The Closet Santa Barbara

Most people may think Johanna Melamed might have been a little crazy to open a second location for her high-end consignment store, The Closet, which is based in Santa Barbara, during a time of contraction in retail. Even Melamed had her doubts after she opened her new store in Westlake Village last October. But after taking a crash course in business planning through the Santa Barbara and Ventura counties Women’s Economic Ventures (WEV), she felt she had the know-how to open the new store and see it become a success.

“WEV was a wonderful experience; they formalized the knowledge that I had accumulated, and gave me the tools that took my business to the next level,” she said.

Melamed bought The Closet in Santa Barbara in 2003, shortly after she graduated from the University of California, Santa Barbara. She said the store wasn’t much at the time, but its popularity grew, almost strictly by word of mouth, during the next five years. When inventory began coming in too fast to sell at her Santa Barbara store, she called WEV to figure out her next move. She enrolled in WEV’s 14-week 56-hour Self-Employment Training Course in late 2007. The objective for all students is to complete a business plan by the end of the course. Upon graduation, she had sharpened her business skills, made a feasible business plan and opened her new store 10 months later. Although success wasn’t immediate, she is still glad she took the risk.

“The first couple of months were really frustrating, even if [the resale] business is supposed to do well … in a down economy,” she said. “But the last two months have been really fantastic.”

Melamed isn’t the only person trying to make the most out of a dire situation in this economy. Thirty-five students graduated from WEV’s training course in December and are looking forward to opening or expanding their businesses in Ventura County. Since the course’s inception, more than 4,000 people have taken the course in the last 15 years. From that, 1,000 businesses in Ventura and Santa Barbara counties are now run by WEV graduates or those who obtained loans from the organization.

Although the news about the economy can make any optimist downtrodden, Marsha Bailey, CEO of WEV, believes that now is the time to run with small business ideas.

“I think it is really important to support small local businesses,” she said. “They are the backbone of our economy.”

She said there is a perception that most people work for Fortune 500 companies, but the reality is that small businesses employ more than 80 percent of the nation’s workforce.

Bailey, who founded WEV more than 20 years ago, has focused the organization’s efforts on teaching people how to put together a business plan as well as helping entrepreneurs open or expand their businesses, even with credit problems, through the loan program.

“The goal is to help every client figure out if their business idea is feasible and if so, to finish a business plan.” Bailey said. “There is a lot of skill building, financial training, management training, marketing, all those things you really need to know as a start-up business owner.”

WEV’s loan program, which loans up to $25,000 for start-up businesses and up to $50,000 to expand a business, requires every individual to have a business plan if the loan is more than $5,000. If less than $5,000, WEV requires loan applicants to complete a three-page questionnaire about their business models.
WEV will begin its Self-Employment Training Course in February. Anyone interested in the course must take a one-hour orientation before enrolling. Orientations will be held in Oxnard on January 28, from 11 a.m. to noon, and February 4 and 6, from 11 a.m. to noon. The class runs for 14 consecutive weeks, one night a week for 3 hours, and includes two full Saturdays. Classes are taught in Santa Maria, Santa Barbara, Oxnard, Thousand Oaks and Ventura.

With a business plan in hand, either through the course or done elsewhere, a person can be eligible for a loan through WEV. There is approximately $1 million available for start-ups or business expansions. Bailey hopes the organization will be able to obtain another $1 million through public and private entities for the loan program.

The interest rates on loans provided by WEV are typically a little higher than banks. Bailey encourages business owners and entrepreneurs to start at banks for loans, but if denied, WEV loans can be obtained more easily. Since WEV is an economic development group and doesn’t take deposits, it doesn’t have to be regulated as banks are and can loan money to applicants who wouldn’t necessarily qualify for business loans.

Although the training course isn’t free, fees are done on a sliding scale based upon an individual’s current income. The cost of enrollment can range between $200 and $2,500. 
 
For locations and details about orientation, call WEV 604-9000.
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The Closet’s owner, Johanna Melamed, is named a “Profile of Success” by Women’s Economic Ventures.  She sits down for an interview with WEV to talk about the challenges facing a young business owner, her definition of success, and her plans for The Closet’s future:

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Locations: Santa Barbara & Westlake Village
Established: October 2003
Employees: 5
Contemporary High-End Resale Consignment Boutiques
(www.theclosetsb.net)

Johanna first went into business when she was just 19 years old, taking over a small vintage clothing boutique in Isla Vista. She loved fashion and clothes and thought it would also help pay for college.  After about 4 years, even with a move to downtown Santa Barbara, her business had reached a plateau. She felt there was great potential to grow, but did not have the business knowledge nor the confidence to make the important decisions she needed to move forward.  Johanna turned to WEV, completed the SET course and in 2008, opened her second boutique in Westlake Village. It is quickly becoming one of the most popular resale boutiques in the area.

