Beth Benike
Appearances
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So my name is Beth Beneke and I am the CEO and founder of Busy Baby. I grew up in Southern Minnesota, the daughter of an entrepreneur. My dad has a small business. He's a welder. So I grew up in his business and I grew up wanting to have my own business as well.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And we would have to come up with that in the 30 to 40 days it takes for the product to get to the U.S. ? And I can't get any more loans. I'm fully leveraged. I have my house on the line already. I can't get more loans. I can't come up with that kind of money.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Once it hit over $100,000, there was no way we could afford to import our products anymore. And that's when we decided to just abandon it in China until we could figure something out. So the products are currently sitting at my factory. They've graciously offered to store them for us at no cost until we can find a new direction.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Well, here's the thing. I'm not in a face-off with the administration because I'm not a player in the game. I'm a pawn. There's literally nothing I can do. And I was coming up with strategies, but then any strategy I came up with, I'm afraid to execute it because the policy changes every 24 to 36 hours.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
One strategy, which I have now since learned is illegal. But what a lot of people are talking about and are recommending is export your products to a different country. repackage them, and then re-import them to the U.S.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
But you still have to make a change to it. You have to make a physical change to the product, the packaging. So we were thinking, well, we have some friends, personal friends that live in Australia. We could send it to Australia. We could then have them help coordinate repackaging and then import it from Australia. And with the 90-day pause, we'd only pay 10% tariff.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
But that is country of origin fraud. So instead, I'm pivoting. I'm shifting gears. I'm going to try to find a way to sell it in another country. There are babies all over the planet. I unfortunately cannot sell it to Americans once I run out of what's in my warehouse right now, unless something changes, obviously. So I'm going to start looking for ways to sell it overseas.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yep, that's what it's supposed to do. I have gone very deep down the research rabbit holes for my options for producing in the US. We did try to produce in the US initially. Once we got started and had market validation, we did work with a company in Minnesota to try to produce it here. There are some nuances to our type of manufacturing.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
We have compression molding, which is a different kind of manufacturing machine than typical. We have the requirement to be a clean facility because our products go in baby's mouth. So it has to be a sterile facility. It can't just be any old factory. So now I have two options. I'm very fortunate that I have a 10,000 square foot commercial space in my building that's available for lease.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It was the freedom. It was the being able to leave work and come to my softball games and choose the work he wants to do and turn away the work he doesn't want to do. Being in control of your own destiny.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I could build my own factory in there. Like I own the building. I could build my own factory. So if we just like quickly look at that route, I got pricing for the machines that I need. I need eight different machines to make my products. The total of that, if I bought the machinery from China, would be just under $400,000. Wow.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Now, do I have to pay 145% tariff on top of that to get the machinery to be able to manufacture? Right now, probably. Yeah. So now we're doubling my cost to even set up manufacturing. But let's just say I don't. Then I have to find somebody with the expertise to set up the manufacturing and to run the manufacturing. But because this type of manufacturing doesn't really exist in the U.S.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
right now, there's no expertise in the U.S. to set this up for me. Right. Now we have to talk about the cost of importing the raw material.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And the tariff on top of that. Then we have to talk about the downtime I have. So I told you I got two to three months worth of product in my warehouse right now. It will take 12 to 18 months if I had the money, if I had the expertise to get this set up. Now that's just one production line. I actually have eight products. And with one production line, I can do 100 units per day.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So I would have to buy multiple production lines for that one product. Now I have eight other products or seven other products beyond that. So just the pure cost, okay, let's scratch that idea.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Financially, logistically, and in the end, my product is going to probably have to be three times more expensive for the consumer. So I guess I'm better off paying the tariff because that's less.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So let's scratch that idea. Let's say magically we find a factory in the U.S. that has the exact machinery, the clean environment, and access to the raw material, which is still imported and tariffed. And they're willing to work with me. Awesome. Let's do it. The first step is to create molds.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
That process takes four to six months in itself for one mold and costs me somewhere around $100,000 to $120,000. Wow. So you tell me... How am I supposed to do this? How am I supposed to do this? And now you're cutting off all my income.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
But what he always told me is, you know, you really got to be passionate about what you're doing because when hard times hit, and they absolutely will, if you're not passionate about what you're doing, you're not going to make it. So when I finished, graduated high school, I wasn't passionate about anything other than not going to college. I tried it and wasn't a big fan.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
When you cut my legs out from under me with no notice, and I can't even save money or seek investment or come up with any kind of plan, I can't even sell the products I've already paid to have made in the US because I can't afford to bring them into the US. Nobody can afford to this quickly move to the US with manufacturing. We don't have the infrastructure. We don't have the raw materials.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
You know, it's just none of it makes damn sense. My husband's a farmer. We grow corn and soybeans. He's out planting today. Minnesota is really good at growing crops. We have great soil. We have intelligent farmers. We have great equipment. China is really, really good at manufacturing. I love my team in China. We send each other gifts. They send me videos. They love making my products.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
We have a great relationship. I would love for every country to do what it is best at and be able to thrive on what they're good at. I honestly don't think that we can bring manufacturing to the U.S. and be good at it. We already have hard enough time with the businesses that are currently here finding good workers. Who's going to work in these factories?
