Uncluttering the Closet

By Rick Desloge
St. Louis Business Journal - May 4, 2007

David Gast knew he was taking a risk, and potentially losing his base of customers.

Gast faced the prospect of renewing a franchise agreement with California Closet Co. nearly two years ago. Instead, he opted to drop the franchise and operate the business on his own.

The switch was risky. The decision meant Gast, 44, gave up the California Closet national brand and recast his business as Beyond Storage. "Short of getting married and having kids, it was the hardest decision in my life."

But it turned out to be a positive one, he said. As an independent company, Beyond Storage was able to lower its prices by an average of 10 percent -- an important factor in the competitive, local market.

Gast's foray into closets started in 1985 when he joined a closet business launched here by his father, Arnie Gast. David Gast then moved to Kansas City to open a California Closet franchise, returned in 1998 to rejoin his father and then acquired the business the next year, while it was still under the California Closet franchise.

Gast said the renewal agreement with California Closet included an increased royalty fee even though much of the company's marketing and advertising targeted other parts of the country where the franchise has a larger presence. The franchise owners also wanted to take over a customer database that Gast and his staff of 17 people had developed during 20 years in business in St. Louis, he said. In the end, he said he could not agree to the new terms and Beyond Storage was born in November 2005.

The company's custom cabinetry and other work generated revenue of $1.6 million last year, and is on track to match that figure this year, he said. That's approaching the $2 million in revenue the company generated under its former name. The new business, however, no longer has to pay a 5 percent franchise fee on its sales, or a marketing fee of 3 percent of sales, Gast added. "My biggest challenge now is getting across to my customers that it's the same company they used to do business with."

Gast said Beyond Storage is spending about 10 percent of its revenue on marketing. The company is working with the KolbeCo Marketing Firm in St. Charles County, which has aided in a print and direct mail campaign.

Many old customers continue to call Beyond Storage's offices for new projects.

"They've done five major projects in my house including two complete home offices -- lighting, desks, countertops, file cabinets, wall treatments -- everything but the chair I'm sitting in," said Mike Flotken, president of Mailing and Marketing Services. He said he continues to do business with Beyond Storage because of the quality of the ideas and the workmanship.

By remaining independent, Beyond Storage also has been able to work with A&G Concepts, a separate business of closet accessories developed by Arnie Gast. The two businesses share space in the Westport area. A&G develops and sells products ranging from wall safes that can be hidden in closets to specialized tie and belt racks to custom ironing boards that can be stored and used in a walk-in closet.

Such extras are important in the closet business where Beyond Storage faces competition from other local companies, including NewSpace and the St. Louis Closet Co., David Gast said. Beyond Storage maintains control over its projects by manufacturing nearly all its own cabinets at its workshop. About 60 percent of Beyond Storage's business is closets, 25 percent is home offices, and the balance is made up of specialty work, such as garage remodelings and wall bed additions.

As difficult as the decision was to drop the franchise, Gast said, he now wishes he could have done it sooner.

Professional services: Teresa Rolfes, a St. Louis business banking client manager with Bank of America, handles the banking for Beyond Storage. Tom Lewin of Gallop, Johnson & Neuman is the company's attorney. Jeff Smith of the Brown Smith Wallace CPA firm is the company's accountant.