Bill Merry Sr. made some dramatic changes to save his 31-year-old ornamental-iron company from extinction.
In the 1960s and 1970s, the Nashville, Tenn., company's core business was making decorative iron pillars for carports and patios.
Iron stair railings also were brisk sellers.
But architectural tastes changed, and Mr. Merry was faced with the fact that homeowners began to prefer wood -- not iron -- railings.
"We just had to look for other things to do," he said. "For a while there, we sold a lot of security doors and burglar bars."
Although burglar bars didn't inspire his designers, they did pay the bills and turned the company in a new and prosperous direction.
"As security became more important to well-to-do homeowners, we began to sell nice, big entrance gates," Mr. Merry said.
In recent years, Herndon & Merry Inc. has crafted custom gates for many of Nashville's country music stars, including Minnie Pearl, Crystal Gayle, Waylon Jennings, Ronnie Milsap and Tammy Wynette.
As Mr. Merry's example illustrates, a great advantage a small business has over a big one is the ability to adapt quickly to keep up with shifts in the marketplace.
"About 20 times a day, I remind people, 'It isn't what you want to sell, it's what somebody wants to buy,' " said John Graham, president of Graham Communications, a marketing consulting firm in Quincy, Mass.
Discerning small-business owners are constantly evaluating signals from the marketplace.
And they are more willing to change direction, Mr. Graham said, because "the distance between the cash register and the bank is so much shorter for a small business than for a big business."
Mr. Graham and other consultants say you should be constantly rethinking your marketing strategy. When changes are needed, you can make them without spending a lot of money, hiring new people or abandoning your core business.
He offers these tips:
* Ask "What does my customer want to buy?" not "What do I want to sell?"
* Educate, educate, educate.
* Share your expertise with your customers. What distinguishes one company from another is the amount of good information it is willing to share with others.
Here's how Mr. Merry did it.
In the late 1980s, with the gate business flourishing, Herndon & Merry branched off in a new direction.
It opened Garden Park Antiques, which transforms antique ornamental iron into decorative indoor and outdoor furniture.
Mr. Merry opened the antique business because several customers asked the company to refurbish pieces of antique ironwork purchased abroad.
Today, interior designers flock to the store to pick up one-of-a-kind pieces of wrought-iron furniture for their clients.
"We just paid $45,000 for a load of antique ironwork," said Mr. Merry, who recently began advertising in magazines aimed at the affluent, including the Robb Report, in an attempt to reach upscale and wealthy homeowners.
The gate business is thriving as well. "We built 30 to 40 gates last year," he said. "We are building gates for homes all over the U.S."
Mr. Merry's willingness to change has paid off. In 1991, sales at the family-owned business exceeded $1 million.
Mr. Merry's wife, Moneta, and their three sons, Bill Jr., Keith and Kevin, work together in the company, which has about 20 employees.
Mr. Merry concedes he waited too long to take the business in new directions, because it was so easy to do things the same old way.
"But one day we woke up and made some drastic changes," he declared.
While small-business owners such as Mr. Merry adapt to changing markets, large corporations, including International Business Machines Corp. and Sears, Roebuck and Co. are struggling to do the same thing.
Big corporations "reconstruct reality to fit their picture of it," consultant Graham said.
A survey conducted by Yankelovich Clancy Shulman, a Westport, Conn., consulting firm, seems to prove his point.
Most of the 1,000 chief executives taking a one-hour marketing test failed it, said Robert Shulman, a principal in the firm.
About 88 percent of those surveyed said they thought the best prospects for an established product were people similar to their current customers.
In fact, almost the exact opposite is true.
Mr. Shulman said that if someone looks and thinks like your current customers, but isn't one, there is a reason.