Minnesota Valley Business Journal

Legal Eagles Mankato has history of a strong local bar Also in this Issue: • Weilage’s quiet national expansion • Pappageorge’s restaurant • Acorn Custom Cabinetry

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march 2012 • Volume 4, Issue 7

■

18

Special Focus: Getting business financing

■

28

Greater Mankato Growth Greater Mankato Growth members will celebrate not only the success of our marketplace, but also the accomplishments of GMG and its affiliates at the GMG/CVB annual meeting on March 6.

Raising the bar The Mankato legal community has a long history of producing respected and successful lawyers and law firms.

Local attorneys say the increased complexities of law require a more specialized focus for many lawyers.

Your local Small Business Development Center is a free resource that can help lead your business through the various options for securing financing.

■

22

■

40

Profile: Pappageorge Jay “Flip” and Layla Pappas rely on their long experiences in the food industry. Flip worked with his dad at Maggie’s for 25 years to make their Pappageorge restaurant on North Riverfront Drive a success.

MN Valley Business • March 2012 • 3

Features

F E A T U R E S

D E P A R T M E N T S ■

From the Editor................................. 6

■

Business informer............................. 8

■

2011 a year of growth in Greater Mankato

Joe Spear: Legal business still mostly local ■

Vehicle, retail, construction trends in the area ■

Job trends.......................................10

Departments

Construction, real estate trends.....11 Building permits, housing starts, home prices, interest rates

■

Retail trends....................................12 Auto sales, retail sales and hotel business

■

Agriculture Outlook.........................14 Kent Thiesse: Does it feel like the ’70s in ag?

■

Agribusiness trends........................15 Area commodity prices

■

Business updates............................16

Target plans Apple centers, Palmer leaves Soybean Association, Johnson Outdoors loss widens, and more ■

Greater Mankato Growth Member Activities . ........................30 Groundbreakings, new businesses, relocations and expansions

Regional, state unemployment information ■

Greater Mankato Growth................28

■

Greater Mankato Growth CVB .......33 Communities remember the U.S.-Dakota conflict of 1862

■

Regional Outlook.............................34 Jack M. Geller: Who are the job creators?

■

■

■

Up & Coming...................................36 The Weilage Group

All in the Family..............................42 Acorn Custom Cabinetry

Business memos/ Company news................................44 Keep up on who’s moving up, what’s new

Business Commentary....................20 Pat Becker: Chamber pushing for fairer rules

On the Cover: Randall Knutson (left), Scott Kelly (center) and Daniel Bellig, of Farrish Johnson, were recently selected for a Minnesota Lawyer’s Attorney of the Year award for their involvement in the case of Bearder vs. Minnesota. The three successfully sued the Health Department over the agency’s practice of retaining blood samples from newborn screenings without written consent of parents. The state tests the blood samples for disorders in newborns, but the agency also retained the samples for other tests.

4 • march 2012 • MN Valley Business

keep them healthy and happy. occupational medicine services Mankato Clinic Urgent Care @ Adams Street is your provider of Occupational Medicine Services.

Our staff will collaborate with you to help manage risk factors, keep your employees healthy and happy and get them back to work quickly and safely after an injury.

No appointment is necessary for most examinations. Just walk in for prompt, professional service.

For additional information call 507-385-4075 or visit www.mankatoclinic.com

Urgent Care Hours of Operation: Monday - Friday from 8 a.m. - 8 p.m.

Saturday from 8 a.m. - 5 p.m.

Sunday 11 a.m. - 5 p.m.

March 2012 • VOLUME 4, ISSUE 7 PUBLISHER

James P. Santori

EXECUTIVE EDITOR

Joe Spear

ASSOCIATE EDITOR

Tim Krohn

CONTRIBUTING WRITERS

PHOTOGRAPHERS COVER PHOTO GRAPHIC DESIGNER

From the Editor

PAGE DESIGNER

Jack M. Geller Sara Gilbert-Frederick Tim Krohn Jane Laskey Jean Lundquist Pat Becker Kent Thiesse Marie Wood Pat Christman John Cross John Cross Jenny Malmanger Liz Klukas

ADVERTISING MANAGER

David Habrat

ADVERTISING SALES

Cheryl Olson

ADVERTISING ASSISTANT

Barb Wass

ADVERTISING DESIGNERS

Seth Glaser Sue Hammar Tony Helget Liz Klukas Christina Sankey Aaron Tish

CIRCULATION DIRECTOR

Denise Zernechel

For editorial inquiries, call Tim Krohn at 507-344-6383.

For advertising, call Cheryl Olson at 507-344-6390

MN Valley Business is published 12 times a year at 418 South 2nd Street Mankato, MN 56001.

Legal business still mostly local

Y

ou often don’t think of the legal business as one where a community can gain growth. Lawyers sometimes are considered defensive mechanisms in business — you hire them to stop something bad from happening instead of making something growth-oriented happen.

So this month’s feature on the local legal profession or “bar” as they say, is enlightening. Many legal cases now involve wealth management and family business succession. But the business, unlike others, hasn’t really gone through any consolidation into large statewide and national firms.

Law offices are still mostly a local business.

That may be appropriate as client relationships seem to be one of the keys to a successful legal business. And local lawyers have to play nice, as it were, as they often see each other around town. Conversely, dealing with Twin Cities law firms can be a little more combative. Of course, lawyers know they are the target for many arrows pointed their way. They’re often seen as the problem in rising health care costs with their threat of multi-million dollar lawsuits. Actually, Minnesota’s medical malpractice law is much less about creating the need for defensive medicine than laws in other states or at the national level.

The legal profession has done a good job at promoting itself with a state and national system of defining top lawyers and “super lawyers.” Our feature offers a list of local lawyers having achieved those designations.

And just like every other business, the legal profession has been changed by technology. Shelves and shelves of law books are no longer needed for anything but maybe show. The Internet and services like Nexis put all legal research at the touch of a computer mouse.

Surprisingly, there has been little real growth in the number of lawyers practicing in the Mankato area for decades.

We’re not sure what that means. It may simply mean some of the corporations, like Free Press Media, have their own corporate lawyers not based here. When there were more local, homegrown and owned businesses, there was probably more of a need for local lawyers.

6 • march 2012 • MN Valley Business

By Joe Spear Mankato has a history of lawyers making it to roles of statewide prominence.

The recently deceased Robert J. Sheran was an associate justice and chief justice of the Minnesota Supreme Court. Another onetime Mankato lawyer Sam Hanson also was on Minnesota’s top court. The Farrish Johnson Law Office attorneys Scott Kelly, Randall Knutson and Daniel Bellig recently won a big case that has statewide implications. They represented 100 or so people who claimed the state of Minnesota health department had illegally retained infant blood samples and used them for a variety of research projects.

It was a case of the state not getting written consent from the parents as required. Now, under the recent ruling, the state will have to destroy many of the samples.

Julia Ketcham Corbett, a partner at Blethen, Gage & Krause, won one of the biggest personal injury lawsuits in the southern Minnesota when she helped secure a judgment of $7.5 million for a young boy who suffered a head injury as a result of a car accident. Eventually, Corbett sees the local bar growing as Mankato becomes more and more of a regional center. So, lawyering may indeed be just getting started as a growth industry in Mankato. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com

Smart law.

Bold decisions.

507.345.1166 127 S. 2nd Street Mankato

www.bgklaw.com

reliable • resourceful • reassuring • respected

■

Business Informer

Construction Local home sales up 9 percent Last year saw an improvement in the sale of existing homes, growing 9 percent from the year before.

Last year, 1,536 homes were sold, up from 1,411in 2010, according to figures from the Realtors Association of Southern Minnesota. The data covers south-central Minnesota and doesn’t necessarily include all homes that have been sold.

The biggest sales month, as is tradition, was in June when 185 homes were sold.

Home building up slightly The number of new home starts in Mankato and North Mankato inched up 5 percent in 2011.

There were 120 housing starts last year, up from 114 in 2010. They include single family homes and multi-unit homes.

Foreclosures fall The number of foreclosures fell significantly in the region in the third quarter of last year, according to the latest data available.

Blue Earth County had 45 foreclosures, down 20 percent from the same quarter of 2010. Nicollet County had nine foreclosures, down 31 percent.

Most other counties in the region saw a drop of 20-65 percent in foreclosures in the quarter. Only Brown County saw an increase. They had 24 foreclosures, up 50 percent.

Whether the drop is a sign of improvement in the housing market is tough to tell. Analysts say much of the slowdown in foreclosures nationally was due to the foreclosure process being temporarily slowed after some financial institutions were caught cutting corners while filing foreclosures.

■■■

Agriculture

Farm commodities fairly strong Local corn prices in late February were $6.20 per bushel, down 48 cents from a year earlier and a few cents lower than in January.

Soybeans were selling for $12.07 a bushel, down $1.32 a bushel from a year earlier but up 50 cents from January.

Hog prices have continued to be strong, with a 185 pound hog selling for $85.61, up about $8 from a year earlier.

Milk prices, too, remain good at $20.60 per hundredweight, up $3.60 from a year earlier.

■■■

8 • march 2012 • MN Valley Business

Energy

Crude oil up $6 over 2011 The federal Energy Information Administration expects the price of West Texas Intermediate crude oil to average about $100 per barrel this year, almost $6 per barrel higher than the average price last year.

Based on recent futures and options data, the market believes there is about a one-in-fifteen chance that the average WTI price in June 2012 will exceed $125 per barrel, and about a one-in-fifty chance that it would exceed $140 per barrel.

For 2013, prices are expected to continue to rise, reaching $106 per barrel in the fourth quarter of next year. The forecast assumes that U.S. real GDP grows by 2.0 percent in 2012 and 2.4 percent in 2013.

More savings on heating This is the third consecutive month in which the forecast of average household expenditures for heating fuels has been lowered because of the continuing unusually warm weather for most of the Nation. Average household heating oil expenditures are now expected to increase by only 1 percent this winter heating season (October 1 to March 31) compared with last winter.

Natural gas and propane expenditures are projected to decline by 11 percent and 5 percent, respectively, and electricity expenditures are 4 percent lower than last winter’s levels.

Pump prices close to last year The government expects regular-grade motor gasoline retail prices to average $3.55 per gallon in 2012, compared with $3.53 cents per gallon last year, and then average $3.59 per gallon in 2013. State fuel taxes affect at-the-pump prices.

During the April through September peak driving season each year, prices are forecast to average about 7 cents per gallon higher than the annual average.

