By Marcia Jedd
October 30, 2006/—Closets get no respect. From the contractor perspective, closet remodeling and design projects are small potatoes. Many contractors may not even take on a stand-alone closet remodel. But remodelers and design/build firms do well to do closets to garner future and bigger business or gain valuable word-of-mouth referrals.
"Don't turn it down. Anytime you do a good job, they'll call you back," says John Austin, manager of the remodeling division for JLM Design/Build in Edina, Minn. JLM does the occasional closet project, particularly with a larger remodel. "We do a fair amount of smaller closets. We'll work with the homeowners to give them what they want, which might be putting in melamine shelves, laminated wood shelves or regular wood shelves."
For bigger closets, JLM refers customers to local specialists or California Closets. "These firms do it much more efficiently and are set up to do it in the shop," Austin says. Still, Austin notes contractors can still make good margins on closets. "You won't lose money by doing closets."
Closet specialty
Higher margins, fewer hours and a single focus called Peter Dell, CGR, and his wife and partner Jan Dell to form Closet Connection in January 2006 after more than 22 years as a general remodeler. The Dells' remodeling firm began offering closets 15 years ago as a niche, prompted by Jan entering the business. She's maintained the specialty ever since by doing all the firm's closet estimates and applying her practical design sense to closets. Peter notes that professionalism is key; he advises estimators to dress in office attire and carpenters to be neat in appearance.
"When done right, you can easily clear 35 to 50 percent net margins by doing closets. In general remodeling, if you make 10 percent, you are beating the industry average by a long way," Peter says, noting that closet margins are higher than large remodeling project because of less complexity and volume efficiencies.
Closet Connection has recently opened an expanded showroom which helps drive additional business, Dell says. And to meet storage demands of today's homeowner, the business is doing more garages and pantries.
Solutions provider
The secret to success of the closet niche turned all-closet business? "It's the benefit of focusing on one thing. It's a one-person installation. Carpenters do need some talent to do it," Dell says. He views Closet Connections as a 100 percent service business. "We're really a storage solutions provider."
Peter advises those considering a closet niche or closet-only business to partner with an expert. "Don't focus so much on the relationship with the manufacturer but align yourself with companies that can provide you with someone who can provide you with a lot of expertise." For both high quality products and expertise, Closet Connection partners with Windquest Companies for storage systems.
JLM and Closet Connection are examples of how a niche pays. Combined with a rich customer database and referral business, an all-closet business is more attractive to buyers than many typical remodeling businesses.
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