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It reminds me very much of basic training in the military. When you go through basic training, they break you down and then they build you back up and you're stronger because of it. In theory, that's a great, difficult, but great way to do things in certain circumstances. However, this is not short-term pain. This is immediate death to thousands of small businesses.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I'm not okay. I'm scared for my friends. I'm scared for myself. They don't understand. This is certain death for us. It is certain death for so many of my friends and myself.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Not in the literal sense of—actually, no, I'm not going to say not in the literal sense because the very first thought that came to me when he announced the 104% tariff was at least I have life insurance so that there's a way my family can still have a home. And I immediately caught myself.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And a recruiter called me out of the blue and I ended up joining the military. So I joined the army. I convinced my brother to join the military. So we served together in Europe. We deployed to the war in Iraq and we started in Kuwait before the war started.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yes, because there's nothing more important to me than my family and my kids and them having a place to live. And even though this was not a mistake I made in my business, so two years ago, I made some business mistakes just because I'm a new business owner and entrepreneurship is hard. And so a couple years ago, I got into a dark place and I sought help and I got help.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And since I went through that two years ago, I made sure that I have developed a network of people to reach out to, people I can talk to, people I can commiserate with, people I can lean on, medication that I can take should I need it.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I am afraid for all of the small business owners that are doing this on their own, who don't have someone to lean on or the coping skills, because this is like the biggest tsunami that just came out of nowhere and crushed our entire country for small business owners. I am okay. But now I'm worried about everybody else who doesn't have that.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I'm not even allowing myself to consider that. I'll find a way. Because I refuse to be a victim. Yeah, I refuse to be a victim. I refuse to quit and I refuse to fail. And I'm not going to teach my kids to be a victim or to give up. I'm going to show my kids that you just have to adapt and overcome. There's always a way. There's always a different thing you can do. You're never stuck. It's hard.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It sucks. But it's a great lesson for them to learn as well.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I think it's going to end with us learning new things and new ways to do business. What I'm visioning is we're going to learn how to do international distribution and more babies around the world are going to get to have our products. And then eventually this is going to work out where we're going to have a global company. It's not going to just be, you know, my American small business.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
and so like to bring that around now now my brother runs busy baby with me oh wow um and we always joke about 20 what's it been like almost 22 23 years ago when we were sitting in the desert you know throwing little rocks at a bigger rock waiting for something to happen um did we ever imagine we'd be schlepping baby products out the back of our cars at the state fair like just if you would have told us that in iraq we would have just laughed
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I'm going to have a global brand. So as much as it hurts right now, that's my goal. I'm going to figure this out. And in the end, I will have a global brand.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Hey team, New York Times, The Daily. This is Beth Beneke with just a follow-up to our conversation from the other day.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
You know, I'm spending all my time and energy right now trying to figure out how to bring manufacturing back to the U.S. But companies like Apple and Microsoft, who are in probably the best position to be able to do just that, to be able to bring manufacturing back to the U.S., they no longer have any motivation to do so. They're exempt from the tariffs. It's not going to affect them.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So what motivation do they have to bring manufacturing to the U.S. ? It's very disheartening to see that announcement today and see that big corporations don't have to worry about the tariff. They're fine. They don't have to pay it. But the rest of us do.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah, so after the Army, it took me a few years to readjust to civilian life. So I settled back in in Minnesota. I found a great corporate job, and I met my now husband, and we started a family. So I had taken the full three months of maternity leave that my company offered and went back to work. And when I went back to work, two of my stay-at-home mom friends took me out for lunch.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Their girls were adorable, but a complete distraction the entire meal. Just doing what babies do. You know, they reach for everything on the table. They drop things on the ground. We couldn't finish a conversation, you know?
