dating a friend of mine. I remember, yeah, I remember meeting her and totally just being like, she's so interesting. And then that was like so long ago at this point.

Kat (05:33)

Yeah.

Catherine (05:35)

That is so great. There are a lot of small business owners that go into business with their significant other, with their family. I'm curious, how do you, you have a business relationship, you also have your personal relationship. How do you kind of manage those two?

Kat (05:52)

We try to keep it separate. So home time is home time. Every once in a while we'll get excited about something and want to talk about it. And that's great. Every once in a while one of us will be excited to talk about something and the other one's like, hey, I'm home. Let's talk about this tomorrow at the studio. How about a 9:30 meeting?

So we do try to keep it separate. We also have such different skills that I feel like we're not stepping on each other's toes. And we don't, I'm sure if we did have similar skills, we would work it out. But there's not really even that opportunity to clash because I know nothing about photography. I know nothing about web design. I know nothing about graphic design. You know, I have opinions about what I think looks nice, just like Dale has opinions about fashion, but he doesn't know how to make a coat or know exactly which fabric is going to work for what garment. So we stay in our lanes.

Dale (06:56)

Yeah, we stay in our lanes. In the beginning we worked in the same space, which was fine, but it definitely…. as soon as we were able to get so we have two spaces. We have Kat's in the sewing studio right now and I'm in our photo studio slash my office. So yeah, I think that helped a lot too. Once we had two separate spaces too… We actually spend a lot of time on the phone, which is hilarious because she's like literally right above me.

But yeah, no, we do it. It seems crazy. I think. It's kind of… I don't know. I think our work relationship and our personal relationship, we have both of those. It just makes us pay extra attention to how we treat each other, you know. I think it helps. It helps our relationship, yeah, it's cool.

Catherine (07:50)

Yeah, that's beautiful. I love that you're just a power couple with a business. That's amazing.

Well, I know that we are going to talk about the holidays. So I'd love for you to talk me through holiday prep. I know there's probably so many components to it, because there's the financing side, and then because you're a physical goods business, you probably have to prep a lot of inventory as well. Can you walk me through that process end to end?

Kat (08:16)

Yeah, I mean, we're always thinking about the holidays because it's one of our busiest seasons. As a sustainable clothing company that wants to counter fast fashion and overproduction, we also keep that in mind. So we don't go wild and crazy for the holidays, but we do make sure that we have a lot of extra inventory as a company that makes a lot of wearables. 

We try to up our accessories production, it's easier to give a gift to someone that they can use that you don't have to worry about their size, whether they'll wear it. I know a lot of clothing purchases happen when you buy something for yourself, or maybe you're buying it for your partner or someone you know really well. But we want to make sure that we really up our accessories production for the holidays. And so we start right about now, August.

Usually the way we work is we'll put out one collection at a time. But for the holidays, we like to put out a bunch of different things and make sure that they're at a bunch of different price points. Because the gift you give your mom or your partner is going to be probably a different price point than what you give your coworker or an acquaintance.

Dale (09:31)

Yeah, yeah, and I think we do start prepping for the holidays, like buying materials. Probably we start in like June, I would say, just to kind of amass our materials for making everything. We finance.

Kat (09:31)

Yeah.

Dale (09:53)

We haven't gotten any large, you know, large funding or financing, but we do finance mostly everything on either credit cards or like revenue based kind of loans, small loans, like specifically through Shopify, and some lines of credit like that.

Catherine (10:13)

Okay, that's awesome. I feel like I have so many follow up questions. I'd love to start with the overproduction part. How do you kind of forecast what you'll need so that you don't overproduce?

Kat (10:29)

Yeah, we definitely like one of the first things we'll do is look into our past holiday sales. See what number one like what was selling the most, how many of that we sold, what our general sales were. And then of course we always aim for higher than that the next year. But we don't want to go crazy. We want to create things that are thoughtful gifts that people will use.

and try to veer away from the marketing aspect that makes people think like, need this, I need it now. I just want to buy a lot and give it away and maybe they'll use it, maybe they won't. It's about thoughtful investment purchasing for us.

Dale (11:15)

Yeah. I, we usually also do a small run of like one of a kind, like coats usually made out of like Hudson Bay blankets. and those are like pre-orders, but we try to make it so customers can order them with enough time to get them for the holidays. So we'll probably like the end of October, right? The end of — no, or like the end of September. And that's kind of cool to you because like we usually cap the number of coats that we're going to like, you know, pre-sale. And we usually always sell out, which is kind of great.

Catherine (11:56)

That's great. You do a good job planning that you sell out every year. That's awesome. It seems like a really well-oiled machine. Like you start getting materials in June. You start prepping in August. You want everything in a good place ready to ship in October. Was there like a learning experience that you went through that helped you refine that process?

