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NEARLY $1M FOR TRAINING EMPLOYEES
Twenty-eight businesses in northwest lower Michigan will receive a total of $906,348 for employee training from the second round of fiscal year 2024 grants from the state’s Going PRO Talent Fund. The employers will use the funding to train 171 new hires and 291 existing employees. The funding will also support 66 registered apprentices. Award recipients span multiple industries and include Great Lakes Stainless, Promethient, Dan Brady Painting Services, Lear Corporation, Venturi, Safety Net, Munson Medical Center, and Kalkaska Memorial Health Center. Businesses applied for the Talent Fund grants with assistance from the Northwest Michigan Works! business services team.
NEW: URGENT CARE VET
Omnivet Urgent Care Veterinary Hospital (omnivet.org) is now open at 3960 West Royal Dr. in Traverse City. Founded by Dr. K.C. Van Fleet, the practice is one of the only stand-alone veterinary urgent care facilities in northern Michigan.
CORNERS CROSSING BREAKS GROUND
A groundbreaking ceremony was held last month for a new, $45 million workforce housing rental community in Blair Township. Located at 953 Deronda Dr. (formerly Prevo Road), Corners Crossing is being developed by Wallick along with Homestretch Nonprofit Housing Corporation for families earning 80-90% of the area median income. The 192-unit community will include eight, three-story walk-up buildings with 24 apartments each. There will also be an on-site clubhouse with a management office and resident amenities. Wallick serves the affordable housing, senior living and workforce housing markets and currently manages more than 200 affordable and senior communities across the Midwest. Additional project partners include the Michigan State Housing Development Authority (MSHDA) and Blair Township.
NMC APPROVES CAMPUS MASTER PLAN
Northwestern Michigan College trustees recently approved a new campus master plan designed to migrate spaces between campuses and significantly expand student housing in order to make its Traverse City Front Street campus a vibrant, modernized hub for learning and living.
“Central to our plan, NMC Thrive, is the goal of enhancing campus life. By consolidating student services, developing new and modern campus housing, and revitalizing our teaching and learning spaces, we are creating a more engaging, accessible and supportive atmosphere for our students, faculty, staff and guests,” President Nick Nissley said in a press release. The plan lays out a decade-long vision and is estimated to cost between $164 and $235 million. Funds are anticipated to come from selling unused properties, state and federal assistance – which has already been received for aviation and energy projects – as well as future fundraising.
SEARCH UNDERWAY FOR NEW 20FATHOMS LEADER
Tech and startup accelerator 20Fathoms in Traverse City is on the hunt for its next leader.
Executive director Eric Roberts recently announced he will retire in September.
20Fathoms is at a key juncture as it last year received $7.3 million in grants from Michigan’s Small Business Support Hubs and the U.S. Department of Commerce. At the time, Roberts – who has led the organization since 2021 –hailed a brand-new chapter and plans for 20Fathoms to implement a growth plan to expand its geographic reach, launch new programs and more. Roberts will continue to serve on the 20Fathoms board of directors, which is leading a search for his replacement.
TC DDA LEADER:
‘INTERIM’ NO MORE
Harry Burkholder is the new executive director of the Traverse City Downtown Development Authority (DDA). A Traverse City native, Burkholder has more than 15 years of public service experience. He served as the DDA’s interim CEO following former director Jean Derenzy’s departure, and had been the COO since 2019. Before his DDA roles, he was the executive director of the Land Information Access Associa-
$1,022,000
tion, a nonprofit promoting sustainable and resilient communities in Michigan and the Great Lakes region.
RESORT RECEIVES AUTISM CERTIFICATION
Crystal Mountain in Thompsonville has become the first four-season resort destination in Michigan to achieve Certified Autism Center status. This certification is awarded to organizations that prove their commitment to accommodating all guests, including autistic and sensory-sensitive individuals. To earn this designation, staff undergo an autism-specific training and certification process and the resort receives an onsite review with recommendations on accommodations for visitors. The certification is part of a larger city-wide initiative to turn Traverse City into a Certified Autism Destination. This designation is awarded to communities with a multitude of trained and certified lodging, recreation and entertainment options that are accessible and accommodating to autistic and sensory-sensitive individuals and their families.
CSLC ADDS SUTTONS BAY CLINIC
Cosmetic Skin & Laser Center (CSLC)
| RegenCen, with locations in Traverse City, elsewhere in Michigan and in Florida, recently announced its newest location at 102 Jefferson St. in Suttons Bay. With this expansion, CSLC continues to provide aesthetic and rejuvenation services to residents and visitors in northern Michigan and Leelanau County.
RELOCATION: GOLDEN CIRCLE ADVISORS
Golden Circle Advisors in Traverse City has moved to The Village at Grand Traverse Commons (Bldg 88) to support its growth and expansion of service offerings. The office can now be found at 921 West Eleventh St., Unit 1E. The office is led by founder and managing director Curtis Kuttnauer.
Q2 BUSINESS GROWTH SURVEY RELEASED
Traverse Connect recently conducted its second quarter Business Growth Barometer Survey of investor and member businesses, aimed at providing a snapshot of the regional business sentiment, outlook and current challenges. Quarterly
surveys inform the organization’s strategic priorities and help it respond to the needs of the business community. The survey shows 87% of respondents agree the region is improving as a place to grow their businesses, an increase from the first quarter. Compared to the winter, respondents feel more positive about summer staffing and recent developments to address the region’s attainable housing barriers to business growth. Find the complete report at traverseconnect.com.
GOLF CENTER ADDS TO OFFERINGS
TC Golf Performance Center recently took its golf technology to the next level with the addition of outdoor TrackMan bays, used for improving golf skills while seeing the ball in flight. The four outdoor bays are available for individual practice or group entertainment. Learn more at tcgolfperformance.com.
NEW LEADER FOR BOOK PUBLISHER
Mission Point Press, a Michigan-based book publisher, has hired Jen Wahi as its new general manager to help navigate the next phase of the company’s growth. The new position is part of an operational transition as the Traverse City company’s three founding partners move from direct supervision of its activities into more of a board-of-directors role. “The senior partners all felt it was time to turn the day-to-day reins over to someone innovative and younger to take MPP to the next level,” said Doug Weaver, MPP’s business manager and one of the partners. Wahi has extensive book-publishing experience, having headed her own book-design company while also being director of creative services for Cherry Lake Publishing Group and Sleeping Bear Press in Ann Arbor. Mission Point Press was founded by Heather Shaw, Anne Stanton and Weaver in June 2015. They will remain owners. The company, now in its tenth year, has published more than 500 books under the Mission Point Press and Chandler Lake Books imprints.
Forbes Best -in-State Wealth Management Teams
Business owners who have been looking to get their feet wet in real estate and diversify have had a bumpy ride these past 10 years. It seems like in the past you could count on cycles of expansion, followed by cycles of contraction. Prices and interest rates cycled up, and then every few years or decade, they would cycle down. Perhaps, if you timed things right (although not perfectly) you could buy the dip and benefit when things rebounded.
After working hard and putting a small percentage of income aside for the past 20 years, I kept waiting for a similar cycle to jump in, but there haven’t been the old, clear signs of when the right time to do this is. It’s not to say there haven’t been opportunities, but over the past 10 years the people I’ve seen do well seem to see things a bit more creatively, especially if they are new to the market.
Over the past 10 years, we have seen not just one, but multiple generational things happen. We went through a pandemic that caused much uncertainty and pain. (On this level, I am just happy our other two businesses survived.) Largely due to the pandemic, interest rates went down to historical lows. At this time, I wish I had the foresight to overlook high prices and jump in!
Additionally, we haven’t seen much fluctuation in prices and have slowly seen home prices skyrocket, even as our economy went to the brink of a recession. By one estimate I read, the average home value in the United States went up from $207,000 to $389,000 from 2013 to 2023.
REAL ESTATE FOR ENTREPRENEURS:
Jumping in during uncertain market dynamics
In Michigan, and specifically Traverse City, home prices have followed similar trends as Traverse City has been put on the map.
This has occurred both during, and now, after the pandemic. Throughout all this, it seems as though the entire world is discovering how wonderful northern Michigan is. With all this, where are we at now? Will things keep climbing? While no one knows, what are some practical lessons learned for us and where do we go from here?
I should preface that this is not by any
different types of properties or types of businesses.
4. Tax benefits: Leverage real estate investments to reduce taxable income.
5. Wealth-building: Build long-term wealth and equity through real estate. With different benefits and reasons to invest in property, even with the dynamics of the past 10 years, it would seem as though real estate might still make sense for many people. For example, if one believes that our area will keep booming and the major goal is appreciation or tax
If one believes that our area will keep booming and the major goal is appreciation or tax benefits vs. primarily cash flow, real estate can be a great option.
means legal or financial advice, but rather conclusions I have established for myself based upon my specific goals after talking to various professionals in our community, as well as through my own lessons learned. In trying to find a way forward, regardless of market conditions, it’s best to first evaluate one’s own goals. Goals in real estate can vary, such as:
1. Cash flow: Generate steady, predictable income from rental properties.
2. Appreciation: Benefit from the increase in property value over time.
3. Diversification: Spread risk across
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benefits vs. primarily cash flow, real estate can be a great option. For someone with a desire to reinvest positive cash flow into more properties and wanting to start now, more creative work may need to be done.
Perhaps look for properties that have been on the market for longer periods of time (a great way to find motivated sellers willing to negotiate). Another option is getting creative with financing to lower monthly payments and make the numbers work. Could there be properties with hidden potential to either decrease costs or increase potential revenue? These are
just a few ideas, but the real answer here is to get creative and put our entrepreneurial minds to use.
After all of this, the conclusion I have come to is that even for my goals, if I keep waiting, I could be waiting for a long time. As local realtor Nan Ray says, ‘Just like a brokerage account, it’s less about timing the market, and more about spending time in the market, but it still has to make sense depending on your individual goals.’
Local Realtor Mike Annelin has always told me, ‘When in doubt, invest in yourself!’ Lastly, Jeremy Kilbourne of Arch Mortgage has always been willing to get creative to help me make the numbers work and adds that having the right local professionals in your corner can make all the difference. Keep learning, and then when you do jump in, especially with the right people around you, you will have the resources necessary to be successful. Who knows what the market and tomorrow will bring? When all else fails, try to make the best of what is available today.
Sebastian Garbsch founded Formative Fitness after graduating from Ferris State University with his bachelor’s in business. He is the owner of Blue Goat Wine & Provisions and is currently serving as president of the Traverse City Philharmonic, as well as on the board of TC Tritons Rowing and Downtown Traverse City Association. In his free time, he enjoys spending time with his family, being outdoors and seeking new opportunities that align with his passion for business growth and community engagement.
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Local commercial real estate experts talk trends in office, restaurant/retail, industrial markets
By Craig Manning
For good reason, northern Michigan’s residential real estate market tends to be the subject of near-constant discussion and analysis. Where are home prices landing right now? What do the inventory numbers look like? Who’s buying and selling? What properties are attracting bidding wars or big way-above-asking-price cash offers?
While the housing market is one of Traverse City’s most hot-button topics, it’s not the only real estate market that merits attention. From office buildings to retail and restaurant spaces to industrial parks, northern Michigan’s commercial real estate market has gone through its own major swings in the past few years, with the gig economy, the pandemic, local labor shortages, high interest rates, and financial trouble for national chains all sending significant reverberations through the local market.
To see where things stand in local commercial real estate, we touched base with three experts: Dan Stiebel of Coldwell Banker Commercial Schmidt Realtors, Marty Stevenson of EXIT Realty Paramount, and Kevin Query of Three West. Here’s what we learned.
The big picture
Both locally and nationally, commercial real estate started the decade off on the wrong foot. As COVID-19 descended on America, a mixture of business closures, work-from-home pivots, stay-at-home orders, and general pandemic anxiety caused the U.S. commercial property market to crater.
In July 2020, Bloomberg reported that commercial real estate transactions for the second quarter of that year were down a whopping 68% from Q2 2019. And by September, the Commercial Real Estate Development Association was ready to dub the COVID-19 pandemic worse for the commercial real estate market “than the global financial crisis of earlier in this century.”
But the market has been steadily recovering ever since, with many employers bringing their workers back to the office and with lessened pandemic anxiety bringing the action back to bars, restaurants, retail stores and other public-facing businesses.
According to Stiebel, the bounce-back has continued into 2024. For the first half of the year, he reports that total sales volume for commercial properties in Grand Traverse County was up 30% yearover-year, and total listings sold was up 26%. Lease transactions, meanwhile, are mostly staying steady, with 62 commercial units leased in the first half of the year, compared to 65 for Q1 and Q2 last year. High demand is also driving increases in average sale price and price per square
“There’s a lot of demand for places to live downtown, or for short-term rentals, and the office market is still comparatively soft.”
– Dan Stiebel, Associate Broker, Coldwell Banker Commercial
foot (both up 4%) and decreases in days on market (down 4%, or 10 days) from where they were a year ago.
If these numbers prove anything, it’s that rumors of commercial real estate’s demise were highly exaggerated. However, our experts warn that, while numbers are up in the big picture sense, that doesn’t mean every segment of the market is performing well.
The office market
Query once called commercial office space “the biggest loser of 2020” – a big claim that nonetheless may have been accurate.
In Q4 2020, the U.S. office market “recorded the first instance of more than 40 million square feet of occupancy losses in a given quarter,” per the Chicago-based Jones Lang LaSalle, a global commercial real estate services company. In total, tenants across the country vacated some 84 million square feet of office space in 2020, bringing the total industry-wide vacancy rate to an unprecedented 17.1% by the end of 2020.
Traverse City saw its own fair share of vacancies pop up during the pandemic – most notably with Hagerty, one of the area’s largest employers, vacating huge pieces of its once-dominant downtown office footprint. According to Stiebel, the aftershocks of that peak-COVID period are still being felt throughout the TC office market, especially in the downtown core.
“I can think of at least four buildings downtown that have converted their upstairs into residential,” Stiebel says, pointing to former office spaces in the Masonic Building and the Beadle Building as examples. “There’s a lot of demand for places to live downtown, or for short-term rentals, and the office market is still comparatively soft. There are still a lot of vacant spaces from where Hagerty has vacated, and those aren’t the only vacancies, either. For instance, the Bank of Northern Michigan building, since Huntington pulled out, that one has also been sitting empty.”
Despite the high-profile vacancies, Stiebel assures that the office market is
in a better place than it was a few years ago. Between Q1 and Q2 2024, 13 office spaces were sold in Grand Traverse County – up from just seven for the first half of 2023. On average, those properties commanded a $230 per square foot sale price – higher than any other commercial real estate segment, save restaurant space.
“The bigger spaces are sitting on the market because they’re just more difficult to sell or lease,” Stiebel says. “For the most part, those properties have a tenant who is still paying the rent, so the landlords aren’t as motivated (to find a new tenant). And then they’re also larger spaces, so they’re more difficult to lease out without dividing them.”
Stevenson agrees that size is the driving factor in what’s selling or leasing across Grand Traverse County’s office market and what isn’t.
“Smaller office units remain in demand, which continues the years-long trend sprouted by the gig economy and strengthened after COVID,” he said.
“The local market for larger offices has slowed over the past few years, with the lion’s share of larger office spaces taken on by medical users, and mid-size offices maintaining a somewhat healthy outlook thanks to financial institutions, title companies, real estate brokerages, and others. If larger office spaces can be easily converted into smaller spaces, it behooves the owners to list the property with such options.”
While Stevenson sees more conversions coming down the pike, he says that anyone worried about more short-term rental conversions shouldn’t fret too much.
“Converting to residential or shortterm rentals is a costly endeavor that is restricted to only a few zoning districts,” Stevenson said.
Restaurant/retail space
According to Stiebel’s data, there was only one restaurant sale in Grand Traverse County during the first six months of 2024, and just seven retail units sold. Leases are slightly higher – 12 leasing transactions in the retail segment across Q1 and Q2 – but are still down 45% from the same period last year.
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“At the asking prices sellers are expecting, most projects simply do not pencil.”
– Kevin Query, Associate, Three West
On the restaurant side, Stiebel says he’s dealt with multiple clients who had “planned to open restaurants” in northern Michigan but have put those plans on hold “because of staffing issues.” He sees a connection between the dip in office occupancy downtown and the decline in demand for restaurant properties in the area.
“It used to be that we had a lot of choices of places to go get lunch downtown; now, a lot of restaurants are only offering dinner,” Stiebel said. “The reasons are twofold. One, it’s still a difficult labor market, so the existing restaurants don’t have the staff to cover lunch hour. And two, even restaurants like the Pie Company, which are traditional lunch places, I think they’re struggling more than they used to because they don’t have the volume of people coming downtown to work.”
“The restaurants we do have, I think they pivoted and survived very nicely,” Stiebel continued. “But it’s still expensive real estate to do it only on dinner.”
Staff shortages and the changing patterns of restaurant traffic have also changed the type of space that would-be restaurant operators are looking for.
“Many restaurateurs are seeking smaller dining areas – or none at all yet those spaces are scarcely-available,” Stevenson said.
Stiebel agrees, and points to excessive square footage as the primary reason many restaurant spaces outside of Traverse City’s downtown core have sat on the market for months or even years at a time. In Leelanau County, for instance, restaurants like Fischer’s Happy Hour Tavern in Northport or the Cedar Tavern have struggled to find buyers. Both are larger spaces from a different era of restaurant design.
