MNVB nov 14 by Free Press Media

Terry Beenken and Angela Deluca have found a niche in the screen printing business. Photo by Pat Christman

Not for the faint of heart Entrepreneurs face myriad challenges Also in this issue • Loose Moose Saloon & Conference Center • Grand Center for Arts and Culture • Mapleton Farm & Home

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F E A T U R E S November 2014 â&#x20AC;˘ Volume 7, Issue 2

Entrepreneurs face a variety of challenges as they start and build a new business, chief among them finding the money to start and grow.

The closing of the Mapleton Hardware store could have left a big gap in the town, but Jim Heins saw opportunity for bringing it back.

Anne Makepeace has spent two decades helping turn the Grand Center for Arts and Culture into a success while preserving a historic building.

The history of the Loose Moose Saloon dates back to 1903. Today the fourth and fifth generations are running the family business.

MN Valley Business â&#x20AC;˘ November 2014 â&#x20AC;˘ 5

■ october 2014 • VOLUME 7, ISSUE 1 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner Kent Thiesse Heidi Sampson Paul Shneider PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Jen Wanderscheid Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.

■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 12 ■ Construction, real estate trends.. 29 ■ Agriculture Outlook...................... 30 ■ Agribusiness trends..................... 31 ■ Job trends..................................... 32 ■ Retail trends................................. 33 ■ Greater Mankato Growth.............. 34 ■ Greater Mankato Growth Member Activities ....................... 36

From the editor

By Joe Spear

Business canaries take flight

ur feature story this month tracks the journey of entrepreneurs who may be just getting started and those who have been in business for several years. It’s always good to hear from these folks as they are sometimes the early indicator or the so called “canaries in the coal mine” for the state of our economy. That analogy doesn’t follow through completely because entrepreneurs don’t ever really go away as a group or demographic. No matter what external forces might make being in business tough, it seems entrepreneurs are driven by the belief in their idea above all else. Granted, many find help and good advice along the way, as pointed out in our feature this month. The Small Business Development Center and Mike Nolan at Minnesota State University have helped hundreds of businesses. They might get advice on how to manage their cash or how to obtain a loan. Sometimes they get a network connection for someone who needs what they are selling. In the current business environment, you continue to hear that it may be more difficult to get a loan than it used to be. Bank regulations have gotten tougher since the economic fallout of 2008. Required equity for a building project might be higher than it has been in the past. The bankers may want more proof that a project or idea will work. You also see a continued trend in some industries of downsizing, creating efficiencies, which can in some cases lead to outsourcing. Many businesses come to fruition as a result of a down economy. Laid off employees may have known their business so well, they’re able to resurrect it as a new entrepreneurial company that can provide a service better and faster than their old corporate employer. There’s an advantage to knowing the competition and how they can be beat. So a world of corporate downsizing isn’t all bad for the entrepreneurial environment.

6 • November 2014 • MN Valley Business

But a shrinking work force often means shrinking incomes. Money is tighter. The rate of discretionary spending can go down as a workforce reshuffles from high-paying jobs to lower-paying jobs. We’ve seen some of that occur through the economic recovery as well. You often hear of places like Silicon Valley being a hotbed of entrepreneurial activity mostly because the conglomeration of similar businesses in one place offer a kind of network on steroids. But these kind of geographic places are not as necessary as they once were, mainly because of online, virtual networks like LinkedIn and other sites. Entrepreneurial knowledge, just like news, is more accessible as a result of the Internet. The trick is trying to make sense of it or being able to glean information that could be really useful. While the Internet and platforms for accessing it are exploding, this explosion in and of itself cannot explain or even be highly correlated to any burst of entrepreneurialism. While some businesses are built on the Internet - Amazon and eBay come to mind - the Internet will not be guarantor of success for a bad idea. In fact, businesses that use the Internet as a mainstay of their business seem to be more susceptible to breakneck competition and ever changing technologies that make a product obsolete overnight. The local entrepreneurial landscape does not appear to be in any danger, according to our cover story. One can count a number of stories of extraordinary success by local entrepreneurs. And while corporate entities may dominate our business culture, we should remember that those business didn’t just show up one day out of the blue. Every business at its beginning was started by an entrepreneur. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com

Local Business People/Company News

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Freiberg joins Brunton Architects

Brunton Architects & Engineers has added L. Charles (Chuck) Freiberg as a senior associate architect. Freiberg brings 38 years of experience in architectural design. His projects include hospitality, retail, manufacturing, and recreational facilities such as ice arenas throughout the United States, including 10 in the Twin Cities. Before coming to Brunton, Freiberg spent 18 years working with RSP Architects in Minneapolis.

Fristed joins I+S Group

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Promotions announced at Abdo

Abdo, Eick & Meyers announced the following promotions. Kathleen Heupel, Kevin Knopik and Karen Elsenpeter have been promoted from senior accountant to manager. Mark Ebensteiner has been promoted from senior accountant to audit supervisor. Layne Kockelman, Heidi Lellman, Sarah Rathlisberger, Justin Nilson, Bonnie Schwieger, Veronica Tews and Tony Thorn have been promoted from accountant to senior accountant ■■■

Enventis honored for philanthropy

Enventis Corp. was recently presented with the Corporate Philanthropic Partner of the Year award from the Minnesota State University Foundation. Since 1963, Enventis has provided more than $1 million to MSU through the Enventis Foundation. Additionally, the company has provided an annual gift for more than two decades to underwrite a MSU Department of Theatre & Dance production along with scholarship funds to benefit students in the College of Business and College of Science, Engineering and Technology. ■■■

Ackerman joins Swanson Hinsch

Swanson Hinsch & Co. recently hired Kimberly Ackerman, senior accountant. She has over nine years of experience in Twin Cities CPA firms specializing in individual and diverse small business taxation. Her knowledge areas includes real estate agents, law firms, farms (cattle and grain), construction and excavating companies, rental properties, vacation resorts, wholesale distributors and equipment refurbishing Kimberly Ackerman companies. ■■■

Travis Fristed

Travis Fristed, PWS, was hired as Manager of Environmental Services at the I+S Group Mankato office. He has 10 years of experience in stormwater management, natural resource evaluation, environmental regulation and permitting projects throughout the upper Midwest. His expertise includes wetland delineations, functions and values assessments, environmental review, plan design, amendments, inspection, and

permitting. As an environmental compliance manager on designbuild projects he has routinely completed local, watershed, state, and federal environmental permits for public infrastructure projects throughout Minnesota. ■■■

Feltault joins Farrish Johnson

Attorney Nicole Feltault has joined Farrish Johnson Law Office in Mankato. She focuses her practice in the areas of business planning, estate planning, real estate, and employment law. ■■■

Powers honored by CPA society

The Minnesota Society of Certified Public Accountants recognized Christine Powers of St. Peter as the recipient of its 2014 Public Service Award. The award recognizes CPAs who have distinguished themselves in community, charitable and civic activities. Powers devoted eight years of service advancing the mission of the Greater Mankato Area United Way as both a board member and board chair. She mentored the president and director of operations to help the United Way achieve the highest standards of fiscal responsibility and stewardship. She has led multiple committees and events, including the annual Day of Action and Women with Heart Committee. In addition to her work with the United Way, Powers also secured volunteers and a larger space for the growing BackPack Food Program in Mankato. She was also recruited by the Children’s Museum of Southern Minnesota to serve a three-year board term to develop financial reporting policies and procedures. Powers is a business partner with Abdo, Eick & Meyers. ■■■

Coopman joins AmericInn

Angel Coopman has joined AmericInn Hotel & Conference Center as assistant guest services Manager. She brings more than two years of hotel experience.

MN Valley Business • November 2014 • 7

Hinz new Frandsen Bank president

Nick Hinz has assumed the position of president of Frandsen Bank & Trust’s Mankato and North Mankato offices. Hinz has been with the bank since 2006 when he started as a credit analyst. Since that time he has held the positions of compliance officer, security officer, loan review committee member, assistant vice president, and has been vice president for the past three years. During most of this time he has continued to devote a major portion of his time to commercial lending and business banking. Outgoing president Keith Boleen has been president of the Mankato bank since 1990, when it was Valley Bank. Hinz grew up in Fairmont and has lived in Mankato for 12 years. He is active in local civic affairs, including the Children’s Museum and United Way.

