Hole-in-the-Wall Organizers : Messy Closets Mean Tidy Profit
Neil Balter knew one thing when he graduated in 1978 from Cleveland High School in Reseda: He didn’t know what he wanted to be when he grew up.
Seven years later he is president of California Closets, a multimillion-dollar Canoga Park-based business with franchises across the country. Now, he says, his life mission is clear: “Go out and spread the gospel of closets.”
Balter is one of several entrepreneurs who have found a new and seemingly lucrative market in what they call “home closet organization”--redesigning the common one-pole, one-shelf closet into an efficient patchwork of cubbyholes, shelves and racks.
At Least 14 California Firms
There is no way of knowing exactly how many such companies exist nationwide, several of the larger firms’ owners said. Most have sprouted in the past five years. They agree that there are at least 14 in California, Balter’s being the largest.
“No matter who started this, it has taken off for one reason,” Balter said. “Everyone has messy closets.”
That apparently universal fact, in addition to a housing market that has encouraged people to remodel rather than move and an emphasis on smaller units in home construction all have combined to create more demand for efficient storage space, the closet people say.
“We’ve lived with wrinkled clothes and piles of shoes for too long,” said Roxanne Billman, owner of Always Better Closets in Burbank, which redesigns about 200 closets a month.
Order From Chaos
A closet organizer peers into the client’s dark spaces, inventories his worldly goods then produces a plan for rods, belt racks, drawers, shelves, and cubbyholes for shoes.
The average bedroom closet costs about $400. It takes about four hours to install the finished product.
Balter’s company does the sawing and construction at the customer’s home. Others build the components elsewhere and then install them.
The closet people say their best customers are women between the ages of 25 and 55 whose household income is about $30,000.
“We are mainly after the women because they are the ones who make this type of household decision,” said Katharina Wentworth, California Closet’s advertising director. The company has spent $1.5 million on local advertising in 18 months.
Customer Alice Stearns of Woodland Hills, who said she is between 55 and 65, said she saw a closet-organization advertisement and thought, “My closet looks like the before photo. There are boxes, hats, clothing bags, a wig case and God knows what else up there.”
On Friday morning she had her closet redesigned for $440. Friday afternoon she said: “I think I better go out and buy some new clothes, there are so many empty spaces now. I’m having neighbors come over tonight to get a look at this.”
The plunge into the closet business often is accidental.
At age 17, Balter was supporting himself by helping a friend build patios and do other handiwork at homes in the San Fernando Valley. As a favor to a friend, Balter installed a couple of extra shelves in a bedroom closet.
“My friend showed it to a couple of neighbors, and they asked me to do the same for them,” Balter said. “Then their friends saw it and started calling me.”
$1,000 Start
A friend loaned him $1,000 for tools, Balter said, and for a year he supported himself on word-of-mouth business from Valley homeowners.
In 1980 he began attending Pierce College, where he met David Seigel, an advertising instructor who persuaded him to advertise.
“The first ad cost me $300, but as soon as it ran, the phone started ringing off the hook,” Balter said. Seigel then helped him obtain a $10,000 loan so Balter could buy a van and hire a helper.
In 1982 his sales reached $124,000. By that time, he had dropped out of college and opened an office on De Soto Avenue in Canoga Park.
California Closets’ sales nearly doubled from 1983 to 1984, from $560,000 to $1.1 million. Profits in 1984 were about $72,000. Figures for the first nine months of the company’s 1985 fiscal year, which began in May, 1984, showed revenue of $1 million with $155,000 in profits, said Bob Reisner, financial vice president.
Franchises Started
At the same time, the company began franchising across the country under the name of Creative Closets. For $45,000, franchise owners get vans, materials and training. They agree to surrender 5% of their revenue to California Closets, the parent company, and to spend another 5% for advertising.
So far this fiscal year, 57 franchises--from Waltham, Mass., to Anchorage, Alaska--have grossed $8.2 million in revenue.
Jason Kinsella, president of Huntington Beach-based Beautiful Closets, a similar firm, had spent most of his carpentry career building bars and kitchen cabinets.
“Around 1980 people started to get innovative and began asking me if I could do things like building stereos and wall units in their closet,” Kinsella said. “Before I knew it, I moved to the bedroom and was telling them how to hang their shirts.”
Bright Prospects
Kinsella said he receives about 75% more inquiries when he advertises closet-organization services as opposed to kitchen cabinet installation. He said his 1984 sales revenues were $1.5 million and that he expects that to double in 1985.
Hank Bogardus, president of San Francisco-based Just Closets, said he learned to organize a closet in the Navy. He was in charge of equipment storage aboard a submarine.
“When I got married, my wife’s clothes took up all the closet space,” Bogardus said. “So I built compartments in the closet like we had in the submarine.”
Like Balter, he began reorganizing neighbors’ closets. When he moved from Florida to California in 1980, he started a chain of closet accessory and design shops. He now owns seven shops and has franchised another seven from San Diego to Seattle.
“My research tells me that there are 355 million closets in America,” Bogardus said. “Now, if I could only capture 1% of that, I’ll be just fine.”