“In my experience, the restaurants that have opened recently tend to have smaller spaces and smaller staffs of 20 or under,” Stiebel said. “We’re not really seeing the larger restaurants that require 100-plus people to run them.”
It’s not just restaurateurs that are hunting for more compact real estate. Stevenson says smaller footprints are also all the rage among retail buyers – especial-
ly for brand-new businesses that haven’t established a clientele or made a name for themselves yet.
“The now-shelved downtown retail incubator that had been planned by the Traverse City Downtown Development Authority (DDA) would have been a tremendous asset to fledgling retailers in this new economic environment,” Stevenson said.
The DDA killed the incubator concept in July, amid concerns about funding and staffing the incubator given the uncertain future of TIF 97. The organization had been trying to bring a retail incubator to downtown TC since at least 2021, with the goal of providing a bridge that newer operators could take between pop-ups or food trucks and permanent brick-and-mortar stores.
Unfortunately, the lack of demand for large-footprint spaces is coming at a time when failing national retailers are leaving many of those properties up for grabs.
That trend isn’t necessarily new: Over the past decade, Traverse City has bid farewell to stores like Kmart, MC Sports, Toys R Us, Younkers, and Sears, all of which leased sizable buildings. This year will see another big exit: In June, the drugstore chain Rite Aid announced a round of 12 closures across the state of Michigan, due to struggles with bankruptcy. Several of those locations are in northern Michigan, including a newly built space at the corner of Front Street and Garfield Avenue that Rite Aid moved into less than five years ago.
Stevenson thinks the exodus of Rite Aid – particularly in that newer building – might cause developers pause as they consider building those types of large commercial spaces in the future.
“We’ve seen retailers come and go, and any new builds may want to keep in mind that their initial tenant might not be their tenant for long,” Stevenson said, noting that, in the case of national chains like Rite Aid, “the building is typically designed specifically for that initial tenant.”
“Retail spaces are typically wide-open boxes produced for a single user, making large retail spaces costly to renovate into multi-tenant buildings,” Stevenson said.
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Locally, developers have had some success turning former big box stores into new, innovative projects. Take the Cherryland Mall, now redubbed the CLEAR Center and envisioned as a community hub that will include current tenants like the Traverse City Curling Club, the Traverse City Philharmonic, and a K1 Speed indoor go-kart center – as well as future possibilities like 24/7 golf, a trampoline park, or a roller rink. The former Kmart in Acme is another example: It’s now a multi-use development that will eventually encompass pickleball courts, office space, a coffee shop, a fitness center, warehouse space and apartments.
For his part, Stevenson says he doesn’t see similarly innovative possibilities taking form at the soon-to-be-vacant Rite Aid space.
“Hopefully, a national retailer will take advantage of the new building and prime location, as other larger buildings that have been converted from their single-tenant uses have the benefit of more options based on the size of their parcels,” he said.
The industrial sector
If there’s a silver lining to northern Michigan’s rather checkered commercial real estate report, it’s the industrial market.
“The industrial segment has been the most consistently strong sector of our local real estate market during my 10 years as a commercial realtor,” Stevenson shared.
While there have been some “peaks and valleys,” Stevenson thinks the area’s robust manufacturing sector, as well as the focus of local economic development leaders on building Traverse City into a thriving tech hub, will continue to drive demand for industrial real estate going forward.
“A new development, such as the technology and logistics park being discussed near the airport, will certainly improve the outlook for companies eyeing our market, given that no large-scale ‘traditional’ industrial parks have been built in our area for quite some time,” Stevenson said. “Regardless of what happens with that project, I’d expect the local industrial market will remain strong into the foreseeable future.”
While Stiebel has observed some signs of “softening” in the local industrial market in recent years, he mostly blames high interest rates and low inventory.
“That’s coming off of our greatest period of demand we’ve ever seen for industrial,” Stiebel said of the slight dip. “Industrial had a huge run up until the interest rates started climbing. For both industrial sales and leases, any time something came on the market, it was snapped up immediately. Now, we’re seeing a little bit of availability again. Companies are asking, ‘Do we want to see what’s going to
happen before we expand?’ But I would imagine demand will pick up again in a year or two, when interest rates come down.”
The future
Interest rates are certainly the elephant in the room when it comes to predicting what the future might hold for northern Michigan’s commercial real estate market. Right now, Query says the commercial market in northern Michigan “is getting a bit jammed up” with low inventory problems – a series of kinks that likely won’t be worked out until interest rates drop.
“There are sellers out there that are interested in selling their properties, but you’re seeing some pretty high expectations on pricing from those sellers,” Query explained. “In this area, there isn’t really any distress that would force sellers out of their properties, so most sellers aren’t in a position where they have to accept a lower price than what they expect. And then, on the buying side, interest rates are starting to bite. At the asking prices sellers are expecting, most projects simply do not pencil.”
Query also doesn’t expect new construction to solve the inventory problem, citing a lack of skilled trades in the area as the cause of “stubbornly high” building costs. He predicts inventory will stay “tight and keep prices elevated” until interest rates drop.
Are those drops imminent? Stiebel thinks one or two interest rate cuts are coming before the end of the year, and while he doesn’t expect those cuts to be big, he does anticipate they’ll get the commercial real estate market moving a bit faster.
Stevenson, meanwhile, doesn’t think there will be any big shifts in the market until inflation trends turn around.
“Think to back a few years when gas was around $2 per gallon, a burger and fries at a sit-down restaurant was $10, and you didn’t have to shop online to find deals,” Stevenson said. “The costs of all goods are up, the discretionary funds for most people are down, and that combination makes it hard for all businesses to flourish.”
Stevenson
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CLEAN SWEEP:
Entrepreneur builds successful business cleaning up after contractors
By Ross Boissoneau
It’s a messy job, but someone has to do it. And sometimes that someone is Andrea Holcomb.
It’s clear that where others saw a mess, she saw an opportunity. She started her company, Extreme Cleaning Solutions, when a friend told her they needed someone to clean their house.
“It was a side hustle, and offset daycare,” said Holcomb.
At the time she was working as a bartender and looking to go to college, but as a single mom of an 18-month-old, she was stretched thin, both time-wise and financially.
It turned out that her first cleaning job landed more such clients, and she decided to try to make a go of it. She came up with a business name and began reaching out to secure more jobs cleaning houses.
“I skipped the college part to see where this takes me,” she said.
Before long, it had taken her to a construction site, which she admits wasn’t something she’d bargained for.
“It was super overwhelming,” she said of that first foray into cleaning a construction site. Boards, nails and sawdust weren’t typically things she’d had to deal with while cleaning kitchens, bathrooms and living rooms.
She persevered, and after familiarizing herself with the particular needs of construction industry and site cleanup , she decided it was worth pursuing further and made a commitment.
“I thought, ‘Wow, I could make this a business,” Holcomb said.
So she jumped in, changing her DBA to an LLC, getting insured, and joining the local Home Builders Association affiliate and the Builders Exchange of Northwest Michigan. She didn’t stop there, also joining Traverse Connect and the Better Business Bureau.
As one would anticipate, construction site cleanup is much more involved than vacuuming floors, cleaning appliances and polishing furniture. There’s specialty equipment, complying with Michigan Occupational Safety and Health Administration (MIOSHA) safety standards, and understanding everything from American Institute of Architects (AIA) contract agreements and documents to open-bidding submissions and blueprint drawings. A lot to learn, as Holcomb found out.
She embraced the challenges, and 17 years on she now leads a team of 14 employees from her office on Sixth Street. She works with companies from across the state and beyond, always making sure to meet all the legal and other requirements.
“There’s a lot of paperwork,” she noted.
Plus, there is special training and certifications her staff need.
“All our staff are certified to operate scissor lifts or booms,” she said.
Today Extreme Cleaning Solutions still services homes as well as commercial settings, including office spaces and retail spaces, and construction sites, where it provides everything from rough cleans and final post-construction cleanup to remodeling and renovation cleaning services.
She and her crew can and do work at sites as often as the construction companies need, whether it’s daily, weekly or anything in between. When the construction is finished, Holcomb and her crew do a final cleanup prior to occupancy.
“Once it’s complete…we go back and do a spiff, a surface clean,” she said.
Holcomb recommends always using a professional firm that is certified and insured for cleaning office spaces, construction sites and even homes. She said paying cash to firms or individuals that may offer to do cleanup can leave the owners open to paying for accidents or damage themselves, as well as potential problems should someone get injured or cause injury on the job.
Learn more about the company at extremecleaningtc.com.
BEYOND CLEANING
• For those into DIY who just need a place to dump their trash, there are a number of companies that offer dumpster service. That includes GFL and Construction Waste Services North, among others.
• Others, such as Dri-Life Restoration, offer a complete menu of services beyond cleaning. They provide water damage restoration, fire damage restoration and mold remediation.
• In addition to post-construction and other commercial services, Scrub Club Cleaning Service offers Feng Shui cleaning services. Feng Shui is a traditional practice that originated in ancient China to harmonize the furnishings of a home to direct their chi – their energy forces – to harmonize individuals with their surrounding environment. According to Scrub Club, a Feng Shui cleaning clears clutter, dirt, and germs, which act as a barrier in producing the good flow of energy in the home.
Holcomb
Real Estate in Northern Michigan
Are agents really ‘fleeing’ the industry?
By Kierstin Gunsberg
It’s been a wild ride on the housing front these last few years. Record low mortgage rates in early 2021 spurred a buying frenzy, with more than six million homes sold nationwide. As rates surged, a shortage of inventory led to bidding wars and soaring home prices.
Locally, the market mirrored national trends. This year, home sales cooled while prices continued to climb, leaving buyers and sellers fatigued by the whiplash of an erratic housing market.
No one is more attuned to the roller coaster turns than real estate agents, with recent reports indicating many are leaving the industry due to the volatile market and oversupply of agents. But as anyone who’s packed up to make the move to northern Michigan will tell you, it’s not like the rest of the country. TCBN caught up with two local agents to get the lowdown on how the industry is holding up here in northern Michigan, who’s staying, who’s leaving, and where they’re heading.
Traverse City real estate broker Brad Platt has seen it all. When he co-founded
Century 21 Northland in 2006, the country was on the verge of the Great Recession, which led to millions of foreclosures and left the industry reeling. Since then, Platt and his brokerage have weathered the usual real estate ups and downs, like
northern Michigan was so incredibly high before COVID,” recalled Platt of the 2021 and 2022 buying frenzy. “When COVID happened, people started saying, ‘Wow, I can keep my Chicago salary as long as I have an Internet connection.”
“It’s equivalent to being like a triathlete. You have to endure a lot of pain. And you have to be in it for the long game...”
– Ted Schweitzer, Realtor, Real Estate One
shifting interest rates, plus the unusual, like the 2020 market pause that left agents wondering if another housing crash was imminent.
As everyone knows now, it wasn’t.
Remote work, once a rare fringe benefit, became the new normal, allowing workers to live wherever they wanted. And it seemed like a lot of them wanted to live here.
“It was crazy. I mean, our stock in
Platt adds that buyers came from as far as California and Texas to snap up homes with their big-city salaries.
“The bang for the buck was immense,” he said. “The market changed because of it.”
With wealthier out-of-staters driving up the cost of northern Michigan’s housing, agents were inundated with offers, and many saw it as an opportune time to enter the real estate industry.
So, after all of that, are agents really “fleeing”?
The quick answer is yes. The nuanced answer is, not exactly.
The National Association of Realtors has lost close to 100,000 agents over the last two years, but in northern Michigan, agent numbers are holding steady. Aspire North Realtors, Northwestern Michigan’s MLS office, had 1,040 registered agents in fall 2022, a number that rose slightly to 1,050 in June of this year.
Still, Platt said northern Michigan is going to see agents leaving and, to some degree, it already has. But, he cites a less headline-worthy reason: many are aging out of it.
“Nationally and statewide, we’re going to be losing agent population,” he said. Yet, Platt notes, even retired agents still leave one foot in the door to act as liaisons between buyers, sellers, and newer agents, helping those newbies get acclimated.
Of course, the local agent numbers are staying steady instead of growing because of another demographic: agents who tried it out before realizing it’s not the right role for them.
“We are seeing agents getting out of the business. It’s quite often because they probably shouldn’t have been in it in the first place,” said Platt.
Many of those agents came in when the housing market was white hot and looked like an easy buck.
“There was a perception that you could just put a sign in your yard and it would pretty much sell,” said Ted Schweitzer, an agent with Real Estate One Front Street.
Schweitzer, who’s been a Realtor for more than a decade, likens the role to a lifestyle, not just a job.
And, he notes, new agents may eventually become deterred by the behindthe-scenes paperwork and elbow grease.
Taking calls at all hours from anxious buyers, hiring house cleaners, and going in to respectfully depersonalize a seller’s home are all routine tasks that anyone looking to jump into the industry should be aware of, he explains.
“You wear so many hats. You have to be very resilient and it’s never the same. You’re dealing with people’s emotions and you’re dealing with homes and property and weather and so many different things going on,” said Schweitzer. “It’s equivalent to being like a triathlete. You have to endure a lot of pain. And you have to be in it for the long game. You always have to finish, of course. But it’s a lot of work. It’s
not putting a sign in the yard, it just goes so much deeper than that.”
As for the notion that agents may be leaving because there isn’t enough work to go around now that the housing boom is slowing, Schweitzer says he hasn’t observed that to be the case.
“I don’t see people in our area leaving the real estate market. The real estate market is still strong and they’re not being pushed out or having to go find jobs elsewhere,” he said. “It’s a volatile market. It can run hot and cold. Your client business is also volatile, so there are times when you are not as busy as you wish. There’s times when you’re just too busy. But no, I don’t see anybody ‘closing up’ their real estate business because there’s not enough business.”
Schweitzer added that compared to larger markets, northern Michigan’s agent pool leans collaborative over competitive, something newer agents should keep in mind as they establish industry relationships.
As for those agents who are quitting after coming to the conclusion that they’re not the best fit for real estate, they’re leaving for roles in TC’s business-sphere, says Century 21’s Platt. As he puts it, like the market itself, real estate can be too unpredictable for some agents who prefer to trade in the high-earning potential of
real estate for steady, mid-grade salaries and guaranteed corporate benefits, things that aren’t certain as an independent, licensed agent.
Another factor that could lead to more agents exiting the industry in the near future is the new compensation rules that took effect this month. Following a settlement in the lawsuit against the National Association of Realtors (NAR) this spring, real estate databases no longer include offers of compensation for buyers’ agents, effectively reducing their potential income. On the flip side, lower real estate transaction costs could theoretically bring more sellers to the
market and make homes more affordable for buyers by increasing supply. If that happens, it could equal more sales for those agents who stay.
Platt pointed out a silver lining to losing agents to retirement and career jumps: Newcomers will be up against less competition and established agents will be able to capture a larger share of the market.
“It goes up and it goes down and that’s how it’s always been,” said Platt. “But we’re going through a period where we’re going to be losing agents and it’s going to be very beneficial for new people to the industry and experienced realtors that are in this for the long haul.”
ATTORNEYS
Robert
Scott
Jeffrey
Peter
Andrew
CONGRATULATIONS TODD MILLAR!
Platt
Schweitzer
FROM THE DESK OF...
Matt Bulloch, CEO and President of Tentcraft
By Art Bukowski
Matt Bulloch is a high-energy guy. The founder and leader of TentCraft was eager to show the TCBN around his company, which manufactures custom tents, structures, and event products that provide businesses (from small mom-and-pop shops to globally recognized brands) the ability to better promote themselves. Thanks, Matt! If you have an idea for a “From the Desk of” feature, please email abukowski@tcbusinessnews.com.
1. Leaders are readers and leaders are learners. I give out a lot of books and I receive a lot of books. I am woefully behind. I typically try to put a Post-It note on each cover of who gave me a book and why, so when I read it I can follow up.
2. This is the book (2 Second Lean) I give out the most. As a manufacturing company, we try to follow Lean manufacturing principles. A lot of companies end up embracing the Japanese aspects of Lean Manufacturing and it can get really complex, really quickly. Paul Akers wrote this great book simplifying Lean into ‘fixing what bugs you.’ Every employee reads this book their first week at TentCraft.
3. I really enjoy fantasy football, especially the smack talking and side betting. This is just one ring from my numerous titles across various leagues (I’m obviously exaggerating).
4. This is a cool globe that somehow spins on its own when it’s hit with sunlight (a gift, possibly a Sharper Image purchase). I absolutely love Traverse City…but there’s a big world out there.
5. Here’s some random TentCraft parts and improvements. Probably most notable is the solid copper cone. This was part of a machine and initiative that never really worked out. Keeping it on my desk reminds me that
things don’t always work out perfectly, but we can keep trying different things and running different experiments and we will ultimately figure it out.
6. I frequently grab this big calculator for quick and dirty calculations instead of populating something into Excel or doing something more complex.
7. Rap Snacks Ramen noodles – did you know these were a thing? An employee gave these to me. As a suburban white kid growing up in Baltimore County in the ‘90s, I obviously listened to a lot of gangster rap. This just makes me smile that this is a thing now.
