Pair Parlays Curiosity Into Profit : Small Business: A Cleveland toy firm taps a child’s imagination with kits to turn old boxes and safety pins into cars or dollhouses or bracelets.

In an age of Teen-Age Mutant Ninja Turtles and Nintendo, two women who started a toy company in their basement have created a growing business that relies on an endless source of entertainment--a child’s imagination.

Phyllis Brody and Evelyn Greenwald, owners of Creative Art Activities Inc., banked on children’s curiosity and ingenuity when they founded Creativity for Kids in 1979.

“So many of the other toys are entertaining you. . . . With our toys, rather than a child being passive, they participate,” said Brody, 53, a former social worker. “People go into one of the toy supermarkets and buy what the kids say they want from television ads rather than buying something that is more in line with the kids’ interests.”

The idea has paid off. The business has moved into a Cleveland warehouse as sales have increased 30% to 40% each of the last five years. The two Cleveland Heights owners say it is accurate to estimate that sales exceeded $2 million in 1989, though they decline to give specific sales figures.

The company’s 40 kits contain materials to transform old boxes into cars or dollhouses, safety pins and sequins into bracelets and cardboard tubes and clothespins into dolls, puppets and monsters.

Harry Guckert, publisher of Playthings, the New York-based trade magazine founded in 1903 for the toy industry, said Creativity for Kids has carved out a special niche in the toy market.

“Creativity for Kids is excellent,” Guckert said. “We call them specialty retailers. The two gals have researched the market and their company is strong. There are a lot of companies in this differentiated market that are not.”

The company’s products have won seven Parents’ Choice awards, a toy industry award for excellence.

Many of the kits are just a collection of household items, the kind of stuff parents used to assemble for play on a rainy day--feathers, glue, colored paper, corks, paint, fabric, wood and yarn, said Greenwald, 49, a lawyer. She said the kits satisfy the needs of working parents who don’t have the time to round up craft items but still want to offer children creative opportunities.

Ten employees work at company headquarters, mailing orders to about 1,000 small toy shops nationwide that feature educational and specialty products.

The employees order hundreds of pounds of feathers, millions of wiggly eyes, pine cones and an array of other items. The suppliers ship the items to a sheltered workshop program where handicapped workers assemble the toy kits.

Aimed at children 4 and older, the kits range in price from $3 for a party favors kit to $25 for a pre-cut doll bed. The product line is inexpensive in an industry with annual sales of $12 billion.

“The kits are a combination of facts, playing and learning. They make up their own rules--no one tells them how to do it,” Brody said.

For $7.95, the Let’s Pretend Travel Kit includes maps, passports, postcards and tickets. The Let’s Pretend Restaurant offers dinnerware, menus, place mats, order pads and other items needed for a restaurant.

Other kits include the ingredients to make a personalized T-shirt, hat or masks or items to operate a hotel or supermarket.