Kat (12:18)

Definitely. So our first year, we had been in business for less than a year when the holidays came around. And at that point, we were only offering made to order items.

Dale (12:19)

Yes.

Kat (12:32)

So we did a great job selling the first holiday season, but it was insane amounts of production. And we basically skipped our own holiday. And so we thought we can't do that again. We need to have ready-mades, especially for the holidays, so that we're not relying on people buying things that we then need to make and get out in time for the holidays. We still do the Hudson Bay, some of that. But it's not 100% that anymore after that first season.

Dale (13:06)

Yeah, it's way more planned out. And you know, we still feel like we. Even though we've gotten much better at it as the time goes on, it's still every year. It does kind of still feel. Like the first year, it's like such a crazy learning curve. And we're always learning more.

Catherine (13:23)

Yeah, I think that's the case for any business, like even big ones sometimes are rushing during the holidays trying to get their campaigns and all the things that they need out the door. But that's great that you kind of were able to learn from your experiences and start kind of backing out until like a longer timeline. And I think it is especially important so that you can get some of your own rest and recovery during the holidays.

But yeah, the other thing I was wondering is you seem to have a really good grasp of inventory. So you said that you think a lot about accessories and things that don't need sizing, lots of different price points. How did you come up with that strategy?

Dale (14:07)

It kind of was… part of it's also we like to use every piece of fabric as well. It's a huge part of our business. So that's kind of where the accessories sprouted from — just being like, “What are we going to do with these 20 inch pieces of blanket?” But I'll let Kat continue on.

Kat (14:30)

Yeah, I was going to say that we're a zero-waste company. So we the leftover scraps from coats and dresses and things like that that we've made for accessories. So it's actually really nice because we have a lot of that material already. So we buy extra material for the holidays, but we already have been kind of collecting it throughout the year. 

And then that's the opportunity to use it. I think we learned that accessories work well for the holidays kind of just by accident, just putting different things out during different years and every year looking back at our sales history and saying like, wow, hats did really well. Wow, clutches did really well. We only sold a few quilt coats. And then tweaking and fine tuning our sales plan from there.

Dale (15:25)

Yeah, and it's not always… sometimes we make mistakes too. I think last year, we overproduced something that we thought was going to sell because it sold well the year before. And then we were kind of like, we ended up sitting on like a bunch of inventory that we had to kind of like a fire sale eventually.

Catherine (15:48)

Yeah, that makes a ton of sense. I think that makes sense too that you are kind of like looking at your sales every year. Could you dive deep into that process with us? Like what does that look like? When do you start kind of auditing what has been selling and what hasn't and making decisions about what you then buy and produce?

Kat (16:12)

We look at that all year. So it's not something that's specific to the holidays. You know, once we're planning for fall, we'll look at last fall and the fall before, spring, the fall before. We really do it month by month to see what our sales were. So we, it's nothing specific to the holidays. It's kind of just how we work. 

And we keep spreadsheets of our sales month to month with a section for because it's not just enough to have the numbers. It's like, this month we made this much money. This is what we sold. We did this market. We did that market. This Instagram post really blew up with this product. And it kind of gives a picture month to month. And so we definitely go to that first. We also sell on Shopify. And Shopify has a really great… it records and analyzes a lot of data. So it's easy to see who was buying, what their trends were. So we just look at all of that. And then we don't really have a mathematical equation to figure it out. It's just kind of like, let the information get dumped in and then figure out what we're going to make.

Catherine (17:26)

Yeah, and that seems to have been working well. So there's no need to do heavy math, it sounds like. Yeah, none of us do. At least not the creatives. 

Kat (17:32)

Yeah, I don't like heavy math.

Catherine (17:44)

OK, so that's how we plan for sales and what you produce product-wise. Let's switch gears and talk a little bit about financing. I know you mentioned that you put things on credit cards, use line of credit, and there's some things that you use through Shopify. Is that kind of something that you do year round, or is there like a special push that you make to prep for the high season, like the holidays?

Dale (18:04)

We do kind of do that year round, we definitely, you know, we'll take out bigger lines of credit towards the holiday just to pay for everything. But it's kind of like a juggling act because we haven't figured out exactly what kind of funding we want to scale. That's a whole nother conversation probably, but.

Yeah, we're just kind of like juggling credit cards and lines of credit and, you know, short-term like revenue based loans.

Catherine (18:41)

And that can be a great way to kind of like bridge gaps, especially with e-commerce businesses. How do you do the calculations to ensure you can take out financing and like to pay it back? I think that a lot of people, if you're comfortable diving into it, because a lot of people I think have fears around putting too much on a credit card or taking out too much debt because there's always a chance that you won't be able to pay it back. So how do you take those calculated risks? 

