Next on "Start Up," we're going to New York City to talk to Helen, Derek, and Jan, who started Lo & Sons, the unique carryall bag company for travelers on the go.

Then, we stop in Detroit, Michigan, to talk to Rob and Robert, who created Detroit Mercantile Co., a retail store that offers customers an authentic taste of Detroit culture.

Then we head to Milwaukee, Wisconsin, to talk to Judi and family who started It'z My Party Cakery, a bakery that puts a touch of art into every delicious dessert.

All of this and more is next on "Start Up."

-The American small business was built on one thing -- into ev relationships.

dessert.

And every time a customer walks through the door, a new one begins.

PayAnywhere was built to help entrepreneurs do what they do best.

So keep loving what you do.

Just get paid for it.

PayAnywhere.

-The Michigan Economic Development Corporation is proud to support "Start Up" and all the dreamers, thinkers, and doers.

Pure Michigan -- ready for the next big thing.

-You've written your own story of success, and it shows.

♪ Chrysler is proud to support "Start Up" and all the people out there who define their own success.

My name is Gary Bredow, and I'm a documentary filmmaker and an entrepreneur.

The economy is in less-than-perfect shape, and when the jobs go away, there's nothing left to do but get up and get creative.

And there are people all over America doing just that.

It's estimated that up to 85% of new businesses fail, so I'm going coast to coast to hear the personal stories of the people who beat the odds and started a successful business from the ground up.

This is "Start Up."

I'm on Broome Street in New York City to talk to Helen, Derek and Jan, who created Lo & Sons Travel Bags.

Now, when Helen realized that the bag that she wanted to buy didn't actually exist, she called on her sons to help fill that demand and it changed the course of their lives.

Let's go hear their story.

As the economy begins to recover and disposable income steadily grows, revenue for handbag and luggage accessories will increase at an average annual rate of 1.2% to $9.2 billion.

Growing disposable income is expected to rebound spending on luxury goods and spending on travel, which is creating a demand for luggage items.

Helen Lo couldn't seem to find a piece of luggage that met all of her travel needs, and after a series of trial and error, her and her sons have created a solution that finally served not only her needs but fills a gap in the market.

How did you get involved in making bags?

I'm in Beijing.

It's the summertime.

I was working for a product design research consultancy.

My mom, she's having more time finally to do things on her own and get some traveling in.

So she was looking for a bag, and she was like, this bag for this and that bag for that, "but I can't find this bag that has all the things I'm looking for."

And I made a joke, "Why don't you make your own bag, then?"

Walk me through the steps of that first conception, all the way to the prototype.

Okay, the first conception was, actually, doing the research.

DEREK: So I went to airports, commuting areas in Hong Kong and looked how people travel and what bags they were using.

The next thing was finding a designer.

And Jan had a friend who's an industrial designer and he came up with a tech pack.

And the next thing was factory.

We didn't know anything about factories.

So, my husband went to college with a friend who's in Hong Kong, and he's big in the supply chain management.

So he asked him for recommendation and we found a factory.

But we also found that it's really important to pick a factory that is referred by someone.

Otherwise, you don't know what you're getting.

And we were very lucky to find someone who was willing to take us on because they realized that neither one of us had been in the business.

We were not that lucky initially with our tech pack, our specifications, the drawings.

They didn't like it.

They didn't like it?

Because they make handbags, and our bag was more functional.

So the factory was good enough, they had someone there who designs bags, and he's one of the owners, so he worked with us.

We went through seven rounds of prototyping with them, and I think what was a lot different from our process and what they were used to is that, each round of prototyping, we would actually have people use it and test it out and actually get feedback on what we could adjust to make it, really think about the use like traveling and just the comfort and all these thoughtfully considered things.

And most fashion brands they make maybe three rounds of prototypes, so we're getting to six and seven.

They loved you guys.

They absolutely loved you, didn't they?

I have never found a bag that, when I do this, it behaves that way, like this is pretty perfect.

So it's a well-mannered bag.

Incredibly well-mannered, very well-behaved.

