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It is no secret that small businesses took the brunt of the economy beating delivered during the country’s most recent recession. The Business Journals released an article, based on U.S. Census Bureau data, estimating that 170,000 small businesses closed their doors between 2008 and 2010. Furthermore, when tracking trends over the nation’s one hundred biggest markets, it was found that seventy-five of these markets had fewer smaller businesses than in the previous year. Due to the fact that the most recent recession was caused by the burst of the United States housing bubble, it comes as no surprise that the markets most hurt were real estate and any businesses connected with construction and home improvement.

However, as the dust settles, small business owners Brad Davidson and Mark Little, of Incognito Custom Closets, are still standing as one of the only small businesses, in their market, still on its feet.  The following serves not only as a testament to the success of Incognito Custom Closets, but offers tremendously useful advice to those attempting to start or grow their small business in Memphis.

The Economics of the Memphis Market

When Brad and Mark decided to go into business together in 1994, they did their due diligence to see what the Memphis area needed. “The Memphis market is unlike any other market of its size…in comparison to surrounding markets, the per capita personal and household incomes are much lower,” says  Brad. With further research, I find that he is not only correct, but that the Memphis market is, as Brad puts it, “remarkably competitive.” A 2011 United States Census Bureau study listed Memphis as “the poorest large metro area in the nation.” As a result of this, all industries in Memphis are, for lack of a better word, cutthroat.

“In the Memphis market, it would be unwise to open a Ferrari dealership,” Brad explains. “In fact, if you notice, the Memphis market only has room for one Cadillac dealership. In years’ past there were two Cadillac dealerships; however, the newer one was unable to compete in the competitive Memphis market.”

But this doesn’t just relate to cars. When Brad and Mark order products to display and sell, they take into account what the Memphis market can support. “Products that are supported and sold in surrounding market, such as Atlanta or Nashville, cannot be sold here. While a ‘Ferrari’ closet could easily be sold in the Nashville area, your chances of selling it in Memphis aren’t nearly as high.”

Having Business in that Business

William Manchee, author of Go Broke, Die Rich: Turning Around the Troubled Small Business, believes that, “Many small businesses are doomed from day one, not from competition or the economy, but from the ignorance of their owners . . . their destiny is already decided because they have no idea how a business should be operated.” This sage advice perfectly reflects what Brad describes as their biggest mistake.

Brad had no qualms in describing their first few bumpy years in the industry. He claimed that their ignorance of running a custom closet business was easily their biggest mistake. “Mark and I had no business getting into the custom closet industry; we knew nothing about running a custom closet business. We wasted hundreds of hours and hundreds of thousands of dollars learning the ins and outs of the business.” Additionally, he offered up that “no one has any business, starting a business in an area where they have no expertise or experience. We made costly mistakes…and if I had it to do again, I wouldn’t have done it the way we did.”

Two Reasons for Success

Incognito Custom Closets hasn’t survived the dot-com bubble burst of 2001 and the housing market crash of 2008 on luck. Brad attributes two items to their continued success: unsurpassed customer service and the fact that they offer the best product available in the Memphis area.

“There are four steps to successful customer service, and they are pretty easy to remember. One through three is ‘I’m sorry, I’m sorry, I’m sorry!’ and the fourth step is to ask: ‘What can I do to fix it?’” Brad explains that in Memphis’ competitive industry, it is important to retain repeat business and grow based on reputation and word of mouth.

“The most important part of customer service is the ability to convert unsatisfied customers into returning clients. A few times a year, we have clients that come to us unsatisfied with a completed job. The product will have been ordered correctly, installed perfectly in accordance with the customers’ wishes, and performed in a timely manner; however, the customer is upset with the finished project. No questions asked—other than ‘What can I do to fix it?’ from step four—we take all the material out and start over from scratch. Sure, it means that we do the project for a loss, but the satisfaction of our clients is, and always will come first.”

The second reason that Incognito Custom Closets has thrived in a down economy is the quality of their product. “When we first got into business we used low quality material—I mean, it was junk! We didn’t know any better and our supplier informed us that the cheaper material was what we needed to use to make a profit (Needless to say, this supplier is now out of business). With our 100% warranty on our products, we spent a fortune on labor and materials ensuring that our clients were happy. We were constantly fixing problems that had been created because we used cheaper materials. As it turned out, it actually cost us less to use higher quality material.”

As Incognito Custom Closets arrives upon its 20th year in business, both Brad and Mark haven’t forgotten their humble beginnings in the small business world. During the interview Mark was with a new client helping installers carry materials from their vans into the job site, and upon my arrival Brad was showing a potential client around their 7,000 sq. feet showroom.  In growing their small business these owners have continued to stay active in the day to day operations, demanded their employees maintain high levels of customer service, and have provided top quality products in a competitive market.

Learn more about the story behind Incognito Custom Closets by clicking here.