8. I love both of these pieces. One is a painting of a Colombian street poet that I acquired during a trip to a wedding in Cartagena, Colombia (my wife said there was no way we were hanging this in our house, so I took it to work!) and a very heavy copy of Frederic Remington’s “Coming Through the Rye.” I’d always loved this sculpture. To me, these guys represent the feeling of accomplishment that you get from completing a mission with a small team. You can tell by looking at them that their work is done and they have had a few beverages celebrating some great accomplishment. They are laughing and shooting their pistols in the air. They clearly just completed something awesome and are celebrating together. I love that feeling.
Consider a simple investment strategy to help reduce guesswork
For most investors, the key to success is simple: Buy low and sell high. But how often have you seen this scenario played out?
• When the market is up, an investor feels good and buys stocks.
• When the market is down, that same investor gets scared and sells.
Although reacting like this may feel instinctively right at the time, buying high and selling low is unlikely to result in a profit.
Why do investors do this? The reason may have a lot to do with us making investment choices the same way we do many important decisions: using both our heads and our hearts. When there’s market volatility — including both market highs and market lows — our emotions tend to take over and we may make illogical choices going against our best interests.
Rather than falling victim to the potential perils of emotional investing, you may want to be completely logical: get into the market when it’s down and out when it’s up. This is known as “market timing.” While this approach sounds rational, the problem is it’s extremely difficult, even for experienced investors, to do consistently. There’s an old saying: “No one rings a bell” when the market reaches the top of a peak or the bottom of a trough. Translated, that means anyone attempting to time the market finds it difficult to know exactly when to make their move.
For example, if you think the market has reached a peak and get out and then share prices keep rising, you’ll miss out on the additional profits you could have made by waiting. And after you get out, how do you know when to get back in? If you act too quickly, you’ll forego better bargains as prices continue to fall. If you wait too long, you may sacrifice the chance to fully benefit from a market rally.
Give dollar cost averaging a look
To avoid the potential problems of emotional investing and market timing, consider a strategy called “dollar cost averaging.”
Dollar cost averaging is the practice of putting a set amount into a particular investment on a regular basis (weekly, monthly, quarterly, etc.) no matter what’s going on in the market. For example, you could invest $500 each month. In a fluctuating market, this practice lets you purchase:
• Additional shares when prices are low
• Fewer shares when prices increase
You may well be using the strategy already. If you participate in an employer-sponsored retirement plan, such as a 401(k) or 403(b), and contribute the same amount each payday, you’re using dollar cost averaging.
Get help for when the going gets tough
One of dollar cost averaging’s challenges is you have to stick with the strategy even when the market declines, and that can be difficult. However, during times like these, dollar cost averaging can be most useful by letting you purchase shares at lower prices.
Because dollar cost averaging can be simultaneously more difficult and advantageous when the going gets toughest, consider turning to a professional financial advisor for help. He or she should offer a voice a reason during these periods as you grapple with whether to adhere to the strategy.
HIRT | JULIAN | BLACK Financial Consulting Group of Wells Fargo Advisors
THEY’RE LOVIN’ IT
Inside Matthew and Lori Schulz’s McDonald’s empire
By Art Bukowski
While it’s not uncommon for McDonald’s franchise owners to have multiple locations, not very many have a spread like Matthew and Lori Schulz.
At 36 locations (including all five in Traverse City and several others in northern Michigan) the East Grand Rapids couple own more restaurants than any other franchisees in the state. Add in 15 Metro Detroit restaurants separately
owned by Matthew’s niece and nephew, and the Schulz name packs a punch in the McDonald’s world.
The TCBN caught up with Matthew and Lori to learn more about them and their operations.
A family business
Matthew, 61, was born into McDonald’s. His grandfather, Karl Oeser, was a
close friend and associate of legendary McDonald’s corporate founder Ray Kroc.
“That’s where it all began,” said Matthew, a Port Huron native. “They were friends when they were younger.”
Matthew says Oeser was a partner with three other people in one of the first restaurants in Michigan (in Detroit) before eventually opening up his own restaurant in Port Huron in 1961. It was the 319th location; McDonald’s now has
more than 41,000.
Matthew’s father, Gunter Schulz, went on to partner with Oeser, and the pair at one point owned 22 restaurants from Port Huron down to the Detroit area.
“Dad was really the one who really grew the company,” Matthew said. “Grandad started with three or four, but dad helped grow it to 22.”
And as those restaurants opened, Kroc himself showed up sometimes, often stay -
Photo courtesy of Up North Voice
ing with the Schulz family.
“He would actually come to the restaurant and do the ribbon cutting. We would all be lined up there, my brother, my sisters…we’d have five, six of us across, and Ray would be in the middle,” Matthew said. “It really was a family business – back in the day, everyone was really close.”
Naturally, Matthew and his siblings grew up in the restaurants. And while there was plenty of fun, games and food, there was also business to attend to.
“When I was seven or eight years old, that’s when we started shopping the restaurants. Dad would have me go to the counter. (He would ask,) ‘How was your visit? Did they say thank you? Did they greet you? Were they pleasurable? Is the food hot?’” Matthew said. “I’d sit down with my father and we would go over the meal and the experience. How did the restaurant look? Was it clean?”
Matthew purchased his first restaurant in Richmond in 1989, followed not long after by Marysville, just south of Port Huron.
“It was 26 years I owned the Richmond location, and 23 years for Marysville, and being a part of those communities, those small towns, it was just fantastic,” Matthew said. “Great places to build a business.”
Meanwhile, Grosse Pointe native Lori broke into the business without any ties. Starting as a teen she worked at a banquet hall in St. Clair Shores, learning each aspect of the business before going on to Northwood University (where Matthew also attended, though they did not know each other there).
After spending some time in other industries, she decided that restaurant work was in her blood. Fast food seemed more appealing than fine dining, so she went down that path. After exploring some options, she set her sights on the golden arches.
“McDonald’s was by far the hardest to enter, but I put an application in,” she said. “They called me maybe eight months later, and I ended up going to Chicago several times for interviews.”
The process from applicant to owner was more than two years, Lori says. Aside from the obvious financial training, she learned every single aspect of running a McDon-
ald’s restaurant – a corporate requirement designed to make owners and operators intimately familiar with operations.
“I know how long it takes to mop a floor, clean a bathroom, cook the food. I’ve been there and I’ve done it all,” Lori said. “Everything I could possibly tell somebody to do, I’ve already done myself.”
Matthew and Lori first met around 2002 when she was in the process of finally acquiring her first store, which happened to be owned by Matthew’s brother, Markus.
“We met through McDonald’s, but it wasn’t the happiest of meetings. He really wanted to buy M-59 and Gratiot (in Metro Detroit), but they really wanted me to buy it,” Lori said. “So, Matthew really didn’t care for me all that much at first.”
Matthew remembers it well.
“It was my brother’s restaurant that my father said that he should sell to his brother. And somehow Lori ended up getting the restaurant,” Matthew said. “So she and I didn’t talk for about 10 years. I was a little upset.”
Fast forward a decade later. After being at many of the same owner meetings and spending a lot of time together, the bad blood not only faded, but it slowly gave way to love. Even before they eventually married in 2015, McDonald’s corporate offices (which targets owners for expansion and success) talked to them about acquiring stores in the Grand Rapids area.
“McDonald’s basically approached us and said, ‘You both are ready to grow. You’ve been waiting. So why don’t you think about the west side of the state?”’ Lori said. “At that time there was just a lot more opportunity to grow over there.”
Lori bought eight restaurants in and around Grand Rapids and Matt bought seven (they sold their east-side restaurants in the process). Northward expansion continued through COVID, with Cadillac, Grayling, Houghton Lake, Gaylord and all five Traverse City locations acquired by 2021.
“When we got married, we really started taking off because we put our heads together, our efforts together. We grew from seven and eight to 36 today,” Matthew said. “We’re just mustard and ketchup and burgers and fries, and it’s fun to see how it’s grown.”
“When we got married, we really started taking off because we put our heads together, our efforts together. We grew from seven and eight to 36 today. We’re just mustard and ketchup and burgers and fries, and it’s fun to see how it’s grown.”
– Matthew Schulz, owner, McDonald’s
like all that information.”
Steering the ship
The restaurants are run by a family office – the Schulz Organization – which is common for franchisees with many locations. They employ more than 2,000 people across their restaurants, all guided by a management structure that includes individual store managers, several district supervisors and three operations managers, along with various support staff.
“Really the only way you can run a well-oiled machine is with excellent upper management,” Lori said. “We have good people.”
Functionally speaking, much of the day-to-day is left to management. But Matthew and Lori are still involved in the business. They review numbers every day and regularly confer with management about strategy and direction.
“I look at all 36 restaurants, make sure everything’s right. It’s labor, overrides, refunds, that kind of stuff. Anything you can think of that pops up on a screen,” Matthew said. “I’m a data person, and I
They also like to get into their restaurants as much as they can, though that’s become a bit harder as they’ve expanded to so many locations.
“In our travels we stop in, sometimes expected, sometimes not,” Lori said. “We’re in all of our restaurants on a regular basis.”
As the state’s largest operators, they are active in various charitable organizations, both through McDonald’s and within the communities they serve. They are also heavily involved in internal leadership groups for McDonald’s owners.
“At this point in time, with as many restaurants as we own, McDonald’s really wants to see Matthew and I sitting on board of directors, PR committees, subcommittees and other things we have internally that help the whole state make better decisions,” Lori said.
The Schulzes are proud of their charitable efforts. In addition to helping corporate offices direct charitable contributions, the Schulz organization itself also donates tens of thousands of dollars a year to
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various causes throughout their service area, and Matthew and Lori personally contribute to Ronald McDonald house charities.
They also invest heavily in their employees. They have given out more than $250,000 in tuition assistance to their workers over the years and have seen several employees rise within the organization.
“It’s great to put your people on a plan. Watching them grow. Watching them start off as a crew person, becoming a general manager, making some great money, and watching their family grow,” Matthew said. “When you can have a couple thousand employees and you’re watching people grow like that, it’s a special feeling.”
They’re also happy to think about the broad-reaching impact of their operations. Corporate does the food buying and spends upwards of $150 million in Michigan alone each year.
“If you look at how many millions of pounds of agriculture is bought in the state of Michigan, it’s just incredible. It really is. Eggs, apples, you name it,” Matthew said. “There are many different products we buy in-state that keep jobs in Michigan.”
Dollars and cents
The McDonald’s business model, generally speaking, works like this: The corporation owns the building and real estate, while the franchisee owns the individual restaurant business. Ownership of each restaurant is usually structured around 20year contracts, and to remain in good standing on those contracts, many conditions must be met.
body understands one common goal, and that’s to impress the guest and grow profitably together.”
Sales at an individual restaurant average $3.8 million nationwide and about $3.4 million in Michigan, Matthew said. The Schulzes declined to discuss their revenue per restaurant, but indicated that it varies considerably depending on several factors.
“They all have different sales volumes, different rent and service fees,” Lori said. “And they have different rewrites. One might be ready to tear down and rebuild in a couple years. And for one we might have paid a little bit more, but it was just rebuilt a couple years ago.”
All five Traverse City area locations are under the $3.4 million Michigan sales average, Mooney said, so there’s room for improvement. But included in the sale with the Traverse City locations was Gaylord, which has the highest sales volume of any standalone store in the state at around $6 million.
“I know how long it takes to mop a floor, clean a bathroom, cook the food. I’ve been there and I’ve done it all. Everything I could possibly tell somebody to do, I’ve already done myself.”
– Lori Schulz, owner, McDonald’s
The most significant of these conditions are tied to yearly “graded visits” in which corporate makes sure everything is in order at each location.
“Every year they come in and they’re looking at everything from top to bottom. Quality, service, cleanliness, shift leadership, health and safety, food safety,” said Peter Mooney, operations manager for the Traverse City restaurants and several others. “You have to go through this whole process and you have to meet the requirements and have certain numbers in order to pass a visit.”
The Schulzes enjoy a good relationship with McDonald’s corporate offices. There have been bumps in the road in years past, but they say they are feeling good synergy these days.
“Over the years, you have your highs and lows. Today, it’s great to see the threelegged stool (corporate, suppliers and franchisees) all working together, because that’s the only way you’re going to succeed in today’s market,” Matthew said. “Every -
“You look at the whole package and make a good decision,” Lori said.
The northern Michigan market has been challenging to a degree, the couple said. They’re already dealing with significantly increased food costs across the board, but getting workers in and around Traverse City has been a real grind.
“I believe when we bought the restaurants up there, they were only paying $13, $14 an hour. And then we went up to $20 an hour,” Matthew said. “So your margins shrink. It’s much harder to operate a profitable company when you’re paying those wages…but it was very difficult to find help (in Traverse City). We just couldn’t get people.”
For the most part, franchisees can set their own prices (they vote on certain promotions that have to be adhered to, among other restrictions). Increased labor costs in the local market have led to higher prices here, even as prices downstate remain lower.
“You have to offset higher costs,” Matthew said. “In the end, you still have a bank note, and you still have the need for reinvestment.”
But pricing is always delicate, even at McDonald’s.
“We (raise prices) within reason, because as business owners, we know if we outprice the customers, we’re going to be in trouble,” Lori said. “We have competition, including our other owner operator friends, all surrounding us. So, we try to stay reasonable with our other competitors.”
But as prices rise, the Schulz restaurants are doing their best to provide their own
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deals and push things like the app, which allows users to earn points and be eligible for special pricing.
“We’re definitely trying to get more value to our guests,” Matthew said. “We always tell everybody to use the app. There’s an opportunity right there.”
They’ve also helped address their own labor shortage by hiring about 100 foreign visa workers to work in their restaurants.
“We have to serve our guests with a gold standard,” Matthew said. “We need people, and this helps us bridge that gap.”
Matthew and Lori bought several homes in and around Traverse City to house these visa workers, and have provided them with bikes, shuttles, group outings and other amenities.
“We want to make sure they’re comfortable, and we…want to show them what it’s like being in America and what you have to offer in Traverse City,” Matthew said. “It’s so beautiful. They think they’re in God’s country up there, which they are.”
What’s next?
The Schulzes say they are always looking to reinvest and expand, provided it makes financial sense.
“We’d always take a look (at more restaurants),” Matthew said. “If the company wants us to grow and they give us the opportunity, we’ll definitely take it.”
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While they’re aware of national trends and happenings with the corporation – in cluding a recent experiment with artificial intelligence-powered drive throughs – they don’t have strong opinions on many of these issues. Their goal is to be the best franchisees and business operators they can be and let corporate sort out the big-picture stuff.
“At some point, it needs to evolve. Who knows where that’s going to be. We don’t make that decision,” Matthew said. “If a play gets handed down, we’ve got to run with it.”
For now, they’ll continue to take pride in what their family – including the extended family – has built. Matthew’s niece Erika Schulz-Rogers was the first fourth-generation owner in the company’s history, he said, and she was joined by brother Dieter Schulz in ownership. The pair have many of the restaurants that Matthew’s dad and grandpa owned.
“My father was very influential. He was the boss. And it’s really neat to see how he made my brother Markus and I into (who we are today). We’re so grateful he gave us the opportunity with McDonald’s, and now we have the next generation,” Matthew said. “We know our gramps and our dad would be looking down saying, ‘You guys are doing great.’”
STOCKED & LOADED:
Local startup looks for differentiators in crowded grocery delivery market
By Craig Manning
Can you call it a trend if it’s been steadily growing for more than half a decade? That’s the big question worth asking about food delivery services, which saw incremental growth during the back half of the 2010s, exploded in 2020 amidst pandemic stay-at-home orders, and then only continued their climb in the years since. It’s been a long enough growth line that these delivery businesses and the consumption habits they’ve created seem to be here to stay.
Broc Crandall and Zach Hite, the founders of the TC-based startup Stocked, are committed to getting a piece of the action.
Stocked launched in 2021, inspired by an idea that Crandall got in 2019 while on a ski trip with friends in Colorado.
On that trip, all Crandall wanted to do was get out on the slopes, but he instead found himself burning up half a day’s worth of precious vacation time running errands and getting the vacation rental provisioned with groceries and supplies. Surely, he thought, there must be a better (and faster) way of stocking up on supplies during a vacation.
When Stocked launched, it did so with a simple goal: Having groceries sitting on the counter and items stocked in the fridge when travelers arrive at their rentals – and thus saving them from wasting valuable vacation time in the grocery store.
That’s a slightly different approach than the typical food delivery service. Offerings like Uber Eats, Postmates, and DoorDash do a lot of their business by fetching takeout food for customers who don’t want to
leave their homes. Most grocery delivery services – like Shipt or Instacart – don’t specifically target the vacation rental/travel market.
Still, Crandall and Hite see their business riding some of the same growth waves that are currently happening in both of these two segments of the food delivery world.
According to Bloomberg Second Measure, sales for major meal delivery services were up 8% year-over-year as of March 2024 – part of a hot streak that dates back to the start of the pandemic.
Per Bloomberg, the popularity of meal delivery services soared 59% between March and April 2020 – and 162% year-over-year – and has never dipped back down.
As for grocery delivery services, those are up 4.3% year-over-year as of April, ac-
cording to a Brick Meets Click/Mercatus Grocery Shopper Survey.
At least for now, Stocked is riding an even bigger growth trend.