It has just the right amount of pockets.

I keep my laptop in here.

I travel with it.

Pretty much everything.

What is your business model?

Did it start online and then went retail?

Explain the whole process.

To be honest, we did not really think about the business model -- we just focused on the bag and made sure we had a nice product.

BREDOW: Why is that?

Because most businesses at least consider sales.

We did.

[Laughter] I think our approach was different because we actually took things one step at a time.

All right, I mean, we did not go by the textbook kind of approach with a business plan.

We know that that's the proper thing to do, but we didn't do it, mainly because I think...

I think we were not -- we didn't have the goal of, you know, setting up a retail store.

We had spent a lot of time designing the website, and so when people went to our website, their impression was, "Oh, it's a pretty legitimate brand, they have really cool products," and we ended up starting to sell a lot through our website and then just naturally, organically it grew through e-commerce.

Where did those funds come from?

For us, it was not a large undertaking, because we were not thinking of a brick-and-mortar store.

We did not have to think about lease.

We also had a lot of miles, because my husband travels a lot.

And then also working with the factory, as we developed, we didn't have to pay.

We were lucky in that sense, so I wouldn't recommend that to everyone because... because it would cost more.

Talking about creating a brand, how do you do that from scratch?

Our way was definitely based around social media.

And I think because we had built a pretty nice website, it allowed us to kind of, with limited resources, get our name out there.

We kind of were in this weird space between handbags and luggage, so what we needed to do was show the functionality and also build like proof.

And so what we did is we gave a lot of bags away to online influencers.

And as a result, with the word-of-mouth online and social media, we were able to start building a brand.

What is your advice to other people looking to start something, like either early in your career like these guys, later in your career like yourself?

What would you say to other people in the same position?

Uh, I don't think it's the age, I think it's at the stage you're in.

And also following your heart and your passion.

And as Derek says, being authentic.

You know, you don't do what other people do without knowing what the hell you're doing.

You don't start a business just because, wow, someone else started a business or someone else had a restaurant.

Or, in your case, just because you needed the bag.

Right.

[Laughter] Well, it's kind of true, though.

You guys went out there and made sure other people needed it too.

And that was a calculated, educated decision that puts you in the position that you're in.

Well, it's definitely been an eye-opening conversation for sure, inspirational, and I learned a lot.

So, thanks a lot.

Appreciate it.

-Thank you.

-Thank you.

Lo & Sons is truly a family business.

And sometimes the best invention is hanging right off your shoulder.

Things can always be made smarter, better, simpler, and as long as you have the commitment to see it all the way through to the bitter end, anything is possible.

For more information, log onto our website and click the link for Lo & Sons.

I'm on Russell Street in Detroit, Michigan, and we're going to go talk to Robert and Robert, who, with their third partner, Sherri, created the Detroit Mercantile Company.

There's definitely been a shift in consumer consciousness about how products are being made.

So, with their years of experience and the general store concept, these three are creating one of Detroit's most memorable retail experiences.

Let's go hear their story.

Americans are definitely spending more at retail giants than they are at independent retailers.

But the fight for market share continues to play out on a local level.

Independent retailers are attracting longtime customers due to their unique store presence and ability to carry hard-to-find products.

Rob and Robert took their experience in small business, combined with their love for Detroit, and started the Detroit Mercantile Company, a unique store that offers a curated collection of new and vintage items.

Starting the store, what did it take?

What were the beginnings of the Detroit Mercantile Company?

ROBERT J.: The store started with the big front counter.

We knew we wanted sort of a mercantiley feel to it, so we located this old 1900s counter and set that in place, said, "Okay, let's build the store around that."

The space we're in right now, Robert had been using this space for a couple years for his own warehousing and online fulfillment for Detroit Manufacturing, his office.

It was a pretty bare-bones, warehousey looking place.

It was almost unleasable.

People didn't think that this was a good spot for retail.

They thought it was too far away from the Eastern Market and you're in a residential building.

For all the reasons nobody else liked it, was the reason we said, "This is exactly why it should be a retail space."