Lots of natural gas Natural gas working inventories continue to set new record seasonal highs and ended January 2012 at an estimated 2.86 trillion cubic feet, about 24 percent above the same time last year.

The average 2012 Henry Hub natural gas spot price forecast is $3.35 per MMBtu, a decline of about 65 cents from the 2011 average spot price.

The prices will average $4.07 per MMBtu in 2013.

Oil supplies to tighten Absent a significant oil supply disruption world markets should continue to gradually tighten in 2012 and 2013, as increases in global consumption outpace production growth in countries outside of OPEC. World liquid fuels consumption grows by an annual average of 1.3 million barrels per day in 2012 and 1.5 million in 2013.

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Initial unemployment claims

Minnesota initial unemployment claims

Business Barometers

Nine-county Mankato region

Major industry

January

Construction Manufacturing Retail Services Total*

’11

’12

Percent change ’11-’12

482 345 126 360 1,313

484 441 140 330 1,395

+0.4% +27.8% +11.1% -8.3% +6.2%

2010

2011

130,000

110,000

1,000

A

M

J

J

A

Local number of unemployed

S

O

N

2010

Nine-county Mankato region

D

2011

0

J

F

8,425 4,784 2,632 8,733 24,574

-2.2% -5.5% -13.4% -11.2% -7.4%

2010

2,781.6 2,739.5

M

A

M

J

J

A

S

2011

O

N

D

168,484 200,308

250,000

11,000

2011

Minnesota number of unemployed 2010

7,139 8,538

12,000

225,000

10,000 9,000

200,000

8,000

175,000

7,000 6,000

8,611 5,063 3,039 9,833 26,546

3,000 2,000

M

Percent change ’11-’12

Minnesota non-farm jobs

120,000

F

’12

(in thousands)

127,757 121,227

J

’11

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don't equal total because some categories not listed.

Nine-county Mankato region

100,000

January

Construction Manufacturing Retail Services Total*

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don't equal total because some categories not listed.

Local non-farm jobs

Major industry

J

F

M

A

M

J

J

A

S

O

N

Unemployment rate Number of non-farm jobs Number of unemployed

2011

5.4%

4.5%

54,933

56,488

3,161

2,651

Source: Minnesota Department of Employment and Economic Development

10 • march 2012 • MN Valley Business

J

F

M

County/area

(includes all of Blue Earth and Nicollet Counties) 2010

150,000

A

Unemployment rates

Mankato/North Mankato Metropolitan statistical area

December

D

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

M

J

J

A

S

O

N

D

Counties, state, nation December 2010 December 2011 5.5% 5.9% 7.3% 9.8% 6.3% 5.4% 6.8% 7.2% 6.9% 6.6% 6.8% 9.1%

4.5% 5.2% 5.6% 8.0% 5.1% 4.4% 6.0% 5.4% 5.4% 5.5% 5.7% 8.3% J. Malmanger

Residential building permits Mankato $428.0 $394.6

2012

Residential building permits North Mankato $266.4 $494.9

$3,000

2011

(in thousands)

2012

$8,000 $2,000

$6,000 $4,000

$1,000

$2,000 $0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

2011

2012

Information based on Multiple Listing Service and may not reflect all sales

90 59

200

F

M

A

M

J

J

A

S

Housing starts: Mankato/North Mankato

O

N

D

2011

Includes single family homes attached and detached, and townhomes and condos

2012

40 1 2

30

150

20

100

10

50 0

J

Source: City of North Mankato

Existing home sales: Mankato region 250

$0

J

F

M

A

M

J

J

A

S

O

N

D

Commercial building permits Mankato $9,000

2011

J

F

M

A

M

J

J

A

S

O

N

D

Source: Cities of Mankato/North Mankato

Source: Realtors Association of Southern Minnesota

$695 $934.7

0

(in thousands)

2012

Commercial building permits North Mankato 2011

$86.4 $289.5

$12,000

(in thousands)

2012

$9,000

$6,000

$6,000 $3,000 $0

$3,000 J

F

M

A

M

J

J

A

S

O

N

D

2011

County

2012

4.7%

5.0% 4.5%

3.5%

3.9%

J

F

M

Source: Freddie Mac

F

Foreclosures:

Interest rates: 30-year fixed-rate mortgage

4.0%

J

M

A

M

J

J

A

S

O

N

D

Source: City of North Mankato

Source: City of Mankato

5.5%

$0

A

M

J

J

A

S

O

N

D

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

Third quarter 2010 56 16 15 41 14 13 31 26 13

2011

Percent change

45 24 6 28 11 9 12 10 6

-20% +50% -60% -32% -21% -31% -61% -62% -54%

Source: Minnesota Foreclosure Partners Council J. Malmanger

MN Valley Business • march 2012 • 11

Business Barometers

$10,000

2011

(in thousands)

Vehicle sales 2010 1,200

Business Barometers

Sales tax collections

Mankato — Number of vehicles sold 663 2011 675

$500

1,000

$382.5 $385.2

$400

800

$300

600 400

$200

200

$100

0

Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Mankato 2010 2011

(In thousands)

J

F

M

A

M

J

J

A

S

O

N

$0

D

Source: Sales tax figures, City of Mankato

Lodging tax collections 2010

$45,000

2011

J

F

M

A

M

J

J

A

S

O

N

D

Source: Sales tax figures, City of Mankato

Mankato food and beverage tax

Mankato/North Mankato $26,234 $24,901

2010

$60,000

$44,650 $41,216

2011

$50,000 $30,000

$40,000 $30,000

$15,000

$20,000 $10,000

$0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

$0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato J. Malmanger

Stocks of local interest

Jan. 11

Feb. 13

Percent change

Archer Daniels

$28.89

$30.93

+7.1%

Ameriprise

$51.76

$55.04

+6.3%

Best Buy

$24.64

$25.21

+2.3%

Crown Cork & Seal

$34.23

$37.35

+9.1%

Fastenal

$45.58

$50.58

+11%

General Growth

$14.83

$16.71

+12.7%

General Mills

$40.53

$39.34

-2.9%

HickoryTech

$11.23

$11.86

+5.6%

$1.44

$2.14

+48.6%

Itron

$38.80

$41.12

+6.0%

Johnson Outdoors

$16.83

$18.31

+8.8%

3M

$84.13

$88.03

+4.6%

Target

$49.27

$52.36

-7.8%

U.S. Bancorp

$28.27

$29.18

+3.2%

Wells Financial

$17.25

$15.35

-11.0%

Winland

$0.53

$0.61

+15.1%

$26.73

$26.44

-1.1%

Hutchinson Technology

Xcel

J. Malmanger

Gas prices-Mankato

$3.00 $2.00

$3.19

$1.00 $0

J

F

M

A

M

J

J

A

S

O

N

D

O

N

D

Gas prices-Minnesota 2012

2011

$3.44

$4.00 $3.00 $2.00

$3.17

$1.00 $0

J

F

M

Source: GasBuddy.com

12 • march 2012 • MN Valley Business

2012

2011

$3.45

$4.00

A

M

J

J

A

S

J. Malmanger

Pauline Kruger Vice President, Mankato Location

Matt Zebro Vice President, Commercial Lending

1601 Adams Street, Mankato, MN 56001 • PO Box 310, 53 1st Street SW, Wells, MN 56097 800.944.5869 • www.wellsfederal.com

Agricultural Outlook

Does it feel like the late 1970s?

D

uring the past few years, many comparisons have been made with the agricultural economy of the late 1970s, with record grain prices, high farm profits, and rapid increases in land values. Here are some things to consider: Soybean futures traded above $13.50 per bushel for much of the first nine months of 2011 before dropping to near $12 per bushel by late January of this year. The record price prior to 2008 was $12.90 per bushel, which was set in 1973.

July corn futures were above $7 per bushel on several occasions in 2011 before dropping back to near $6 per bushel by late January 2012.

USDA has projected net farm income for 2011 at $100.9 billion, which is up $21.8 billion from 2010.

All of the top five farm earnings years have occurred in the past decade.

Overall farm debt-to-asset ratio is now estimated at about 10.4 percent, which is the lowest in decades and the total farm-based equity is the highest ever.

Average land values in Iowa were up 32.5 percent at the end of 2011, the highest annual percentage increase ever, and land values have increased by 53 percent since 2009, which is a more rapid rate of increase in land values than in the 1970s.

Land rents for cash rental contracts in most areas of the Midwest are expected to be up 10-25 percent or more for 2011. Everyone is bullish on the future of profitability in production agriculture.

Usually when everyone is thinking one direction is when things change and sometimes those changes can occur quite rapidly. In 1979, following some

■ “Rising crop input costs and land rental rates in 2012 will likely reduce profit potential and add more risk.”

By Kent Thiesse

very robust farm income years, the government implemented a grain embargo that caused a rapid decline in grain exports and resulted in much lower grain prices. This rapid drop in grain prices along with much higher interest rates led to the farm crisis of the 1980s. While economic conditions are much different than in the late 1970s and early 1980s, there are some yellow caution flags to think about with today’s agriculture economy: The cost of production for corn and soybeans, including seed, fertilizer, chemicals and fuel is expected to increase again for 2011 and is nearly double the cost of production five to six years ago.

The increased cost of production, combined with the higher land rents, means the break-even price for corn production is now near $5 per bushel for corn and approaching $11 per bushel for soybeans. For some producers this could become a serious issue if the grain prices start to drop rapidly.

What will be the impact on the agricultural economy if the world economy continue to struggle in the next few years?

Will the land purchases at today’s prices still be economically viable at grain prices of $4 corn and $9 soybeans?

Crop revenues are likely to remain strong for 2012 though possibly not as high as 2011. However, rising crop input costs and land rental rates will likely reduce profit potential and add more risk. MV Kent Thiesse is a farm management analyst and vice president, MinnStar Bank, Lake Crystal.

He can be reached at (507) 381-7960 or kent.thiesse@minnstarbank.com

14 • march 2012 • MN Valley Business

Strategies for farm operators

F

ollowing are some financial strategies for farm businesses to consider during these highly volatile times:

— Keep the “current position” (cash available) segment of the farm business strong. It may be better to use excess cash revenues from the farm operation to pay down short-term farm operating debt rather than to make extra payment on term loans. Pay attention to the level of working capital and the current ratio on a farm financial statement. If there is a big decline, it could signal some concerns.

Be wary of excessive spending for family living and non-farm expenditures.

— Be cautious of machinery and facility investments for the farm business.

Make wise decisions on the use of available cash for these investments.

