The Closet
Description: High-end clothing retailer with three locations in Orange County, California
Founders: Billy Stade, 35, & Kari Stade, 25
Location: Costa Mesa, California
Projected 2005 Sales: $6 million

Snowboard Season: Billy Stade's passion for snowboarding led him to start selling snowboards out of a tiny 5-foot-by-20-foot retail space in 1993. With only enough money for first and last month's rent, Billy negotiated deals with vendors he knew to front him product. The snowboards sold well that first season, but as warmer weather approached, Billy realized he'd have to expand his product offering if he was going to stay in business during the spring and summer months. As he looked at the surf and clothing shops in his high-traffic Huntington Beach, California, location, Billy decided to get into the fashion arena. And there were other expansions: About six years ago, Billy hired Kari as an office manager, and the pair married in 2003.

Fashion Forward: Going beyond typical surf wear, The Closet sells both men's and women's fashions that echo chic international styles with the relaxed California vibe mixed in. "We always had to be forward, progressive and intelligent to compete with such big surf shops around us," recalls Billy. Today, The Closet sells only a few high-end, limited-edition snowboard products, having shifted to focus on its extremely successful fashion retail business. With an eye for the high-end sportswear and casual trends exemplified by brands like Lacoste, Modern Amusement, Stussy and Volcom, The Closet has been compared to boutiques like Henri Bendel in Los Angeles.

Failed Economics: It hasn't been all sunny days for this entrepreneurial couple, though. They recall late 2001, when The Closet launched a third location that was quickly toppled by the economic downturn after 9/11. "We just buckled down," says Billy. "We went completely bare-bones. It was just [Kari] and I working 9-to-9 shifts [to] build back up." With perseverance, they weathered the storm, and today the company again operates stores in three of Orange County's coastal locales--Costa Mesa, Huntington Beach and Newport Beach--with plans to add two more next year.