“We’ve doubled our revenue since last year, and we’ve opened a Florida market – in Sarasota and Venice – which is doing really well,” Crandall says. Despite the focus on the vacation rental niche, he admits that Stocked is navigating “a very competitive market” and is fighting a bit of an uphill battle against “the big guys.” Still, Crandall is confident that Stocked will continue to thrive and grow, thanks to the unique differentiators it offers.
“All these big players (in the grocery delivery space), they’re doing their shopping at the big box stores: Walmart, Walgreens, Rite Aid, Meijer, Costco, what have you,” Crandall explained. “In Traverse City,
Stocked is working with local stores, like Burritt’s Market or Edson Farms, to supply our customers with groceries. We do offer the big box stores – you kind of have to do that, especially if your competition is offering it. But when people come to the area, we want to focus on making their experience the best it can be, and we can do that by offering fresher, healthier, higher-quality products from local grocers.”
Hite says those locally focused options have been successful in getting out-oftowners to pick Stocked over bigger grocery delivery services like DoorDash or Shipt – even though most Stocked customers probably have way more familiarity with those nationwide providers.
“We’ve talked to a lot of customers, and we’ve heard a lot of them say things like, ‘We saw your service and the local stores you deliver from, and that’s something we want,’” Hite said. “There are definitely some customers who just want what they want and don’t really care where it comes from. But there are also a lot of people who are very local-centric when they travel.”
Those choosing the local option, Hite notes, are often the customers “who tend to be more health-conscious,” whether that manifests in a desire for organic foods, for fresher, locally grown produce, or even for small-batch craft spirits. For
those customers, Stocked offerings like locally made charcuterie boards, farmraised poultry and meats from Up North Heritage Farm, or non-alcoholic spirits from Audacia Elixirs have been big hits.
Hite says the local focus is something that Stocked has been able to offer because it is a small, agile business, whereas bigger delivery services mostly stick to the big brand-name stores for logistical convenience.
So, how much growth can Stocked support before the special local touch would become untenable?
“Profitability is very important to us, and that’s something we want to take very seriously,” Hite said. “We do want to scale, but we don’t want to scale too fast, to the point where we’re constantly having to raise venture money to survive. We just launched this expansion in southwest Florida, and I think we’re going to tackle that as hard as possible this year. But we also want to hit new markets for next summer, particularly along the west side of Michigan. Grand Haven, Saugatuck, Holland, Grand Rapids, all those areas are on the table, and we might even venture up into the Upper Peninsula, if we can find the right partner up there. I’d say that, five years from now, if we’re in 10-15 different vacation markets, we would be extremely happy with ourselves.”
As for moving beyond grocery delivery
“There are definitely some customers who just want what they want and don’t really care where it comes from. But there are also a lot of people who are very local-centric when they travel.”
– Zach Hite, co-founder, Stocked
services and tackling the takeout/meal delivery market, Crandall and Hite don’t see themselves taking on DoorDash anytime soon.
“For now, we’re pretty happy with our niche in the grocery side, because it’s really allowing us to do things before the guests arrive,” Hite said. “So far, we’ve hemmed and hawed a bit about takeout
in general, because we don’t want to consider ourselves on-demand delivery service. That’s where our biggest competitors thrive, and that’s something we’re simply not set up for. But we do offer some meal prep deliveries with a local company called In It to Win It, and we might look to do a little more with that kind of thing going forward.”
Hite and Crandall
FINDING THE BALANCE
Restaurants struggle with high food, labor costs
By Art Bukowski
Whether it’s for goods, services or food, consumers are constantly hit with higher prices these days.
Inflation (and plenty of talk about inflation) began during the disruptions caused by COVID and has continued since, leading to changes in spending habits and a public weary of sticker shock as they go about their daily lives.
In lockstep with increased supply costs is a workforce that demands higher and higher wages, particularly throughout northern Michigan and especially in the service industry.
While virtually every business has been impacted by these increased costs, restaurants are in a particularly unenviable position. As costs for food and staff continue to grow, many are forced to choose from a slate of unattractive choices: raise prices, cut quality, reduce portion sizes or slash service.
Local restaurateurs know that figuring out the right balance is critical for shortterm survival and long-term success.
“It’s a ton of pressure,” said Jeff Libman, general manager of Amical in Traverse City. “You work very hard to put
out quality product, make it look good and put it at a price that works for the business, but that also doesn’t give the guests sticker shock, and that can be really hard.”
More importantly, one or two wrong moves could spell disaster in an increasingly competitive environment where already price-shy consumers have a ton of options.
“The real cost would be somebody telling you that your food is not good (or overpriced) and that they’re not going to come back,” Libman said. “I love the firsttime shopper…but what I really want and what we really need is the repeat. Getting the best quality is where it starts.”
Feeling the pinch
While there’s certainly some flexibility when it comes to building a menu, the real gut punch comes from the dramatically higher cost of staple ingredients used in many (if not most) dishes.
“People don’t realize it’s the simpler products that are costing more money,” Libman said. “Flour’s gone up. Dairy has gone up. Eggs have gone up in price. Lettuce has gone up in price.”
Over at Mission Restaurant Group
(Blue Tractor, Jolly Pumpkin, North Peak, Mission Table and several others), Paul Olson winces when he looks at certain items his organization buys in bulk. Olson is a managing partner of Mission Table who also serves as vice president of culinary development for the restaurant group.
“Mayonnaise is insane. Do you know how much mayonnaise we go through?” he said. “And it’s doubled in two years. It’s the oil.”
And it’s not just food costs. Restaurants are also offering as much as $8-10 an hour more for certain positions than they did even just a decade ago, and they’re still struggling to fill their openings.
“Our dish washing is now $22 an hour. Labor is super high, and because there’s so many restaurants here, we’re all fighting for the same people,” Olson said. “The cooks will jump ship for a dollar an hour more. It’s brutal.”
Staffing has proved to be a vicious cycle of sorts, leading managers to reduce hours, which in turn cuts into profits. While North Peak is again open on Sundays, it was closed for all of them last summer.
“A Sunday is $10,000 to $20,000 in sales,” Olson said. “You add that up over
Bray and Brittney McCabe
the course of the summer and that’s a lot of money.”
The region is now loaded with very good restaurants, so owners and managers are keenly aware that they still have to bring their A-game while they tweak pricing, selection and more.
“There’s too much good food out there. It wasn’t like this 20 years ago,” Olson said. “You could serve average food and still make money. Now you’ve really got to be competitive…and you’re doing it with a less talented labor force.”
Over at Glendale Burger Shop, the Elmwood Township restaurant that garners rave reviews for its “smashburgers,” owners Brittney and Bray McCabe have never known anything but the grind. They opened their popular brick-and-mortar shop in July 2023 after about four years in a food truck, so their entire existence has been impacted by inflation. While they’ve been fortunate that their beef supplier (Maxbauer’s) has raised prices only slightly, everything else has skyrocketed.
“What I want people to really understand is we only (raise prices) if we have to. These decisions are never made lightly, and everybody puts a lot of time, thought and effort into it. And it’s such a hard thing, because you want people to feel good about spending their money. You have to find the balance.”
– Jeff Libman, General Manager, Amical
BUILDING BUSINESS.
TRUST.
and five of them are profitable. This helps pay our bills.”
Amical has also raised prices incrementally in the last few years, but Libman says that’s something they’ve done plenty of times during the restaurant’s three-decade run. The key is to spread the increases out across the food and bar and to make the price bumps slight.
“You don’t want something that was $28 yesterday to be $35 today. That’s just insane,” Libman said. “(And) you can’t do everything all at once.”
For each menu item, Amical’s team looks at the lowest they can afford to sell it while being cognizant of how much customers can reasonably be expected to pay. You’ve got to “find the ceiling,” as Libman puts it.
“What’s the number that allows our clientele to eat here and have the experience that they’ve come to expect from us consistently over 30 years?” Libman said. “And what’s the smartest way to make that happen without getting smaller in portions?”
Service people have “pleasing skills running through their veins,” Libman said, and raising prices is almost always a last resort.
“What I want people to really understand is we only do it if we have to. These decisions are never made lightly, and everybody puts a lot of time, thought and effort into it,” Libman said. “And it’s such
“We’re always eating out, checking out other restaurants, seeing what other people are paying. Before we raised prices up here, I went all over the place. How much is the burger? How much is the steak? Is there a surcharge? An item can’t be $28 here if I can get the same thing at Apache for $21.”
– Paul Olson, VP of Culinary Development, Mission Restaurant Group
a hard thing, because you want people to feel good about spending their money. You have to find the balance.”
Most managers also live in constant fear of outpricing themselves, especially when
other factors are considered. Multiple major road construction projects have taken a toll on downtown restaurants since 2021, for instance, as plenty of customers have decided to avoid the congestion.
“We already know we are going to have less people,” Libman said. “So do we want to have even less people because the prices are too high?”
Olson and his team are often out
scouting to see what the competition has to offer.
“We’re always eating out, checking out other restaurants, seeing what other people are paying. Before we raised prices up here, I went all over the place,” he said. “How much is the burger? How much is the steak? Is there a surcharge? An item can’t be $28 here if I can get the same thing at Apache for $21.”
Ultimately, Libman hopes that people understand that if all food prices have gone up, folks need to rethink what it means to eat out, especially when it comes to fine dining.
“If I’m going to spend $42 at McDonald’s, I need to change my mindset,” he said. “And that’s a conversation that I like to have with people. The baseline has changed.”
At Glendale, the McCabes set out initially to have one person get a burger, fries and a drink for under $15. They’re still in that zone five years later, despite their cost for certain items (fries, for example) doubling in that time frame.
“I think the fast casual business model is that if the prices go up, I just have to sell more,” Bray said. “I’m not sure that’s a good business model, but it’s where my head’s at…I’ll raise the prices if I absolutely have to, but I don’t want to.”
Holding nearly steady on prices (they’ve bumped their signature burger up a buck) has not gone unnoticed by customers.
“We do get positive feedback that we have good prices, and it’s so funny that the same price two years ago wasn’t considered a good deal,” Brittney said. “People thought we were ripping them off at the food truck. Now in the restaurant, people are like, ‘This is really reasonable.’”
Other options
There are, of course, other ways to deal with increased costs that don’t involve raising prices – but it doesn’t mean they are any less painful. Amical for almost two
be cool with it?”
Amical recently reversed course (olives are now by request only), but Mission Restaurant Group is sticking to its guns after pulling the free curry chips and aioli from Jolly Pumpkin.
“It was like $700 or $800 a week worth of giveaway in the summer, and that adds up quick,” Olson said. “It also fills them up, so they eat less appetizers.”
Mission Restaurant Group has also taken a very close look at prep times, considering current labor costs. They can now buy pre-prepped ingredients – peeled
“I think the fast casual business model is that if the prices go up, I just have to sell more. I’m not sure that’s a good business model, but it’s where my head’s at…I’ll raise the prices if I absolutely have to, but I don’t want to.”
– Bray McCabe, co-owner, Glendale Burger Shop
years stopped giving away free bread and olives, as it had for decades.
“Between bread and olives, you’re talking about tens of thousands of dollars that we would give away,” Libman said. “Certain things are just the cost of doing business, but when margins are tighter, how can you just give away $20,000 and
shrimp, diced veggies, pre-cut steaks – and the premium is still cheaper than paying someone to do it in-house.
“If it’s going to take $22 an hour for the prep cook to peel this stuff, it doesn’t make any sense,” Olson said. “And the end product is maybe just a little bit inferior, but it’s not super noticeable.”
They’ve also tweaked menus a bit and added more sharable appetizers and other items that are both tasty and cheap.
“We’re just trying to provide more value while still making money,” Olson said. “Pizza is relatively inexpensive to make, for example. We can put it on the menu for $10 and we’re still making money, and it feeds four people for an appetizer. Pasta is another one. Pizza and pasta are brilliant because the costs are really low.”
Mission is also pouring a ton of energy into making sure visitors to its restaurant have the best service possible. Their manager bonuses this year are focused on things like secret shops (essentially sending a spy in to test out the experience), health inspections and other items.
“Since we’ve already raised prices everywhere, we’re really working on that guest experience,” Olson said.
Glendale is in the fortunate position of being debt free and doing most of the work themselves, but they may soon make some pretty significant shifts to tap into more sources of income.
“In our minds, if we hire people that are going to cost more money, that opens us up to do things that we’ve had on the back burner,” Bray said. “We’ve never done catering. We’ve never done events. We still have a whole food truck that we could roll out. We have all these other revenue streams that we could open up.”
ENVIRONMENTAL STEWARDSHIP AWARD
PRESENTED BY KEEN
OVERVIEW
KEEN powers up Commongrounds Traverse City with a sustainable solar solution.
YEARLY KILOWATT HOURS AVOIDED: 40,198kWh annual production
SAVINGS EQUIVALENT TO:
3,160 gallons of gasoline consumed 33 acres of trees preserved
Commongrounds Cooperative had a great experience working with KEEN for our solar installation. They were a creative brainstorming partner that helped us figure out financing and logistics. Pleasure to work with!
By Cortney Danbrook, columnist
Take any given summer evening in downtown Traverse City and the streets are abuzz with people enjoying northern Michigan’s watering holes. From after-work drinks, to birthday celebrations to bachelor and bachelorette parties, residents and tourists alike frequent our fine establishments to celebrate. In fact, in Grand Traverse County alone there are more than 500 liquor licenses serving the patrons of these celebratory gatherings.
However, liquor licenses come at a price – especially in northern Michigan where the lack of available liquor licenses makes them a costly acquisition and a coveted asset that an establishment cannot afford to lose.
With Michigan residents consuming almost 25 million gallons of alcoholic beverages annually, how does a business ensure they do not jeopardize their liquor license and the critical revenue stream it produces? By following the law – but sometimes, however, that’s easier said than done.
All liquor licensees must abide by the laws and administrative rules set forth in the Michigan Liquor Control Code. Violating these laws results in fines and even suspension of a business’s liquor license. The list of potential violations is a vast, tangled web of regulations ranging from failure to cooperate with law officers, to allowing fights on a licensed premises, to the illegal use and benefit of a liquor license, to intoxication of an employee or licensee on premises. In fact, a few of the most common violations may or may not surprise you:
1. Sell or Furnish Alcohol to a Minor or Intoxicated Person: There is no surprise that selling alcohol to someone under the age of 21 invokes serious consequences and is one of the most common violations that liquor licensees face. In fact the Michigan Liquor Control Commission (MLCC) regularly employs student decoys under the age of 21 to carry out controlled buys at licensed establishments in coordination with their enforcement officers. While regular training for staff in checking valid identification ensures compliance with under age sale of alcohol, a higher level of diligence is absolutely necessary to ensure patrons are not over-served.
BUZZ KILL
State’s liquor license laws weave a vast, tangled web
back to that summer evening in
Traverse City. A large group of young women are dressed in color-coordinated outfits with one proudly wearing a white “Bride to Be” sash. There’s only one issue: The soon-to-be bride has had one too many and is being helped down the sidewalk. They enter their next bar, however the bride is quickly ushered out of the establishment without being served. Why? A liquor licensee is held to a strict standard that they “shall not directly or indirectly…sell, furnish or give alcoholic liquor to an individual who is visibly intoxicated,” a critical factor in such determination being “the outward appearance and conduct of a patron or other intoxicated person” and corroborating witnesses to the same. Sale of alcohol to such an individual will most certainly result in fines and potential suspension of the liquor license and may open that licensee to liability for damages to any individual who was subsequently injured by that visibly intoxicated individual.
2. Failure to Meet Alcohol Server Training Requirement: All businesses know that their most valuable asset is their employees; this is especially true for liquor licensees. So much so that the MLCC mandates at a minimum that supervisory personnel who have completed an approved alcohol server training program must be employed during all hours where alcohol is served. Further, any new licensee must provide proof of server training certification to the MLCC within 180 days of issuance of their liquor license. Well-trained staff is the first line of defense for liquor licensees as they are face to face with customers and enforcement officers. Any action or inaction an employee takes has a direct impact on that establishment’s liquor license and their continued business operations.
3. Improper or No Display of Liquor License/Permits: If you’ve ever walked
into an establishment that holds a liquor license, you will likely see a very unassuming piece of paper displayed on the wall. It’s a very important one, however, as all licensed establishments must have their liquor licenses, including all related permits, “framed under a transparent material and … prominently displayed.” And yes, the MLCC actually wants them framed. Additionally, the license must be signed by the licensee or individual with designated signing authority who is listed on file with the MLCC. A seemingly simple step, yet one that is often missed
With so many regulations affecting licensed establishments, it is crucial for a liquor licensee to be well informed as to how these laws affect them.
as licenses are renewed, new permits are obtained, or a new license is issued.
4. Gambling or Possession of Gambling Equipment: This one seems simple, too, right? Well, let’s go back again to downtown Traverse City, but this time in the height of March Madness. It’s NCAA basketball bracket mania and everyone from your work colleague to your neighbor wants you to join their bracket pool. Meanwhile, a well-meaning local establishment looking to capitalize off of the madness decides to distribute their own March Madness brackets to attract customers through the promise of cash prizes to the winner. Much to that liquor licensee’s dismay, they are in violation of the Liquor Control Code by allowing
unlawful gambling on their licensed premises. Unfortunately, even a gathering of friends for a game of poker at a licensed establishment can be viewed as illegal gambling if the activity meets the following criteria: 1. Consideration (cost or physical presence required to participate); 2. Chance (where luck, not skill, determines the winner); and 3. Prize (money or other thing of value).