Make sure these investments are needed and have a potential return to the business and are not being made simply to avoid paying income tax.

— Be cautious of buying expensive farm land. There is likely to be a lot of farm land for sale in the coming months.

Don’t get caught up in the hype of “Buy now because they don’t make any more farm land.” Make sure that any land purchases are financially sound for the farm business. Shop around before settling on a farm purchase. Compare the cost of owning the land to the likely annual land rental rates. Be cautious of excessive use of available cash for land investments.

— Look at ways to control expenses and reduce financial risk. Fine tune grain marketing plans based on your cost of production and take time to analyze the best crop insurance strategies. Be cautious of excessive bidding for land rent and consider flexible lease contracts to address volatile crop prices.

— Meet with your ag lender early and often to discuss your farm operating credit needs, planned machinery and equipment purchases, potential land purchases, as well as the projected cash flow impacts on the farm business.

Discuss grain and livestock marketing plans and how they fit into cash-flow plans. Discuss any financial concerns early, either farm-related or non-farm, while there is still time to make adjustments.

Corn prices — southern Minnesota 2012

2011

$8.00

(dollars per bushel)

$6.68

$13.39

$12.00 $11.00 $10.00

$6.20

$2.00

$12.07

$9.00 J

F

M

A

M

J

J

A

S

O

N

D

Source: USDA

M

A

M

J

J

A

S

O

N

D

$85.61

$22.00

$80.00

$20.00

$70.00

F

M

A

$20.60

$18.00

$77.04

$60.00

Minimum prices, class I milk Dollars per hundredweight

2012

2011

$24.00

$90.00

J

F

Milk prices

185 pound carcass, negotiated price, weighted average

2012

2011

Source: USDA

J

Source: USDA

Iowa-Minnesota hog prices $100.00

$8.00

$16.00 M

J

J

A

S

O

N

D

$14.00

$17.00 J

F

M

A

M

J

J

A

S

O

N

D

Source: USDA. Based on federal milk orders.

Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

J. Malmanger

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Downtown Mankato 507-625-6816 Lake Crystal 507-726-2137 Good Thunder 507-278-3630

BUSINESS BANKING

www.minnstarbank.com Member FDIC

Business Barometers

$13.00

$4.00

$50.00

(dollars per bushel)

2012

2011

$14.00

$6.00

$0

Soybean prices — southern Minnesota

Updates: Business news, local relevance

■ ■

AgStar retires patronage allocations

AgStar Financial Services’ Board of Directors has approved the retirement of its 2002 patronage allocations. With the 2002 retirement, AgStar distributed $17.8 million in earnings to more than 11,400 eligible stockholders.

“As a financial cooperative, we’re pleased to share a portion of profits with the individuals who have helped build our success,” said Lowell Schafer, chairperson of the board of directors The patronage program was implemented in 1998 and targets a seven to 10 year retirement timeframe of non-qualified dividends. Yearly allocations are based on company earnings and the amount of products or services a stockholder purchases from AgStar during the year. AgStar has allocated $295.9 million in patronage dividends and retired more than $58 million to qualified stockholders.

Updates

■

Palmer leaves soybean association

Executive Director of the Minnesota Soybean Research & Promotion Council and Minnesota Soybean Growers Association has left the organizations. Jim Palmer has served as executive director of the two organizations, known collectively as Minnesota Soybean, since 1997.

Palmer has been in the soybean industry for 31 years and has served twice as Executive Director in Minnesota. He was serving as Executive Director of MSGA when the 1990 Farm Bill established the national soybean checkoff and then joined the United Soybean Board in St. Louis to help launch the checkoff.

Palmer returned to Minnesota as Executive Director in 1997.

A committee of farmers will determine how the search for Palmer’s successor will proceed.

■

Target plans Apple centers

Target said it plans to test Apple centers at 25 of its retail locations this year.

A Target spokeswoman described the tests as “expanded displays” of Apple products, but declined to say how the merchandise would be arranged or whether there would be Apple Store-like displays to showcase it, The New York Times reported.

Apple already has small stores within Best Buy locations, but enlarging its presence at Target would make the computer, phone and music brand more accessible to everyday shoppers who are not necessarily looking for electronics.

Target currently sells some Apple products, like iPads and iPods, but it does not sell Macintosh computers. Ms. Jenkins declined to comment on whether the test centers would include computers.

The Apple details came after Target described a separate program, called The Shops at Target, to open small boutiques in its stores. For the first round of the shops, which will open in May and run for six weeks, Target will showcase five local stores, like Polka Dog Bakery in Boston, which sells pet food and accessories, and The Webster in Miami, which sells clothing.

16 • march 2012 • MN Valley Business

■

RadioShack pulls down Best Buy

Best Buy Co. shares took a hit after rival RadioShack Corp. reported a poor performance in the fourth quarter.

Some investors viewed RadioShack’s shrinking profits as evidence that brick-and-mortar electronics companies — like Richfield-based Best Buy — were losing the sales battle to online competitors such as Amazon.com.

The news from RadioShack renewed calls for Best Buy to buy Texas-based RadioShack, which would reduce competition and allow Best Buy to accelerate its move into stores with smaller footprints.

“Best Buy stores are too big — they know that,” trader Patty Edwards told CNBC. “I think they should take over RadioShack.”

■

Johnson Outdoor loss widens

Johnson Outdoors Inc. said first-quarter loss widened to $2.9 million, or a loss of 30 cents per share, from last year’s loss of $1.2 million, or a loss of 13 cents a share. The company noted that the first quarter result included exceptional items amounting to $1.1 million and also higher legal, bad debt and sales related expenses.

Net sales for the period edged up to $80.2 million from $78.7 million a year ago, with double-digit growth in the Marine Electronics and Watercraft divisions compensating for lower military tent sales.

■

3M has encouraging results

3M Co. posted encouraging results for the fourth quarter of fiscal 2011, with earnings growth of 5.5 percent year over year.

Earnings per share beat estimates by 4 cents.

For full-year 2011, earnings per share increased by 5.9 percent year over year.

Total revenue in the quarter increased by 3.3 percent year over year to $7.1 billion. For 2011, total revenue was $29.6 billion, an increase of 11.1 percent year over year.

■

Target sales up in January

Target Corp. reported that its net retail sales for the four weeks ended January 28 were $4,608 million, an increase of 5.1 percent from $4,383 million for the same period last year.

“January sales were near the high end of our expected low to mid single-digit range, reflecting strong performance in both discretionary and non-discretionary categories,” said Gregg Steinhafel, chairman, president and CEO. “Sales trends were healthy throughout the month and across the country.”

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1750 Northway Drive North Mankato, MN 56003 800-729-7575 www.corpgraph.com

■

Special Focus: Getting financing

SBA loan guarantee improves odds

By Marie Wood Photo By Pat Christman

W

hether you are starting, growing or reinventing your business, your local Small Business Development Center (SBDC) is a free resource that can help you secure financing.

The South Central Minnesota SBDC, housed at Minnesota State University, serves the Region Nine Mike Nolan counties of Blue Earth, Brown, Faribault, Le Sueur, Martin, Nicollet, Sibley, Waseca and Watonwan.

Funded by the U.S. Small Business Administration and regional partners, the Center’s business experts provide consulting services and many workshops at no cost. SBDC Director Mike Nolan is a longtime entrepreneur who holds an MBA. “I believe in lean start-ups — cut down all the extraneous stuff. That said you can only grow yourself so far without leverage,” said Nolan. In 2011, Nolan noted that his organization served more than 350 clients. More than a third of the SBDC’s work is loan packaging, but consulting usually continues in other areas.

“We assisted businesses to secure $13.5 million in loans last year,” said Nolan.

There are three categories for business loans: Start-up, growth and turn-around/transition.

The SBDC helps many local businesses tap into funding opportunities and prepare the documentation that lenders require. Program Coordinator Julie Nelson said they also work with clients on QuickBooks software to get financial data in order.

“We’re making sure that all the documents are gathered and filled out properly and that you’re applying for the right loan,” said Nolan. One viable option is the SBA Loan Guaranty Program. Local banks administer and deliver the loans, but the SBA guarantees a large portion of the loan. For instance, on a $100,000 loan, the SBA guarantees 85 percent or $85,000.

“The SBA takes some of the risk out of the equation for the banker,” said Nolan.

18 • march 2012 • MN Valley Business

Nolan and colleagues also help secure “gap funding” for start-up and growth financing. For instance, one loan package may consist of 70 percent from the bank, 10 percent from the owner and another 20 percent from the city.

Southern Minnesota Initiative Foundation, Port Authority of North Mankato, Region Nine, USDA Rural Development, cities and counties have lending programs for businesses.

Most are not grants; they are loans to be paid back.

In each loan package, the SBDC addresses the Five C’s of Credit: character, capacity, capital, conditions and collateral.

Consultants look closely at cash flow and business plans. A consultant might ask what if sales are down 20 percent, can you make your payment?

“We do a lot of stress testing of business plans,” said Nolan. MV

SBA loan guaranty programs Banks and other lending institutions offer a number of SBA guaranteed loans to assist small businesses. While the SBA doesn’t make the loan, it does guarantee the loan. Here is a sampling.

7(a) Loan Program This is SBA’s primary and most flexible loan program, with financing guaranteed for a variety of general business purposes. It’s designed for start-up and existing small businesses and delivered through commercial lending institutions. The major types of 7(a) loans are Express, Export, Rural Lender Advantage, and Special Purpose.

Many offer a streamlined process.

Patriot Express SBA also has launched an initiative to help military veterans become entrepreneurs. The Patriot Express offers a streamlined process, fast turnaround, higher maximum amount, lower maximum interest rate, and an easy to use line of credit.

504 Debt Refinance Under the Small Business Jobs Act, the SBA has implemented a refinancing program through September 17 of this year. Business owners work with a lending institution and SBA-approved Certified Development Company.

Talk to your banker

W

hile every loan is tailored to individual businesses and interest rates can vary accordingly, the news is good for loan seekers.

“The rates are extremely attractive right now,” said Cole Nelson, commercial loan officer for Community Bank Mankato.

Community Bank’s web site advises business owners to consider whether they need cushioning for cash flow during down times or money for daily operations. If so, a working capital loan or revolving line of credit may be a good choice. For equipment, business expansion or projects that require a lump sum of cash, consider a longCole Nelson term loan.

In 2011, Community Bank helped many local businesses owners grow. Here are the documents you will need to apply for a loan at Community Bank. In some situations or businesses, more documentation may be needed: Tax returns from the last three years; personal financial statement; balance sheet; income statement (profit & loss).