Kat (19:11)

Yeah, I mean, it is really scary. It is a risk. And we always feel nervous about it every single year, every single time we do it, because every year the economy is so different. So you can look back on your previous sales and say, we made this much. We can take out this much. But you never know if last year is going to be a reflection of this year.

So it is risky. And it usually works out for us. When it doesn't, we'll run sales. January and February are luckily a great time to have sales. People are expecting them and looking for. And just making sure that we're having enough sales without compromising our values of, just buy this because it's on sale.

Buy it because you've wanted it and you've been thinking about it and it's an investment purchase and hey look, now's a great time to do that because it's on sale.

Dale (20:11)

And the credit cards are probably the riskiest thing that we use to finance our business. The lines of credit are a little easier just because there's like a, instead of it being like an interest rate, it's like just a set fee that you're paying for the amount of money you're taking. and I would say the Shopify small loans, they help so because we know exactly how much it's going to cost us to borrow that money. And there's no, there's like no hidden fees. We pay it back with a percentage of our revenue, every transaction. So, I mean, if anybody's considering the Shopify Capital, I would say go for it.

Kat (20:56)

Yeah, I agree, Dale, because with the Shopify Capital, if we have a lot of sales for the holidays, which we're hoping we will, it gets paid off right away. And if we don't, it just takes a little bit longer to pay it off. But we're not having to pay as much during slower months because it's based on the revenue. So that's our first source of financing usually.

Catherine (21:21)

Yeah, that's great. So it sounds like you just kind of go for a really transparent pay structure and you always have a backup plan when you're looking for financing. That makes a ton of sense.

Kat (21:30)

Yep. Yeah.

Catherine (21:32)

Yeah. Speaking of, you mentioned that every year the economy is a little different this year. There are some fears around tariffs and if they will be hit by the holidays. How are you thinking about those if you are and trying to prepare?

Dale (21:46)

We were a little worried about the supply chain, our supply chain getting kind of screwed up. But most of the stuff that we buy comes from the US. So it hasn't, we haven't really felt that much pain as far as supplies go.

And a lot of the stuff we buy is, you know, vintage, vintage or like back stock or dead stock. So that part of it, we've been spared, which is great. But yeah, we have a lot of customers in Canada.

Kat (22:21)

Yeah, being in Vermont. We're right on the border with Canada. I think a lot of our previously we had targeted Canada, because we sell warm, warm coats and winter accessories and things like that, especially around the holidays. And we have seen a huge decline in our sales to Canada. I don't think we've sold a single piece to Canada since the tariffs.

And I am not an expert on tariffs. I've heard that it's the Americans that are paying the tariffs. I don't know what the Canadians are paying extra to get things from the So I don't know if it's a financial thing or kind of a political thing. People aren't feeling good about buying from us when they're in Canada, because we have that riff right now.

Catherine (23:10)

Yeah, have you had to go and try to find other markets to make up for the loss in Canadian sales?

Kat (23:20)

We haven't. We probably should.

Dale (23:22)

Although we're, yeah, we're always trying to, I would say. There's also just so many options, like sales channels that we could focus on too. We primarily kind of, focus a lot on Instagram as our primary sales channel. But yeah, it's been rough just watching. We were getting consistent orders from Canada, all over Canada too. It was not just like across the border. And then all of a sudden it just completely stopped. And yeah, we're just kind of left wondering why. I mean, we know why.

Catherine (24:04)

Yeah, fair enough. So actually, I do kind of want to talk about your sales strategies. You get a lot from Instagram. So does that mean that your customer base is pretty national, or do you have a customer base that's local as well?

Kat (24:20)

We have a national customer base for sure. I would say most of our sales are to California and New York. We also have a lot of sales to Austin, Texas and Virginia. But we do have a local community that supports us. We do markets, especially around the holidays. We do holiday markets here. We have open studio hours so people can try things on and chat and get custom work. And we really like to reach out to our immediate community. So we get a lot of great feedback from them and we definitely, we do a lot more sales in Vermont than we would, I think, if we weren't based in Vermont and that's because of the community. So it's both.

Catherine (25:10)

Yeah, I love that. Can we talk a little about the holiday markets? How do you go about sourcing them and getting into them?

Kat (25:19)

Yeah, so actually last year we didn't do any holiday markets. We had just had a baby in April and I know this, but my brain wasn't thinking about it. You sign up for the holiday markets in June and July and we totally missed the ball. So this year we've signed up for a few. We're still waiting to hear. They're fun. They're a lot of work. Since we don't do markets on a regular basis, prepping for them and getting everything looking good, getting the structures to present the pieces can be expensive. So we try to just do a couple. And they're usually local to Vermont, especially since we're producing everything ourselves for the holidays to sell online.