What prompted you to go into business for yourself?  
I wanted to try working for myself. I thought that I might be able to do it and in the meantime it would help pay for college.  I decided that if I could make money doing something I love, on a schedule that I could customize to fit my life, I should give it a shot!  I had no idea what I was doing or that I would make a career out of this, but I knew I had to try.

What has been your biggest business challenge?
I went into business for myself when I was barely 19 years old, and I found it difficult to be taken seriously as an employer and decision-maker as a young woman.  My biggest challenge in running my own business has been being the ultimate decision maker. It comes with so much responsibility and there’s been time after time where I didn’t had the experience to fall back on to know what is the right decision … and I didn’t have the formal education in business either. The best thing I did was to try to educate myself as much as possible. Taking the WEV course gave me a lot of the tools I needed to meet that challenge in a way that I feel comfortable with and start to make informed decisions.

What has been your biggest business success?
The accomplishment I am most proud of is being voted Best Consignment Store in the Santa Barbara Independent readers’ poll the last few years running, especially considering that the area is home to a number of excellent consignment shops.  This measure of success is particularly rewarding because it tells me that our customers are genuinely happy with their experience at The Closet, and nothing is more important to me than customer satisfaction.  I feel great about transforming the tiny little vintage boutique I bought into a company that I’m really proud of, that I love working in, and provides a service that’s great for the community.

Who is your ideal customer?
My ideal customer is very fashion conscious, really appreciates great value, and loves a good deal….an independent, fabulous woman. She likes to shop in a fun, friendly, boutique environment where she always gets low prices and high-end service.

What has been the biggest surprise about owning a business?  
The biggest surprise for me has been that I actually love business!  When I first started The Closet I knew I loved clothes and fashion but I never considered that I might have a “business sense.”  It turns out that I still love clothes, but I also relish in the challenges of marketing, in empowering employees, and in the ins and outs of operating a business.  I like looking at numbers and I like the challenge. Who knew!

How do you juggle all the pieces of your life (family/work/self/volunteering) to make it all come together?
When I first became a business owner I was between my first and second year of college at UCSB.  Juggling a full course load, a social life, and running The Closet was more challenging than I ever could have imagined.  The key to sanity for me was never thinking too much about everything that was on my plate.  If I just crossed one bridge at a time, I could get everything done.  And I definitely enlisted my friends on more than one occasion for some late night inventory sessions at the store! Now I am even able to use my business as a vehicle for volunteering with nonprofits. We work with the Community Environmental Council, so the business itself can give back to the community whereas before, I could not stretch my own time to make that kind of difference.

What advice do you offer other women who might want to start their own company?
You have to be proactive.  I have learned that my biggest successes have been directly linked with taking initiative and facing obstacles head-on.  If you shy away from a challenge, you avoid the learning experience that comes from surmounting it. Be as educated and informed as you can to make the best decisions…and still be prepared for anything.

How did WEV help you to achieve your goal or dream?
I came to WEV more than four years after starting The Closet, at a point where I felt like the growth of the company was stunted by my lack of basic business education.  I had a vision for my business, but I did not have the tools to manifest that vision.  WEV has given me the education and skills I need to take The Closet to the next level of success, which for me is opening the second location in Westlake Village.  WEV has been awesome; it has given me so many opportunities. I couldn’t be more grateful.

Is there something you learned from WEV that you use everyday?
There are a lot of things I learned from WEV, but one that I really love is the Vision Board. We made a collage and put it together. I framed it and hung it in my house just like they told us to. And I spend a few minutes looking at it every single day. One of the things I had on my Vision Board was open a second shop on Thousand Oaks Boulevard, and it came true. It works.

What does success mean to you?
Success means a lot of different things to me. Success as far as my business means that eventually I want 50 stores. I want a company that is fully integrated into the community, that gives back, that provides a great service, that’s well regarded. I want a company that’s just as great to work for as well as to work with. That is success for me.

What is the biggest reward you get from your business?
The biggest reward is when I bump into someone on the street and they’re wearing an entire outfit from The Closet, they look fabulous, and I think they feel fabulous. Nothing could be a better reward, I love that.

Photography courtesy of Meghan Nicole Photography (www.meghannicolephotography.com)