It's not right in the market.

It's one of the places in the Eastern Market district where you can park in front of the place you're trying to get to as opposed to having to park and walk a few blocks.

Did you guys have to take out a personal or business loan?

ROBERT S.: There were no formal resources for us to get.

What I would say to anybody watching who's in that position is, the truth is, you already know where to get enough resources to start a business if you're serious about it, if your vision is strong, if your skill set is developed to the point where you're ready to do it.

The resources are really there, enough to get started and enough to test your vision out.

You said the formal resources just aren't there, you mean the banks aren't giving money out.

Especially for a new retail outside the Eastern Market off the beaten path.

In 2007, Americans spent an average of $2,520 at their local independent retailer.

They only spent $941 at Walmart and an additional $5,615 at other big box chains.

What are you holding?

ROBERT J.: There's a couple terms for it.

It's called Fordite, or Detroit Agate.

It's a material that's been used for years.

People have been making jewelry or paperweights or other crafts out of it, but it's got a good tie to Detroit or Michigan and the region.

It's a good story.

BREDOW: That's different layers of paint?

ROBERT J.: Just different layers of automotive paint built up.

If you give it to a skilled jeweler, they can take and cut and polish it and then turn it into a piece of jewelry like that.

Is this your first time at the Detroit Mercantile Company?

Actually it is.

-It is?

-It is.

What is the vibe that you get when you walk into the store?

WOMAN: It's Detroit.

It really is.

BREDOW: Why?

WOMAN: I've always gone -- and most Detroiters always know, they know the "Dally in the Alley," which is huge on Wayne State.

This is the vibe, this is Detroit.

This is the Eastern Market.

You know you're in Detroit when you walk in the store.

This is a senses place -- touch, taste, feel.

And I find it interesting, you want people to come in first before they experience you virtually.

The purpose of the Mercantile is to come in and see it.

Feel what the quality is, see the store be part of the surroundings.

And we've launched a website.

A few months ago we started building and populating it and we're still in the process of that.

We haven't told people, "Go to our website to shop."

Because we wanted the store to be experiential first.

What's the number-one question that you need to ask yourself before opening a business?

I think the first thing you look at is, is this something that I enjoy doing, am I happy with it?

Am I happy telling people this is what I do for a living?

Am I happy bringing people into the store and showing them?

If you can say yes to that, that's the first thing to do.

The second thing you have to ask is, is this a brand for one?

Are we the only people who are going to love this store?

Because if Robert and Robert are the only two people who want to buy locally made jeans and... recast vintage hardware, accessories, then it doesn't matter what else you do, it's not going to go anywhere.

What do you say to people that have doubt in brick-and-mortar retail in today's market?

Retail's alive and well.

We conceived the brand pretty thoroughly before we started preparing to open the doors.

And that's where you start, is with philosophy, and that's where retail and other businesses are made or broken.

If you know who your customer is and your customer really exists, retail's a great business to be in.

Consumerism for the sake of consumerism is not what's important, and our store, if anything, is not about that.

It's about finding high-quality things and good things that are locally produced and are important and connecting people with that.

I think it's a real shift.

ROBERT S.: We feel like the value proposition in 21st-century retail is different.

We're just at the front end of the market in that respect.

Can you explain to me what your greatest hardship or lesson learned in business to this day would be, so that maybe somebody else could take it and not have to make the same mistake?

Mine would be not to take things personally.

As with any business or relationship, there are some people in the world that just aren't nice to deal with.

10,000 other people that you can work with that will be happy to work with you and other products and other services and just go find what is easy to work with and has the same vision that you have, and don't take any of it personally.

-Hard lessons build character.

-Most definitely.

The biggest lesson I think that I learned in owning and running my own business is to know what you do and know what you don't do.

It's important to me to know what I'm doing and know why I'm doing it and to operate according to that every day.

So stay within your own rules, standards and guidelines that you've set for yourself.

Don't let maybe dollar signs or anything else... Short-term opportunities.

Unless they're really big dollar signs.