Often the loan process only requires local decision making by Community Bank.

Sometimes Community Bank uses SBA Loan Guaranty Programs to absorb the risk.

“There are a lot of tools out there to help small business owners secure loans they might not otherwise secure. We’d be more willing to take a risk on a small business, because the SBA is behind us,” said Nelson.

One new tool is the SBA Debt Refinance Loan, which helps businesses secure lower interest rates over longer fixed terms.

“It helps your overall position. Lower rates and debt consolidation helps your overall cash flow perspective,” explained Nelson. MV

The five c’s of credit Money lenders are always looking for the best clients to lend their money to. But what sorts of things do they look for in a company? This is where the 5 c’s of credit comes in.

Character The character is the client’s reputation and reliability. Are you trustworthy enough to repay the loan?

Things associated with your character include your business experience and knowledge, references and education, and personal and/or business credit history.

Capacity Is your company able to repay the amount borrowed? Your company’s cash flow will be reviewed, and how you intend to repay the loan is established. Payment history and records on other credit relations will be looked at and considered. These include personal and commercial.

Capital How much money have you invested into your business? The amount of your own money put into the company portrays a message of confidence and trust. It shows that you have taken the risk of funding the company, so the lender supplying the financing knows it is safe to do the same.

Conditions How well is your business currently faring? What will the loan be used for? Is it for equipment, expansion, or just for financial security? Things such as the economy, competition, and customer base are noted.

Collateral If for some reason you cannot provide repayment, collateral will be a secondary source of repayment.

Collateral can include things such as inventory, equipment, real estate, stocks, accounts receivable, etc. Usually a signed contract is needed as a guaranty.

Source: www.Businessloans.org

For more information South Central Minnesota Small Business Development Center at www.myminnesotabusiness.com Small Business Administration at www.sba.gov Business financing basics at www.SmallBusinessLoans.com

Business Commentary

Chamber pushing for fairer rules, fewer delays

T

he complaint surfaces regularly among Minnesota business owners and managers, seemingly increasing in intensity and frustration.

“Why can’t government let me run my business instead of assuming that I’m doing something wrong and then regulating me to death? I wish they would just once say, ‘I am here to help,’ and not ‘I am here to regulate, inspect, audit or second-guess you.’ “ Policy-makers should not misconstrue. Minnesota owners play by the rules, and, with rare exception, they are not asking lawmakers to change standards. But they are increasingly aggravated with lengthy and, in some cases, endless regulatory practices. It is as though the processes were built assuming that most businesses are going to do the wrong thing. This approach places many of our businesses at an unreasonable disadvantage with their competitors across the nation and world.

Ensuring fairer rules and fewer delays in the state’s regulatory landscape is among the Minnesota Chamber’s top priorities during this 2012 legislative session. It is at the foundation of ensuring a strong business environment, and, in doing so, maintaining and creating jobs for Minnesotans.

Already on our agenda is continued streamlining of the environmental review and permitting system. We’re pleased to report significant progress on that front in 2011, thanks to leadership from Governor Dayton as well as bipartisan support among lawmakers. Still, more work remains.

In addition, businesses are burdened by a variety of other state regulations that affect many aspects of their operations — oftentimes increasing their costs of staying in Minnesota.

For some companies, they seek a more cost-based approach by the Public Utilities Commission to setting electricity rates and service standards for customer groups. For others, reforming the legal system by reducing the statute of limitations — the maximum time after an event that legal proceedings based on the event may be initiated — is important and aligns Minnesota with other states. In the tax arena, businesses are frustrated by audits that appear to be motivated by generating revenue rather than the appropriate amount of tax.

The Minnesota Chamber is advancing several initiatives aimed at leveling the regulatory playing field. Among our primary legislative measures: Ensure a timely and predictable permitting system. Clarify that permittees must be notified within 30 days after an application is submitted as to whether it is substantially complete and, if not, the state agency must state the reasons in writing. Overall, we want to make certain that the recent changes in law are being administered as envisioned.

Create an economic development coordinator to guide large private-sector economic development projects among state agencies.

The individual will marshal these projects through all permits, loans, grants, rules and regulations. The goal will be to get a “yes” or “no” from each state agency in a timely fashion.

Advocate legal reform on a variety of fronts including reducing the statute of limitations, addressing class-action litigation statutes and rules, and modifying how attorney fees are awarded.

Legislation is not always needed to address business concerns.

20 • march 2012 • MN Valley Business

By Pat Becker Government can proactively become more customer-focused rather than maintaining an adversarial relationship with the regulated community. When regulations are developed and implemented, agencies could assume that the vast majority of businesses will comply once they know the rule — that there’s no need for acrossthe-board approval and auditing procedures. Random checks could replace blanket procedures far more often than is current practice.

The maze of state regulations challenges companies of all sizes and types on a variety of fronts. And they are more than an annoyance.

The rules represent distinct threats to the state’s economic vitality.

Businesses are not asking agencies to be less thorough in their protection of our health, or the environment, or consumer or employee rights. We are, however, asking for a predictable process and sensible regulations to promote job growth. In far too many instances, a process that takes months in other states and countries can extend for years in Minnesota. That’s often incentive enough for companies to look elsewhere to locate and expand facilities.

We live in a global economy. Businesses large and small routinely compare all costs and regulatory requirements against other states and nations. The development of the state’s economy and job growth must be the primary consideration of state policies. Without business and job growth, our celebrated quality of life will not last. MV Pat Becker is service manager at Ingersoll Rand, Minneapolis, and chair of the Minnesota Chamber of Commerce energy policy committee.

By Tim Krohn Cover Story

Photos by John Cross

Mankato’s legal scene: Big changes, stable numbers

22 • march 2012 • MN Valley Business

■ “It felt good knowing that all the work you did really makes a difference for somebody.”

As legal work becomes more complicated, local attorneys focus more on particular areas of practice

A

s Mankato has grown dramatically as a regional center, more regional professional firms — from CPA groups to banks - have moved to town.

But that trend of Twin Cities businesses taking a big interest in Mankato has, surprisingly, not been seen in the legal community. Save for Leonard, Street & Deinard law firm, which merged with a local firm several years ago, local firms and solo attorneys are the rule here.

Still, many think it’s inevitable that as Mankato’s clout grows, more regional firms will be testing the waters here.

“It wouldn’t surprise me if there’s some bigger firms merging in smaller firms. That’s happened more in St. Cloud and certainly in Rochester,” said Julia Ketcham Corbett, a partner at Blethen, Gage & Krause.

Leonard, Street and Deinard was the result of the 1997 merger of one of Mankato’s oldest firms (Regan, Regan & Meyer, founded in 1910) and one of Minneapolis’ oldest firms (founded in 1922).

Doug Peterson, of Leonard, Street & Deinard in Mankato, said the merger grew out of the local firm’s relationships with Leonard, Street & Deinard partners and said the merger was simply a good fit for both groups.

Local lawyers say Mankato’s history of long-time local law firms has helped maintain a respectful and cordial relationship in the Mankato bar for many decades.

“I’ve noticed that there is an increasing lack of civility in the

profession, not here but around the state,” said Will Partridge of Farrish Johnson.

“In the old days you could literally hand-shake a deal and know they were good for it. The local bar is still amazingly collegial, but the wider bar throughout the state is not. It’s more combat for the sake of combat.”

Corbett agrees. “It’s an amicable bar here. It’s a great place to work. When you deal with an attorney from the Twin Cities there’s a different feel,” she said.

“Everyone here is a strong advocate for their client but you can trust they are doing everything on the up and up. We see each other around town and you have to work together. It’s different than if you don’t see and know each other.”

Mankato native Peterson, who worked in the Twin Cities, including 11 years as a federal prosecutor until returning to Mankato, said he is seeing pressures to return more civility to the legal profession.

“I think the courts and clients have become frustrated with lawyers who don’t get along and lawyers are responding. I think the civility is improving,” said Peterson, noting that unnecessary warfare costs clients money and wastes court time.

Jerry Maschka, of Maschka, Riedy & Ries, said the city has also been blessed with a very strong legal community.

“Mankato has a history of having good lawyers. I’m familiar with a lot of firms and we have a good reputation in

MN Valley Business • march 2012 • 23

Cover Story

— Julia Ketcham Corbett

has increased.

Law firms today also have more support staff.

“In the old days, Jim Manahan and I had one secretary and one office manager. We were able to support two full-time lawyers with ■ “We have a high quality justice systwo full-time staff,” Partridge said. tem which in many cases is too costly “Now there are more support and people can’t always afford to have people, more legal assistants, paralegals.” their dispute resolved on the merits.”

Cover Story

— Doug Peterson Mankato. We’ve had a long list of well-respected attorneys.”

Maschka said.

The number of lawyers in town has also not changed much in the past 30 years.

“In 1979 when I started, I counted, there were 129 lawyers.

That’s about the same now. It’s amazing, the faces change but the numbers are about the same,” Partridge said. The numbers include private firms and city, county and legal aid attorneys in Mankato.

“There’s not a lot more attorneys here now even though the city has grown,” Corbett said. “If greater Mankato continues to grow at rates predicted, I foresee that changing.”

Corbett has seen one demographic change in the bar she likes. “There’s definitely more women than when I started (in 1994). I was the only woman here when I started. Currently we have four women and are adding a fifth. We’ll be almost 40 percent women,” she said. “I see more women in other firms too.”

Technology transformation

Specialize, specialize

Maschka said an increase in laws has driven more attorneys to specialize in certain areas of

practice.

“More lawyers specialize now and there are more certifications for specializations than there were years ago,” he said.

The large firms in Mankato — who each have about a dozen attorneys — specialize in a broad number of areas, while solo- or small-firms often stick to one or two areas of practice.

“There are just so many more services overall now,” Maschka said. “The larger firms in town are about twice the size they were. Thirty years ago there were a lot more attorneys on their own.”

Partridge said law has not necessarily gotten more complex.

“But there are just a lot more laws. There’s general law, taxes, real estate, family law, criminal law. You just can’t keep up with it all. You have to go to seminars on all the changes each year. Eventually you find out what you’re interested in and what will keep you busy and you focus on it.”

What has brought sea change to the bar is technology.

“We use to have a huge law library,” Corbett said. “It’s gone. We couldn’t even donate the books, nobody wanted them. Everything is computerized and searchable.”

But like in all businesses, technology isn’t necessarily freeing.

“We’re much more available now and your clients expect you to be available,” Corbett said. “Clients will e-mail you on the weekend and they’ll expect you to e-mail them back.