5. Alteration, Sale or Transfer of Premises Without Permission: Alcohol is a highly regulated industry, so almost anything that affects the liquor license or the licensed premises often requires approval by the MLCC. In fact, the MLCC has detailed diagrams of each establishment on file. Adding an outdoor bar or patio? That requires prior approval from the MLCC and an on-site visit from them. Michigan’s three-tiered alcohol distribution system is designed to keep manufacturers, wholesalers and retailers separate, with ownership in one tier prohibiting you from having ownership in another tier. As a result, the MLCC tracks all underlying ownership of liquor licensees. Want to transfer an ownership interest in the entity that owns the liquor license to your daughter? That requires prior approval from the MLCC. How about sale of your liquor license to a third party? Surprise! That, too, requires the approval of the MLCC.
With so many regulations affecting licensed establishments, it is crucial for a liquor licensee to be well informed as to how these laws affect them. Their liquor license and business depend on it.
Cortney Danbrook is an attorney at Danbrook Adams Raymond PLC in Traverse City. She provides specialized counsel to business clients on liquor licensing and regulatory compliance, and advises individuals, families and businesses in the areas of estate and succession planning. She can be reached at (231) 714-0163 or cdanbrook@darlawyers.com.
Flash
downtown
Mammoth Owners Plot
Massive Distilling Operation, Agritourism
Hub For Former Pugsley Site
By Craig Manning
A giant manufacturing facility, a business park and technical education hub, a command-and-control center for satellite launches, and housing site for people experiencing homelessness. These are a few of the ideas that have percolated for the former Pugsley Correctional Facility in Kingsley since it was decommissioned as a prison.
Now Chad Munger, founder and owner of Mammoth Distilling, is confident he has the winning ticket to turn Pugsley into a thriving economic asset.
Michigan’s newly-approved 2025 budget includes $2 million “for the redevelopment of a former corrections facility in Grand Traverse County into an agricultural tourism hub.” Munger plans to buy the 105-acre Pugsley site and turn it into a massive commercial distilling operation –and eventually, an agritourism epicenter.
“My wife [Tracy Hickman] and I have started a second distillery; it’s called Consolidated Rye & Whiskey (CRW), and it’s a contract distilling operation,” Munger said. “It’s not a craft distillery, and it’s not going to be a brand where you’ll see bottles of CRW bourbon on store shelves. Instead, it’s a larger distillery, and it will make barrels of whiskey for the contract market, to be sold to other brands inside and outside of Michigan. And it will be using 100 percent Michigan grain.”
CRW is an outgrowth of another ambitious project at Mammoth. The distillery has been working to revive a prohibition-era grain called Rosen rye. Beloved among moonshiners for fast-growing productivity and rich flavor, Rosen fell out of favor due to cross-pollination and hybridization of the crop that compromised its unique character. Working on South Manitou Island, Mammoth crews have
spent the past four years turning heirloom seeds into full-fledged Rosen rye crops, in hopes of giving the whiskey market its first taste of Rosen in more than 80 years.
“The Rosen rye project introduced us to a lot of new people and taught us a lot about the state’s interest in getting the craft distilling market in Michigan to a place where it’s more about buying and using local grain,” Munger said.
Thanks to state tax incentives, he explained, distilleries across Michigan have plenty of motivation to buy and use Michigan-grown grain, but don’t always have the opportunity.
“Everybody’s interested in [using Michigan-grown crops], but at Mammoth, we found that it’s very hard to do,” Munger
any given farmer, Munger said it’s difficult to convince growers to grow less common strains of rye.
That’s where Munger hopes CRW can make a difference. Soon, he said, Rosen rye will be “commercially viable,” with plans to have “a couple thousand acres” of it growing by next fall. CRW is also growing Hazlet rye – the rye “typically purchased by the big distillers in Kentucky and Tennessee” – and is working with MSU to breed “a brand-new variety of rye, specifically for the distilling industry, that will offer better agronomics and more desirable characteristics” for whiskey making.
The goal with all these growing operations is to create a critical mass for
“We’re going to make enough whiskey that we can incentivize growers to actually grow what we want…”
– Chad Munger, founder/owner, Mammoth Distilling
continued. “A lot of the grain that is being grown statewide is more commodity crop stuff. Which makes sense: There is an established market for certain varieties of corn and wheat and rye. But those commodity-type crops aren’t what we’re interested in, particularly after our experience with Rosen. We realized that the heritage varietals have real mass appeal, and that they make interesting distillate with way more character.”
Because most craft distilleries only buy “a small amount of grain every year” from
high-quality whiskey production in northern Michigan – enough to move the needle on what other growers throughout the state are willing to plant.
“We’re going to make enough whiskey that we can incentivize growers to actually grow what we want,” Munger said. “We’ll be a guaranteed buyer, so farmers don’t have to worry about whether some collection of 60 small distillers around the state wants what they grow. Instead, they’re going to grow it and sell it to us on contract upfront, and we’ll pay them a premium.”
Using the distilling operation to be built out at Pugsley, CRW will turn those specialty crops into a whole lot of whiskey. Munger said the plan is to produce 6,000 barrels of spirit in the first year, with potential to scale production up to 50,000 barrels per year.
CRW will sell most of it “into the contract market,” or to buyers who purchase pre-made whiskey in bulk and then bottle and sell it under their own labels. A much smaller quantity of whiskey will go a different route. Munger wants to help some Michigan farms establish a network of “single-estate growers.” For each grower, CRW would make a certain amount of whiskey “exclusively from the grain they grew on that particular farm” and then sell that whiskey back to the growers.
Having that kind of value-added product, Munger explained, would allow growers to turn more of a profit, all while providing “an opportunity to build local agritourism concessions around their farm.”
Munger’s ultimate vision? The “Michigan Rye Trail,” a twist on the Kentucky Bourbon Trail, a world-famous collection of 46 distilleries throughout the Bluegrass State. Munger wants to do something similar in Michigan, but spotlighting the grain-growing farms and their single-estate-grown spirits rather than distilleries. The trail would culminate at Pugsley, where the “agritourism hub” concept comes into play. While Munger’s first priority is getting the CRW distilling operation to a successful place, he sees potential for the property to eventually include a hotel and spa, camping or glamping components, “family-oriented outdoor recreation” offerings, and storefronts for “other Michigan value-added ag producers,” such as breweries, wineries, and restaurants.
A WELL-OILED MACHINE
Fustini’s plans for growth, new locations, succession
By Craig Manning
New store locations. New e-commerce opportunities. New partnerships with resellers. A push to grow beyond northern Michigan and become a dominant brand statewide – and perhaps even farther afield.
These are the types of growth measures you would typically expect to hear about from a young company just hitting its stride. They’re perhaps less expected for a long-established brand that has spent the better part of the last decade holding steady. But such is the unusual case of Fustini’s, the Traverse City-based retailer that has been bringing premium olive oils and vinegars to northern Michigan since 2008.
Fustini’s spent years on the growth trail immediately after its inception, opening a second location in Petoskey in June 2009 and adding locations in Holland and
Ann Arbor the following year. But the company’s expansion efforts hit a snag in the mid-2010s with locations in Mackinaw City, Boyne City, and Wailea, Maui, all of which opened between 2013 and 2015 and closed within a few years.
The Fustini’s brand has not added any new store locations to its portfolio since, and speaking to the TCBN in June of 2020, founder and owner Jim Milligan said that future expansions – at least of that ilk – were unlikely for the retailer. Four years later, though, Fustini’s once again has its eye on growth, and Milligan is confident that things will be different this time around.
“It’s hard work, and there is risk involved,” Milligan said. “We acknowledge that we’ve opened seven stores and have four operating, which means we’ve had failures. But the biggest change is that, back then, opening up new locations was all on me. And while I had a lot of background to do that – I had a 30-year
career with 3M and a lot of experience in marketing and international sales – I’m not getting any younger. The idea of opening up more locations to take advantage of this growing market just didn’t appeal to me after a certain point. Now, we have the business processes and the wider leadership team to go after these new opportunities properly, and so I think the risk of failure is much lower.”
The push to pursue growth is part of a broader five-year plan at Fustini’s that’s aimed at preparing the company for longterm stability and posterity. One key aspect of that plan? Succession, given that Milligan – who started Fustini’s in 2008 after being laid off from 3M at the age of 55 – is already well into his second career. While the Fustini’s founder insists he’s nowhere near ready to ride off into the sunset, he does point to his age as part of the reason that the business has been working so hard on a roadmap for the future.
Key to that future is the appointment of longtime employee Liz Lancashire as the general manager for all of Fustini’s. In any post-Milligan version of Fustini’s, Lancashire would likely be the face of the company. For now, with Lancashire handling the day-to-day operations of the company, Milligan says he’s “moved more into a vision role,” where he’s looking at the big picture and developing strategies for what the next chapter of the business should look like.
The whole process of future-proofing Fustini’s just happened to dovetail with big growth in the olive oil market. According to the North American Olive Oil Association, olive oil sales in the United States soared 25% in 2020 alone, and have continued to thrive ever since. Milligan and Lancashire both noticed that uptick during the pandemic, which kept people out of restaurants and spurred a home cooking movement. They say those same customers who started buying olive oil during the peak of COVID have mostly continued on as Fustini’s regulars, while other newbies have been drawn into the fold even more recently by the product’s documented health benefits.
“Bottom line, we see a market opportunity here,” Milligan says. “The market for good, healthy, extra virgin olive oil continues to grow. The United States has always been under-penetrated in their use of olive oil versus, say, Europe. In
the U.S., consumption is less than one gallon (of olive oil) per person per year. In Mediterranean countries, it’s five to eight times that. So, the market is there, and as consumers are starting to realize that this product class is related to good health and heart-healthy ingredients, we’re well-positioned to grow.”
In preparing to chase that growth, Fustini’s has adopted something called the Entrepreneurial Operating System (EOS), a business methodology described as “a complete set of simple concepts and practical tools that has helped thousands of entrepreneurs around the world get what they want from their businesses.” By focusing on “six key components” of a business – people, vision, data, issues, process, and traction – EOS purports to help businesses “clarify, simplify, and achieve” big goals.
“A lot of it just has to do with creating a stronger foundation,” Milligan said of the EOS system. “It’s a foundation of leadership; it’s a foundation of better business practice and better processes. And as a result of investing in this new process for managing our business, we feel that we now have a much better capability to take advantage of opportunities for growth.”
Over the next five years or so, that growth will follow a three-pronged approach. The biggest one is new stores, which Milligan says could end up anywhere in Michigan or anywhere in the Midwest.
“We’re looking for locations that are
“We have these connections where we’re focused on improving community health through diet and nutrition. That’s what we’re all about here. And that’s what we want going forward: We want to be part of the community and contributing to improving things in the community, wherever we are.”
–Jim Milligan, founder/owner, Fustini’s
under-served with olive oil and vinegar, that have tourist foot traffic in their shopping districts, and that match with our target demographic, which we’ve found is
40- to 70-year-old females that love to cook and entertain,” Milligan said. When asked for specific locations where Fustini’s stores might pop up in the near
Lancashire and Milligan
future, he says that it’s still too early in the process to say for sure, but that major Midwest cities like Cleveland, Indianapolis and Chicago have all been bandied about.
As for avoiding the failure-to-launch problems that Fustini’s experienced with its shops in Mackinaw City, Boyne City, and Wailea, Milligan assures that he and his team have taken pains to learn the lessons from those stumbles. In Mackinaw City, for instance, he says there was high foot traffic from tourists, but not in a demographic category that matched with the typical Fustini’s customer. In Boyne City, the problem was being too close to another Fustini’s location – the Petoskey store – that was performing better. And on Maui, Milligan says, Fustini’s simply made the mistake of “dropping into a market” without knowing enough about the community or the customers there.
audience and know the location, so that we can be impactful while we’re there.”
“We want everyone to be eating oil and vinegar with their food.”
–Liz Lancashire, GM, Fustini’s
“In Traverse City, we’ve got all these relationships with organizations like Food Rescue and with the Groundwork Center,” Milligan noted. “We have these connections where we’re focused on improving community health through diet and nutrition. That’s what we’re all about here. And that’s what we want going forward: We want to be part of the community and contributing to improving things in the community, wherever we are.”
While Milligan and Lancashire don’t have a specific timeline for opening new stores, customers will likely start seeing the rollout of the other two growth plan prongs – new e-commerce pursuits and new authorized resellers –almost immediately.
The Fustini’s team is also vowing to do more in leveraging its existing e-commerce assets – an email newsletter with more than 120,000 subscribers and a website with more than 3,000 recipes – to drive customer engagement and retention.
out certain locations for new stores – to get Fustini’s products out into the world. In particular, Milligan says the company is hoping to grow its presence in grocery stores and boutique shops downstate and into the Upper Peninsula.
“Wherever we go, we want to be part of a community,” Lancashire said. “I’m sure it was a lovely community in Hawaii, but what did that have to do with us? We understand now that we need to know our
On the e-commerce front, Milligan says Fustini’s recently gave its website a makeover and pivoted its online and instore point-of-sale systems over to Shopify, which he thinks will allow for a more seamless customer experience all around.
Regarding resellers, local customers may have already noticed Fustini’s displays popping up in regional grocery stores like Oleson’s, Tom’s, or Hansen Foods in Suttons Bay. The brand plans to expand that reseller network – particularly as it rules
Overall, the three prongs play into a simple but ambitious five-year plan for Fustini’s.
“We want everyone to be eating oil and vinegar with their food,” Lancashire concluded.
Bankruptcies Climb
Business and personal cases on the upswing in the five-county region
By Rick Haglund
Rising grocery prices, rent and other living costs, combined with near-recordhigh credit card debt, are pushing more people into bankruptcy following several years of declines in filings.
Local bankruptcy attorneys and credit counselors say the numbers could continue to jump this year as consumers’ finances are stretched thin, despite easing inflation, falling interest rates and rising wages.
“We are seeing a lot of folks trying to make ends meet with their service industry jobs,” said Karen Emerson, home ownership and financial empowerment center manager at the Northwest Michigan Community Action Agency in Traverse City. “We’ve all heard, ‘A view of the bay is half your pay.’ Service industry folks have to get a second job to pay the bills.”
Bankruptcy filings in West Michigan fell precipitously during the COVID pandemic, thanks to lucrative federal stimulus checks to consumers and small businesses, plus a $600 a month temporary federal bump in unemployment payments to jobless workers.
“COVID had a dramatic impact on bankruptcy filings. It was a ski slope,” said Traverse City attorney Paul Bare, who’s been practicing bankruptcy for nearly 40 years.
Bankruptcy cases in the U.S. Bankruptcy Court for the Western District of Michigan fell from 5,770 in 2019 to 2,821 in 2022, a 51% drop. Filings rose to 3,193 in 2023 and are on the upswing again this year.
There were 1,942 bankruptcy cases filed as of mid-July, compared to 1,818 during the same period in 2023. Sixty-three of those cases as of mid-July were business bankruptcies, up slightly from 61
during the same period last year.
“Many businesses have suffered losses, mostly during COVID, that could never be recouped,” said Traverse City bankruptcy attorney Jeffrey Alandt. “Today we are seeing more business cases than in the past.”
The Western District bankruptcy court has jurisdiction over 49 counties, including Benzie, Grand Traverse, Kalkaska and Leelanau counties.
Nationally, bankruptcy filings rose 16% in the 12-month period ending on March 31, according to the federal court system.
Local bankruptcy attorneys say many people who can’t meet living costs are running up their credit card balances, which could lead to a continued increase in bankruptcy filings.
Americans’ credit card balances stood at a total $1.12 trillion in the first quarter of this year, according to the New York Federal Reserve, down slightly from a record $1.13 trillion in the fourth quarter of 2023.
The average credit card holder in Michigan has a balance this year of $5,503, which will take 17 months to pay off, according to a February survey by Bankrate. com. The average credit card rate for new offers in July was 23.14% and 21.51% for existing accounts, according to WalletHub.
“Credit cards are a slippery slope. It takes a while for people to realize they’re never going to pay this off,” said Traverse City bankruptcy attorney Cici Clough. “A lot of people live paycheck to paycheck and they’re putting (living expenses) on their credit cards.”
Other types of consumer debt also are dragging down household finances. Clough said she had one client who was paying 31% annual interest on a car loan.
“It’s like robbery,” she said. “It really does exist.”
Thirty-eight percent of households in the five-county northwest Michigan region do not earn enough money to pay for the basic necessities of housing, child care, food, technology, health care and transportation, according to Northwest Michigan United Way. Those counties are Antrim, Benzie, Grand Traverse, Kalkaska and Leelanau.
Local bankruptcy attorneys said they expected filings to be even higher than they’ve been post-COVID. But rising home values have prevented many people from being able to protect equity in their homes in Chapter 7 bankruptcy liquidations, keeping some from seeking that avenue.
“Many of our new clients have more equity than they can exempt under Chapter 7,” Alandt said. “This forces them to
seek bankruptcy under the more costly Chapter 13 where they must pay back all or a portion of their debt over a period of three to five years in order to keep their homes.”