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Exactly. So I just went online. What am I going to buy on Amazon that's going to make it so my kid's not this distraction when he's old enough to join us at the table? So I did the search on Amazon. My friend said, you know, you really need to make sure you have a clean surface to put baby's food on because you never know what they're wiping these tables down with.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
If you put the stuff on the plate, the plates get thrown on the ground. I said, well, okay, cool. Yes, we need that. But I also want to attach their toys so that they can't throw them on the ground.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
No, no. There's been a million pacifier clips where you can like attach stuff to their clothes. And then there's regular placemats that you can like, they had this, I think at the time it was pretty much just disposable placemats that you could like stick down to the table. And I wanted something that was going to be reusable and an idea popped in my head.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And that night I went home and I got like silicone caulk that you use to like caulk around your sink or your bathtub, whatever. And I squirted it into a quarter baking sheet and then I started cobbling together something that might work That developed into me buying some silicone dog mats off of Amazon and suction cups.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And then I used another set of like my husband's fishing tethers to glue attachment points to the top of the placemat. So now there was a mat where you could put the food and then also these little fishing tether things where I could just change out toys and just hook up the toys. And because it was suctioned to the table, baby didn't throw it onto the ground.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah, I mean, I didn't even know it was called a prototype at the time or a minimum viable product, I now know is the term. The most important step was to find a professional who knew how to do that, because I certainly did not. So I found my product developers in Utah, and they held my hand all the way through the manufacturing process.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
We did look for manufacturing in the U.S., and because we were at such a small scale, it wasn't a fit for us to be able to start in the U.S., so we started in China.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It comes down to... costs and volume. So it is very expensive to manufacture in the U.S. Obviously, the cost of labor is very high, but most of the raw material that we use in manufacturing, like for us, we use silicone, which comes from silica, which is not readily available and sourced in the U.S.,
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So for us, to import the raw material was more expensive than importing the product in its finished packaged form.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So that's one aspect of it. But so for the factories that do exist in the U.S., they typically have very high minimum order quantities. So you would have to start off with 10,000 or 20,000 units of... to make it worth their time to set up the line. I mean, there's a lot of work that goes into a manufacturing line, setting up the machinery.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Now you're tying it up so nothing else can get produced, getting the material ready. China was willing to do a minimum order quantity that first round of 1,000 units.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Exactly. And unlike, you know, maybe tech startups or other small businesses that get funding, I was bootstrapping. I sold my car. I used my tax return. I borrowed $35,000 from my stepdad. I still owe him that actually. So I ended up doing a 5,000 unit run because I wanted to do multiple colors. So when I launched the product in 2019, I blasted my entire email list.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Probably like old high school boyfriends got an email saying I was launching a baby product. And the initial orders were mostly from friends and family. But the first time I got an order from someone I didn't know of, and then they left me a positive review, I knew that was, like, everything was going to be okay. Next up is a solution to a common problem for babies.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So part of my original email list that went out when I launched the product included a Shark Tank producer whose email I had gotten previously when they were looking for veterans to feature on the show. Hi, Sharks. My name is Beth Fimbo. I'm from Rochester, Minnesota, and I'm here seeking $250,000 for 5% of my business, Busy Baby. Wow. That ultimately led me to being on Shark Tank.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I filmed during the pandemic in 2020 and then aired in March of 2021.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I think 20%- It was the most amazing experience. It was surreal. I would love to do this with you for 15. I can't go past 15.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Good luck to you. Thank you guys. I am rooting for you. Thanks. I just, I'm very confident in myself and my plans and what I'm doing. And I really think I can do it. I just wasn't willing to give up 18%. The weekend we aired, we had about six weeks worth of sales in three days. It's unreal. We sold so many busy baby mats. It was just amazing.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