That’s just the way it is.”

Peterson said better technology allows attorneys in Mankato to easily consult with those in the firm’s other locations.

“It allows us to interact with our colleagues as if they’re down the hall.”

Partridge said technology has dramatically changed how firms are run as a business.

“Because of technology, equipment costs are consuming more and more of our overhead.

That’s why we’ve had to treat it ■ “There’s general law, taxes, real esmore as a business than in the past. We have a 10,000-squaretate, family law, criminal law. You just foot building with I don’t know can’t keep up with it all” how many computers and you have to replace them routinely.

— William Partridge The cost of running an office

24 • march 2012 • MN Valley Business

Peterson said he’s noticed that business, tax and intellectual property law has gotten more complex.

“There are more disputes arising from more sophisticated business transactions.” In this area, farm law has grown in complexity and importance as farms have grown larger and more profitable.

“There are some complex tax and estate issues. They come into play especially when the owners are interested in transitioning their businesses to the next generation,” Peterson said.

He said the digital age has also led to more focus on intellectual property law.

“Trade secret concerns of businesses are part of that picture.

The most valuable possession of a number of businesses is their know-how and the ideas they’ve developed. So in this digital age, efforts by competitors to take advantage of that in an inappropriate way spawns litigation.”

Peterson said there’s also often conflicts when an employee leaves a company as to what information they can take with them to their next endeavor.

“In divorce mediation, if people can get together on what’s going to happen with their kids and there stuff that’s better than someone else telling you.”

Peterson, who was appointed by the Minnesota Supreme Court to serve on the Civil Justice Reform Task Force last year said one thing the group didn’t do is recommend changes to the mediation process. “Mediation has been wildly successful and that’s an area where if it’s not broken we didn’t want to fix it.”

He said the task force looked at practical ways to improve the civil system and made recommendations to the Supreme Court. “We had a recognition that we have a high quality justice system which in many cases is too costly and that people can’t always afford to have their dispute resolved on the merits.”

Peterson said some recommendations were for ways to streamline the discovery process, particularly in cases where the dispute involves $100,000 or less.

A rewarding job

Corbett, who won one of the largest civil settlements in southern Minnesota history, said getting a settlement someone A transformational change in courtrooms across the state in needs and deserves is a highly rewarding part of the job. recent years has been that many fewer civil cases go to a fullThe case involved a young boy who had a traumatic head blown trial proceeding. injury from a car crash. The settlement was $7.5 million, but That has been by design. Legislators and cash-strapped it is invested and will be paid out over his lifetime, totalling judicial systems have put a variety of sticks and carrots in place near $100 million. to push opposing sides to settle cases without taking up so “He’ll need 24/7 care his entire life,” Corbett said. “I’m still much court time. In many cases, for example, two sides are in touch with them, he’s doing very well. That was one of the required to try mediation before they can proceed further. most fulfilling things in my career.”

“We’re doing a lot more mediation and things than when I She said the boy, now a teen, and his parents moved out of started,” Corbett said. “There just aren’t many civil trials the area and used the money to build a residence that will anymore. It’s a good change in the sense people are solving become an adult group home with staff when he is older, things more amicably and with less cost. allowing others with brain injuries to be helped.

“They built what will be a staff room where the parents live now, they have therapy rooms, an exercise pool.”

Corbett and her husband visited the home recently. When they left, her husband told her all of it was possible because of her. “I said, other (attorneys) could have done it for them. But it felt good knowing that all the work you did really makes a difference for somebody.”

Maschka, who also specializes in personal injury lawsuits, said major awards like the one Corbett won are much rarer than people think.

“There are calls for a need for tort reform, which is misleading. It implies there is a need for it, which in my judgment there’s not. “There is no screaming need for tort reform in Minnesota. Minnesota has very well structured forms for malpractice cases, it’s very difficult to bring malpractice suits,” Maschka said. ”There’s’ been no increase in average jury awards, it’s probably been down. Juries are very conservative.”

He said those injured by someone else face a host of needs and expenses.

“People don’t understand ■ “People don’t understand the the problems people face problems people face when they have when they have some sort of accident.” MV some sort of accident.”

More trials avoided

MN Valley Business • march 2012 • 25

Cover Story

— Jerry Maschka

Local “Super Lawyers”

S

Cover Story

everal area lawyers are on the ‘Super Lawyers’ list, which acknowledges top lawyers annually in all 50 states.

Super Lawyers is a rating service developed by Thomson Reuters that recognizes attorneys who have attained a high-degree of peer recognition and professional achievement.

Besides the “Super Lawyers,” the service recognizes “Rising Stars” — those who are 40 years old or younger, or who have been practicing for 10 years or less.

Super Lawyers selects attorneys using a rigorous, multiphase rating process. Peer nominations and evaluations are combined with third party research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement.

The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. (www.superlawyers.com).

Following are local attorneys named to the list in 2011.

Some have been named for several consecutive years. Several other attorneys have won the honor in the past.

Marcus J. Christianson

Jerry Maschka

John M. Riedy

Charles W. Ries

Joseph P. Bluth

Scott V. Kelly

Randall G. Knutson

William S. Partridge

Aaron J. Glade

Douglas R. Peterson

Wade S. Davis

Philip R. Reitan

James Turk

Kenneth R. White

Jason C. Kohlmeyer

Michael Dove

Justin P. Weinberg

Maschka Riedy & Ries Marcus J. Christianson Jerry Maschka John M. Riedy Charles W. Ries Manahan & Bluth Joseph P. Bluth Farrish Johnson Scott V. Kelly Randall G. Knutson William S. Partridge Aaron J. Glade (Rising Star) Leonard, Street and Deinard Douglas R. Peterson Wade S. Davis (Rising Star) Reitan Law Office Philip R. Reitan Blethen, Gage & Krause James Turk Kenneth R. White Law Office Kenneth R. White Rosengren Kohlmeyer Jason C. Kohlmeyer (Rising Star) Gislason & Hunter Michael Dove Justin P. Weinberg

ADA rewrite a game-changer for business

W

hen it became law in 1990, the Americans with Disabilities Act forced companies to take new steps to ensure they did not violate the rights of those with disabilities.

But attorney Julia Ketcham Corbett, a partner at Blethen, Gage & Krause in Mankato, said a revision of the law enacted at the end of the Bush administration has dramatically changed how businesses must comply with the ADA. “It’s made things very different, it’s completely turned on its head from what was originally there,” said Corbett, who works extensively with businesses on HR issues.

She said that under the old law, it was very difficult for employees to establish they had a disability and were protected under the ADA. “With something like 95 percent of ADA cases, the plaintiffs lost their cases.”

Corbett said Congress responded by expanding the list of what are protected disabilities and directed businesses to focus on accommodating those with disabilities. “(Congress) said stop focusing on whether they’re disabled and focus on making sure they are enabled to work, whatever is going on with them,” Corbett said. “The focus has changed dramatically.”

She said changes in the Family Medical Leave Act and other employee-related laws have made HR more complex.

“There’s a lot more for employers to be careful of, like handling genetic information, discrimination laws, sexual orientation as a protected class.” MV

26 • march 2012 • MN Valley Business

Advancing Business for a Stronger Community

2011 a Period of Growth for Greater Mankato

2

011 was a strong year for the Greater Mankato marketplace, capturing the attention of individuals from inside and outside the marketplace. As the 2011 accomplishments detailed to the right demonstrate, the region has a lot going for it.

This strong performance has a lot of people inquiring about what goes into the “secret success sauce” here in Greater Mankato. But according to Greater Mankato Growth President & CEO Jonathan Zierdt, “there’s no one single ingredient, but rather a combination of assets, including industry diversification, supply chain availability, business resources and access to talent, that help make up our recipe for business success in Greater Mankato.”

Because of these assets, while not entirely recession proof, Greater Mankato has been more recession resistant than other areas. So, how can we maintain and further this positive position? By continuing to build on our assets, while maintaining responsible, strategic growth, Greater Mankato will continue to serve as a showcase for economic success long into the future.

Greater Mankato Growth

Annual Meeting Shines a Spotlight on Success Greater Mankato Growth members will celebrate not only the success of our marketplace, but also the accomplishments of GMG and its affiliates the Greater Mankato Convention & Visitors Bureau and City Center Partnership. It’s also an opportunity for the organizations to say thank you to the many individuals who make these achievements possible and look toward future success in the coming year.

The GMG Annual Meeting takes place March 6 from 11:00 – 1:00 p.m. at the Minnesota State University, Mankato Centennial Student Union Ballroom (free parking in visitor lot). For more information or to register online, visit greatermankato.com/ gmg-annualmeeting.php.

2011 Marketplace Milestones • 25th in the nation on Forbes 2011 list of ” Best Small Places for Business and Careers” - In June, Forbes ranked Greater Mankato 25th in the nation of all places in the U.S. with populations less than 245,000. Forbes based the ranking on the entire MSA’s performance in a variety of areas, including job growth, costs (business and living), income growth, educational attainment, projected economic growth and quality of life.

• Level 1 Regional Trade Center - In addition to receiving this new designation for retail and service sales in December 2011, the U of M’s Trade Center Hierarchy Report also indicated the community had a 123% increase in taxable sales from 1990 to 2009, nearly triple the next-highest rate of 42% for St. Cloud.

• 51 New Building or Renovations Projects Planned, Started or Completed in 2011 - Square footage data was available for 30 of the 51 projects, totaling 721,590 square feet of new or renovated space. Total construction costs for all projects for which financials were available (31 of the 51) was estimated at nearly $23 million. These figures do not include the future Wal-Mart Distribution Center, with an estimated construction cost of $100 million and a size of 880,000 square feet.

• Year over Year Job Growth of 1.7% - With 891 more jobs in 2011 than in 2010, Greater Mankato had the highest job growth for any Metropolitan Statistical Area (MSA) in the state.

• Average Monthly Employment Rise of 2.2% - Average monthly employment for residents living in the MSA grew from 54,785 in 2010 to 55,988 in 2011, an increase of 1,203 employed. Average monthly unemployment for the same period went down from 6.15% in 2010 to 5.28% in 2011, with unemployment never going below 5% in the last four months of 2011.

• Average Number of Establishments Up - The average number of establishments in the first two quarters of 2011 was up .7% from the same period for 2010 and up 3.1% from 1990.

• Total Payroll Increase - Total payroll for the first two quarters of 2011 was up 4.7% from the first two quarters of 2010.

For more details and data sources for the above statistics, visit greatermankato.com/business-vitality.php.