Wagner joins AgStar as VP and CFO

AgStar Financial Services has named Jase Wagner as senior vice president and chief financial officer. Wagner brings more than a decade of financial and investing experience. Wagner has led initiatives that have included completing $500 million of capital transactions since joining AgStar in 2009. He’s held various positions, most recently serving as managing director of AgStar’s AgriJase Wagner Access business unit. He also was instrumental in developing AgStar’s institutional investor program and leading investor relations. Before joining AgStar, Wagner held positions with Deephaven Capital, Allied Capital and Lehman Brothers.

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Three take new roles at Pioneer

Duane Olenius, president of Pioneer Bank’s greater Mankato market announced new roles within the bank. Vice President Mindy Annis, who has been with the bank for 35 years, has been named a personal banker in the bank’s Mankato branch and Marie Krause, who joined the bank in February, has been named a personal banker in their North Mankato branch. Andrea Johnson, a credit analyst for the bank for the past two years, has been named a business banker in the bank’s North Mankato branch. A new position at the bank was also created with Clay Sharkey joining the bank as assistant vice president, senior credit analyst.

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Carpenter joins Water’s Edge

Rachel Carpenter, formerly with Primrose Retirement Community, has accepted the director of marketing and elder enrichment position at Water’s Edge. Carpenter continues her work educating the community on elder care. She says she will be closely involved with the elders “to create opportunities for meaningful Rachel Carpenter engagement and enriching experiences based on what they like and want.”

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Hildebrand to retire from Ridley

Mankato-based Ridley Inc. announced that its chief financial officer Gord Hildebrand will be retiring in the spring of 2015 after 15 years with the company. “Gord’s contributions to Ridley’s success have been immeasurable,” said CEO Steve VanRoekel” The company said the announcement is being made in advance to allow the process of identifying a replacement to begin immediately.

8 • November 2014 • MN Valley Business

To submit your company or employee news. e-mail to tkrohn@mankatofreepress.com Put “Business memo” in the subject line. Call or e-mail Associate Editor Tim Krohn at tkrohn@mankatofreepress.com or 344-6383 for questions.

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Business and Industry Trends

Construction Home sales strong

The sale of existing homes continued to be strong through the summer and fall in south central Minnesota. There were 220 homes sold in September, up from 170 the same month a year earlier. Home sales have been between 220 and 253 since May of this year, significantly above the same period last year.

Home construction stays strong

Mankato is finishing the building season with a strong residential construction market. In September, Mankato issued $4.4 million in residential building permits, about $2 million more than the same month a year earlier. North Mankato had $1.2 million in permits in September, down about $200,000 from a year earlier. The residential construction this year has been weighted very heavily toward apartment buildings.

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Agriculture

Crops prices continue fall

Corn and soybean prices continued to tumble through the fall. Locally sold corn was at $3.09 per bushel in October. That compares to $4.15 a year earlier. Soybeans were at $9.04 in October, down from $12.63 a year earlier.

Hog prices hold up

Lower feed costs from falling grain prices and a strong demand for pork have kept hog prices relatively high. A 185-pound carcass was selling for about $101 in October, about $12 higher than a year earlier. Hog prices have ranged from $99 to $120 since May, after never getting above $100 last year.

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Energy

Home heating costs to be lower

Average household expenditures for natural gas, heating oil, electricity, and propane will decrease this winter heating season compared with last winter, which was 11 percent colder than the previous 10-year average nationally. Projected average household expenditures for propane and heating oil are 27 percent and 15 percent lower, respectively, because of lower heating demand and prices, according to the Energy Information Administration. Lower heating demand and higher prices contribute to natural gas and electricity expenditures that are 5 percent and 2 percent lower than last winter.

Gas prices to stay lower next year

Crude oil prices, U.S. regular gasoline retail prices fell to an average of $3.41 per gallon in September, 29 cents below the June average. U.S. regular gasoline retail prices are projected to continue to decline. EIA expects U.S. regular gasoline retail prices, which averaged $3.51 in 2013, to average $3.45 in 2014 and $3.38 in 2015.

N.D. to reduce natural gas flares

About one-third of the natural gas North Dakota has produced in recent years has been flared rather than sold to customers or consumed on-site. The rapid growth in North Dakota oil production, which rose from more than 230,000 barrels per day in January 2010 to more than 1.1 million barrels per day in August 2014, has led to increased volumes of natural gas that comes from oil reservoirs. These increased volumes require additional infrastructure to gather, process, and transport gas volumes instead of flaring them. These additions can take time to build, and well operators are often reluctant to delay production. In an effort to reduce the amount of natural gas flared, North Dakota’s Industrial Commission established targets that decrease the amount of flared gas over the next several years. The first target of 26 percent flared is set for fourth-quarter 2014, with continued decreases in flaring reaching 10 percent by 2020. North Dakota recently reported that it was close to achieving the 26 percent reduction target for natural gas flaring, as the percentage in August was 28 percent flared. The rest of the produced natural gas was either sold or used at the production site.

Demand weakens for crude

Weakening global demand helped North Sea Brent crude oil spot prices fall to an average of $97 per barrel in September, the first month Brent prices have averaged below $100 in more than two years. EIA projects that Brent crude oil prices will average $98 in the fourth quarter of 2014 and $102 in 2015.

U.S. crude production up again

Total U.S. crude oil production averaged an estimated 8.7 million barrels per day in September, the highest monthly production since July 1986. Total crude oil production, which averaged 7.4 million barrels per day in 2013, is expected to average 9.5 million barrels per day in 2015. If realized, the 2015 forecast would be the highest annual average crude oil production since 1970. Natural gas plant liquids production is expected to increase from an average of 2.6 million barrels per day in 2013 to 3.2 million barrels per day in 2015.

Natural gas inventory, prices down

Natural gas working inventories on September 26 totaled 3.10 trillion cubic feet, 11 percent below the level at the same time a year ago and 11 percent below the previous five-year average. Despite the lower stocks at the start of this winter’s heating season, EIA expects the Henry Hub natural gas spot price to be $4 per million British thermal units this winter compared with $4.53 last winter. This price forecast reflects both lower expected heating demand and significantly higher natural gas production this winter.

MN Valley Business • November 2014 • 9

Minnesota Business Updates

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■ Fastenal profits rise Industrial and construction supplies provider Fastenal reported a rise in third-quarter profit, as net sales grew about 14 percent mainly due to higher unit sales. Earnings per share, as well as revenues met analysts’ expectations. For the third quarter the company posted net earnings of $133.31 million or $0.45 per share, up from $119.35 million or $0.40 per share in the previous year. Pre-tax earnings increased to $212.99 million from $188.64 million in the previous year. Net sales for the quarter grew 14.3 percent to $980.81 million from $858.42 million in the prior-year quarter. Wall Street expected revenues of $980.10 million for the quarter. As at the end of September 2014, the number of stores totaled 2,647, down 1.5 percent from last year.

■ ADM pushes into Asian markets Grain giant Archer Daniels Midland has expanded a joint venture relationship with Japanese agricultural commodities group Marubeni Corporation to improve its access to Asian grain markets. The two companies have merged their US-based Kalama Export Co. with the Columbia Grain export terminal in Portland, Oregon, previously a subsidiary of Marubeni, bolstering their export capacity from the U.S. Pacific Northwest. The port is a key part of the export gateway for U.S. agricultural goods to Asia. The revamped Kalama joint venture will be re-named Pacificor. ADM, a 19.9 per cent shareholder in Australia’s GrainCorp, has had the partnership with Marubeni since the Japanese company bought the U.S. grain business Gavilon last year, giving it a 45 percent share of the Washington State based Kalama (which is also 45 percent owned by ADM). The latest ADM move comes as it completes its largest acquisition to date, last month closing a $3 billion-plus deal to buy European food and beverage industry natural ingredients supplier, Wild Flavours.

■ Target lowers prices to woo customers Target Corporation, the secondlargest U.S. discount retailer after Wal-Mart Stores, has been battling reduced in-store traffic over the last few quarters, amid a challenging retail environment for brick-and-mortar retailers. Consumers are increasingly looking for convenience in shopping, which has led to a growth in competition from e-commerce retailers, like Amazon.com, which offers free shipping and more distribution centers to reduce delivery time.