BREDOW: Unless they're really big.

Lesson learned, okay.

Add two zeroes, and I might compromise.

I don't know.

Thank you guys so much for talking with me.

-I really appreciate it.

-Thanks for coming.

You should never be willing to sacrifice the integrity of your brand.

You have to understand who your customer is.

And you should only focus on the highest quality level of manufacturing.

Three pieces of advice that could redefine retail.

For more information, log onto our website and click the link for Detroit Mercantile Company.

I'm standing on the corner of Bluemound and 53rd in Milwaukee, Wisconsin.

We're going to talk to Judi and family who started It'z My Party Cakery.

Now, Judi had to overcome a lot of hardships to start this business.

What she ended up with was a very sustainable business.

She brought her family much closer together and she creates some amazing baked goods.

Let's go in and hear her story.

The global baked goods industry is expected to exceed $310 billion in 2015.

Demand for baked goods and pastries are being driven by changing lifestyles, leaving people little time to prepare homemade confections.

Factors fueling market expansion also include convenience, affordability, and the demand for a healthier baked product.

Judi started baking elaborate cakes for her children's birthday parties, which helped her gain the confidence of her family and friends to turn this passion into a business.

And with the support of her husband and children, Judi is designing some of the most celebrated cakes in Wisconsin.

First I want to know who you are, as a person.

JUDI: Well, I remember all my life wanting to do things with my hands and create things.

When I was about 13 years old, that's when I started in decorating.

My aunt was my inspiration.

She did cake decorating out of her home.

Then through the years, I had to get out of the house.

I was a stay-at-home mom with my kids.

They had the best birthday cakes on the block, and the envy of the entire neighborhood.

And, uh...

I decided I needed to venture out of the house, eventually ended up as an office manager for a painting company.

And then went to a big bike store, and I was there for several years as the office manager, bookkeeper.

And then ventured on through to an attorney's office, where I worked there for five years.

Every day that I sat behind the desk and worked on a bankruptcy or worked on... an eviction or whatever, all I thought about was going home and finishing my cakes.

BREDOW: Tell me about It'z My Party.

JUDI: Well, It'z My Party is all about custom cakes.

I love to create custom cakes.

I don't want your cake to look like cake, I want it to look like something else.

I'm a hands-on person.

I want to be able to do things with my hands and be able to use my creative process.

And sitting behind a desk wasn't doing it for me.

This area, why did you choose this location?

Well, looking for a nice place that you can start a business is harder than you think.

I, first of all, didn't have the funding to be able to put a kitchen in anywhere.

It was way out of my reach.

It's a centralized location, and so... that was a key element.

I wasn't way on the south side, I wasn't say on the north side.

I'm pretty accessible all the way around throughout the city.

Talk about your family a bit.

How did they feel about that?

Was it constant support, were they always pushing you?

JUDI: All my kids, very supportive.

My youngest daughter pretty much works side by side with me.

After grumbling and growling and fighting and kicking and screaming, she's now... found a love for it, too.

In 2011, the U.S. bakery industry included 2,800 commercial bakeries, with and annual revenue of $30 billion.

There were also 6,000 retail bakeries, with a total annual revenue of $3 billion.

How does it feel to work in this business with family, and how has it changed your life since this business has opened?

Our life's gotten very much busier and hectic.

But it's fun -- it's a good group.

Meeting together, always working as a family.

You can't beat that.

It's chaotic.

[Laughter] It's more of a controlled chaos.

We all know wh needs to be done, but it's good being around the family.

BREDOW: Let's make some cake!

JUDI: Yes!

We are kneading fondant, or conditioning fondant.

BREDOW: Fondant.

What is fondant?

JUDI: "Fon-duhn," as some people call it...

It's actually a rolled sugar, but before you can put it on a cake, you have to condition it, get it soft and pliable, like Play-Doh.

And then we're going to add some color.

I've got green for you and purple for me.

Now, this here is, some people use powdered sugar.

Some people use corn starch.

I prefer corn starch.

And we just want to powder the table.

BREDOW: Okay.