Chamber of Commerce and Economic Development

507.385.6640 • greatermankato.com

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Our greatest incentive is our people Higher Productivity

#25 on Forbes

2011 Best

Lower Absences

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Small Metros for

Minnesota Work Ethic

Business & Careers.

Strong Talent Pool Educated Employees

(5 higher ed. institutions)

greatermankatobusiness.com • 507.385.6650

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Civic Engagement

Visitor Attraction & Servicing

Existing Business Support

New Business Growth

Your Business

Business Promotion

Talent Development

Community Marketing Public Affairs

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omplete Your CGuide to

Greater Mankato August-December 2011

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29 Public Affairs 19 Greater Mankato Day at the Capitol 20 Candidate Forums 21 Issues Dialogues

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Community Marketing 22 Online Community Events Calendar 23 Cost of Living Index Tool 24 Guide to Greater Mankato 25 Relocation Information

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Existing Business Support 1 Greater Mankato Business Showcase 2 Greater Mankato Business Awards & Hall of Fame 3 GMG Ambassador Visits 4 Regional Economic Summit 5 Tour of Manufacturing

Business Promotion 10 Business Before Hours 11 Business After Hours 12 GMG Cavalier Calls on New Members 13 Greater Mankato on the Green 14 Songs on the Lawn

New Business Growth 6 Regional Economic Development Alliance 7 greatermankatobusiness.com –

online resource for business information 8 Online and print advertising for

business attraction 9 Lemonade Day Greater Mankato

Talent Development 15 Greater Mankato Campus & Community Fair 16 K-12 Career events, including Greater Mankato

Career Expo 17 Greater Mankato Young Professionals 18 Greater Mankato Leadership Institute

Visitor Attraction & Servicing (via the Greater Mankato Convention & Visitors Bureau) 26 Mankato Marathon 27 Senior Games 28 Conventions 29 Competitions and Tournaments Civic Engagement 30 Envision 2020 31 City Center Partnership 32 Greater Mankato Leadership Delegation

Inter-City Leadership Visit to Charlottesville,VT

* Photos By Sport Pix

MN Valley Business • march 2012 • 29

Greater Mankato Growth

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Member Activities Upcoming Member Events

7:30 - 9:00 a.m.

5:00 - 7:00 p.m.

March 6 Gustavus Adolphus College April 3 Mankato Clinic @ Madison East Center May 1 JBeal Real Estate Group in the Historic

Graif Building

Greater Mankato Growth

2012 Business After Hours Sponsored by

March 21 April 18

May 16

MRCI WorkSource Pediatric Therapy Services, Inc. and EllieGail’s Bakery & Catering Mayo Clinic Health System

2012 Business Before Hours Sponsored by

December Business After Hours at United Prairie Bank

December Business Before Hours at Marco

January Business After Hours at Loyola Catholic School

January Business Before Hours at Holiday Inn Express & Suites

For information on these and other member events visit greatermankato.com/gmg-events.php

30 • march 2012 • MN Valley Business

Cavalier Calls on the newest Greater Mankato Growth Members

Ambassadors celebrate

growth

Alliance Insurance 895 Madison Avenue, Mankato

in Greater Mankato

Indian Island Winery 18018-631st Avenue, Janesville indianislandwinery.com

New Corporate Office Coughlan Companies 1710 Roe Crest Drive, North Mankato

Mankato Brewery 1119 Center Street, North Mankato mankatobrewery.com

New Business Linde Small Engine 3010 3rd Avenue, Mankato

Young Life P.O. Box 13, Mankato greatermankato.younglife.org

New Business Northwoods Candy Emporium River Hills Mall

In 2011 the Greater Mankato Growth Cavaliers made 59 calls on new members.

In 2011 the Greater Mankato Growth Ambassadors helped 61 businesses celebrate milestone moments of growth.

MN Valley Business • march 2012 • 31

Advice from the Accelerator: Are You Ready to Start Your Own Business?

By Jill Klinger, GMG New and Emerging Enterprise Director

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wning a business is appealing – be your own boss, set your own hours, get lucrative opportunities and work in a field you enjoy.

Sounds pretty good right? However, starting a business requires a considerable commitment of time, energy and more often than not, money.

Businesses that are more likely to succeed are those that do extensive research of their industry and market, design a strategic business plan, surround themselves with the expertise necessary to successfully execute the plan and utilize the business-building resources available. It is important to weigh the pros and cons of starting a business before leaping in head first.

For this reason, the South Central Small Business Development Center has partnered with the Greater Mankato Business Accelerator and the Regional Center for Entrepreneurialism to continue the “Orientation to Starting a Business in Minnesota” workshop, which was previously administered through a grant program. Attendees can expect to explore whether self-employment is the right path, learn about the risks and rewards associated with starting a new business and discover what resources are available in the marketplace.

If starting a business has been on your mind, attend this workshop to find out if it’s right for you. The workshop is offered at no charge and occurs on the second Wednesday of each month from Noon - 1:30pm at varied locations. For more information and the location of an upcoming workshop, visit greatermankato.com/business-start.php.

Greater Mankato Growth

As New & Emerging Business Director for Greater Mankato Growth, Jill Klinger runs the Greater Mankato Business Accelerator.

The Business Accelerator is a program of Greater Mankato Growth, City of Mankato and Regional Economic Development Alliance.

The program serves as a single access point to connect entrepreneurs with the area resources and services they need to succeed.

Greater Mankato Business Community Gathers April 10

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t’s the once a year event no one wants to miss. Mark your calendar for the 2012 Greater Mankato Business Showcase presented by Charter Business on April 10 from 4:00 – 7:00 pm at the Verizon Wireless Center.

Everyone in the business community is encouraged to attend this popular event, which will give you the opportunity to get together with more than 500 individuals from businesses throughout Greater Mankato and learn about the products and services they provide.

Plus you’ll get the chance to sample food from a variety of Greater Mankato restaurants.

32 • march 2012 • MN Valley Business

It’s a great opportunity to visit with others in the business community in a fun and informal environment, so make plans to attend. Who knows? Your next valuable business connection might be waiting for you – at the Business Showcase!

GMG members: Booth spaces may still be available. Reserve yours before they sell out.

Presented by

Communities remember the U.S. - Dakota Conflict of 1862

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t has been 150 years since the U.S.-Dakota Conflict of 1862. At least 450 white settlers and soldiers lost their lives, along with countless Dakota causalities. In 2012 we try to comprehend the events leading up to the conflict along with the tragic outcome - a mass hanging of 38 Dakota on December 26, 1862. It is the largest mass execution in U.S. History.

Several communities in the Greater Mankato area are holding special events to commemorate the conflict.

A Self-Guided Tour This self-guided tour takes you to 20 historic sites in Mankato, St. Peter, Redwood Falls, Sleepy Eye and New Ulm, Minnesota. These maps Mahkato Annual Traditional Pow-Wow Honoring the 38 Dakota can be found at the Greater Mankato Convention and tours, banquets and marker dedications, along with several Visitors Bureau or online at other events during the week. These events will be held in visitgreatermankato.com/Dakotaconflict150.php.

Mankato - Discover the “Dakota Culture and Heritage Brown County from August 20-26.

St. Peter - All year round the Treaty Site History Center/ Speaker Series.” A monthly educational series celebrating the Dakota People in recognition of the U.S. – Dakota Conflict of Nicollet County Historical Society has a wealth of information 1862 Sesquicentennial is hosted by the Blue Earth County regarding the Dakota people and the U.S.-Dakota Conflict.

Historical Society (BECHS) the first Saturday of each month Gustavus Adolphus College held the Dakota History Lecture throughout 2012. The events are held at BECHS and other Series in January. The presentations can be viewed live through “Gustavus Live” at gustavus.edu. locations.

Dakota War History Ride - From August 2 –5, a bicycle The Mahkato Annual Traditional Pow-Wow Honoring the tour is planned to commemorate the 150th Anniversary of the 38 Dakota is a gathering of Native Americans from a number U.S.-Dakota Conflict. Have Fun Biking, Wahoo! Adventures of tribes. The Pow-Wow is September 21 and 23 at Mankato’s Land of Memories Park, where the Dakota people held many and The Fit Tourist have combined their expertise to create a ceremonies and gatherings before the U.S.-Dakota Conflict. 150-mile, three-day, fully supported, bicycle ride that will be The Pow-Wow is free and open to the public. It has been held fun, educational and scenic. Riders will be bused from St. Peter in Mankato since 1972. The event includes the beautiful rega- to Montevideo to begin the three-day journey through the lia of the dancers, traditional music, delicious foods and beauti- Minnesota River Valley, stopping at historic sites to learn from local experts and overnight stops in Montevideo, Redwood ful crafts.

New Ulm - The Brown County Historical Society, 150th Falls and New Ulm. Events continue to be added. For more information inSteering Committee, Turner Hall and Junior Pioneers have planned a 150th Commemoration week-long event including cluding contact information, a calendar of events, a history of symposiums, walking tours, historic area bus tours, round-ta- the U.S.-Dakota Conflict and resources, visit visitgreaterble discussions, cemetery tours, theatrical performances, Thun- mankato.com/Dakotaconflict150.php. der in the Valley, postage cancellations, book signings, cemetery

MN Valley Business • march 2012 • 33

A disingenuous view of those ‘job creators’ Regional Outlook

E

very decade or so a new a word or phrase becomes so popular and so over-utilized that it is rendered virtually meaningless through its overexposure. In fact, for much of the last decade the word “entrepreneur” seemed to fall into that category.

Captured by the outstanding success of people like Steve Jobs, Jeff Bezos, Bill Gates and Mark Zuckerberg, Americans, led by the popular and business media, began to characterize the entrepreneur as a tech-savvy, risktaking, swash-buckling savant of a business person.

As a result of this national obsession on entrepreneurship, colleges and universities began offering degrees in entrepreneurship, policymakers passed legislation to facilitate greater entrepreneurial behavior, and even local communities started looking in the mirror trying to assess how “entrepreneurship-friendly” they were.

At the same time it became evident that the young son who put up his capital to purchase and expand his father’s local hardware store; the farmer who takes financial risks every day; or the local business person who quietly, but successfully owns and operates a small manufacturing plant are just not sexy enough to wear the label “entrepreneur.”

Now the latest phrase being put on a pedestal is the “job creator.” And not surprisingly, given the deep drop in employment since the beginning of the recession, politicians are trying to do everything they can for this new category of economic hero. In fact, in today’s highly-charged political environment, it seems like every single piece of legislation at the state and federal level must be labeled as either beneficial or detrimental to the job creators. But who exactly are these job creators and why are they so important?