10 • November 2014 • MN Valley Business

Target’s expansion attempts in Canada failed miserably as the retailer faced strong competition from alreadyestablished retail chains and an overall slow consumer environment in Canada. Target started its operations in Canada in March 2013 but did not meet sales targets. It ended up reporting a loss of $329 million for the fourthquarter. Owing to the increasing challenges, Target has adopted a turnaround strategy to win over its old shoppers. A part of this strategy is that the retail chain has lowered its prices considering the cut-throat competition from WalMart’s “everyday low prices.” According to a price study by Kantar Retail, Target’s products are 3.9 percent cheaper than Wal-Mart’s. Moreover, the prices are about 8.7 percent lower if a customer avails the benefits of Target’s loyalty debit or credit “REDcard.” The survey includes 33 consumer goods, ranging from edible, non-edible, health, and beauty categories

■ State taps into craft beer tourism The latest to take note of Minnesota’s bubbling craft beer scene? The state’s tourism agency. Last month, Explore Minnesota and the Minnesota Craft Brewer’s Guild partnered for an advertising campaign promoting “Brewcations” to the more than 50 craft breweries now operating in the state. Clint Roberts, the guild’s executive director, said the campaign spans a webpage with a map of breweries and reports on fall colors to brochures placed in visitor centers statewide, according to a story in Twin Cities Business. These efforts come at a time in which Minnesota is now among the top-10 craft beer-producing states in the U.S. The industry represented a $742 million economic impact last year, according to Explore Minnesota, and estimates peg the craft beer business as providing nearly 8,000 fulland part-time jobs. Legislation passed in 2011 that allows on-site beer sales in taprooms has also helped, with effects felt from a tiny start-up in Two Harbors down to the 150-year-old August Schell’s Brewing Co. in New Ulm.

■ General Mills launches bee campaign One of the country’s largest food companies is the latest to address the alarm over the dramatic drop in bee populations around the country in recent years. Bees pollinate an estimated 75 percent of food crops, which has pushed Cascadian Farms, an organic-foods company owned by Minnesota-based General Mills, to launch a campaign to highlight the dwindling bee population and encourage preservation efforts, according to a story in The New York Times. The Bee Friendlier campaign, which is designed by Minneapolis-based Solve Advertising and Branding, includes a video and advertisements. The video shows Cascadian Farms’ effort to plant 1 million wildflowers – a feeding ground for bees – across farmland.

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Business Commentary

By Paul Shneider

Protect yourself at the start of a new business

tarting a business is an exciting and challenging other things. The business must also file an annual time for entrepreneurs. In addition to actually renewal with the Secretary of State’s office. It is crucial running the business, there is an incredible amount that the entrepreneur does not comingle business and of things to do - opening bank accounts, obtaining personal funds. There must be separate bank accounts licenses, setting up a website, marketing, tracking income and records. and expenses, determining what type and levels of While a properly formed and operated entity will insurance are appropriate, paying taxes, creating and provide protection for the entrepreneur, there are certain managing intellectual property, hiring employees … The circumstances in which the entrepreneur should consider list goes on and on. putting his or her personal assets at risk. For example, All of these tasks require the entrepreneur’s scare banks will not typically lend money to a new business resources of time and money. Often, the biggest concern that does not have established assets and cash flows when starting a business is practical. What happens if without requiring the entrepreneur to sign a personal something goes wrong - can someone take your house or guaranty. From a practical perspective, this will put the other personal assets? Depending entrepreneurs’ personal assets at on how the business is organized risk. However, the entrepreneur can and operated, the answer may be choose the loans which he or she will For entrepreneurs that yes. sign personally. A personal guaranty One of the best ways to protect puts the personal assets at risk to the are starting a business your personal assets from a business extent of the guaranty, but does not with a partner, there are creditor is to operate the business jeopardize the protection that within an entity. There are many otherwise exists. other complications that considerations in choosing an entity There are websites that offer to – tax considerations, whether the quickly and cheaply help arise from the shared business will have employees, how entrepreneurs to incorporate or ownership structure. many owners or outside investors organize an entity. However, in some will be involved and what role each cases, you get what you pay for. They will have in the business, the exit help you fill out a form and cannot strategy for transitioning out of a successful business, explain the nuances of what each term means. In this etc… – and this article cannot look at all of them. regard, it is akin to filing a postcard with the Minnesota While an entity may provide tax and financial Secretary of State’s office. They might be appropriate for incentives, one of its greatest benefits is the ability to the seasoned entrepreneur who is experienced in starting limit the personal liability from the risk associated with a business, but they offer a number of pitfalls for your business pursuits. inexperienced entrepreneurs. To save time and money, some entrepreneurs try to For entrepreneurs that are starting a business with a take on this challenge by themselves. They organize or partner, there are other complications that arise from the incorporate an entity with the Secretary of State’s office shared ownership structure. It will take an attorney much and think they have covered all the bases. In some cases, longer to straighten out an improperly formed business a simple filing may be appropriate; however, it may not than it will for an attorney experienced in forming address some important considerations. Additionally, entities to set up the entity correctly the first time. there are still many other steps to ensure the corporate Additionally, an attorney can address other issues that entity will provide a liability shield and protect the start-up businesses face and will likely save the business entrepreneur’s personal assets. If the entity fails to adopt money in the long run. appropriate procedures and observe corporate Entrepreneurs have a lot on their plate when starting a formalities, the entity will not protect the entrepreneur if business. Working with a lawyer to form an entity is a challenged in court. very effective use of entrepreneur’s scarce resources: time To be respected by a court, the corporation must and money. If an entrepreneur chooses to do it alone, it maintain appropriate books and records and maintain may cost a lot more time and money to straighten things corporate formalities. At least annually, a meeting of the out after the fact. MV shareholders or owners should be conducted in order to Paul Shneider is an attorney at Blethen, Gage & Krause, elect directors and discuss and document other PLLP. His practice focuses on helping businesses and important business. Similarly, a meeting of the directors nonprofits with their legal needs. He has advised clients or governors should be conducted at least annually to on entity formation, corporate governance, dissolution, discuss and document the appointment of officers, and day-to-day business issues. He also helps businesses compensation for officers, plans for expansion or with succession planning and has a diverse real estate acquisitions that will require substantial liquid assets, practice. He can be reached at 507-345-1166. review of leases, contracts, and insurance policies, among

12 • November 2014 • MN Valley Business

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MN Valley Business • November 2014 • 13

Mike Nolan, director of the Small Business Development Center

Going it alone Entrepreneurs face myriad challenges

By Tim Krohn | Photos by John Cross and Pat Christman

tarting and growing a new small business holds many challenges, but one challenge seems universal. Mark Porisch, who has run a hot sauce and popcorn dressing business for a decade, is quick to answer about the top three challenges his business faces. “Money, money and money. Or maybe Money, time and money.” Indeed, most entrepreneurs say that correctly calculating the amount of capital needed and finding the money through sales or loans are big bumps on the road to success. Mike Nolan, director of the Small Business Development

14 • November 2014 • MN Valley Business

Center in Mankato, said those financing challenges often peak after the business has been up and running for a while. “Three fourths of the time the people we help are already in business. They’re in business because they like it, not because they like cost-analysis or analyzing inventory control and they often don’t have the cash to grow their business,” Nolan said. “People come in and say we keep growing but we don’t have any more money. We help them find ways to free up cash in their business or to go borrow money so they can grow.” Husband and wife team Terry Beenken and Angela

Cover Story

Terry Beenken and Angela Deluca of Good Times Manufacturing Deluca have seen substantial growth in their screenprinting business, Good Times Manufacturing, since they started it in their home in 2004. Now in a facility on North Riverfront Drive they are again outgrowing their space as more orders come in from clients, including pending deals with major retailers Target and Scheels. “Our biggest problem is still financing,” Beenken said. “We started with $200. There’s a low cost of entry to get into screen-printing, so it’s easy to start out, but it’s hard to have a sustainable business model to grow at a good rate. We’re always fighting that because we don’t have enough equity in it to take on big jobs.” Still, said Deluca, their experience leaves them in a much better position to hone in on their best markets and plan for big accounts. “It’s exciting when you start a business and have your hopes and dreams and now it’s exciting because you’re grounded and established and have the equipment you need and are looking at the longevity,” she said. “Target and Scheels are a big thing to bite off. We’ve been working with a financial planner the last two years; we strategically plan the opportunities rather than just taking everything that comes along. So now we can do a Target or Scheels and know how to plan for it,” Deluca said. When Keith Adams started Alemar Cheese in 2009 he’d just come off a period when he had to close the former Bagel Bros. shops, which he’d co-owned, and had precious few resources to start up a cheese production facility.

