How SMB Helped Closet & Storage Concepts Beat the Great Recession

In 2008, Closet & Storage Concepts, the storage solutions franchise out of Philadelphia, had established a slow but steady growth rate. In its eight years of franchising, the brand had opened more than a dozen locations in markets across the country. Then the recession hit, and like most businesses, Closet & Storage Concepts’ growth came to a screeching halt. Worse, it’s existing franchisees found themselves in the unenviable position of servicing a housing industry that had all but completely crumbled. They needed help, and Closet & Storage Concepts did not have the infrastructure to buoy them through the historic economic downturn.

“Some of our franchisees were hit really hard,” said Bob Lewis, Closet & Storage Concepts’ president and CEO. “They were struggling, and weren’t sure how to help them.”

Closet & Storage Concepts had built their franchise entirely in-house, without the help of any consultants, and Lewis says their expertise had always been more consumer-oriented than operational.

“We had always nailed the consumer aspect of our business,” he said. “We’ve got amazing products and services, and we were able to build a great business out of that. But running a successful business and running a successful franchise are not the same thing.”

Early in 2009, Lewis found the help his company needed when he met a franchise business consultant named Steve Beagelman at a networking event. Beagelman had just gotten his consulting firm, SMB Franchise Advisors*, off the ground, and though the business was young, Lewis was impressed by Beagelman’s depth of knowledge in the industry, and he hired SMB to help right Closet & Storage Concepts’ ship.

“SMB was brand new, but Steve knew everything about the industry,” Lewis said. “Even just speaking with him, we learned so much about how we could improve our franchise.”

Beagelman and his team at SMB quickly got to work stabilizing Closet & Storage Concepts’ franchise model, taking special care to bolster the brand’s franchisee support systems. Before the recession, Closet & Storage had grown so steadily that Lewis admits he’d never thought about helping franchisees establish a consistent size structure that could withstand changes in the economy.

“Before 2008, the housing market was booming and growth was not an issue for us. After the recession, we had to recalibrate that,” he said. “SMB helped us right-size each of our franchise locations so that they could run sustainable businesses that weren’t entirely reliant on the health of the housing market.”

To help Closet & Storage Concepts get a better handle on the health and sustainability of their franchisees, SMB introduced a suite of protocols to monitor financial performance and detail metrics for every store, which could then be compared not just across the system but also against other franchisors. That level of granular insight allowed Closet & Storage Concepts to forecast the successes and problem areas of their entire system with far greater accuracy than ever before.

The project lasted for roughly 18 months, finishing up in early 2011, just as the economy started to recover. Lewis says that SMB left his franchise in perfect condition to take advantage of the growing economy.

“We were so much stronger after working with SMB. As the economy got better, our franchisees were performing very well and we were in great shape to continue growing,” he said.

But that project did not mark the end of Closet & Storage Concepts’ relationship with SMB Franchise Advisors. Two years later, in 2013, the franchise enlisted SMB’s help again to manage its acquisition of More Space Place, a massive undertaking that doubled the size of Closet & Storage Concepts’ system.

“We could not have done that acquisition without SMB,” Lewis said, “and I’m not just saying that. Steve’s knowledge of franchise operations and evaluations was essential in making that work.”

SMB stayed with Closet & Storage Concepts for another two years as the brand reorganized to accommodate the larger system. These days, Closet & Storage Concepts does not employ SMB full-time, but Lewis says they maintain a project-based relationship, with Closet & Storage reaching out to SMB whenever they need help fine-tuning an aspect of their operations.

“We consider SMB our go-to partners,” he said. “We’re not an emerging franchise or an incubator, so we don’t need to work as closely with them as a smaller franchisor might, but whenever we run into any operational issue, Steve is the guy we talk to.”

Looking back, Lewis says he only wishes SMB had been around when he was first building Closet & Storage Concepts.

“If they had been around when we were starting out, we absolutely would have used them to help us perfect our franchise,” he said. “Whenever I talk to a new franchisor, the first thing I tell them is, ‘don’t try to do this by yourself.’ Then I tell them, ‘call Steve.’ When you are getting involved in this industry, you don’t know what you don’t know, and that’s the critical issue. You may have a great core business, like we do, but franchising is its own game, and you need someone who has been there before to guide you. That’s what SMB has done for us, and we wouldn’t be where we are today without them.”