Similar to the “entrepreneur” is there some special personal attribute that distinguishes “job creators” from the rest of us?

It seems reasonable to me that at its core a job creator is one who creates new jobs in the economy. So maybe the

By Jack M. Geller, Ph.D first step in understanding the job creator is to understand how exactly a new job is created. And at the heart of my argument on job creation are two simply economic principles: supply and demand. Simply stated, when the aggregate demand for your goods and/ or services increases to the point where you may not be able to adequately supply your customers in a timely manner, you risk losing some of those customers to your competitors.

Accordingly, the business owner has a choice: (1) risk losing some customers or (2) create a new job that will allow the business to better meet the increased aggregate demand of its customers.

Viewed this way, the decision to create a new job is a simple, rational business decision based upon the increased aggregate demand for the business’ goods and services. The more the demand increases and sustains the more jobs the business will create.

Likewise, as we saw during the recent recession, the more the demand drops off, the more likely it will force business owners to make the similarly rational business decision to shed jobs to meet this new level of reduced demand. As they say … its just business.

But also bear in mind what this simple explanation doesn’t suggest.

34 • march 2012 • MN Valley Business

First, it doesn’t suggest that the creation of a job is an act of charity or benevolence. Jobs are not created as a function of kindness or goodwill. Nor does it suggest that providing a tax break or other fiscal incentive to a business will lead to new job creation.

Unfortunately, politicians on both sides of the aisle seem to believe that such incentives will work, as that’s the only real tool they have in their toolbox. So new incentive programs are proposed all the time for high tech jobs, green technologies, returning veterans, etc.

But if you agree with my simple explanation, the only factor that can truly drive and sustain real job growth is a significant increase in the aggregate demand for goods and services.

Accordingly, while policies to lower the cost of business such as the lowering of tax rates, tort reform or regulatory relief may be helpful, they will be disappointing as job creation stimulants.

On the other hand, policies designed to put more spending money in the hands of middle-class Americans might be more effective, as that is where true aggregate demand originates.

But what is most disappointing to me is the seemingly accepted view that these simple economic principles are somehow personified as individual attributes of the “job creator.” And therefore satisfying or appeasing the job creator is the correct path to employment growth. To me this view is disingenuous, as it simply denies the economic reality of how jobs are actually created.

Another way to look at it is to ask, if the CEO whose business demand picks up and hires 100 new workers is personified as a job creator, what is he or she called when demand weakens and they are similarly forced to shed 100 jobs: a jobs destroyer? MV Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota Crookston.

He also serves as director of the federally funded EDA University Center at UMC. He can be reached at gelle045@umn.edu

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Up and Coming

Scott Weilage, who founded the Weilage Advisory Group in 1985 with his parents, has been expanding into more states.

Succeeding on purpose Weilage Group quietly growing a national presence

By Jean Lundquist Photos By John Cross

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cott Weilage approaches business as the president of Weilage Advisory Group as he approaches life.

“It’s all about the climb — the journey. If you’re coasting, you’re going backwards. You succeed on purpose — don’t be surprised by it.”

Yet when talking to Weilage about his business — past, present and future — a word he uses

36 • march 2012 • MN Valley Business

often is “humble” as he describes his approach to life and business.

Weilage says he came from humble beginnings.

Weilage was 22 in 1985 when he founded the Weilage Advisory Group with his parents, Ken and June Weilage. He recalls his family was facing challenging times.

“My father had just recently gotten out of alcohol treatment, the IRS just cleaned out all of

Although the Weilage advisory Group has been successful since its beginning, the advent of the Internet has made it even more so. “With technology, I can be anywhere now, and do what I do. I don’t have to be in a large metro area to be successful. The Internet has leveled the playing field.”

Weilage says being in a smaller community has now become an asset, especially a city like Mankato. The cost of living is less than in a big city, and the amenities are still within reach.

For example, Weilage lives in the country, but is only four minutes from his office with only two stop signs along the route.

Weilage also cites “access to great talent in Mankato with the local university and colleges.” That asset is underutilized, he believes. As much as Weilage draws success from the Mankato area, he also continues to give back. Last year, Weilage and associates put together a fundraiser that harvested $2,000 for the ECHO Food Shelf. This year, he’s raising

Up and Coming

their cash for back taxes that were owed, and my parents were facing foreclosure. Yet, it seemed like a perfect time to start our company.”

The company they started was involved in the three things the business still offers: wealth advisory, employee benefit solutions and brokerage services.

A year later, Weilage and his father were in Monte Carlo, Morocco, dining with Princess Stephanie. They attended as the guest of an insurance agency with which they did business.

Their first year had been a resounding success, and things have been growing ever since. When Weilage Advisory Group started, they were in a one-room office above the Phoenix Restaurant where the Civic Center now stands in downtown Mankato. “All three of us were in there with a couple of beatup filing cabinets,” he says.

Weilage didn’t really learn a lot about the business side of business from his parents, he says, but he learned a lot about how to be successful from them. “My mother taught me about compassion, and my father taught me to never give up.”

Business acumen was learned from those he rubbed shoulders with in his early days, he says. One of his childhood friends was Todd Snell.

“Watching the Snell family grow this little car dealership downtown was full of life lessons.”

Other early compatriots were Curt Fisher, Tim Lidstrom and Randy Dombrovski, all successful local businessmen. Those three shared the upper floor of the Phoenix Restaurant with the Weilages.

When the Phoenix was razed, Weilage moved to the Northwestern Mutual Building, also in downtown Mankato. “I used to look out my window and watch tumbleweeds blow across the block where the Civic Center is now.”

Weilage credits much of his success to staying humble with a strong commitment to customer service.

But another coup came when he hired the woman who is his office manager, Kathy Langdon. “She’d worked with successful bank presidents with upper management at a company called CWC. That she wanted to come and work with me gave me great confidence. She’s gold.”

Weilage says when CWC “imploded” a few years after she joined Weilage, he had even greater confidence in her business understanding. Langdon has been with Weilage Advisory Group for 16 years.

Kathy Langdon has been with Weilage for 16 years.

MN Valley Business • march 2012 • 37

Up and Coming

Weilage started out in a small office above the Phoenix Restaurant where the civic center now stands. money for the CADA House shelter for abused women and their families.

In the past six or seven years, Weilage slowly has been expanding Weilage Advisory Group across the country. The company has a presence in 13 states now, through distribution partners. “There’s no reason we can’t be in all 50 states now,” Weilage says, though he admits that’s not necessarily his goal.

“If it happens, it happens,” he says, though some promotional printed pieces for the company read, “Quietly Growing a National Presence.” The expansion and the increasing use of technology and social media have provided some challenges for Weilage and his business model. “We want to continue to ‘wow’ our customers. Keeping things personal is important in our business. We need to supply that personal touch to all our customers, both large and small.

Barbara Campbell works at the Weilage headquarters on Good Counsel Drive in Mankato.

38 • march 2012 • MN Valley Business

The bottom line, Weilage believes, in the quality of marketing and customer service. “The best marketer can win.”

Weilage’s parents both retired from the business at the beginning of this year. “I’m privileged to have worked with them for over 20 years,” he says. And though they are enjoying retirement, Weilage says he’s a little disappointed. “I thought they’d miss us more than they do.” MV

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It’s a family tradition

Profile

Jay and Layla Pappas continue a long family presence in Mankato dining

By Marie Wood Photos By John Cross

W

hen Jay “Flip” Pappas was a sophomore in high school, his dad, Jay Pappas, sprung him from school for the day to wash dishes at Maggie’s Cafe and Saloon, on its first day of business in 1982. For $3.35 an hour and no school, Flip was in.

Today Flip is the owner-chef of Pappageorge Restaurant & Bar on North Riverfront Drive in Mankato. Known for steaks, fried walleye, and barbecue ribs, Flip has rounded out the menu with signature pastas, salads and sides, burgers and sandwiches.

“The thing I like most about the restaurant business is cooking during the dinner rush,” said Flip.

Through high school, Flip worked for his dad at Maggie’s and then was the kitchen manager from 1987 to 2006. That’s how Flip met his wife, Layla. Layla was a server there for eight years and head server for two years. At age 18, she began waiting tables at the Wagon Wheel.

Together, Flip and Layla Pappas have established Pappageorge, with Flip cooking and running the kitchen and Layla serving and running the front of the house. Both are professionals who are focused on pairing the best food with the best service.

“At the end of the day, it’s awesome to know you’ve worked so hard for yourself,” said Layla.

Flip is a fourth-generation restaurateur. He named the restaurant after his great grandfather who came to America from Greece in the early 1900s. Michael Pappageorge shortened his name to Pappas — a name known for fine dining in Southern Minnesota.

40 • march 2012 • MN Valley Business

■

Flip Pappas

Former kitchen manager, Maggie’s Cafe, Mankato Graduated from Mankato East High School, 1985

■

Layla Pappas

Former head server, Maggie’s Cafe, Mankato Sales and marketing degree, South Central College Graduated from Maple River High School, 1994 Photos of his ancestors and their restaurants decorate the bar. His uncles still operate Michael’s in Rochester and The Hubbell House in Mantorville. His father operated the memorable Michael’s in downtown Mankato in the mid1970s.

The landmark Michael’s restaurant in downtown Mankato, shown in this photo from the 1970s, was operated by Jay Pappas’ father.

“Flip has a lot of formal and informal training. He does an excellent job carrying on the family name,” said Mankato resident Jim Anton, a longtime buyer and seller of bars and restaurants.

Flip starts his sauces and soups in the morning and that TLC goes into everything he makes, said Anton.

He often creates new specials such as wild mushroom ravioli with filet mignon medallions. Flip slow cooks his barbecue ribs until they’re tender and many customers say they won’t eat a steak anywhere else.

“He cuts all his own meat. If you are going out in Mankato for a steak, that’s as good as you can get,” said Anton.

Their own place

When Flip and Layla were approached with the lease for their restaurant space, Flip was on the fence.

“Layla said ‘Let’s do it.’ It’s a good combo, her and I,” said Flip. “We work a ton.”

Once Flip and Layla took the leap, it only took 34 days to open Pappageorge. They created the menu, hired and trained staff, painted, decorated and more.

“It was a very intense month,” said Layla.

“It was awesome to put something like that together. It was exciting. Then you realize you have to run the place every day,” said Flip. They opened in September 2007. Approaching the fiveyear benchmark, Pappageorge has earned a steady customer base of all ages — from young couples to retirees.

