Virginia Business Of The Year

2005 Virginia Small Business Success Story of the Year
David Nygaard Fine Jewelers (Hampton Roads Finalist)
Overcoming tough odds and personal trials, jeweler builds a small business into a chain of stores.

by Cindy Robinette Moshenek
for Virginia Business

February 2006

David Nygaard was born 42 years ago on Friday the 13th but no one meeting him today would think he was ever unlucky. The father of six is the owner of a rapidly expanding Hampton Roads jewelry-store chain.

Just a few years ago, things looked bleak for Nygaard's business and his family. His single jewelry store was losing sales, and three of his children were facing life-threatening medical problems.

Dealing with one of these challenges would be difficult for most people. Nygaard, however, persevered. As he and his wife saw their children through medical treatments that would include heart surgery, he took a major business risk by opening four new stores, a move that eventually increased his market share twentyfold in Virginia Beach.

His accomplishments reflect his diligence in handling all of his relationships, with his family, his employees and his customers. "My success is defined by how I affect people," he says. "Everything I do reflects my values, and these values affect every facet of my life."

Because of Nygaard's ability to succeed despite great obstacles, Virginia Business has named him the first recipient of the Small Business Success Story of the Year award. The magazine launched the competition to recognize the accomplishments of small business owners throughout the state.

Nygaard is one of four regional finalists picked from a field of 76 nominations. The finalists were recognized at a Jan. 26 awards luncheon at the Darden Graduate School of Business Administration at the University of Virginia where Nygaard's selection as the overall winner was announced.

The Virginia Business award adds to a growing list of honors the company has received in the past 12 months. The business has been named Small Business of the Year for Virginia Beach and Hampton Roads, and was cited by Inside Business as one of the best places to work in the Hampton Roads region.

A native of Alexandria, Nygaard's interest in gems dates back to a rock collection he began as a child. He collected stones from the Mojave Desert while his Navy family was living in California. When he was in eighth grade, the family moved to Hampton Roads where his mother, a jewelry designer, started a business, Sandy's Touch of Gold in Virginia Beach.
Nygaard joined his mother in the business after graduating from the College of William & Mary in 1986. By 1995, he had bought out her interest in the store. Three years later he renamed it David Nygaard Fine Jewelers.

With the beginning of the new century, Nygaard's family and business faced severe tests. In May 2000, his newborn son, Nathaniel, developed co-arctation of the aorta, a potentially deadly defect that would require four heart surgeries over the next two and a half years. In August 2001, his wife Jan gave birth to twin girls, Aby and Aly, who were three months premature. His daughters had Twin to Twin Transfusion Syndrome, a disease of the placenta. Doctors initially gave the twins only a 10 percent chance of coming home from the hospital. Beyond that, they faced the possibility of blindness, severe retardation and other complications.

During this time, gross sales at Nygaard's store were declining. They dropped 35 percent from October 2000 to September 2001 as the economic recession following the dot-com bust reduced demand for high-dollar merchandise. He was forced to cut his staff by half, from six to three. The store's sales continued at a depressed level into 2003. Nygaard, who tracked changes in the jewelry business, realized that his store was following a disturbing national trend. From 2000 to 2003, single-store businesses around the country lost 20 percent of their market share and had a declining return on assets.

Nygaard managed to keep his business marginally profitable but he realized that, in its present form, "it would survive but not thrive."

Nygaard credits a strong religious faith with helping him handle his simultaneous struggles at home and at work. After months of treatment in hospitals, his children were able to assume normal lives with no long-term effects. A mutual-aid group called Christian Care Medi-Share helped with medical expenses. Meanwhile, Nygaard was planning a dramatic turnaround for his business. "I wanted to build a really great business, and I realized I couldn't do that in just one store," he says. "Believing successful businessmen are not afraid to take risks, I changed my business strategy from a single 'regional' jewelry store to a multistore operation within the same media market."

Nygaard came up with a detailed business plan for a small jewelry store chain and persuaded his banker, BB&T, to make a series of financial arrangements that eventually would include $300,000 in loans and $200,000 in lines of credit. In 2003, he began looking for new store locations. His second store at Greenbrier in Chesapeake opened that year, followed by the Red Mill Commons Virginia Beach location in 2004. Two additional stores, in Williamsburg and at The Town Center in Virginia Beach, opened last year, and he plans to open a sixth store in Newport News this year.

The new business model has enabled the business to increase its share of the independent jewelry market in Virginia Beach from 0.8 percent in 1998 to 16 percent today. "It enabled us to provide a career path for employees and benefit from economies of scale," he says. "It is better to dare great deeds and fail than live in a gray twilight."
When his current expansion plans are complete, Nygaard expects store sales to climb from $2 million at the single store to $12 million at six stores, while his staff grows from four to 40.

Nygaard's CPA, Mark Bassett, says that while the jeweler takes risks, he is not reckless. His client "thinks through every aspect of his business" before making a move. "He possesses the three essential aspects of a successful businessperson: he's a great technician, a great manager and a great entrepreneur," Bassett says. "David is a well-balanced person, in my opinion."

The years of struggle were not without benefits, says Nygaard. "Although these years were the most difficult imaginable, they produced happy memories and a determination to succeed. My employees and family became one and the same during this time."

Tim Birkholz, manager of the company's Williamsburg store, says the ties between Nygaard's family and employees are genuine. "David's integrity as an employer comes from his realizing that the relationships we create and maintain are more important than money to us," he says. "The reason I think his business is so successful is because David is a man of high morals; he does unto others as he would have them do unto him."

Nygaard's religious faith is evident. His stores, for example, are not open on Sunday. In addition, he participates in C-12, a fellowship of Christian CEOs who meet monthly to discuss ethics and business issues. The group's facilitator is Ralph Miller, a former CEO and retired business professor who also meets regularly with Nygaard's managers.

These sessions, says Nygaard, help build relationships between managers and employees and, in turn, between employees and customers. Also benefitting customers is a software database Nygaard developed using a customized form of File Maker Pro. The database records customer preferences, wish lists, important events and other information. Since the database was introduced, customer returns have dropped from 1 percent of sales to 0.2 percent, and repeat customer purchases have increased by 65 percent.

"We are a welcoming, nurturing, family-owned small business because of David," says Jamie Dumont, a retired police officer who manages the Red Mill Commons store. "I think he has an uncanny ability to bring out the good in people."

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