Tim Downey | Crain's Nashville

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Tim Downey

Background:  

Nashville's award-winning Southern Land Company has 30 years experience building residential communities. Founder Tim Downey said he modeled Southern Land after the Walt Disney company, striving to create beautiful and fun residential and commercial developments. Some of the company's biggest successes include Franklin's Westhaven, 4000 Hillsboro and the McEwen Building.

The Mistake:

I never stop making mistakes. When I first started the company, I struggled for seven or eight years barely getting by and not being able to pay my bills on time.

All of my early projects were struggles to make money and be viable. I never had a project go broke or get foreclosed on or fail, but I wasn't making any money either.

There was one project I did on Signal Mountain in Chattanooga in my early days, and I fell in love with the land. But you had to drive through an older neighborhood to get there and it wasn't in a place where people necessarily wanted to live. I thought I could buck the trend by building something beautiful and overcome the location and the fact that you had to drive through the neighborhood.

That was probably the most painful project I ever did because it turned out beautiful and no one wanted to live there for years and years. Now, it's actually very successful because it finally got built-out and it eventually became fashionable to live there. It was kind of like a restaurant in a really bad neighborhood that all of a sudden got really popular.

When I was picking that location, there was a part of me that was saying, "I shouldn't do this. This isn't the right spot." Yet, I didn't say no. I did it anyway. That was the biggest turning point for me because it was so painful to get through it. From that point on, I learned to say no and to be selective.

It turned out beautiful and no one wanted to live there for years and years.

The Lesson:

Because I went through the pain and stress of struggling to get by, I got really focused and careful. Real estate is very location-driven, and all of my struggles when I first got started were probably because I couldn't get people to pay enough to cover what it cost. I started getting really careful about only doing projects in places where people were willing to pay for what I do.

I learned to say no to projects and say it won't do well. I think the power of being able to say no and walk away from projects that don't make sense became ingrained in me because of all those early mistakes of doing projects I shouldn't have done.

That's one of the reasons why the company is so spread out now. We have our home office here in Nashville, an office in New York City, and one in Dallas. People will ask me a lot of times why I don't just stick to Nashville, and the reason is to find those incredible spots where we can build what we build and get people to pay, we have to search high and low to find these very unique locations.

Now, we do an incredible amount of due-diligence ranging from market studies and surveys before we start any project. If I go to a new city and am thinking about doing a new project on a certain block, I’ll ask the waiters and waitresses in surrounding restaurants what people think of the neighborhood. We usually try to survey 200 to 400 people that just walk by an area. We are overly careful and cautious, and that’s why we look at hundreds of sites over the country and are lucky to pick two or three.

Follow Southern Land Company on Twitter at @SouthernLandCo.

Photo courtesy of Southern Land Company.

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