“Raising money was a problem because credit wasn’t an option. So I had to approach friends, which was difficult to do, but they came through for me,” Adams said. Now Adams has his Camembert-style Bent River cheese in stores around the country, including the top cheese shop in New York City, and has added two new cheeses that have helped his business take off. The Good Times roll Beenken and Deluca, both trained as teachers, got into screen-printing after Beenken used his artistic skills and love for bike racing to begin printing T-shirts and other items for bike racers. The home-based business grew and they moved to their current facility in 2011, where they employ seven people. “We’re getting ready to expand again. We’re doing semiloads out of here. We’re starting to feel as cramped as when we were in our house,” Beenken said. The couple’s big break came when they began filling a niche in the resort wear market that wasn’t being met by the other big printing companies. Beenken used his artistic skills to produce shirts that would be sought by those who drive Jeeps in the mountains of Colorado, where it’s a big recreational pastime. That opened the door to a variety of resort-wear products. “The resort wear is neat because you can create great art and push the envelope a little,” Deluca said. “And you can have one design that sells in a lot of different stores. We’re in Colorado, New Mexico, Utah, Alaska and

MN Valley Business • November 2014 • 15

Greg Simmons helps create the screen-printing designs at Good Times Manufacturing now we’re just getting into resort wear in Minnesota and Wisconsin.” The couple had been talking with Target for a while but had to delay a commitment as they make sure they will have the capital and facility to handle a major account. “There’s a big risk exposure,” Beenken said. “We could grow very fast but there’s a lot of risk in it. You have to take risk, but not too big of risk.” The couple said their advice to other entrepreneurs is to seek help in forming your business model and keep an eye on your goals and business plan. “The SBDC was a big thing for us. They really got us focused on running the business on numbers. You don’t just take a leap of faith all the time, you look at actual numbers and base things on that. Giving a helping hand The SBDC, located at Minnesota State University, has had a growing client list in recent years, Nolan said.

16 • November 2014 • MN Valley Business

“We’ve helped start 27 businesses this year and have worked with 403 clients this year so far. We’ve helped clients access $11 million in capital. It’s really grown.” Nolan said one of the most common mistakes he sees in startup businesses is not seeking help soon enough. “The four phases of a business is the idea, planning, funding and starting the business. By then, you’re either growing or dying. People sometimes wait too long for help. If you’re out of cash, we can help.” That help can come in pinpointing available credit sources, renegotiating debts, and working with cities and counties, who have an interest in retaining local jobs, Nolan said. One cash force Nolan said entrepreneurs have to be wary of using is short-term borrowing for long-term assets, such as equipment. “People buy on credit cards. You do that enough and you have so much short-term debt due and you’re not making

Mark Porisch has found good markets for his Lucky’s sauces and dips. enough money to cash flow it.” He said they often work with clients to make sure they have the necessary information to approach a bank for financing. “A lot of banks have specific compliance requirements. They have to prove that the loan was worth doing.” One tool the SBDC uses is creating a dash board to help people manage their business. “It’s like the dashboard of a car showing how fast am I going, how far can I go?” He said that while businesses struggling to grow face challenges, so can businesses that are growing. “Some go out of business by growing too fast, too. Managing growth is just as hard as managing business downturns,” Nolan said. “It’s not necessarily one mistake people make, there are lots of things that can go wrong. One thing I try to do is get people to work one hour a week on their business. Not in their business but on it.”

Going national When he started Alemar Cheese Company five years ago, Adams did not begin with a bang. “I ruined the first batch. It’s heartbreaking to have all this wonderful, organic milk and have that happen.” But after refining his skills, Adams saw steady growth with his sole product of Bent River cheese. It came from a steady determination. “Distributors are the way you grow your business in the cheese business and they’re not standing there waiting for you. You have to prove it to them. After you have sales it’s much easier. They come after me now, or if I call it’s a warm phone call because they know me.” “We’re coast-to-coast now.” Alemar has received numerous glowing reviews in publications across the country and recently got one of its cheeses into one of the premier shops, Murray’s Cheese Shop in New York. Adams said his drive to perfect his Bent River cheese probably held him back longer than he should have allowed. He recently added Good Thunder, a Surly-beer washed-

MN Valley Business • November 2014 • 17

Porisch turned his hobby for making sauces at home into a full-time business. rind square, and Blue Earth American Brie. “I should have added a second cheese earlier. When we made the second cheese, sales grew dramatically.” Adams recently hired Craig Hageman as Alemar’s fulltime cheese maker and has been considering opening a retail shop in his business. “We’ve kicked around maybe having a tasting room once a week or something. We’d love to put in a kitchen because Craig was a chef for a long time and he’s so good.” Making his own luck Porisch’s entrepreneurial trail started like many. Laid off from his job, friends encouraged Porisch to start selling his homemade hot sauces and popcorn dipping sauces. Lucky’s Popcorn Dressing was born in 2008 as Porisch dipped into savings. “I tried to do as much on my own dime as I could. I had two small SBA loans through the Southern Minnesota Initiative Foundation, and that was certainly helpful for cash flow and expansion. SMIF has been very helpful,” Porisch said. “I think a lot of people would like to be entrepreneurs, but you don’t know how much work and money it takes. I tell people I’ve turned my 401(k) into a 000(k).” The operation has grown with his products in several food co-ops in the state as well as all Kowalski and Whole

18 • November 2014 • MN Valley Business

Foods stores in the Twin Cities. He recently got his hot sauce and honey mustard sauce in all of the Whole Foods stores in the Midwest region. Still, it’s a one-man operation. “I cook everything and market and sell everything and do the books and that takes more hours of the day than I’d choose it to. “I’m trying to bring a couple of investors in to get me out of the kitchen so I can do more selling. I’ve reached the limit of what I can do anymore.” His advice to would-be entrepreneurs: Understand the time commitment and money that will be needed. “Everything is going to take three times longer and take three times more money than you put in your business plan,” he said. “That being said, it’s a ton of fun. I’m happy that I started it and I’m happy with the reaction to it. I’ve won awards including in Louisiana - for hot sauce of all things.”

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MN Valley Business â&#x20AC;˘ November 2014 â&#x20AC;˘ 19

Kevin Maslakow (left) and Steve Breiter continue to learn the needs of their customers at the new Mapleton Farm and Home store.

Saving a local linchpin Mapleton regains its hardware store

By Heidi Sampson | Photos by Pat Christman

n 2012 the Mapleton Hardware store closed, its entire product selection sold off as the remnants of an empty building occupied Mapleton’s Main Street for the next year and a half. By 2013, Jim Heins, owner of several agricultural-related businesses and a native of Vernon Center, began working closely with the city of Mapleton, trying to figure out if a farm and hardware business could once again be a viable retail establishment. “Jim Heins is a business man,” said Steve Breiter, Manager of Mapleton Farm and Home. “He looked at this opportunity as being something that could potentially benefit himself, as he owns a farm operation near Vernon Center, as well as the local farmers within this area by

creating access to farm and hardware products.” After communicating with the city, Heins decided a hardware store would be a great investment. Before the Mapleton Hardware had closed, it was a “Do it Best” supplier. Hein’s looked at three of the four major hardware suppliers. He chose “Do it Best” as his supplier. “Jim started talking with me in May of 2013,” said Steve. “I ended up coming on board as the Manager on October 1st. We took over ownership of the building on October 16th of 2013, and in coordination with Do it Best, we came up with a game plan of what the store should look like.” The game plan included an extensive remodel, facelift,

Profile

20 • November 2014 • MN Valley Business

Toro lawn mowers line the walkway outside the store. and addition to the existing building. Ron Schultz Construction was hired to gut the building, replacing all of the electrical, plumbing, and heating components. The Main Street door was closed off and a main entrance was constructed on the Second Avenue side, since there were more parking spaces available to customers on that side of the building. With all new electrical, plumbing, and heating in place, the building received an internal facelift through flooring, light fixtures, and aisle choice, creating the feel of a much larger space. An addition was constructed along the side yard, which would allow for community events, vendors, as well as meetings to take place on a regular basis. The space will also be utilized by customers seeking a cup of coffee and conversation. The awning that stretches out into the side yard in front of the addition allows for the current display of lawn and garden items. Once the grade on the side yard is completed, future rental equipment will occupy the yard as a display and pickup area. “Officially, Mapleton Farm and Home opened in April,” said Steve. “Our renovation has taken a lot of time to complete and in many respects, we still aren’t done. Since we had a late spring last year, we were well into June before some of our exterior work was completed. For instance, our sign that said ‘Mapleton Farm and Home’ wasn’t up until June.” Next year the Mapleton Farm and Home’s building will celebrate 100 years, as it originally began as a Case IH dealer in 1915. From its opening date until now, the building has always been an agricultural-hardware related business.

