Modification mojo

The recession has many Nashville-area small firms throwing overboard business plans [From our print edition featured in Monday's City Paper]

Email | Print By William Williams

Cyndi Collett

Cyndi Collett sits in her tiny downtown office surrounded by contemporary chairs, a very eye-catching frosted tempered glass desk and numerous catalogues featuring suppliers of 21st-century home furnishings.

With no windows and enough floor space to accommodate nothing more than a dropped pen or paper clip, the office is tight. No worries for Collett. The hard-working businesswoman, best known for her cosmopolitan furniture store Mad Mod, is simply happy to be involved in her trade of choice.

Collett and Mad Mod co-owner Chris Tait in late August closed the SoBro-based bricks-and-mortar version of their store and reinvented the company as an online-only retailer.

“It’s taken a lot of stress off me,” Collett said.

The change goes beyond eliminating the obvious worries — utility bills, insurance and sweeping floors — that accompany operating a business from a physical space. It has allowed Collett to focus on her new venture: Modern Contract Furnishing Nashville. Now in its third month of operation, MCF focuses on providing both furnishings and décor consulting to businesses with commercial and retail (and, in particular, hospitality) space.

Collett operates MCF from an office within the Nashville Carpet Center on Fourth Avenue South. So far, so good.

“Networking with complementary businesses has drastically reduced expenses for Mad Mod and has allowed MCF Nashville to have a chance to be profitable,” she said.

Collett’s modification of her business is an example of what is becoming the norm for many area entrepreneurs. Faced with a tough economy yet determined to weather the storm, these women and men are altering, sometimes significantly, their existing business models.

Jim Brown, the Nashville-based state director for the National Federation of Independent Businesses, said he has talked this year to “hundreds” of Tennessee’s 8,500 NFIB members.

“Anecdotally, at least three quarters have made some adjustments to their business model,” he said.

By some measures, America’s small businesses have taken it on the chin worse during this downturn than many of the headline-grabbing multinationals. They’ve had to deal with many retail customers pulling back and corporate clients going out of business altogether. They haven’t regained access to still-frigid credit markets. And, they haven’t had a whole lot of federal largesse coming their way.

That has pushed them to rely more than ever on their flexibility, market awareness and wits to survive. Paula Swift did so with her Bellevue-based boutique public relations, consulting and marketing company, Prosper LLC, which she started after working at real estate firm Horrell Co. Swift said Prosper, which she runs as a virtual agency by using contracted professionals, has evolved in an “organic fashion” with a niche clientele centralized in real estate, development and construction. With this background, she created a program for Prosper to provide third-party analysis of all the components related to marketing clients’ properties, both residential and commercial.

“This analysis ranges from the actual property condition and appeal to how it’s being marketed,” Swift said.

After she provides the analysis, clients are free to use their internal staffs or go with another PR and marketing firm for implementation. Given her real estate background, the focus of four-year-old Prosper made sense. But keeping the company going in its original form would not have worked as developers, builders and brokers pulled back during the recession and her market became more crowded.

“By early spring of 2009, new competition continued to arise as many marketing specialists were launching their own businesses after layoffs from the corporate world,” she said. “I quickly realized that drastic changes needed to be made.”

For Swift, that meant turning to a sector of the economic landscape that is generally considered to be more resistant to recession: She has adopted the plan to relate to churches and how they market themselves.

“The overall intent for these platforms is to offer independent information that is also in support of the existing marketing/communications structure and is not intended to compete for follow-through project management,” she said.

Swift’s market-expanding service model also works on a larger scale and in goods-oriented sectors. Murfreesboro-based The Davis Groupe is a prime example.

The 12-year-old company, which built its name supplying Nissan and Toyota with equipment and automation used to make vehicles, has contracted with NCS Power, based in Vancouver, Wash., to head in a very different direction. It will prototype, manufacture and distribute LED lights, which are gaining favor with municipal governments and private developers for their efficiency and sustainability. Clarksville-based Aladdin Lighting Industries will handle sales and marketing of the lamps, which use a fraction of the energy of today’s technology.

With the assistance of State Sen. Bill Ketron (R-Murfreesboro), The Davis Groupe and NCS Power expect to open their plant by the end of this year. During the first phase of its production life, it is expected to create up to 200 jobs.

Chief Manager Jimmy Davis said he sees the move as an opportunity to transfer his company’s skill sets and technology from the automotive industry to alternative energy practices and technology.

“Everyone is moving toward green energy,” he said. “It makes sense. It will be a very easy transition for us because of our knowledge of manufacturing and the resources we have through customers and suppliers.”

Davis said a key is that Tennessee has everything The Davis Groupe needs to successfully make the business model modification. The company will continue as a supplier to its long-standing clients.

“Everybody is changing to modify their business models — if they have survived to this point,” Davis said.

Relying on smarts, not size

Nashville-based architect Brad Norris has survived in the tough economic climate, but feels his long-term prospects will benefit from a strategic change. Following its founding in 2003, Norris Architecture LLC focused on high-end custom residential. This past June, he unveiled a Web site, nashvilleinfill.com, that allows clients to buy designs online.

With business impacted by the economic downtown, Norris found a need to “expand his offerings” with Nashville Infill, which offers stock plans that a developer or individual can buy and use to create a distinctive home. For an additional fee, Norris will modify the stock plan.

Norris, who lives in Germantown and still maintains Norris Architecture, said Nashville needs quality contemporary residential infill development. His new venture’s plans are tailored for homes in the city’s urban core; they take their cues from historic structures yet give them a 21st-century aesthetic.

“I’d been thinking about it for a long time,” Norris said of the change to his business.

Interestingly, many larger national companies have been somewhat skittish about modifying their models. In a recent report called “Injecting New Life Into Old Business Models,” Raphael Amit of the Wharton School of Business at the University of Pennsylvania and IESE Business School professor Christoph Zott wrote that many corporations focus excessively on strategy while overlooking business model analysis.

“Changing the whole activity system rather than optimizing individual activities, such as production, requires systematic and holistic thinking, which can be demanding,” they wrote. “When responding to a crisis, operating in tough economic times or when taking advantage of a new opportunity, rethinking an entire business model may not always be the first thing on a manager’s mind.”

But modification might end up being a matter of survival. In an effort to appeal to a wider potential customer base, Arizona-based Infusionsoft this past summer garnered headlines for altering its model. The company, which provides automatic follow-up software to automate online marketing functions, said it would eliminate its up-front set-up fees (ranging from $2,000 to $6,000) for new customers. Infusionsoft officials also announced a 15-day free trial of the product — a first for the company — according to smallbiztrends.com.

Swift understands the realities small businesses face and the sometimes drastic choices they have to make. Hers is a small company often working with other entities that have limited resources. Prosper’s new model might see her lose some contracts she could have secured had she kept the company static. But keeping the original model was not an option.

“Existing clients of Prosper will continue to be served as previously,” she said. “But new clients will have the option for referrals to an appropriate marketing/communications expert in their field if needed.”

In short, Swift and other Nashville-area owners of small businesses are willing to take one innovative step back to get two survival steps ahead.