In Michigan, Chapter 7 bankruptcy filers can protect only about $40,000 of their home equity, Bare said. Those 65 years and older, and disabled filers can protect up to about $65,000 in home equity. That’s not enough for most people who liquidate their assets to find new housing.
“There’s not a cheaper place to live,” Bare said. “You can’t buy another house because of higher home prices and mortgage rates.”
On the business side, experts predict small business bankruptcies could fall because of the end of a program that allowed many to reorganize their finances more quickly and with less expense under
Emerson Bare
Subchapter V of the bankruptcy code.
Congress created the new category in 2019 for businesses with up to $2.7 million in debt. The threshold was raised to $7.5 million in 2020 as part of a federal COVID stimulus program. But the higher limit expired in June and an effort in Congress to reinstate it failed.
People file for bankruptcies for a variety of reasons, including job loss, divorce, excessive household debt and auto repossessions. But Bare said the biggest one he deals with in his practice is medical debt, which often runs in the tens of thousands of dollars.
And it’s hard to get much relief from hospitals and other health care providers unless the patients are low-income, he said.
“How many people have 80 grand in their bank account?” Bare said. “Those are sad bankruptcies. I don’t like those at all.”
One bright spot in the bankruptcy landscape is student loan debt. In the past, Alandt says, it was all but impossible to discharge student loan debt in bankruptcy.
But the Biden administration has made it easier for student loan borrowers to eliminate the debt through bankruptcy if they can prove financial hardship.
“My office has a number of these cases pending and has most recently received discharges of $77,000 and $380,000 of student loan debt for clients,” Alandt said.
Still, bankruptcy can have severe financial consequences, including ruined credit that can last for years, making it difficult to finance a home, a car or major consumer purchases.
Emerson said the Northwest Michigan Community Action Agency ended its pre-bankruptcy counseling services when bankruptcy filings plunged during COVID. But she said the agency is still seeing a steady stream of workers struggling to make ends meet, families facing
foreclosure and people falling behind in paying property taxes.
Her agency’s focus is now on helping people avoid bankruptcy by offering workshops and individual coaching on money management and boosting credit scores. The agency also provides a variety of social services, including housing and food assistance, and preschool programs.
“We’re meeting people where they’re at,” Emerson said. “We look to step in before bankruptcy becomes an issue.”
BANKRUPTCY BASICS
Chapter 7: Liquidation of assets to pay creditors. Applies to individual and business bankruptcies.
Chapter 9: Provides municipalities with protection from creditors while develop a plan to reorganize debts.
Chapter 11: Allows businesses to continue operating while they craft a plan to repay creditors, which may vote on the plan.
Chapter 12: Designed for family farms and family-owned fishing operation to repay debts to creditors over three to five years.
Chapter 13: Enables individuals with regular incomes to repay creditors in installments over three to five years.
Source: U.S. Bankruptcy Court for the Western District of Michigan
Clough
Alant
By Dennis Prout, columnist
We’d all like to know how the new tax rules could impact our retirement savings. Though the rules have become increasingly complex, there are still a number of valuable opportunities available.
This is perhaps what it felt like when you went shopping for school supplies before your first day of kindergarten. For me, after about 20 to 30 minutes, I would have an irresistible urge to lie down and go to sleep…any carpeted floor would do. Nothing could be more awesome than an unforced nap at age 4. Unfortunately, nothing made Mom more frustrated. Just when she was making progress on finding the right size pants for me, I wanted to lie down.
The point is that the tax changes to retirement accounts can be extremely complex and sometimes mind-numbing. For this article, I’m going to share what I think are the changes that could have the largest impact on you. I’ll also try and cover the lion’s share of the details without causing you to doze into an unforced nap. Required minimum distributions apply to just about every retirement account. This usually includes (except for some workplace plans) IRAs, 401(k) s, 403(b)s, 457s and other tax-qualified accounts. For those born 1950 or earlier, the RMD age has been extended from age 70½ to 72. For those born between 1951-1959, the new RMD age is 73. For anyone born 1960 or later, the new RMD age is 75.
In essence, you have more time to allow your accounts to grow on a tax-deferred basis, as well as more time to potentially convert more of your IRA accounts to Roth IRAs. For example, if your RMD age is 75, you will have to draw about 4%, or $4,000, for every $100,000 you have in the account(s).
RMDs, QCD and Roth IRAs
Is it possible to avoid taking required minimum distributions? Yes! First, own a Roth IRA. Roth IRAs don’t have RMDs unless they’re inherited from a non-spouse, like a parent or grandparent. Another way to avoid the tax is to gift the amount of the RMD to your favorite charity, which is also known as a qualified
SECURE ACT 2.0:
Key financial planning components to increase your retirement savings
charitable distribution (QCD). Why do this? If you’re charitably minded, because of tax simplification, most account holders cannot deduct the amount given to charitable causes. Now, these taxable distributions can be tax-free by just giving the amount required directly to charitable causes, which must be a qualified 501(c)(3) organization. Certain rules and restrictions apply, but if the funds are given directly to charitable cause(s), and you don’t attempt to deduct the same amount, you should be in the clear. As always, consult with the appropriate professionals on this to make certain that you’ve processed and accounted for this properly. The amount you can give through the QCD per year is significant – $105,000 for 2024, with inflation-adjusted amounts each year after this. Opportunity knocks.
529 Changes
Next, for those with a longer planning horizon and who are saving for higher education costs, there is the newly expanded 529 plan that allows for certain longer-term assets within the 529 to be converted to a Roth IRA in the name of the beneficiary of the account, with a current $35,000 lifetime limit allowed. The amount converted must have been in the plan for five years and the account must have been opened more than 15 years prior. The annual limit allowed is up to the beneficiary’s income or the maximum per year contribution amount, whichever is the lesser. The huge benefit here is that the amount converted is not
taxable to the beneficiary (child) and, if the funds are kept in the Roth for five years, can be drawn tax-free as well. No one anticipated this change; this is a good lesson of the benefits of long-term saving. Many participants in these 529 accounts have been saving for their children and
It’s truly amazing how much can be set aside for your own retirement planning use and deferral of your retirement asset accounts.
grandchildren for more than a decade now. While many accounts will be drained of assets to help to fund college tax-free, any assets remaining can now be converted to Roth IRAs for the heirs and can really assist children or grandchildren in saving for other goals, including retirement. As previously noted, check all details for yourself and with qualified counsel.
Qualified Account Deferrals
Last, while not part of the SECURE
Act 2.0, the amounts that can be deferred into qualified accounts have been steadily increasing over the years. For instance, the Roth IRA and Traditional IRA allow you to invest up to $8,000 for 2024, as long as you qualify. As to 401(k) and 403(b) investment limits, you’re allowed to invest up to $30,500 through salary deferrals for the year if you’re 50 or older in the year you make this catch-up contribution. For many, the SIMPLE IRA is what you have available, and the maximum amount you may contribute for 2024 is $19,500 for those age 50 and older.
It’s truly amazing how much can be set aside for your own retirement planning use and deferral of your retirement asset accounts. With even some attention paid to your options and the flexibility now afforded to you, the longer-term retirement saver, your chances have only continued to increase your long-term retirement success.
Dennis Prout, CFP®, CPWA®, Ed Slott Master Elite Advisor ℠ , has been in the financial retirement industry for more than 30 years. Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Capital Asset Advisory, LLC, dba CG Advisory Services, a registered investment advisor. Capital Asset Advisory Services, LLC, CG Advisory Services and Prout Financial Design are separate entities from LPL Financial. Intended for educational purposes only and not as investment advice.
By Andi Dolan, columnist
The 60-year-old Medicare Trust Fund remains a cornerstone of the U.S. healthcare system, providing essential coverage to millions of elderly and disabled individuals. As of 2023, Medicare enrollment stood at 65 million beneficiaries, constituting approximately 19% of the U.S. population, with funding totaling $1 trillion annually. Medicare is structured around two primary components: the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. Together, these vital resources play a crucial role in ensuring access to essential healthcare services.
The HI Trust Fund, Part A, primarily covers inpatient hospital care, skilled nursing facility care, home health services and hospice care. Roughly 90% of the HI Trust is financed by payroll taxes; in 2022 its total funding was $397 billion. Funded primarily by employees, employers and self-employed individuals, this trust faces significant financial pressures due to demographic shifts and rising healthcare costs. The projected date for HI insolvency is 2036.
The SMI Trust Fund provides coverage for Medicare Part B (outpatient services) and Part D (prescription drugs). Financial stability for this fund is ensured through a combination of beneficiary premiums and federal revenues. While the SMI Trust Fund currently does not face imminent shortfalls, future adjustments to both expenditures and premiums will be necessary to address rising costs associated with outpatient services and prescription drugs.
Navigating these complex and interconnected funding challenges offers no simple solution. One thing is clear: reforms to Medicare must be vigorously pursued to curb excessive spending. Overcoming these obstacles entails exploring adjustments in revenue sources, implementing robust cost containment strategies and enacting policy reforms aimed at ensuring the sustainability of Medicare.
One easy way the government can generate revenue: adjust the Medicare Payroll Tax Rate. In 2022, an analysis by the Committee for a Responsible Federal Budget (CRFB.org) determined that a modest increase in the HI payroll tax
Not Broken (Yet):
The brittle bones of our Medicare trust funds
rate could significantly bolster revenues. Raising the HI payroll tax rate by 0.5 percentage points (0.25 percentage points for employers and employees) would generate approximately $530 billion over the next decade. Alternatively, a full percentage point in the combined employer and employee tax rate would yield over $1 trillion during the same period. While these amounts could sufficiently cover the HI Trust Fund’s financing gap over the next decade, they do not fully address the projected long-term growth in HI’s expenses.
Another proposal suggests targeting affluent individuals with higher Medicare taxes to further enhance revenues. Increasing the HI tax by one percentage point for households earning $400,000 (or $500,000 for couples) and above would raise an estimated $117 billion over the next decade.
Repealing the exclusion for Employer-Sponsored Health Insurance (ESI) represents a significant policy option with far-reaching fiscal implications that could reshape coverage in the United States. Today, premiums paid by employers for health insurance on behalf of their employees are exempt from income and payroll taxes, constituting one of the largest tax breaks within our tax code. According to the Tax Policy Center (TPC), eliminating this tax break could potentially increase federal revenues by $414 billion over a decade. This shift may drive individuals to seek coverage through alternative avenues such as Medicaid, the Children’s Health Insurance Program (CHIP), or the nongroup insurance
market (Healthcare.gov), spawning further financial stressors.
The government can contain costs by re-focusing in on Part C, Medicare Advantage (MA). Part C offers Medicare-eligible individuals the choice to enroll in private health plans in lieu of original Medicare (Parts A, B, and D). These MA plans, which are favored by 30 million beneficiaries, were initially designed to promote competition and innovation.
In exchange for outsourcing original Medicare, insurance carriers who provide
The financial health of the Medicare trust funds stands at a critical juncture.
Part C plans receive risk-adjusted payments from the federal government based on the health-score of the beneficiary. In 2023, carriers who enrolled beneficiaries in Part C plans captured $14,380 per enrollee, per year ($1,198.33 per month).
Despite TV advertisements proclaiming low or no MA premiums, the price tag back to the Medicare Trust and taxpayer is a very pressing concern.
According to the Congressional Budget
Office (CBO), federal expenditures for MA plans totaled $320 billion in 2021 and are projected to sharply increase to $921 billion by 2031. Part C insurers spend approximately 82% of what traditional Medicare spends on services – yet they are receiving payments averaging 122% of what traditional Medicare is spending for comparable beneficiaries.
Rethinking Part C’s Quality Bonus Program is another way to contain tax dollars. MA carriers receive additional payments (on top of the $14,000 per person) which amounted to nearly $13 billion in 2023. This line item is a substantial increase compared to previous years. Adopting measures to refine payment methodologies and control coding practices has the potential to yield significant cost savings.
Reviewing MA math is a MUST!
The financial health of the Medicare trust funds stands at a critical juncture. It is imperative that lawmakers consider both spending and revenue adjustments to strengthen Medicare’s finances, with a particular emphasis on implementing reforms aimed at reducing overall healthcare costs. By prioritizing reforms that improve value for current seniors while lessening the financial burden on future generations, we can ensure the viability of Medicare and sustain quality healthcare for all beneficiaries.
Andi Dolan is the owner of Traverse Benefits, a local and independent insurance agency advocating and providing health, life and disability solutions for employers, individuals and Medicare beneficiaries across northern Michigan.
DUCKS IN A ROW
Financial professionals prepare for potential estate law changes
By Art Bukowski
It’s easy to forgive the everyday citizen who doesn’t keep a close eye on what’s going on in Washington. Life is busy; distractions are plenty.
But what if not being aware could quite literally cost you millions of dollars?
Professionals who play a key role in estate planning – financial advisors, attorneys and certified public accountants – are having conversations with their higher net worth clients about the federal estate tax law, which is set to sunset at
the end of 2025 if Congress does not act to extend it.
What this means is that federal tax exemptions on an estate, which right now sit at $13.61 million for an individual or $27.22 million for a married couple, will revert to their 2017 levels. Indexed for inflation, the exemptions will drop significantly to between $6-7 million for an individual and $12-14 million per married couple. Any value above those exemptions gets hit with a hefty 40% tax when the estate is passed on to heirs.
“It’s a pretty substantial tax, so the consequences for heirs could be pretty significant,” said Matt Eckenrode, a certified financial planner who runs the Merrill office in Traverse City.
And while there is some speculation that Congress may extend the higher exemptions, no one knows for sure.
“Because we don’t know, that’s really why we need to be planning right now,” Eckenrode said.
Who’s impacted?
While not a lot of individuals have estates north of $12 million, it’s easier than you might imagine to hit $6-7 million, especially with real estate values surging.
“You could be an elderly farmer on Old Mission with a run-down house,
“You should talk to a financial professional about this (to discuss) these different planning techniques. There are ways that we can either capitalize on the rules as they exist today or make preparations for how to shelter things in the event that they were to change the rules in 2025.”
– Matt Eckenrode, Certified Financial Planner, Merrill’s TC office
but if you’ve got some investments and a lot of property…you could be affected,” said Holly Gallagher, a certified financial planner who serves as president of Horizon Financial in Traverse City.
“(The exemption reduction) is not going to affect everybody, but it could affect more people.”
It’s also important to understand that an estate includes pretty much everything of value, beyond the obvious like real
estate, investments and cash.
“A lot of people don’t recognize that life insurance is included in that as well, so if you’ve got a $2 million life insurance policy, you’ve got to add that on top,” said Andrew Shotwell, a Traverse Citybased attorney with Smith & Johnson who does estate planning. “A lot of my clients are surprised when they hear that.”
Estate professionals are getting with their clients now to sort out what’s in
their estates and who may be affected by the reduced exemptions.
“From a financial planning standpoint, you have two categories of people impacted – those who are in a situation where they would be impacted and are now potentially more impacted, and then people who are not currently impacted, but could potentially become impacted,” Eckenrode said.
Most of the attention will focus on
Eckenrode
those couples or individuals in the latter category. Many people at or near retirement age right now are more likely to be impacted after the reductions, experts say.
“Let’s say mom and dad are sitting on a comfortable nest egg with a couple properties of their own and their total net worth is hovering around $10-12 million, and they’ve got another 20 years to go,” Eckenrode said. “They had a huge buffer when it was $26 million, but now they could suddenly be moved into that category where there could be a significant tax impact.”
Many business owners – even of small to medium-sized operations – could also see themselves impacted by the change.
“The people who tend to build the most wealth in this country are the people who start and build businesses,” Eckenrode said. “They’ve got a lot of stuff going on…and there can be huge ramifications for passing businesses down.”
If Congress doesn’t act to extend the current exemptions, Eckenrode expects more attention on this issue next year when more people realize how close they are to the reduced amounts.
“The people who are planning for it right now already…have a big chunk of dough,” Eckenrode said. “But because a larger chunk of the population could be impacted, I think it’s going to become a big news story in 2025.”
Planning and strategy
So…what to do about it?
Professionals focus on a few strategies that involve getting money out of the estate and putting it someplace where it is has less tax exposure. You can currently give away up to $13 million in your lifetime to your heirs without federal tax, for example.
The obvious downside is that you lose that money while still living instead of passing it along when you die, but if the assets are ultimately going to the same place in the long run, it might be the best strategy.
“I’m talking to a lot of people about whether gifting makes sense to them,” Shotwell said. “You’re losing control in your lifetime, but it’s out of the estate.”
Moving assets into trusts is another option, as doing so removes them from the estate.
“There’s an alphabet soup of different trust setups that can help you shelter (assets),” Eckenrode said.
Regardless of the path, a financial professional can walk through the options.
“You should talk to a financial professional about this (to discuss) these different planning techniques,” Eckenrode said. “There are ways that we can either capitalize on the rules as they exist today or make preparations for how to
“A lot of people don’t recognize
that life insurance is included in that as well, so if you’ve got a $2 million life insurance policy, you’ve got to add that on top. A lot of my clients are surprised when they hear that.”
– Andrew Shotwell, Attorney, Smith & Johnson
shelter things in the event that they were to change the rules in 2025.”
