54-year-old lost her kids' $60,000 college fund by spending it on her side hustle—how she got it back, and more

Kim Vaccarella was so confident in her business idea that she emptied her children's $60,000 college fund to bring it to life.

The move backfired — dramatically.

Today, Vaccarella, 54, is the CEO and founder of Secaucus, New Jersey-based Bogg Bag, a waterproof tote bag-maker on track to top $100 million in annual sales this year, she says. But in 2008, she was a mom of two with an idea for a more practical beach bag. After finding a manufacturer who built a prototype, Vaccarella created two limited runs of stock — first 300 bags, then 600 — which "flew off shelves," she says.

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The early success gave Vaccarella the courage to try something more rash in 2012: putting all her cash, including her kids' college savings, into ordering more than 1,000 bags. Every single bag arrived perfectly functional but aesthetically defective, bearing ugly black streaks.

The manufacturer refused to waive payment, and her lack of liability insurance left her with no recourse, she says — leaving her with inventory she "couldn't sell" and no ability to buy more.

″I went for broke and spent my kids' college money and bought a full container's worth [of bags], and they were all bad, so my heart sank," Vaccarella tells CNBC Make It. "The realization that I didn't know what I was doing really kind of came in fast."

The pivotal 'oh s---' moment

Around that same time in 2012, the U.S. East Coast was battered by Hurricane Sandy. Vaccarella decided to load her defective Bogg Bags with supplies and give them away to local families in need, convinced that the act of charity would mark the end of her business.

"Six months to a year later, all those people who received them as donations started reaching out, and they were like, 'Where can I get more? I need more of these,'" she says. "It was one of those 'oh s---' moments [where I was like], I have to do this."

Vaccarella, who was working full-time as a real estate lending controller, spent the next year saving money for a trip to visit new manufacturers in China. She found a factory, secured $120,000 from a family friend to replenish her inventory and put her business "back on the scene" in 2016, she says.

Two years later, Vaccarella's company brought in more than $1 million in annual sales, she recently told Entrepreneur, and she quit her job to run Bogg Bag full time. The sturdy, easily washable bags went viral on TikTok and Instagram earlier this year, contributing to another significant boost in sales.

The $120,000 investment became "a $10 million windfall" for that family friend, says Vaccarella.

'Somewhere in my mind, I think that I can do anything'

In retrospect, Vaccarella calls her decision to invest her kids' college money "crazy" — but says she stands by the decision. Neither she nor her husband had gone to college, and both wanted their kids to have that experience, but they had very little savings to fund a business they believed in, she says.

The simple act of taking the risk taught Vaccarella to "be comfortable" trusting her gut, she says. Bogg Bag did eventually replenish the fund, helping her 25-year-old son attend college for a year — he chose to drop out, she says — and her 21-year-old son attend community college today.

Her confidence was unshakeable, she adds: "Somewhere in my mind, I think that I can do anything."

Unshakeable confidence is a common trait among many entrepreneurs — and sometimes a necessary one, given the challenges of creating a new business from scratch. But overconfidence can drive businesses toward failure, found a 2020 study published in the New England Journal of Entrepreneurship.

Amazon founder Jeff Bezos' advice: Freely take risks that you can recover from. He classifies risks as either "one-way doors" — essentially, irreversible decisions — or "two-way doors," which have stakes that you can recover from.

In other words, when you're considering a risk, think about what you'd lose in a worst-case scenario. If you're comfortable with that loss, the risk might be an easy one to take — because you can always "come back in and pick another door," Bezos told the "Lex Fridman Podcast" last year.

If you aren't comfortable with a worst-case scenario, be very cautious taking the leap. "You go in that door, you're not coming back," said Bezos. "Those decisions have to be made very deliberately, very carefully."

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