We have a line of products that range from $10 to $30. But the Hero product, the one everybody knows from Shark Tank, that runs $30 retail.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I mean, I think lifetime sales were over $15 million.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
There's my brother and I full-time, and then we have three other full-time employees. And then we just brought on two part-time employees to help us. I was just named, actually, less than a month ago. The SBA gave me a wonderful award.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yep. Small Business Administration awarded me Small Business Person of the Year for Minnesota.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And then this past November, we launched in Walmart for the first time. And then just last month, we launched in Target. For a business our size, that's massive. Huge. It was years of effort to get there.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
So I think what a lot of people don't know is— You make a contract with the retailers. You agree to a certain price that they're going to pay for your product. And then it's a risk for me. Like, we don't know how it's going to sell. But we know we have this contract and it lasts a year. And we've made the guarantee that we're going to supply them with product for this year.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah, well, I just talked to my best friend from the Army we met when we were serving together. And so I filled her in and she's feeling hopeless and helpless with me now.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And so I had to take out additional loans to cover that cost. So I have SBA loans through my bank. But because I already had other debt, I had to leverage my personal property as collateral to get the loan.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yep. Big deal. Big deal. Big risk. Big risk. And every small business that eventually ends up in one of those retailers, it's the biggest risk.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
I mean, we expected the tariffs. Up until that point, we haven't ever paid tariffs. Our product falls into a category that hasn't had tariffs. We pay tax and duty, but we haven't had tariffs to date. So we knew that was going to be a new thing for us, and we budgeted expecting reasonable tariffs of 20 to 30 percent.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah, we knew that was coming. An overwhelming number of people voted Donald Trump into office, and he talked nonstop that that was something that was going to happen. So we expected to have tariffs. Never in a million years would I expect that tariff would be 145%. Never.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah. That's what it is today. Now let's just give it a couple hours. It might be something else this afternoon.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It's devastating. I cannot bring this product into the US now. I don't have that kind of money. And what that means then is if I can't bring in that product and I run out of what's in my warehouse now, then I no longer have revenue coming into my business. And what that means is I can no longer pay my employees. I can no longer pay my loans to which my house is leveraged against.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
And in about six months, I could very, very possibly lose my home.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah. I currently have two to three months worth of product in my warehouse. We just finished production of another two to three months of product. It was supposed to get on a ship two days ago.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
From China to the U.S. And that was the day that tariffs jumped up to 54%. I have somewhere—give me a second. I want to pull out my numbers so I can tell you specifically— The effect. All right, we're going to do a little math. So for us, that meant instead of the $30,000 tariff we had budgeted for, it now was $85,000.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
The product itself is worth $158,000. So suddenly you're faced with a potential $80,000 tariff on about $158,000 worth of goods.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yeah, $85,000 for the 54%. And we don't have that, but we have good margins. We could survive that. And we thought, well, maybe we can do a GoFundMe. Because maybe right now in this political climate, people would be willing to give us $20 to help us get through this so that we don't have to raise our prices or go out of business. It wasn't devastating yet.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
The next day, when it went up to 104%, that math is $164,000. Wow.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
Yep. So that no longer makes business sense for me. I would have to double the price of my products. People are not going to pay double the price of my products. And especially my people. I'm selling my products to new moms and dads. They're buying diapers and formulas and other things that are about to get a whole lot more expensive for them.
The Daily
Her Business Was Thriving. Then Came the Tariffs.
It's already hard enough to be a new parent and to buy all the things you need to buy that you're not used to buying. People are only going to buy what they need.