It’s critical to involve all of the appropriate professionals required to have an estate in order, experts say. For example, Gallagher says a beneficiary form has more power than what’s in your estate documents. If those two things don’t
jibe, you’re in for some trouble.
“You need a good estate planning attorney, you need a good accountant and you need a good financial planner or financial advisor,” Eckenrode said. “You have to have all three, and all three legs of the stool need to know what the other is doing.”
Shotwell
Mark Neithercut Renee Sovis
WE DO BUSINESS DIFFERENTLY.
On the surface, co-ops may look like any other business, but it’s what goes on behind the scenes that makes the difference. Oryana operates in accordance with the 7 Cooperative Principles (see below), ensuring its members have a say in decisions the business makes. Rather than rewarding outside investors or shareholders with profits, a co-op reinvests surplus revenue to its members and its community. This cooperative approach to business results in a powerful economic force that benefits the co-op, its members, and the communities it serves.
How does this system work financially? The capital that sustains the Co-op comes from the annual ownership equity investment, commonly known as your member fee. Members contribute fairly to, and have democratic control over the cooperative’s capital. This equity investment is refundable if a member decides not to continue their membership. In profitable years, if the Board and GM determine that reinvestment isn't necessary, a portion of a member’s purchases is returned to them. When we say it’s your business, we truly mean it!
The decision-making power in a co-op belongs to all the members rather than a minority of corporate shareholders. To ensure this democratic control, Oryana is governed by a Board of Directors, elected by the general membership for 3-year terms. These elections are held annually at the General Membership Meeting.
Through the power of electing the Board, members can actively participate in policy governance via the Board's guidance. Those members who serve on the Board have a fiduciary responsibility to the membership base. Open Board meetings are held monthly, the date, time and location are posted at the Co-op prior to all meetings. A co-op isn’t a co-op without the voices of its members, so your input is always welcome and encouraged.
THE COOPERATIVE PRINCIPLES
Cooperative principles serve as the foundation for cooperative organizations worldwide. These principles guide their structure, values, and practices.
Voluntary and open membership (anyone can shop, everyone can own)
Democratic Member Control through the elected Board of Directors (members help determine what our future should look like)
Member Economic Participation (members contribute to and help control the co-op’s capital)
Autonomy and Independence (democratic member control is maintained through the elected Board of Directors)
Education, Training, and Information (we educate ourselves and others on the relationship between good food and good health)
Cooperation Among Cooperatives (we’re stronger together)
Concern for Community (sharing and caring)
JOIN THE CO-OP
If you would like to become a member of a thriving, local business, visit us in person at our Customer Service desk at either location. Your benefits will start immediately a er joining.
NORTHERN MICHIGAN
Fast Track: Wheels on Rails brings railbiking to Michigan STARTUPS IN
By Kierstin Gunsberg
“There was a lot of red tape,” said entrepreneur Macie Hefron, of getting her Traverse City based startup Wheels on Rails off – or rather on – the ground.
It took Hefron three years of emails, phone calls and paperwork to launch the railbiking excursion business, with her first official season running from late May through early September of 2023.
Railbiking, for those unfamiliar with it, lets riders lean back and explore nature and wildlife on specially designed bikes made to be pedaled along inactive railroad tracks.
Hefron was a recent high school grad when she discovered the unique activity at the beginning of the pandemic. That’s when, like many, she was looking for fun ways to keep busy and active while the gyms were closed.
“I was like, what in the world is this?” said Hefron, whose career thus far has included working for Michigan Department of Transportation’s Office of Rail. “I did some research and noticed that it’s a very rare business to have in the United States and there was a lot of room for growth.”
She was right. Railbiking is an almost totally untapped market. A quick Google search of railbiking tour companies in the U.S. yields scant results and currently Hefron’s is the only one in Michigan. With that in mind, she said it was a great time to enter the scene.
Still, the process was dense and Hefron says she knew she had her work cut out for her.
“I started researching railroads and asked a few railroads in Michigan if I could start,” she recalled. “I got denied quite a few times, probably over a dozen times from different railroads.”
Finally, leaders from Great Lakes Central
Railroad agreed to partner with Hefron, giving her use of several miles of inactive track just south of TC proper. Originally from downstate, Hefron took the green light to pack up and spend her summers in northern Michigan where she runs Wheels on Rails with the help of her seasonal employees. Many of them are teachers looking for extra cash and exercise between semesters.
With visitors and locals alike looking to spend their money on experiences, Wheels on Rails has been a hit. As she gets ready to wrap up a successful second season she’s looking to expand her brand nationally, with an aim for a year-round tour company somewhere a bit warmer than Michigan.
Until then, Hefron shares her advice for other young entrepreneurs: “Don’t take no for an answer,” she said. “I could have easily given up months into my business planning or the first time I got denied.”
Hefron said that even her family was a bit skeptical about the potential of her business plan.
“I just really had to trust in my own doing,” she explained. “I just had to get through and kind of prove them wrong. But it also boosted my confidence level. I think a lot of people go for their careers because their parents are (directing) them or their friends are influencing them or this or that.
“If you set your heart and mind to it, you can do whatever you want.”
20Fathoms sponsors this column. Designated by the Michigan Economic Development Corporation as the Small Business Support Hub for Northwest Michigan, 20Fathoms is a nonprofit organization providing critical services for the region’s entrepreneurs. It specializes in accelerating the growth of innovative and scalable startups. Learn more at 20Fathoms.org.
Photo courtesy Wheels on Rails
By Eric Braund, columnist
You’ve spent decades diligently building up your retirement savings – now it’s time to make it work for you. As you transition into this new phase of life, it’s crucial to see that it lasts.
Many of our clients have shared that navigating all the new tax rules and financial decisions can be a significant challenge as they retire. That’s why we’re here to offer several straightforward retirement asset withdrawal strategies to help you sidestep the common pitfalls and safeguard your retirement for the long term.
Tax Rules
Implementing retirement asset withdrawal strategies is essential because there are typically more tax rules to consider in retirement than there are when you’re working. And each decision you make affects more decisions – it’s like a domino effect.
An example: It’s important to have the right balance between tax-deferred accounts (like a 401(k) or IRA) and tax-free accounts (like a Roth IRA). If you don’t have a good balance, you could consider a more strategic option, like a Roth conversion.
A Roth IRA conversion is a key part of retirement asset withdrawal strategies and involves moving money from a traditional IRA to a Roth IRA. Doing this in years where your income is lower could help reduce future tax liabilities on withdrawals.
However (and here’s where that domino effect kicks in), if you do that, not only can it affect your income taxes for the current year, but it could also impact how much you pay in Medicare payments, and how much tax you pay on your Social Security benefit.
There are a lot more moving parts to consider and one mistake or overlooked decision could result in an unexpected tax bill. But there’s hope. It is possible to lower taxes during retirement – or at the very least, eliminate unnecessary ones.
The Right Combination of Growth and Income
I’ve seen many retirees limit their portfolios to stable investments like bonds and CDs. In my professional opinion, it’s more
Stretching Your Dollar Retirement asset withdrawal strategies that work
important to maintain a balanced asset allocation during retirement.
Given the historically low returns of CD and bond investments, the unpredictability of inflation along with whatever distributions you’re already planning to take could mean you’re putting yourself at major risk of running out of money during retirement if you don’t diversify.
That’s why having the right combination of growth-oriented investments and income-generating assets is critical to any retirement asset withdrawal strategy. While bonds and CDs are often perceived as lower risk, integrating stocks or real estate can provide potential growth and balance out the lower returns and inflation risks posed by these assets. What’s more, if the growth from these investments qualifies as capital gains, it may be taxed at a lower rate than ordinary income. This can help significantly enhance the tax efficiency of your portfolio.
This strategic asset allocation is designed to help your funds last longer, giving you a more comfortable financial cushion throughout your retirement.
Withdrawal Order
Choosing the right sequence for withdrawing from your retirement accounts is vital for safeguarding your future and a cornerstone of retirement asset withdrawal strategies. It’s wise to take a close look at your distribution plan across your taxable, tax-deferred and tax-free accounts. This careful planning not only optimizes your tax situation for this year, but also shapes your finances a decade from now. That’s why it’s important to think about the longterm impact of your current decisions.
For instance, starting withdrawals from taxable accounts can help reduce taxes early in retirement, allowing tax-deferred accounts more time to grow. On the other
hand, integrating withdrawals from a Roth IRA later in retirement can provide tax-free income and potentially reduce the taxable amount of Social Security benefits.
In other words, while taking money from one account right now might seem like a good idea, you should consider how that decision might play out in 10 years. Strategically timing these decisions is crucial to maintaining financial stability throughout your entire retirement.
Social Security Decisions
While it might be tempting to withdraw your Social Security benefits as early as possible at age 62, the sooner you start, the lower your benefit amount. It’s important to consider the long-term effects of that lower amount, and how it could potentially impact your lifestyle during your 70s, 80s and 90s.
Additionally, if you’re still working and receiving a paycheck and you withdraw Social Security benefits, there are significant tax ramifications to consider, especially when you add a Roth conversion to the equation.
For married couples, particularly where one partner earns more, there may be certain advantages to delaying benefits. Not only does the primary earner receive a larger monthly benefit, but if they pass away first, their spouse can also receive this higher amount. This can provide a stronger financial cushion for the surviving spouse in later years and help maintain financial stability.
Choosing the Right Medicare Plan
Thinking about retiring before age 65? Remember that Medicare doesn’t kick in until 65, which means you’ll need health insurance to fill the gap until Medicare is available.
When eligible, you can sign up for the
Original Medicare (parts A and B) or a Medicare Advantage plan. If you opt for Original Medicare, you may also consider a Medicare Supplement plan to cover extra costs. Each option varies in price, coverage areas, co-pays and deductibles.
Keep in mind that if you don’t enroll in the right time frame, Medicare actually penalizes you with higher premiums for the rest of your life. Also, if you’re working past age 65, be mindful of how your employer’s health insurance may affect your Medicare options.
Plan for Longevity
As you plan for retirement, keep in mind that rules and regulations can change with each new session of Congress. And as people live longer, it’s more important than ever that your retirement savings last your entire lifetime.
A certified financial planner can help by working with you to find a sustainable withdrawal rate, a smart investment strategy, and suggestions for when to withdraw Social Security. All these decisions can affect your odds of having enough money throughout your lifetime. Consider seeking professional guidance as you pursue a confident financial future and strategize for your retirement savings to last as long as you do.
Eric Braund, CFP®, CRPC® is the founder and CFO at Black Walnut Wealth Management, a financial advisory firm providing counsel and fiduciary financial services to individuals, families, and private foundations throughout the Traverse City and northern Michigan. Contact him at (231) 421-7711 or visit BlackWalnutWM.com. Braund is an Investment Advisor Representative with Dynamic Wealth Advisors, dba Black Walnut Wealth Management. All investment advisory services are offered through Dynamic Wealth Advisors.
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‘Very
Tough Business’:
Banks, credit unions say office market collapse hasn’t hurt them, but they’re being cautious
By Rick Haglund
When the COVID pandemic hit in 2020, businesses shuttered their offices and sent employees scurrying home to work. Millions of those workers never returned to their cubicles full-time.
The result has been billions of dollars of troubled commercial real estate loans as office leases expire, leaving building owners without rent revenue to repay loans as they come due.
Earlier this year, New York Community Bancorp., the parent company of Flagstar Bank in Michigan, nearly failed over losses connected to its troubled commercial estate loans. The bank was rescued by a $1 billion investment led by former Treasury Secretary Steven Mnuchin’s private equity firm.
More than $17 billion in commercial mortgage-backed security loans are coming due this year, more than double last year’s volume, according to Moody’s Analytics.
“That is a very tough business postCOVID,” West Shore Bank Senior Vice President Sid Van Slyke said about commercial real estate loans.
Van Slyke, West Shore’s Traverse City market leader, says most of his bank’s commercial real estate loans are in less risky owner-occupied buildings.
He echoed the statements of other local bankers and credit union lenders who say they’re taking a measured approach to commercial real estate lending.
“We are much more aggressive on the owner-occupied office spaces, but that is not what’s getting the news right now,” Van Slyke said.
Honor Bank, which is based in Benzie County but does most its business in much larger Grand Traverse County, was
the subject of one of those news stories in March.
Crain’s Detroit Business said Honor Bank had the 20th largest exposure to commercial real estate loans of any Michigan-based bank in the state. The list of banks was compiled for Crain’s by a Chicago-based financial institution consulting firm.
Honor Bank had 44% of its loans invested in commercial real estate loans in 2023, according to Crain’s. All of the top 20 banks were community banks with fewer than $1 billion in assets.
Norman Plumstead, president and chief executive officer of Honor Bank, said his bank’s exposure to the riskiest area of the commercial real estate loan sector – owner-occupied office space – is tiny.
which includes business loans for capital expenditures, such as equipment and operational costs.
Experts say smaller community banks tend to have a higher percentage of commercial real estate loans in their portfolios because of their emphasis on supporting local businesses and developers. Plus, they tend to be less diversified than larger banks, which offer credit cards and larger business loans.
“Generally speaking, there’s still good demand in commercial loans,” Plumstead said. “That’s an area we focus on. It’s a specialty for us.”
Honor Bank had net income of $2.74 million in the second quarter of this year, ending June 30 and assets of $386.8 million. It did not have to write off any
“Generally speaking, there’s still good demand in commercial loans. That’s an area we focus on. It’s a specialty for us.”
– Norm Plumstead, President and CEO, Honor Bank
“Here in Traverse City, there is not an abundance of office space, but there are higher vacancies,” he said. “It’s a small percentage of our book of business. Just 2% of our loan balances are in office space.”
Commercial real estate loans encompass a variety of industries, including retail, hospitality, industrial, multifamily and mixed-used properties. They’re part of the broader commercial loan sector,
commercial real estate loan amounts in the second quarter.
Like many large regional banks, commercial real estate loans represent about 15% of total loans at Fifth Third Bank, which has $213 billion in assets. The bank does not break out data for its Traverse City location.
“Credit performance has been strong and stable due to our discipline around underwriting and client selection,” a
spokesperson for the Cincinnati-based bank said in a statement. The bank has had “zero net charge-offs” in commercial real estate loans this year, the spokesperson said. Net charge-offs refer to loan debt unlikely to be recovered by a bank.
Credit unions, which traditionally offered deposit and loan services to consumers, have expanded into commercial lending in recent years. Some local credit union executives say they’ve seen opportunity in the sector as banks have cut back on some commercial lending.
“Banks have gotten out of hospitality loans. We haven’t pulled back as much,” said Andy Kempf, president and CEO of 4Front Credit Union in Traverse City.
4Front, with $1 billion in assets, has $2.4 million in commercial real estate loans in which borrowers aren’t making payments. But just two loans are involved, Kempf said, one of which will be paid off through a federal loan guarantee. The other is a bankruptcy situation in which the credit union has found a buyer for the property.
“We’re doing all right,” Kempf said. Other credit union executives say they’ve seen an occasional rise in loan delinquencies, in part due to inflation and higher interest rates. But they say the problems are isolated.
“We have a level of delinquency in that portfolio from time to time,” said Justin Wolf, executive vice president of Forest Area Credit Union in Fife Lake. “Sometimes local and economic factors are driving it. Other times the issue is isolated to a borrower or their industry. In both events, we work to find remedies that provide a balanced result for the borrower and credit union membership.”
Kempf Druskovich
Pontius Milliron
Plumstead
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“We are much more aggressive on the owner-occupied office spaces, but that is not what’s getting the news right now.”
– Sid Van Slyke, Senior Vice President, West Shore Bank
Chris Milliron, chief lending officer at TBA Credit Union in Traverse City, says most of the credit union’s commercial real estate loans are in small retail businesses, service businesses and housing developments.
“Residential housing is in high demand and low supply, so one of our biggest
concerns for our commercial real estate is how experienced the business owner or the builder-develop is for the projects we are financing,” he said.
Dan Druskovich, Grand Traverse/ Leelanau regional president at Frankfort-based State Savings Bank, says his bank has limited its commercial real
estate lending to mostly owner-occupied dwellings.
Druskovich adds that fallout on the office space leasing sector from COVID will continue for some time.
“It’s common knowledge that many employers in Michigan, and nationwide, are still sorting out the whole remote work issue, which has impacted the office space rental market,” he said.
Sales of commercial properties in Grand Traverse County, an indicator of commercial real estate loan activity, plunged last year as developers felt the sting of higher interest rates.
Sales fell from a record $63.3 million in 2022 to $39.3 million last year, a 38% drop, according to a report compiled by Dan Stiebel, an associate broker at Coldwell Bank Commercial Schmidt Realtors.
But sales are on the upswing this year, thanks to falling interest rates and a strong local economy.
There were $33.1 million in commercial real estate sales in Grand Traverse County in the first half of 2024, up 3.7% from $24.1 million in the same period a year ago. The number of commercial lease transactions fell, though, to 62 so far this year from 65 in the first half of last year, reflecting continued weakness in the office leasing sector.
Commercial real estate “is doing really well,” Stiebel said. “Overall, we had a lot more sales in the first half of this year.” `
(as of June 30):
million, 35 transactions
million, 49 transactions
$21.4 million, 38 transactions
$9.8 million, 26 transactions
Source: Coldwell Bank Commercial Schmidt Realtors
Stiebel
Van Slyke
A PIECE OF THE PIE
ESOPs, other employee ownership plans ease transitions, spur success
By Art Bukowski
Common sense would dictate that an employee with a financial stake in their place of employment is likely to put in their best effort on a regular basis.