Home Town Service Mapleton Farm and Home already provides some rental equipment while the side yard is in the process of being completed. The store has also been working to build up the inventory as customers come in needing specific farm related items. They do key cutting and chainsaw sharpening, make hydraulic hoses for farm equipment, as well as having the ability to color match paint for customers. They also sell Schaeffer Oil, a specialty line that not many businesses in the local area carry. “We have everything from agricultural spray parts to household items,” said Steve. “Downstairs we have huge selection of electrical, plumbing, nuts and bolts. We even have a pet section that we are very proud of. We carry all natural foods for household pets, which means that our pet food has no known toxins. That’s very important for us, to be conscious of treating our pets properly.” Mapleton Farm and Home is also a Toro and Stihl dealer, providing them the ability to service those brands. Eventually they hope have a small engine repair shop off the back of the store but that is also a work in progress as they keep expanding to meet the needs of their customers with items like fencing, shelving, water softeners and water heaters, piping and conduit, PVC pipe, and even air conditioners. “We hired Kevin Maslakow, our assistant manager, who has a lot of hardware and agricultural experience,” said Steve. “He’s the means behind the product. I have no farm background as all of my 23 years of experience has been in retail and not agriculture, so to find out what spray parts people are using for what is all new to me. However, we are certainly learning as we go.”

MN Valley Business • November 2014 • 21

The hardware store is a Stihl brand dealer and hopes to add a small engine repair shop in the future. Small Town Employment Mapleton Farm and Home employs 20 people - four fulltime employees and the rest, part-time. They also pride themselves on being available to their customers through an on-call system that allows farmers to reach employees of the store 24 hours a day, 7 days a week. “We want to be accessible to our customers,” Steve said. “We’ve been very fortunate to have people from the area communities come in and check us out. Our goal has been to reach three sectors, the local residents, businesses within our target 12 mile radius – which, they’ve really responded quit positively to the store and what we carry – as well as the local agricultural community. The agricultural community is where we’ve really had to learn the most, mostly because they are the most diversified in terms of what it is they do.” A Future for Mapleton Farm and Home Although the Mapleton Farm and Home store still feels like a work in progress as they continue to add inventory and finalize the remodel, they see themselves as continuing to grow and expand with their community in the years to come. “There are a lot of diverse farmers in the area and we want to continue to grow with them,” Steve said. “Our first goal was to get this store open and year two possibly look into the second floor of our building to see if we can’t get some rental units up there. Beyond that, we haven’t really talked seriously about anything. I feel this is a fun environment to work in. I think that people love to shop

22 • November 2014 • MN Valley Business

hardware and we carry a wide variety of products. Anybody coming into our store will find exactly what they need more often than not.” MV

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Anne Makepeace (left) with board chair Jean Geistfeld.

The Grand Center for Arts and Culture

By Pete Steiner

Photos by John Cross

y day, she is the HR director at New Ulm Medical Center. But evenings and weekends, Anne Makepeace dotes on her baby. No, not her 20-year-old daughter who’s away at college. She’s nurturing a dream which, she admits, is still a work in progress. But if one word could sum up the crowning achievement of Makepeace’s professional life, that word would be “Grand.” In fact, that’s the name of her baby, a two-decades-old project in New Ulm. And, if applied as an adjective, “grand” is not an exaggeration. Even in a town filled with spectacular facades, the

Grand Center for Arts and Culture stands out, commanding your eye as you approach on Minnesota Street.

Spotlight

24 • November 2014 • MN Valley Business

••••

So just where have we found ourselves? A few weeks back my wife and I decided to indulge an evening at the Grand. New Ulm is a different world anyway, a “mini-Munich,” as Minnesota Monthly called it. But this place would fit in well in Uptown Minneapolis or Boston or San Francisco. Art lines the brick walls, and at eight, a fine blues trio kicks it in the music

While the Grand Hotel burned down twice the current Grand Kabaret building still sits on the original 1875 field stone foundation. room. The dinner of a Greek salad, pistachio salmon fingers and woodfired pizza is perfect. There’s an art opening in the second-floor gallery that you can visit between music sets. And if Makepeace and her board complete their dreams, much more is on the way. •••• Anne’s great-great-great Grandfather, Phillipp Gross, built the first Grand Hotel at its present downtown location in 1856. It burned down in 1860, was rebuilt and burned again. The present structure sits on the 1875 natural fieldstone foundation. While the HVAC and electrical systems have all been brought up to code, awaiting LEED certification, the exposed original brick walls and tin ceiling on the main floor ooze history. Originally from Milwaukee, Makepeace moved to Minneapolis for a job in 1981. Aware of the family heritage in New Ulm, she finally made a pilgrimage there in 1993. She recalls her succinct initial reaction on first laying eyes on the Grand: “Whoa!!” She began commuting each year to Heritage Fest. By 1997, the family had a historic marker placed on the Grand. About then, two major tenants, including KNUJ radio, vacated the building. Believing the entire structure needed renovation, Makepeace and her then-husband moved to New Ulm. They bought the building and began gutting it in 2001. But by 2003, having trouble finding tenants, they rented out the ground floor space for a concert by a classical guitarist. Impressed by the acoustics, Makepeace had an epiphany: why not make the Grand a space for the arts? Over the next six years, musicians grew to love performing at the Grand Kabaret. But what was to be done with the top two floors?

•••• In 2009, the Grand hosted a public meeting. Megan Rolloff was among those inspired by the idea of an Arts and Culture Center. With an art degree from MSUMankato, she says she knew lots of artists, but they were scattered, with no central place to share ideas. They might gather at someone’s house, exchange ideas, even sell their work there, but they would soon disperse. “A lot of talented people, the Bohemian element, needed a hub,” she said. So she and others immediately signed on as the first board members. They soon decided to create a nonprofit 501(c)(3) that could fund-raise and apply for grants. The Grand Center for Arts and Culture was born. Makepeace began transferring ownership of the building. The board plunged into a full restoration. Designer Christine Carmichael helped blend the historical with the functional. Meanwhile, the new nonprofit got $450,000 in state and federal historic tax credits, partnering with Citizens Bank Minnesota. A Legacy grant from the state netted another $100,000, and community fundraising brought in $100,000 more. Various foundation grants and gifts pushed the total raised to about $800,000. But that still left a gap of more than $1.5 million to cover all the restoration costs. That’s when, Makepeace said, some major anonymous donors stepped in to cover the rest. When they were done, they had an art gallery on the second floor along with a large space up front that can be used for receptions or community education. The third floor had eight artist studios of varying sizes. ••••