It's not really feasible at the moment to be spending a week or two away from the studio around that time. But we do have a lot of markets earmarked that we would like to participate in in the future.

Catherine (26:22)

Okay.

Dale (26:22)

Yeah, we get invited, too. Sometimes we get invited to be in markets too, which is always kind of exciting. But yeah, mostly in just local Vermont. It's great because we get to meet other makers too, and we end up. We end up trading a lot. Like at the markets, it's pretty cool.

Kat (26:42)

Yeah, that's how we do most of our holiday shopping.

Catherine (26:43)

That sounds… that's such a good idea. I love that. That's great.

Kat (26:47)

Yeah.

Catherine (26:49)

Speaking of, you mentioned you're on calls a lot. Something that we hear so much from business owners is they get into it because they have a skill — they like to sew, they like to do photography, those types of things. And then they find that they are just… have to do so many admin tasks and management and stuff like that. What has that journey been like and do you have plans for expansion?

Dale (27:06)

Yeah.

Kat (27:12)

Yeah, we're definitely in the thick of wearing a lot of hats that we don't really want to wear. You know, the accounting hat, the admin you know, the social media We do have plans to expand. We just went through an accelerator startup program called Launch BT here in Vermont. And we were given an amazing business coach and mentor. He is helping us scale. So we do plan to seek funding, scale the business, and then shop out those admin tasks that we're not great at and that we don't enjoy. the master plan to have an accountant, to have a social media manager. To have a marketing manager and then I would focus on designing clothing and Dale would focus on brand identity.

Dale (28:07)

Yeah, that's the dream. Yeah, that program was pretty amazing. It opened a lot of doors for us. Just with like networking and access to services that just seem so far away at the moment. Our business coach who we were assigned, we really hit it off with them and they're essentially still part of… the program's over, but they're part of the business now, which is exciting, because they believe in us enough to where they're essentially working for free.

Catherine (28:51)

Yeah, that's awesome. It's really good to have mentors and people that you can trust for advice. Just having a trusted person is so much better than trying to do it by yourself. Also, crazy that you're doing all of this without an accountant. That's really impressive. 

Dale (29:00)

Yeah.

Kat (29:06)

Yeah, I am the accountant and I mean, when we get funding, we will get an accountant. And then when we get funding, it'll also be above my skill level to do our accounting. So that works out.

Dale (29:19)

Yeah.

Catherine (29:22)

Yeah, that's fair. Do you just use QuickBooks or something right now?

Kat (29:26)

Yeah, we use QuickBooks and then I have a bunch of Excel spreadsheet templates for things like calculating the cost of making a product from the hardware to the fabric to the labor costs, the taxes and everything like that. I do like the numbers part of it and right now we're bootstrapped so the numbers are manageable but that won't be the case for very long.

Catherine (29:51)

Yeah, once you get financing, it's a whole other ballpark. Yeah. Yeah, that makes a ton of

Dale (29:51)

Hopefully.

Catherine (29:58)

Any final words of wisdom for fellow small business owners, people who are looking to start out any advice you have for them?

Kat (30:07)

I would say to fellow business owners, if you're passionate about it and believe in your product or service, just keep going. I know the world is insane right now, but we need small businesses… They're part of the good of any community. So just keep pushing and believe in what you're doing. For people who are starting a business, get QuickBooks before you start and keep track of everything from the beginning.

Dale (30:41)

And don't forget to, I mean, just keep having fun. I think that's something we have to remind ourselves to do is that we're doing something that we love and we feel really lucky that we're able to do it. Yeah, I mean, sometimes it gets really hard sometimes and sometimes it just feels impossible actually. But just keep reminding yourself that you like doing what you're doing.

Catherine (31:07)

I love that. And I love the mix too of follow your dreams, serve your community, and just the practical get QuickBooks and stick to it. That's great. Well, thank you both so much for joining us. This has been really fun and really valuable. Thanks for sharing all of your tips about holiday prep and just how you run an e-commerce business. It's been really great. Thank you so much.

Dale (31:07)

and be

Yeah.

Kat (31:15)

Yeah.

Dale (31:31)

Thank you so much. Yeah, we

Kat (31:31)

Yeah, thank you for having us.

Catherine (31:35)

Thank you to our guests for sharing their story and thank you for listening today. Keep in mind that every small business is unique and there is no such thing as one size fits all advice. So only take what you find helpful. We look forward to next time.