From a wee kiosk in the corner of a dress shop to a chain of 12 stores in six states, a family of Bath Junkies proves small business is alive and well in America.

By Christopher Leonard
ARKANSAS DEMOCRAT-GAZETTE

These are tough times for the entrepreneur.

The NASDAQ stock index crash has gutted the dot-com dreams of last decade's twentysomething millionaires. Huge corporations like Wal-Mart Stores Inc. are gaining ever more prominence and leverage in the marketplace. Last year's recession has banks more hesitant to give loans for startup companies.

All of these factors are stacked against the small-business entrepreneur, but Jocelyn Morelli doesn't have time to think about it.

She's too busy selling bath salts.

It's not uncommon these days to find Morelli in the middle of a vortex of cell phone calls, out-of-state business trips and drawn-out meetings. This is what it takes to keep the Bath Junkie alive. Morelli and her mother, Judy Zimmer, started the Bath Junkie company six years ago in Fayetteville.

They set up a kiosk in a friend's dress shop, selling self-care products like bath salts and shampoo that were custom-made.

Within months, they had their own store in Fayetteville. When that took off during 1997, they decided to open a second one in Eureka Springs. That one did well too, so they opened a third location. Soon they were opening franchise locations.

Now, Morelli and Zimmer find themselves at the helm of a rapidly growing company, complete with a board of directors, a franchise manager and a corporate headquarters and distribution center in Fayetteville that rarely sees a quiet moment
Employees in this office tend to talk about the company like it's some sort of genetically engineered beast that has recently gone through a steroid-driven adolescence, growing beyond all natural proportion.

"Last year at this time," Morelli says, eyes wide, "I never would have dreamed it would be like this."

Last year at this time, for example, Bath Junkie consisted of six stores in three states. Now, there are 12 stores stretching from Wisconsin to New Jersey to Texas, seven franchises and five wholly owned. Five more stores are scheduled to open by October, with another four in the works for 2003.

The headquarters, last year, were in a single office about 15 feet by 15 feet. Now, they are in 1,500 square feet of converted warehouse space.

The company's rise hasn't been easy.

"We've made every mistake there is to make," Morelli said. "We've done everything wrong. But it's still working."

In fact; those at corporate headquarters are working overtime. Morelli and Zimmer put in 12-hour days, and the weekend seems like a foreign concept to them.

In spite of the long hours, "corporate" seems like a funny word for these headquarters, which have a karaoke machine and a minibar. Most of the employees are in their mid-20s and are Morelli's friends.

Even the daily crises that erupt seem a little outside the corporate fence. Carly Fisher, owner of the Rogers franchise, came running into headquarters during a board meeting once, carrying a vial of the "Happy" fragrance, which smelled wrong to her. The offending vial was passed around and sniffed by the board members.

"Ifs got a note of Happy in it," Fisher said in dismay. "But ifs also got a lot of citrus!"

The atmosphere belies the fact that there is real business happening here. Office joking gives way to a hard-core drive for expansion and profit. The employees don't dress like squares, but some don't hesitate to say they want to own a Mercedes by the time they're 30.

It seems at times they are caught up in something larger than themselves.

"This didn't happen because I said: I want to open chain of Bath Junkies," Morelli said. 'It happened because of the demand."

BRING ON THE LOOFAHS

In the 1990s, America found its bathtub.

A new market emerged as consumers threw their money down for specialty bath products like salt scrubs and facial masks.

The leader in this market is the Bath & Body Works chain, which opened in 1990. The chain, which is based in Ohio, has 1,600 locations in SO states. Last year, it racked up $1.7 billion in sales.

"There are a lot of reasons why people are enjoying their bath more," said Barbara Jorgensen, a spokesman for Bath & Body Works.

"People are beginning to understand that they have more control over what they do to take care of themselves — soap isn't just lye and lard anymore," Jorgensen said.

Not only did the assortment of bath products flourish during the 1990s, but so did people's desire to use them. Consumers are looking for more ways to help them relax and escape the stress of daily life, said Paul Rosch, president of the American Institute of Stress.

"There's no question about the fact that job stress ... has increased dramatically over the past few decades," Rosch said.

This leads people to buy any number of relaxation products, from meditation pyramids to bath salts, he said.

When Morelli and Zimmer looked to tap into the market of a bath-hungry public, they didn't compete directly with Bath & Body Works. Instead they found a niche in the market, selling a similar product in a different way.

The essential concept behind Bath Junkie is that everything is custom-made. Customers don't walk in and buy something off the shelf — they create their own product.

When a stressed out soccer mom or cubicle-dweller walks into Bath Junkie, he finds a high-tech arsenal of relaxation and self-indulgence products. Loofah sponges, exfoliating scrubs, ducks (both rubber and sponge) and lotions line the shelves.

Customers pick a base product, such as a salt scrub. Then they approach the counter, where an aproned worker pours the scrub into a metal bowl and mixes it by hand with other ingredients. The customer chooses what color the scrub will be, and which of more than 100 scents it will carry.

Heavy on the Woodstock scent? No problem.

"Our concept is touchy-feely," Zimmer said. "It’s hands-on. Today's consumer needs that. They can go online and see whatever products they want to, but with this they can come in and touch it and feel i.t They like to see a process, and it's something they've created when they're done."

BIRTH OF A JUNKIE

Zimmer moved to Arkansas from California to retire with her husband, Jon, in the early 1990s. Morelli came to visit them in 1995, fell in love with Fayetteville and decided to move here from Los Angeles.

That's when mother and daughter decided to take a concept Zimmer had been brewing for years and turn it into a business.

With less than $10,000 in savings, they opened the kiosk on Dickson Street.

"Customers kept telling me: This is such a great idea," Zimmer said. "When your customer is telling you this could be a national chain — well, you can only slap me in the face so many times. How could I not let this happen?"

But Zimmer and Morelli found out that it takes more that a good concept to make a small business grow — especially when you're trying to convince a bank to give you money to expand.

“I don't care who you are, when you try to get a loan, you're going to need collateral,'' Zimmer said.

Jon Zimmer said they went to several banks in search of financing. "All of them wanted to know how much real estate we owned," he recalled. "I told them we rented all our stores, and they weren't interested."

Bath Junkie has never taken out a bank loan. The company has fueled its growth by reinvesting profits, risking credit card debt and taking a healthy draw from Jon Zimmer's retirement fund.

The company avoided bank debt out of necessity, but doing so has probably helped its bottom line, said Lance Sexton, director of the University of Arkansas Small Business Development Center.

"If you can afford to do your own financing, you certainly improve your chance of being there down there road," Sexton said. He noted that it's rare for small business owners to make a go of it without bank loans.

"I know that for a lot of small business owners, one of the best days in their life is when they finally pay off their bank note," Sexton said.

Jon Zimmer said the company is close to shedding its credit card debt, which he declined to disclose. The company also declined to disclose annual revenues and profits.

With more money rolling in, Bath Junkie is now at a crossroads.

Its owners face the task of institutionalizing their gut instincts, which made the initial stores succeed. What they did in those stores needs to become practiced rote, carried across state lines.

Most meetings revolve around this challenge, whether it be writing a dress code or modifying contract agreements with franchisees.

But board members are quick to point out that they don't want to standardize the growth too much.