MN Valley Business • November 2014 • 25

TOP: The upper floor includes room for artist lofts. Bottom: The Grand Center of Arts and Culture features a variety of local artists’ work. Cash flowing it “We’re not running it to make money,” Makepeace says. “But this has to last another 100 years.” Rolloff adds, “Now, we just have to keep ourselves afloat.” The first floor restaurant is a big part of that. “Pepperboy” is run by Topher, the renowned chef whose credits include the legendary Country Pub. Topher rents the dining room and spacious kitchen from the Grand. He serves up wood-fired pizzas and southern barbeque. Income will also come from rental of the artists’ studios, although only one of the six is occupied so far. The largest studio on the third floor looks out on a beautiful panorama of downtown New Ulm. Rolloff says this was the former bridal suite for the old hotel, where her husband’s great grandmother spent her wedding night. The room and its hardwood floors are currently rented out for yoga classes. The Grand gets commissions from artist’s sales in their gallery, and they stage a couple fund-raisers each year; one last spring netted more than $7,000. Memberships, starting at just $25 a year bring in about $10,000 annually. Meanwhile, they need to apply for more grants, one of which might fund their first artist-in-residence. While Makepeace continues as founding director, the organization is searching for an executive director to help with fundraising. •••• Five years after joining the board, Megan Rolloff remains enthusiastic about the dream: “Now we have a place where we (artists) can support each other. But it will take time…. We can come up with great ideas all day long, but… We are

26 • November 2014 • MN Valley Business

a hard-working board, we’re looking for renters – artists, writers, videographers.” “We have no debt,” Makepeace declares proudly. But she knows that’s half the battle. “I mean, the insurance alone…” and her voice trails. She ticks off lists of projects and tasks, arranges old photos on the walls, some of them from her family collection. “It frustrates me when I see how much is left to do.” Still, the Grand just won a Preservation Alliance Award for Minnesota. That will give even more ammo to their grant writers. Above the lovely little main floor bar, there’s a saying from Goethe, written in old German script. It translates, “Life is too short to drink bad wine.” Anne Makepeace might say, life is too short to do anything that’s less than grand. MV

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Michael Maes (left) with sons Dan and Mikey are the fourth and fifth generations to run The Loose Moose and Mettler’s.

A family tradition since 1903 Loose Moose carries on with Maes family By Heidi Sampson Photos by John Cross

he history of the Loose Moose Saloon & Conference Center dates back to 1903 when Michael Maes’s great-grandfather, Frank Mettler, started a bar located one block from their current location, called Mettler’s. As the bar was passed down the family line over the next four generations, Rene Maes expanded into the building adjacent to Mettlers, which became known as Mr. Rene’s Banquet Hall in 1977. By 1990 they changed Mr. Rene’s Banquet Hall to Chevys. With the purchase of the VFW Post 950 building in 2008, they expanded into what is now known as the Loose Moose Saloon & Conference

Center, occupying three spaces along South Front Street in downtown Mankato. “When we started that whole remodel project after purchasing the VFW, there wasn’t a window in either building,” Michael said. Now the building has a bank of windows. “Also during that remodel project we came up with the Northwood’s moose theme.”

All In The Family

28 • November 2014 • MN Valley Business

MVB: How did you come to own the business? Michael: I bought the bar from my dad, Rene Maes, back in 1996. It was a 10-year process switching ownership over. He passed away in 2009. I would be the fourth generation of

The Loose Moose has a large seating area for diners and a separate banquet room. Mettler’s, my two boys, Mike and Dan would be the fifth generation, and the sixth generation of grandson and granddaughters have already been born. So I’m hopeful our legacy will continue through that generation as well. MVB: How do you divide up your time and duties? Michael: Mike and Dan help manage at night. Actually, I have six really key people that manage the night and day shifts while I oversee the entire operation. We are pretty laid back as a business. You won’t find tight corporation rules here, only a family business that operates as a family.

course there have also been a lot of changes through liquor controls and DWI laws over the years. Front Street used to be wide open, now everything is boxed in. People ask ‘where is your street?’ I say we don’t have a street. We have an alley. Another big change has been the rising cost of food and liquor. We used to sell hot beefs for a $1.10. Back in the 70s that’s all we ever sold, hot beef, beer and popcorn.

MVB: What age were you when you started? Michael: I started when I was in the third grade. My dad put me to work at Mettler’s. I would come down to rack bottles and help clean on Sundays. I got paid 60 cents a Sunday. In the 60s, that was good money. Eventually my pay went up to a dollar a Sunday and that was usually for about three hours of work. Through my junior high and high school days I would come in help dad slice beef. I also scrubbed and cleaned the floors once a week. When I went to MSU for college I started working here full-time at night. I guess this was just something I was destined to do.

MVB: What do you think the biggest asset of the business has been? Michael: My staff. It’s the people that I work with. It’s also the tradition of how we do things and at the same time, we have to think young to get the young people to come and be a part of our clientele, as well as to keep that clientele coming around. I always tell everybody that it takes a long time to keep good customers. It takes just one time to lose them forever. When we do things here, especially with our food, everything is homemade. We offer home cooking at its best. We make our own buns, pizza dough and mashed potatoes, we even peel everyone single one of those potatoes. When we make hot beef, we still have the original cast iron stove in the basement where we cook it for five hours and slice it. It’s what we’ve done for over 50 years. We also have our seasonal Tom and Jerry drinks, which starts up in November. My dad showed me how to make them and I’ve showed my sons, it’s our family’s secret recipe.

MVB: What are some of the major changes to affect your industry over the years? Michael: When I started 18 year olds could drink. Of

MVB: Who is your clientele? Michael: We have families on the Loose Moose side to college kids, business men, and couples who visit the

MVB: How many employees do you have? Mike: I have 41 employees. Five of those 41 are full-time. Basically, all the managers are full-time. Everybody else is considered part-time.

MN Valley Business • November 2014 • 29

Mettler’s side. We welcome everybody on the Loose Moose side. The Mettler’s side is 21 and over. We offer space and catering for large groups and wedding parties on the Loose Moose Saloon and Conference Center side of things. The Loose Moose holds karaoke on the Friday and Saturdays. Every second and fourth Friday of the month we feature a different happy hour band starting in November. Music starts at 5:30 p.m. and goes to 8 p.m. Mettler’s is the entertainment side of things, while the Loose Moose side is the food side. I term it as the naughty-nice sides. MV

Hours:

Mettler’s is open evenings from 3:30 p.m. to 2 a.m. The Loose Moose Saloon Monday through Saturday 11 a.m. to 1 a.m.

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30 • November 2014 • MN Valley Business

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LAW OFFICES IN 14 LOCATIONS NATIONWIDE

Wade Davis

Construction/Real Estate Residential building permits Mankato

(in thousands)

- 2013 - 2014

11000

Residential building permits North Mankato

- 2013 - 2014 (in thousands)

3000

$2,603 $4,420

8250

$1,428

2000

$1,236

5500

1000

2750 0

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

- 2013 - 2014 275

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

Housing starts: Mankato/North Mankato - 2013 - 2014

16 14

165

110

55 J

Source: Realtors Association of Southern Minnesota

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2013 - 2014

Commercial building permits North Mankato

- 2013 - 2014 (in thousands)

2000 1500 1000

$2,440 $1,300

$140 $165

500 D

Source: City of Mankato

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

Foreclosures: 2013 Year End

— 2013 — 2014

5.5 5.0

4.3%

4.5 4.0

4.0%

3.5 3.0

170 220

220

80000 70000 60000 50000 40000 30000 20000 10000 0

Source: City of North Mankato

Existing home sales: Mankato region

Source: Freddie Mac

County

2012

2013

Percent change

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

126 37 46 98 42 49 58 57 17

101 19 27 70 25 43 39 36 24

-20% -49% -41% -29% -40% -12% -33% -37% +41%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • November 2014 • 33

■

Agricultural Outlook

By Kent Thiesse

Will farmland rental rates fall with crop prices?

