Amid recession, a vein of optimism
Some firms finding ways to capitalize
In times of misfortune, they see fortunes to be made.
With creative financing, sharp elbows, and a hefty dose of optimism, some area businesses are aiming to capitalize on these terrible times to expand their enterprises or start up new ones, seizing the day or preparing for the upturn they know will one day come.
For many New England merchants and entrepreneurs, simply finding a way to survive is the order of the day, as sluggish consumer spending and frozen lending markets have made business growth seem out of the question, at least for now. But then there are those like Bruegger's Bagels and auto magnate Herb Chambers, who are ramping up just as everyone else seems to be scaling back.
Call them opportunistic or just plain counterintuitive, but these and other business owners see a window of opportunity, right now. Massive store closings have opened up prime real estate, and landlords desperate for new tenants are more willing to negotiate rents and consider leasing to smaller companies. Widespread layoffs have led to a glut of available talent from sales associates all the way up to management. And manufacturers, like designer Seven jeans, who once reserved exclusive merchandise for select national chains are now willing to market their goods with local ventures.
"It's a riskier marketplace right now, but there's a lot of opportunity," said Mike Tesler, president of Retail Concepts, a consultancy in Norwell. "It's still possible to win out there. But it is hard."
William Ashmore is one of those who sees opportunity - and he sees it in a neighborhood littered with vacant storefronts, stalled projects, and empty-handed shoppers. The 34-year-old owner of Ivy, a restaurant in Downtown Crossing, is currently building his second restaurant, Stoddard's Fine Food & Ale, across the street on Temple Place. He hopes to open in April and already has plans to launch a third restaurant, a classic 1960s diner, around the corner.
"Everyday someone tells me I'm crazy. It seems like the sky is falling, and in the back of my mind I wonder if this is the right thing to do," Ashmore said as he walked through Stoddard's gutted building, where he is saving money by doing his own construction.
"Yeah, you can call me crazy. But I feel so strongly about this. I think it will work."
At a time when many car salesmen are teetering on the edge, Herb Chambers last week opened the doors to a new Audi and Porsche dealership in Burlington. Over the next few months, he'll start a brand-new Infiniti dealership in Westborough and a BMW dealership in Sudbury and complete an expansion in Lynnfield.
Chambers started these projects about two years ago, before the industry went into a tailspin. But he pressed ahead as the economy worsened to take advantage of cheaper construction costs and ample inventory. Troubles in the auto industry will force further consolidation, Chambers believes, and only the strong will survive. Budget-minded consumers who are holding onto their cars longer today are creating pent-up demand that ultimately will need to be met in the next year or two as repairs become too costly or vehicles break down. And Chambers wants to be the one waiting to sell you a car.
"Being an optimist is part of my nature," said Chambers, adding that new car sales were down 19 percent last month at his 44 dealerships, compared with a 37 percent drop seen nationwide.
"We're not building these dealerships for what's going on today. We're building these for the next 10 to 20 years. And there's no better time to be doing it than now."
On Newbury Street, pocked with vacancies and struggling merchants, the boutique Nespresso is seeking to capitalize on consumers looking to save money by making espresso beverages at home. The sleek shop, which opened several weeks ago and sells upscale espresso machines starting at $200, had long looked for a spot on Newbury Street and scored coveted real estate that was vacated last year by bankrupt home furnishings chain Domain Home.
"Coffee culture is shifting once again, becoming much more about the in-home experience," said Frederic Levy, president of Nespresso North America, who flew in from New York this week for a party at the Newbury Street shop. "We are thrilled to finally be here."
Despite the economic downturn, Mayor Thomas M. Menino said the city remains a strong competitive center for new business growth. The Boston Redevelopment Authority is seeing an uptick in applications from merchants looking for city grants and loans, such as Stoddard's Fine Food & Ale, because more traditional financing is unavailable. The BRA gave out nearly $1.5 million in loans to 11 business in 2008, up from $875,000 to six companies the previous year.
"The phone is ringing off the hook," said Susan Elsbree, a BRA spokeswoman.
Up in Burlington, Vt., executives at bakery chain Bruegger's Bagels are talking expansion, not recession. The company is opening 17 shops nationwide in 2009 - 15 percent more than the chain added last year - and additional corporate-run bakeries across New England.
Chris Cheek, Bruegger's vice president of franchise development, has hustled for the past year to set up different financing options for franchisees to help new owners navigate the tough lending markets.
And real estate once snatched up by Starbucks and other chains that are now closing hundreds of stores is changing the restaurant landscape. The National Restaurant Association last month reported that 68 percent of restaurants open at least a year saw a decline in traffic in December, the highest level on record.
"The silver lining on this economic cloud is that there's never been a better time to look for real estate," Cheek said.
"A lot of restaurants are going out of business and others have stopped expanding. Landlords are more willing to negotiate than we've seen in a long time."
Less traditional businesses are also finding reason to believe that growth is possible. As the economy spiraled downward last fall, Karen Blom, co-owner of adventure company Zoar Outdoor, debated whether to postpone a $600,000 zipline project for the Charlemont facility. Ultimately, Blom gave the zipline a green light, thinking the company could take advantage of people vacationing close to home this summer. But in a nod to the recession, Zoar decided to charge $80 for the three-hour tour, instead of the $100 it initially planned.
"We feel like the downturn can't last forever," Blom said.
"Ziplining is a really hot adventure commodity right now. And if we want to be the first in Massachusetts, we have to move along and have faith to go on."
Jenn Abelson can be reached at abelson@globe.com. 