You want to flatten it -- well, yours is kind of flat already.

[Laughter] BREDOW: By chance.

JUDI: And take your roller and just gently start pressing.

Now, I'm going to cover the pillow in purple.

BREDOW: Okay.

JUDI: Then we're going to use the green as an accent.

I'll let you use a ruler here and I want you to cut me out some stripes.

BREDOW: There's one.

JUDI: Beautiful.

I'm going to make a little diamond design on it quickly.

So out of this, I want you to roll some up.

Just grab a chunk, roll it up, and we're going to make a button on the top here.

So, this is a five minute pillow.

Absolutely incredible.

It looks all fluffy and cozy like a real pillow and I'm so hungry, I just want to grab it and eat it.

So, what's the name of your organization?

Well, we are WWBIC.

The Wisconsin Women's Business Initiative Corporation.

We're community development financial institutions.

-Is that a national thing?

-Right.

And basically what we do is we help folks, again, that can't be banked, or they're startups -- Basically someone who can't get financing through a bank.

BREDOW: What could you say about Judi and her?

Does she exemplify the type of people that your organization is looking for?

MAN: Yeah.

We're looking for people that have that typical entrepreneurial spirit, that really have a backup plan behind what they're doing.

It's not just they're shooting it out on a shingle.

You know, there's something that there's concrete here.

It's just that it's not quite on paper yet.

BREDOW: What advice would you give to other people in your position?

JUDI: Ask questions.

From anybody that you know.

A lot of times, you don't know what questions to ask, so just start asking any -- there's no stupid question.

Start looking around at some of the businesses that you're trying to simulate and see what they're doing.

What kind of passion do you really need to be able to succeed at something like this?

Well, you have to like what you're doing.

BREDOW: Kind of the point, right?

JUDI: Yeah.

Um...

I guess it's an inner drive, how bad do you want this?

I mean, if you have the choice to do something that you love to do, versus being forced to do something that you hate to do every day, what would you choose?

I'm going to do something I love to do.

Then it's not work -- It's work, don't get me wrong, but it's not work -- I'm doing what I want to do.

I'm doing what I love to do.

-That's the icing on the cake.

-You got it!

Well, this is definitely a family affair, and the recipe is a passion for what you do and the inability to ever give up on your dream.

For more information about Judi's business, log onto our website and click the link for It'z My Party.

I'm Danny Meyer, the CEO of Union Square Hospitality Group.

I think an entrepreneur needs to have such a deep love for the topic and belief in the idea and in him or herself that they almost are blind to the notion that they might fail.

I think entrepreneurs are really bad at understanding the underbelly of a business plan.

I think great entrepreneurs surround themselves with people who can protect the down side, but all they really see is the opportunity to succeed.

Next time on "Start Up," we're going to Chicago, Illinois, to meet with Mike, who started Union Sushi, a local hangout that combines Japanese cuisine with an American vibe.

Then we're going to Cleveland, Ohio, to talk to Mike and Bryan from eFuneral, a website that simplifies funeral planning.

And finally, we're going to Indianapolis, Indiana, to talk to Mike and Erin, who started Promise Monsters, a business that sells acts of kindness through handmade plush monsters.

Make sure to join us next time on "Start Up."

Visit our website at startup-usa.com, and like us on Facebook and follow us on Twitter.

What did they call organic food in 1950?

No idea.

-Food.

-Exactly.

I'm up!

I'm up!

♪ There's a long road ahead of us ♪ ♪ Before we get our due ♪ There's a long road ahead of us ♪ -You've written your own story of success, and it shows.

♪ Chrysler is proud to support "Start Up" and all the people out there who define their own success.

-The Michigan Economic Development Corporation is proud to support "Start Up" and all the dreamers, thinkers, and doers.

Pure Michigan -- ready for the next big thing.

-The American small business was built on one thing -- relationships.

And every time a customer walks through the door, a new one begins.

PayAnywhere was built to help entrepreneurs do what they do best.

So keep loving what you do.

Just get paid for it.

PayAnywhere.