ost land rental rates in south central Minnesota breakeven price to either increase or decrease. increased from 40-50 percent or more from 2010 University of Minnesota Extension puts out an updated to 2013, according to data compiled by the summary of “Cropland Rental Rates for Minnesota University of Minnesota. Average rental rates for 2014 Counties” each year. The most recent summary was were as high, or even higher, than 2013 land rental rates released in September (see related chart). across the region. Farm operators and landlords are now Land rental rates for 2013 in most of the counties listed beginning the process of negotiating land rental contracts ranged from about $150 per acre to well over $300 per for 2015, and are trying to arrive at equitable rental rates. acre. Average land rental rates in South Central Minnesota The commodity prices for corn and soybeans have been increased by an average of 10.7 percent from 2012 to 2013, dropping rapidly in recent months, due to the expected and increased by an average of 12.1 percent per year from record U.S. corn and soybean production in 2014, and the 2009-2013. associated large increases in the grain supplies. USDA The land rental rates in the summary include both rental recently released the final national average crop prices for agreements between family members, as well as nonthe 2013-2014 year, which were $4.46 per bushel for corn family members. Rental rates on agreements between and $13 per bushel for soybeans. In family members tend to be somewhat 2012-2013 prices were $6.89 for corn lower than the average rental rates in Average rental rate per acre and $14.40 for soybeans. a given area. However, the data also County 2009 2011 2013 Current cash corn prices are near verifies that the average land rental $3 per bushel, while cash soybean rates being paid in a given area are Blue Earth $171 $194 $229 prices are near $9 per bushel. Forward not nearly as high as the “coffee shop Brown $148 $173 $208 pricing opportunities for the fall of rental rates” that are often quoted as Faribault $168 $194 $243 2015 for next year’s corn and soybean the going cash rental rates in an area. crop are only slightly higher than the The U of M data helps provide a good Le Sueur $153 $179 $261 current cash grain prices. Many farm basis for historical land rental rates. Martin $177 $210 $274 operators could face a substantial loss An alternative to the continuation Nicollet $161 $197 $251 per acre at the current projected of high cash rental rates for 2015 may commodity prices and input costs. be for producers and landlords to Waseca $145 $175 $237 Based on Southern Minnesota consider a “flexible cash lease” rental Watonwan $146 $177 $256 farm business management records, agreement, which allows the final Source: University of Minnesota Extension the average total direct costs in 2013 cash rental rate to vary as crop yields for seed, fertilizer, chemicals, fuel, and market prices vary, or as gross etc., excluding land rents, on cash revenue per acre exceeds established rental corn acres was approximately $517 per acre. targets. There are many variations to setting up a flexible Fertilizer costs, and some other expenses, declined slightly lease agreement between a landlord and farm operator. It for 2014; however average direct expenses for corn are is important to farm operators to keep the “base rental probably still in a range of $450-$500 per acre for many rate’ at a level that at least allows them to breakeven on farm operators. their crop input costs and land rental expense. The average direct expenses in 2013 for soybeans in The big key, regardless of the type of flexible lease Southern Minnesota, excluding land rent, were agreement, is that both the landlord and tenant fully approximately $222 per acre. Average soybean direct understand the rental agreement, and the calculations that expenses for 2014 are likely to be similar to 2013 expense are used to determine the final rental rate. It is extremely levels. important that all aspects of a flexible land rental lease In addition, the records showed an average of $116 per agreement be spelled out in detail in a written rental acre on cash rented corn acres, and $77 per acre for contract, which is signed by all parties. Successful soybeans, for costs of farm machinery, hired labor, property agreements have always involved cooperation, trust, and insurance, and other overhead expenses. good communication between the farm operator and the Based on the records, the average crop yields for 2013 landlord. across Southern Minnesota were just over 171 bushels per Many farm operators realize that at current rental rates acre for corn and 48 bushels per acre for soybeans. for the 2015 crop year, along with expected crop expenses At those yield levels, along with the average direct and and projected commodity prices, they are likely to show a overhead expenses listed earlier, and an average land substantial loss per acre on next year’s crop. In many rental rate near $250 per acre, the breakeven price to cases, landlords have been reluctant to lower land rental cover the cost of production was over $5 per bushel for rates, due to high commodity prices and net crop returns corn and over $11 per bushel for soybeans. from 2010-2013, as well as strong demand for rented crop Of course, there can be a big difference in crop yields land. However, it appears that crop economics have and crop expenses from farm-to-farm that can cause the changed significantly from levels that existed in recent

34 • November 2014 • MN Valley Business

Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2013 — 2014 8

$4.15

$12.63

16 12

Iowa-Minnesota hog prices

Source: USDA

Milk prices

185 pound carcass, negotiated price, weighted average

— 2013 — 2014 140

$9.04

$3.09

Source: USDA

$101.11

$25.43

112

Minimum prices, class 1 milk Dollars per hundredweight

— 2013 — 2014 30

126

$20.75

84 70

(dollars per bushel)

— 2013 — 2014 20

Soybean prices — southern Minnesota

$86.08 J

Source: USDA

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.

C. Sankey

years. Serious and honest negotiation between farm operators and landlords will be required to arrive at equitable rental rates for 2015. MV Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@ minnstarbank.com

We’ve been there. We’ll be there. • Appraisals • Agricultural Property Management • Agricultural Real Estate Sales • Commercial Property Management

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• Commercial Leasing New Ulm, MN 507.359.2004

Olivia, MN 800.545.6227

New Hope, MN 877.535.4914

Faribault, MN 866.332.8211

TH 14/CR 41 Interchange Improvements, North Mankato, MN

(507) 625-4171 | www.bolton-menk.com MN Valley Business • November 2014 • 35

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major September Industry ‘13 ‘14 Construction Manufacturing Retail Services Total*

74 141 45 165 425

Percent change ‘13-’14

73 167 37 143 420

-1.4% +18.4% -17.8% -13.3% -1.2%

Major Industry

September ‘13 ‘14

Construction Manufacturing Retail Services Total*

2,286 1,964 1,141 4,758 10,149

Percent change ‘13-’14

2,406 1,784 1,097 4,214 9,506

+5.2% -9.2% -3.9% -11.4% -6.4%

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

Minnesota Local non-farm jobs

- 2013 - 2014

Nine-county Mankato region

126,429 127,125

30000

2000

10000

1000

Local number of unemployed

- 2013 - 2014

Nine-county Mankato region

5,872

8000 6000

- 2013 - 2014

152,473 114,720

150000

4,750

Minnesota number of unemployed 200000

10000

100000

4000

50000

2000 0

2,818 2,887

3000

20000

00000

- 2013 - 2014

(in thousands)

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) August

2013

2014

4.0% 55,022 2,311

3.2% 56,331 1,857

Source: Minnesota Department of Employment and Economic Development

36 • November 2014 • MN Valley Business

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

August 2013 4.2% 4.0% 4.9% 5.1% 4.8% 3.8% 4.0% 5.0% 5.2% 5.0% 5.0% 7.7%

August 2014 3.3% 3.3% 4.2% 4.2% 4.0% 2.9% 3.3% 4.4% 4.7% 3.8% 3.6% 5.7% C. Sankey

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2013 - 2014

987 1200

(In thousands)

- 2013 - 2014

500

1,111

1000

400

800

300

600

$413

$425

200

400

100

200 0

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

Sales tax collections Mankato

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

40000

$32,184

51000 34000

20000

17000

10000 J

— 2013 — 2014 $3.34

4 3 2

$2.87

1 J

Gas prices-Minnesota — 2013 — 2014

$3.20

4 3 2

$2.92

1 0

Source: City of Mankato

Gas prices-Mankato

Source: City of Mankato

$58,043 $60,700

68000

30000

- 2013 - 2014

85000

60000

$37,728

Mankato food and beverage tax

- 2013 - 2014 50000

Source: Sales tax figures, City of Mankato

Stocks of local interest

Sept. 12

Oct. 16

Percent change

Archer Daniels

$50.39

$43.17

-14.3%

Ameriprise

$123.60

$109.87

-11.1%

Best Buy

$33.90

$31.28

-7.7%

Crown Cork & Seal

$49.12

$44.87

-8.7%

Eventis

$17.65

$19.28

+9.2%

Fastenal

$45.60

$40.78

-10.6%

General Growth

$23.77

$24.03

+1.1%

General Mills

$53.05

$48.86

-7.9%

Hutchinson Technology

$4.21

$3.50

-16.9%

Itron

$40.67

$37.06

-8.9%

Johnson Outdoors

$25.30

$27.32

+8.0%

$143.90

$135.05

-6.2%

Target

$62.09

$59.44

-4.3%

U.S. Bancorp

$42.31

$37.10

-7.6%

Wells Financial

$26.00

$25.76

-1.0%

$.76

$0.70

-8.0%

$31.28

$32.28

+3.2%

Winland Xcel

Source: GasBuddy.com C. Sankey

MN Valley Business • November 2014 • 37

We’ve Got Talent... and opportunities Insights on Greater Mankato’s Talent Landscape

ith five higher education facilities within a 30 mile radius in the Greater Mankato region it is no surprise that the area is full of untapped potential. With a wealth of individuals prepared to jump into the job market after graduation the question is not if we have available jobs within the region, it is which industries are hiring. Greater Mankato Growth recently released the 2014 Talent Supply & Demand Report, an update from the

Greater Mankato Growth

By Richelle Ballanger, Marketing & Communications Assistant at Greater Mankato Growth

initial Talent Supply & Demand Report released in 2012. This report is completely unique to our region and was created through the collaborative efforts of Greater Mankato Growth, the Minnesota Department of Employment and Economic Development (DEED), the South Central Workforce Council, Bethany Lutheran College, Gustavus Adolphus College, Minnesota State University, Mankato, Rasmussen College and South Central College.