Jay “Flip” and Many regulars have followed Flip and Layla Pappas Layla from Maggie’s too. say working for “We have the greatest and most loyal themselves following,” said Flip. compensates Mat and Liz Tauer of Kasota enjoy for the long going to Pappageorge, because it’s a locally-owned restaurant with high days and nights.

Life’s lessons

Flip worked side by side with his dad at Maggie’s for 25 years, and he paid attention.

“We were always talking back and forth. In my mid-tolate-20s, I started taking what he said seriously,” said Flip.

A couple weeks before Jay Pappas died in 2008, Layla and Flip recalled a conversation with his dad at their bar.

“Jay said he taught Flip everything Flip knows, but not everything he knows,” said Layla.

Flip knows how to run a successful restaurant. He starts with high quality ingredients, even though it lowers his profit margin. He keeps a recipe book with all the menu items and popular specials. He knows how to cook a steak to perfection, hot and fast, and let it rest before service.

“The challenge is getting people to do exactly what you want them to do and keep them doing that,” said Flip.

Flip and Layla have developed a strong staff of 20 employees. Most have been with them from the beginning.

One cook has been cooking under Flip for 10 years.

Consistency is a priority for both Flip and Layla.

At the end of the week, Flip and Layla agree they wouldn’t want to run a restaurant with anyone else. They close Pappageorge on Sundays to kick back with their two children.

And Flip doesn’t cook.

“We eat a lot of pizza at our house,” said Layla. MV

MN Valley Business • march 2012 • 41

Profile

Layla Pappas’ greets customers and leads the bar and wait staff while Jay runs the kitchen.

quality food. Mat’s favorite dish is the London broil.

“Everyone is welcome there. It’s a good place,” said Liz. After Flip’s done cooking, he comes out and talks to customers. Some regulars come in three times a week for lunch or twice a week for dinner. Customers celebrate birthdays, anniversaries, new jobs, promotions and retirements.

“It’s fun, you’re always part of everyone’s party,” said Layla.

On their wedding day in 2010, Flip and Layla closed Pappageorge for their reception. Layla mailed invitations and also told people to come on down. When they arrived, the place was packed.

The buffet was low to empty, so Flip put a waitress on food and started cooking himself. The groom and staff kept the buffet stocked with barbecue ribs, chicken wings, Greek stew and more. While their guests enjoyed a wonderful buffet, the bride and groom never had a meal.

“I had a little bit at the end, but that was fine with me. I didn’t really mind,” said Flip.

All in the Family

Acorn has moved beyond just making custom cabinets to finishing wood for customers and making virtually anything that someone wants made out of wood.

Doing all things with wood Brothers-in law start Acorn Custom Cabinetry

By Sara Gilbert Frederick Photos By John Cross

A

rchie Benike and Greg Spellacy used to spend their summer weekends sitting in a boat, fishing and throwing out ideas about businesses they could go into together.

“We were trying to figure out how we could use our individual expertise to be successful,” Benike remembers.

Benike and Spellacy had been friends since marrying sisters, Lori and Sue, in 1985 and 1986, respectively. They had been trying to figure out how they could become business partners for almost as long as they’d been b r o t h e r s - i n - l a w.

The cabin north of

42 • AUGUST 2011 • MN Valley Business

Brainerd, which the two couples purchased together in 1995, was their first partnership.

Their second came in 2007, when they joined forces to open a Closet Tailors franchise. A year later they bought a shop and showroom in St. Clair and launched Acorn Custom Cabinetry,

Brothers-inlaw Archie Benike (left) and Greg Spellacy have a few business partnerships, including Acorn Custom Cabinetry, which they started in 2008.

which encompasses both cabinets and closets, as well as almost anything else that can be made out of wood.

Now the two have less time to sit in their boat, fishing and talking. But they did have time to sit down together and talk to MN Valley Business about establishing and running a new business together.

MN VALLEY BUSINESS: What did your wives think when you decided to start this business together?

Archie Benike: Our two biggest supporters are Sue and Lori.

They are our biggest cheerleaders — and we needed them.

Starting your own business takes a lot, from everyone.

Greg Spellacy: They were nervous to the same extent that we were. This business drives their lives now, too.

MVB: Were you able to establish the roles you would both play in the business and how you would use your expertise early on?

GS: We work on that every day. We’re still figuring out what we each do best because it’s continually changing. In a small business like this, we all build, sand, install and do whatever else needs to be done.

AB: But there are definitely some things we do that are based on what we’re good at. Greg is good at the woodworking, and that’s a learning process for me. Right now, I’m out there as a role player — I do the sanding, the spraying and the staining.

But when it comes to closet designs, that’s where I’m going to take the lead.

MVB: What do you enjoy most about what you’re doing now?

AB: We’re building something that’s long term, something that brings immediate satisfaction to people. And we’re trying to do so with good customer service. When people say ‘Thank you very much,’ that’s important to us.

GS: It’s very satisfying to create something for people. There was one customer in the Twin Cities who had been waiting so

long to get new cabinets, she had tears in her eyes when we installed them for her.

MVB: Has the business been growing?

AB: Every year we see organic growth, and it seems to be accelerating. We’re doing more commercial work now, for example.

GS: We’ve been doing a lot of finishing for people too; they bring us doors or trim that they need to have finished. We work with builders who need stair rails, things like that.

AB: We’ve just gotten into a new niche as well — butcher block counter tops.

GS: We just did a 14-foot counter top for Tandem Bagels.

MVB: How did that get started?

GS: I had made one for myself, an island top, actually. We had all these scrap pieces of wood, so I put them together for it. I brought a customer over to see it and then we ended up doing his whole countertop.

AB: Those are the types of things that we really enjoy, things that are a little bit out of the box.

GS: People come to us with lots of different wood needs and we can do them. We do wood bumpers for elevators, for example.

AB: We get some pretty strange requests. But we can do most of them.

MVB: So it’s much more than just cabinets that you do here.

GS: Basically, anything made out of wood.

MVB: It sounds like you’re staying pretty busy, then.

AB: We are steady. When we have a significant job, then there always seem to be little ones around it. And after four years, we’re starting to get referrals as well, which helps us grow.

GS: Last year was better than the year before, and this year is better, so far, than last year.

The Acorn shop and showroom is in St. Clair.

MVB: Are you still able to get up to your cabin together?

GS: We aren’t able to go up as often together anymore; we have to split it up more. But we do still have hallowed weekends when we’re all there — putting the dock in and taking it out, for example.

AB: I remember the first time work caught up with us at the cabin. It was Labor Day weekend, and a product we had been waiting for came in while we were up at the cabin. We had to turn around, put it in for our client and then come back.

That’s just what you have to do. MV

MN Valley Business • march 2012 • 43

All in the Family

MVB: When it comes to the business end of the operations, how do you divvy up responsibilities?

GS: Archie is a tremendous negotiator. He is very determined and able to get what needs to be done done.

AB: Greg has taken on most of the operation of the show and is managing that. I handle the financial end and the marketing.

Greg Spellacy spends a lot of time in the shop doing cabinetry work and working on other custom projects.

Business Memos/Company News

Gislason & Hunter on Best Lawyer list Gislason & Hunter has been named to the Minnesota Best Lawyers List to be published in Minnesota Monthly and Minnesota Business Magazines. Law firms named to the list are nominated and voted on by their legal peers.

Gislason & Hunter is celebrating 75 years as a law firm.

■■■ Serril, Baker partners at Blethan Beth Serrill and Jill Baker are the newest partners at Blethen, Gage & Krause. Serrill focuses on employment law, family law and personal injury.

Baker focuses on commercial law and business organization, real estate, wills, trusts and probate.

■■■ Pediatric nurse joins River’s Edge River’s Edge Hospital & Clinic has added Amy Steffen, a certified pediatric nurse practitioner, to its medical staff. Steffen specializes in both pediatric and young adult medical care.

As a registered nurse she provided bedside care for eight years in the neonatal intensive care unit at Children’s Hospital, Minneapolis.

■■■ I&S Group announces new shareholders I&S Group has announced new shareholders at the firm: Tony Effenberger leads the mechanical and electrical engineering department at I&S and has been with the firm since 2001.

Dan Stueber has been with I&S for 13 years, and is the survey manager in the Mankato office, leading a team of survey crew chiefs and technicians. He is also a licensed professional civil engineer.

Jamie Swenson leads the environmental services department. His background includes community development, comprehensive planning, historic preservation, and sustainable design.

Rod Schumacher has been the director of business development since 2006.

Matt Brand has been with I&S since 2002 and provides civil engineering services for several cities within the area, and has been instrumental in the preparation of numerous engineering studies and reports.

■■■ CVB wins reader’s choice award The Greater Mankato Convention & Visitors Bureau has been awarded the 2012 SportsEvents Media Group Readers’ Choice Award. The award

recognizes the CVB for exemplary creativity and professionalism toward the groups hosted in Greater Mankato throughout 2011. Sports event professionals nominated and voted for the CVB. ■■■ West earns honors from Principal Warren “Buster” West, of the St. Peter Minnesota Business Center of the Principal Financial Group, has earned membership in the Million Dollar Round Table in addition to qualifying for the company’s Premier Club.

West is a 16-year qualifier of the MDRT. Achieving membership is attained by those who have demonstrated exceptional professional knowledge, expertise and client service.

■■■ Buster West Rasmussen offers public accounting program To respond to the market demand for qualified Certified Public Accountants, Rasmussen College has launched the bachelor’slevel public accounting degree program. The college is accepting enrollments for an April 2 start.

■■■

Region Nine hires new director The Region Nine Development Commission has named Nicole Griensewic as executive director.

Griensewic’s most recent job was the resource development manager for Habitat for Humanity of Central Minnesota. Griensewic was offered a $66,000 salary for the executive director position.

The RNDC was organized by local elected officials in 1972 as authorized by the Minnesota Legislature’s Regional Development Act of 1969.

The mission of the Region Nine is to promote the development of the region through Nicole Griensewic intergovernmental cooperation, community and human development, long-range planning and technical assistance.

■■■

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Professional resources to help grow your business AUTOMOTIVE Jerry's Body Shop, Inc. 1671 Madison Ave, Mkto, MN 56001 507-388-4895 www.asashop.org/member/jerrys

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Tasteful Design What is an architect’s role in the design process? We firmly believe that it is to carefully infuse the owner’s goals with the designer’s training to create a building that has that indescribable characteristic of “just feeling right”.

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