The Greater Mankato Young Professionals program seeks to engage and retain talent in the region.

38 November • MN Valley Business 1 •• JANUARY 20132014 • MN Valley Business

The report outlines the total supply of talent within the Greater Mankato marketplace who have completed advanced education beyond high school and compares it to the business demands of occupational categories that most closely align. In a growing economy, area businesses need to find qualified workers and workers need to find employers that can best utilize their talent. The report identifies and provides information on where the Greater Mankato marketplace appears to have shortages in talent as well as where a surplus in talent exists. The report can be used as a tool for organizations and educators to develop and attract talent in areas where there are shortages and within the economic and business development arena to attract businesses in areas of talent surplus.

The 2014 update highlights opportunities for growing and attracting businesses and jobs based on the region’s surplus of talent in a variety of fields including: • Business management and support services • Accounting and financial operations • Mass communication and marketing specialists • Computer science and information technology • Biology, chemistry and physics

• • •

drivers Diesel mechanics and automotive engineering Manufacturing and engineering Home health aides and personal care aides

With a better understanding of what the talent supply and demand status currently is for our Greater Mankato region, businesses, educational leaders and job seekers are able to recognize the gaps as well as the opportunities to capitalize on a talented workforce to meet the current and future needs of our growing economy.

For more information on talent, and to view the full report visit greatermankato.com.

While continued business development is an important piece of the talent supply and demand puzzle, it is also important to look for and analyze talent shortages. Currently there are talent shortages in the following fields: • Production occupations • Truck and equipment

Greater Mankato Growth

DEED projects the creation of 21,377 new jobs and opening of 43,340 jobs due to replacement in the 23 counties of the Southwest Minnesota Planning area by 2020. As opportunities become available job seekers and businesses can benefit from knowing what fields are in high demand throughout our region. Through the 2014 Talent Supply & Demand Report job seekers

would find that the highest potential for employment in the Greater Mankato area can be found within engineering, manufacturing and technology related careers. Businesses looking to locate in the region would find the largest surplus of talent lies in the business, business management, administration and human services fields.

MN Valley Business • November 2014 • 39

Greater Mankato Growth

Growth in Greater Mankato NEW LOCATION

RIBBON CUTTING

Emergent Networks 151 St. Andrews Drive, Suite 600, Mankato

South Front Street Redesign Mankato

NEW BUSINESS

Perfect Tan 1633 Monks Avenue, Mankato

Cavalier Calls on the Newest Greater Mankato Growth Members

Starbucks Coffee Company 1872 Madison Avenue, Mankato starbucks.com

Pieology Pizza 1600 Warren Street, Suite 3, Mankato

40TH ANNIVERSARY

Snell Motors 1900 Madison Avenue, Mankato

40 november • MN Valley Business 1 •• JANUARY 20132014 • MN Valley Business

Water’s Edge 800 Agency Trail, Mankato watersedgemn.net

Cavaliers

Navigating through greatermankato.com

Resources available on Greater Mankato Growth’s website, greatermankato.com

Tools for Employee Recruitment The employee recruitment tool on the Greater Mankato Growth website provides various resources to help with employee recruitment. The tool provides links that can help businesses find the right employees, advertise open positions, get connected with the next generation of employees

and provide potential employees information about the community. The employee recruitment tool also features the Greater Mankato: Way to Grow video. To access employee recruitment information visit greatermankato.com/employeerecruitment.

5:00 - 7:00 p.m. November 4 December 2

Mankato Clinic Country Inn & Suites Hotel & Conference Center By Carlson

2014 Business After Hours Sponsored by:

September Business After Hours hosted by Chankaska Creek Ranch & Winery

7:30 - 9:00 a.m. November 19 December 17

Emergent Networks Unique Specialty & Classics

2014 Business Before Hours Sponsored by:

September Business Before Hours hosted by Primrose Retirement Community

Greater Mankato Growth Business After and Business Before Hours gives representatives from GMG member businesses at the Engaged Level or higher an opportunity to get together with one another to exchange ideas and learn about each other’s businesses. For more information on these and other member events, visit greatermankato.com/events.

MN Valley Business • november 2014 • 41

Congratulations 2014 Business Award Recipients

Greater Mankato Growth

The Greater Mankato Business Awards & Hall of Fame, A Reflection on Success, will be held on November 18, 2014. Members of Greater Mankato Growth are cordially invited to join in celebrating the accomplishments and successes of this year’s award recipients. The event starts at 5:30 pm with social hour, dinner is served at 6:30 pm and the program begins at 7:00 pm. Registration is required for the event and closes on November 11, 2014. To register or view a list of this year’s recipients visit greatermankato.com/business-awards-hall-fame.

Greater Mankato Growth Awards Hall of Fame: Minnesota Elevator Inc. Distinguished Business Award: PresenceMaker, Inc. Entrepreneurial Business Award: Friesen’s Family Bakery & Soup Bar Brian Fazio Business Education Partnership Award: College of Business - Minnesota State University, Mankato and Taylor Corporation - Innovation Center Hap Halligan Leadership Award: Barb Embacher Young Professional of the Year: Kevin Velasquez Visit Mankato Awards Bring It Home Award: Bent River Outfitter Hospitality Award: Justin & Jenna Rinehart, Nicollet Bike Shop

Presented by:

42 november 2014 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

City Center Partnership Awards Renovation Over $3,000,000:VINE Faith in Action, Adult Community Center – VINE Faith in Action Renovation: $1,000,000 - $3,000,000: South Front Street Reconstruction – Front Street Property Owners and City of Mankato New Construction Under $2,000,000:Veterans Memorial Place – Local Veterans Committee, City of Mankato and City of North Mankato Renovation Under $1,000,000: Office Build Out – Visit Mankato Downtown Detail: Pub 500 Patio – Pub 500 Façade Improvements: Public Safety Center – City of Mankato Innovative Interior Remodel: Interior Renovation Y Barbers / Onatah On Belgrade CityArt “People’s Choice” Award: To be revealed at event

Mankato Marathon Five Years of History in the Making

2010 - Start line from the inaugural Mankato Marathon

2012 - Cheer zones added along race course

2014 - Legacy program added

2011 - 5K race added

Greater Mankato Growth

2013 - Toddler Trot, Diaper Dash and Charity Program added

MN Valley Business â&#x20AC;˘ november 2014 â&#x20AC;˘ 43

» C OME JUDGE

for Yourself.

GOLFERS FROM AROUND THE WORLD COME TO CHALLENGE THE JUDGE and the two other golf courses in Prattville at RTJ Capitol Hill. Bring your clubs and come take on Judge hole number 1, voted the favorite hole on the Trail. Complete your day in luxury at the Marriott and enjoy dining, firepits and guest rooms overlooking the Senator golf course. With the Marriott’s 20,000 square feet of meeting space, 96 guest rooms and luxurious Presidential Cottage combined with three world-class golf courses, business and pleasure can definitely interact in Prattville.

THE ROBERT TRENT JONES GOLF TRAIL AT CAPITOL HILL is home of the Yokohama Tire LPGA Classic on the Senator Course September 18 to 24, 2014. The Marriott Prattville is part of the Resort Collection on Alabama’s Robert Trent Jones Golf Trail. Visit www.rtjgolf.com or call 800.949.4444 to learn more.

I+S GROUP

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