While that’s one of the biggest perks of employee ownership plans, there are many other reasons why employers seek out such arrangements. There are a host of benefits to both the employer and employee, and these plans are slowly becoming more common in the Grand Traverse region.
The most common of these arrangements are employee stock ownership plans (ESOPs), though there are other tools that achieve the same or similar goals.
How they work
An ESOP is a tax-favored retirement plan used by private companies that holds company stock on behalf of employees, allowing them a financial stake in the company they work for.
To adopt such a plan, a company first sets up an ESOP trust that holds shares of stock. This trust is governed by many of the same rules as 401(k) plans, but it is funded entirely by the company, either with cash on hand or a loan. The company then buys some or all of the shares from the original owner, allowing them to cash out. As part of this process, an appraiser is hired to determine the company’s value.
Unlike stock options (which give certain employees the right to purchase stock at a predetermined price) ESOPs are almost always given to all employees after a vesting period. Stock allocation varies by plan, but can be based on earnings, seniority or other factors. Stock value is determined by regular valuations of the company over time, and if not already present, a board of directors is usually formed.
While stock in publicly traded companies can be bought or sold at any time, employees with stock through an ESOP can only cash out when they retire or leave the company. If they are leaving to continue work elsewhere (prior to retirement) their ESOP proceeds are usually rolled into another retirement plan.
There are more than 6,500 ESOP plans in the country covering nearly 15 million workers, according to the National Center for Employee Ownership.
A variety of other plans exist that slightly or significantly modify certain elements of the ESOP’s structure. Among these are phantom stock plans, employee ownership trusts, worker cooperatives and more.
Local adopters
ESOPs are very commonly adopted by businesses that don’t already have a clear ownership succession plan. Selling to employees serves as a great way to
“One of our main competitors sold, and the company they sold to promptly liquidated them, got rid of all of the employees and moved the manufacturing to another state, and I really didn’t want that to happen. My financial advisor threw out the option of doing an ESOP. I researched it and it looked like a good plan, so we went down that road.”
– Dan Farley, CEO, Thompson Surgical Instruments
reward talented and dedicated staffers, and it’s also a method to protect those employees from a potentially harmful ownership transition.
Such was the case at Traverse City’s Thompson Surgical Instruments, where former sole owner Dan Farley was deciding what to do next. Heavy on his mind was the worry that if he cashed out to the wrong outfit, his employees would be at risk.
“One of our main competitors sold, and the company they sold to promptly liquidated them, got rid of all of the employees and moved the manufacturing to another state, and I really didn’t want that to happen,” Farley said. “My financial advisor threw out the option of doing an ESOP. I researched it and it looked like a good plan, so we went down that road.”
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Local construction giant Team Elmer’s was recently in the same boat. Members of the Broad family, who owned the company, also found an ESOP appealing as they started thinking about next steps.
“Transitioning to an employee-owned company allowed long-term continuous operation benefiting the crew when owners decided it was time to look toward retirement,” said Tonya (Broad) Wildfong. “There are many types of exit strategies. Ultimately, employee ownership is one exit strategy that benefits future employee owners at Team Elmer’s as they continue to serve their community.”
But Farley and the Broad family are still very much involved in company management after adopting ESOP plans. Farley is CEO, and the Broads (and their team) are still running Elmer’s.
“For someone like myself, you get your cash out of the company, so you reduce the risk, but you can stay involved in the company and still earn money,” Farley said. “An ESOP is great for someone that wants to remain active in the company at whatever level.”
Farley believes that from a business standpoint, productivity can be a huge benefit to adopting an ESOP. Workers know that their hard work can directly translate to more earnings, he says.
“The main positive is the ownership that employees feel in going to work every day and increasing the value of their retirement,” he said.
Feedback from employees at both Thompson and Elmer’s has been strong,
Farley and Wildfong say.
“From what I’ve heard, it’s very, very positive,” Farley said. “We’ve lost some employees since it started, and when you cut them a check to their retirement plan, it really puts (the benefits) in perspective. You’re building up a retirement fund.”
Elmer’s has always had a team concept, Wildfong says, so an ESOP made a lot of sense.
“Employee owners participate and benefit in the growth and success of their company,” she said. “Everyone (in the company) has a role in making our projects a success, and employee owners can now see the value of their shares increase when their company is successful from their thoughtful contributions to each project. It amplifies that team concept.”
Another path
Andrew Kohlmann started work at the former Signs Now (now Image360) in 1996, and in 2008, he and his wife Amy bought the business from previous owners Bill and Elise Auxier.
As the Kohlmanns themselves started to think about the next chapter, employee ownership made the most sense. The Auxiers financed Kohlmann’s purchase 16 years ago, and Kohlmann never forgot what that huge boost meant to himself and his family.
“I never expected to be able to buy the company, as we didn’t have the financial means to be business owners.
“I had always been very dedicated and worked hard for the company, but when I realized that my actions from that point forward were going to directly impact my financial future, it brought me up to a different level as far as my performance and drive and investment in the business.”
– Andrew Kohlmann, owner, Image360
But the previous owner made the opportunity realistic for us,” he said. “And knowing that we purchased the business that way, we really wanted to pay it forward. It struck a chord with me, and I felt like I owed it to others to offer them that sort of opportunity.”
Kohlmann was prepared to head down
the ESOP path, but he hit a snag. Image360 is a franchise, and ESOPs didn’t jive with a few franchise rules (namely one that requires new owners to be approved in a somewhat lengthy process, whereas ESOPs bring new owners on immediately). Image360 ended up pursuing a socalled phantom stock plan, which essen -
“Everyone (in the company) has a role in making our projects a success, and employee owners can now see the value of their shares increase when their company is successful from their thoughtful contributions to each project. It amplifies that team concept.”
- Tonya Wildfong, Communications Director, Team Elmer’s
tially simulates the earnings of an ESOP without giving employees actual ownership in the form of stock. But Kohlmann says his intent is for employees to build wealth that can in fact be used to buy into the company down the line.
“It essentially equates to a vehicle that allows people who are interested to create a nest egg with our help that can then be used later on to either cash out or, at a certain point, allow them to buy into the business with that money,” he said. “We set up a five year vesting
schedule, and then at that five year period, we can then decide together if that’s something that makes sense.”
As with Elmer’s and Thompson, the Kohlmanns were eager to protect and reward their employees.
“First and foremost, it was that idea of offering something unique to the people that make this business what it is, versus selling to a company that could be heartless and not care about anything that the team had built up to that date,” Kohlmann said. “(The
business) is one of our babies, and we feel the best way to ensure its continued success is to share it with those that have the same vision and mindset and core values that Amy and I do.”
Kohlmann also knows first hand that he’s likely to get the most out of his employees in the meantime, as he clearly remembers how his mindset changed with ownership.
“I had always been very dedicated and worked hard for the company, but when I realized that my actions from that point forward were going to directly
impact my financial future, it brought me up to a different level as far as my performance and drive and investment in the business,” he said.
Finally, the Kohlmanns also believe that employee ownership plans are a way to help chip away at wealth disparity.
“As business leaders, the more opportunities we can give our team members to grow and prosper, especially those who are very personally invested in our businesses and communities, the better off we’ll be as a society,” he said.
Wildfong
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BOOK REVIEW
By Chris Wendel
Expectations of customer service have spiraled downward in this post-pandemic world. Squeezed by employee shortages and supply side issues, maintaining quality and consistency in a minimal way is the new unfortunate expectation for business owners and customers. Restaurants might demonstrate this new normal more than any other business sector. It’s been said that one can gather a group of people together who have little in common and the conversation may at first be awkwardly quiet. Yet, if the subject turns to local restaurants, there will be plenty of opinions to share. And with the bar set rather low, then there are plenty of opportunities for business that can exceed customer expectations.
The bestselling book “Unreasonable Hospitality” by restaurant entrepreneur Will Guidara bucks the recent trend of limited customer hopes. He does so by not just explaining his restaurant’s over-the-top customer experiences but by revealing the thought, systems, and hard work that go into building a world class restaurant.
Guidara grew up around restaurants, so the book serves as an autobiography of sorts. His father was an executive with the Restaurant Association, a national support organization for restaurants. This connection exposed Guidara to and started his appreciation for fine dining. After studying at the Cornell University hotel management program, he worked at mostly New York City-based restaurants, on both the accounting and management side.
Viewing both the numbers and the front of the house systems trained him on the essentials of what made a restaurant perform and profit well. Working with chef Daniel Humm, Guidara operated a number of fine dining restaurants in New York including Eleven Madison Park and NoMad New York (which branched out to locations in Los Angeles and Las Vegas).
The meat of “Unreasonable Hospitality” walks through the steps necessary to set high standards and systems that an ultra-successful restaurant builds to maintain a level of detail and quality above all others. Guidara built his unreasonable hospitality first by assembling teams that sought the same standards that he and his managers had. This meant meticulous attention to detail and plenty of communication with customers. It’s also critical to bring the strengths and skill sets of employees into the processes. Guidara demonstrates some of this with the example of a waiter who has great difficulty memorizing Eleven Madison Park’s detailed daily wine lists. After some discussion and observation, Guidara realized that the waiter had demonstrated excellent organization and leadership skills suited for coordinating orders coming out of the kitchen.
He built a process for uncovering employee expertise that could be developed into areas the restaurant could excel in. This resulted in employee-led initiatives,
UNREASONABLE HOSPITALITY:
The Remarkable Power of Giving People More Than They Expect
By Will Guidara
including a refinement of wine offerings, a menu of craft beers for specific entrees, and a significant upgrade in the restaurant’s post-dinner coffee game. When writers came to his restaurants to be featured in local publications, he was quick to deflect interviews away from himself and on to deserving employees.
“Unreasonable Hospitality” also recounts remarkable customer experiences: “Googling” people on the reservation list leads to guests being recognized with personalized greetings when they arrive and overheard table conversations turn into gracious gestures. For example, when a couple visited Eleven Madison Park after their vacation flight was canceled, Guidara’s staff set up a private beach in an adjacent room, complete with sand, beach chairs, and a kid’s pool filled with water to ease their pain.
Guidara’s writing evokes lessons laid out in the books “Setting the Table,” written by his mentor and former boss Danny Meyer, and “A Slice of The Pie” by Nick Sarillo. The common theme is building an exceptional standard for customer service and developing personalized processes that staff members can contribute to. Readers will enjoy learning about Guidara’s career path and his drive for high standards that can be modeled by any type of business.
Chris Wendel works for Northern Initiatives, a mission-based lending organization based in Marquette, Michigan. Northern Initiatives provides funding to businesses throughout Michigan and online business resources through its “Initiate” program to small business owners throughout the United States. Wendel lives and works in Traverse City.
>> BANKING & FINANCIAL SERVICES
1 - Erica Smith has joined State Savings Bank as a mortgage loan originator, part of the lending team at the Traverse City location. She brings more than 20 years of customer service experience, as well as business management expertise, to her new role.
Public accounting firm Dennis, Gartland & Niergarth (DGN) in Traverse City recently announced the following:
2 - Emma Joppich has been promoted to small business supervisor. Joppich joined DGN in 2020.
3 - Bradley LaRose has been promoted to small business manager. LaRose joined DGN in 2020.
4 - Jennifer Terbrack, CPA has been promoted to tax manager. Terbrack joined DGN in 2020.
5 - Zachary Walton has been promoted to small business senior accountant. Walton joined DGN in 2022.
>> HEALTH CARE
6 - Danielle Noble has joined Northern Shores Dental Group in Interlochen as an associate dentist.
7 - Nicholas Ostrander has joined Northern Shores Dental Group in Interlochen as an associate dentist.
8 - Dr. Jessica A. Rickert, DDS, an Anishinaabe dental outreach specialist with Delta Dental based
in Interlochen, recently served as faculty in Mayo Cli nic’s Native American Pathway Program (NAPP). Her presentation, Changing Perceptions…Exceeding Expectations, detailed her journey in becoming the first female American Indian dentist. NAPP aims to address Native American health disparities by increasing the number of Native Americans in health careers.
9 - Presleigh Yovich has joined Munson Neurosurgery in Traverse City as a nurse practitioner. She started her career at Munson Healthcare as a registered nurse in cardiac telemetry and intensive care.
>> HOSPITALITY
10 - B rian Coon-Wickland has joined Shanty Creek Resort in Bellaire as head of people and culture. With more than 25 years of experience in human
2 // EMMA JOPPICH
3 // BRADLEY LAROSE
4 // JENNIFER TERBRACK
1 // ERICA SMITH
5 // ZACHARY WALTON
7 // NICHOLAS OSTRANDER 8 // DR. JESSICA A. RICKERT
9 // PRESLEIGH YOVICH
6 // DANIELLE NOBLE
10 // BRIAN COON-WICKLAND
Photo by Captured by Grace Photography.
resources, Coon-Wickland brings a wealth of experience to the Shanty team.
11 - Danielle Puroll has been promoted to Chef de Cuisine at Shanty Creek Resort in Bellaire. Puroll brings extensive training and experience to her new role. She has been with Shanty more than seven years, starting as a line cook, then transitioning to dining room manager and banquet manager. >> REAL ESTATE
12 - Shelly Klein has joined Coldwell Banker Schmidt Realtors in Traverse City as an agent, specializing in the residential market.
13 - Wayne Toteff has joined Real Estate One as team leader of its Elk Rapids office. Toteff brings more than 11 years of experience in real estate and holds several professional designations.
>> OTHER
14 - Jean Derenzy will join the Elk Rapids Area Chamber of Commerce as its new executive director on September 1. Most recently, she was the CEO of the Traverse City Downtown Development Authority and before that was with Grand Traverse County. Derenzy has long ties to the community, having grown up and graduated from Elk Rapids High School.
15 - Suzie Knoll has been named the new executive directo r of the Conservation Resource Alliance in Traverse City. Knoll succeeds Amy Beyer, who has led the organization for 32 years and is retiring. Knoll brings years of leadership and management experience in the conservation sector. Most recently, she served as the executive director for the Oceana Conservation District since 2014.
16 - Jordan Pinheiro was recently promoted to assistant project manager at Socks Construction in
Traverse City. Pinheiro has worked at Socks Construction for three years.
17 - Alex Tank, a staff member for NMC’s International Affairs Forum (IAF) since 2020, has been named IAF’s new director. Over the last year Tank has helped lead IAF through its 30th season with the support of IAF Advisory Board co-chairs Major General Mike Lehnert, USMC ret., and Stan Otto, former senior U.S. diplomat.
18 - Josh Traeger, founding attorney of True North Legal Group in Traverse City, has been promoted to lieutenant colonel in the United States Air Force Reserves. Traeger joined the United States Air Force in 2010 and served ten years, primarily as a senior military prosecutor. Traeger has continued with the United States Air Force Reserves after leaving active duty, including supporting special operations in the United Kingdom and teaching military law at the Air Force JAG School.
12 // SHELLY KLEIN 13 // WAYNE TOTEFF 14 // JEAN DERENZY
11 // DANIELLE PUROLL
16 // JORDAN PINHEIRO 17 // ALEX TANK
18 // JOSH TRAEGER
15 // SUZIE KNOLL
First Lady Jill Biden visited northern Michigan in July, making stops at The Village at Grand Traverse Commons in Traverse City and meeting with staff and customers at King Orchards in Central Lake.
Elk Rapids Marina kicked off the opening of its downtown Traverse City location at 441 E. Front St. recently. The business offer rentals, including the 100% solar Lilypad, and carries Paddle North products.
The Williamsburg-based KOTI Vacation Rentals team, along with members of Traverse Connect and Traverse City Tourism, celebrating KOTI’s new event venue called Gather. KOTI offers a setting for weddings, events, business meetings, and family reunions, including a modern Scandinavian design cabin community.
North Legal Group founder Josh Traeger celebrated his promotion to Lieutenant Colonel in the U.S. Air Force Reserves at Traverse Connect recently. Pictured alongside him at the ceremony were his daughter Violet,
ROCKIN’
40
COUNTING NORTHERN MICHIGAN
YEARS
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Northern Michigan icon, Terri Ray, has rocked the airwaves since 1984 on KLT The Rock Station As Program Director and creator of the ultra-popular Lunch at the Leetsville Cafe, Terri has built KLT into one of the market’s highest rated radio stations and has kept it there for decades Her passion for radio and commitment to our community are big reasons why
You can see Terri in person this summer as she takes her show on the road with Lunch At The Leetsville LIVE - A look back at four decades of rock & roll in Northern Michigan
True
wife Maggie and son Beau. The ceremony also included a ribbon cutting for True North Legal Group with several in attendance including (l-r): Michael Brood, Jeremy Harnish, Lisa Baker-Lorincz, Pat Ellis, Dr. Erin Eatough, Dr. Jim Cooley, Bill Paladino, Dan Smith, former State Sen. Jason Allen; Peter Lane, Suzanne Allen, Christian Fuller, Seth Johnson and Nathan Hartmann.
Jeff Rynbrandt, CEO, Medicool; Dr. Bruce Patterson, CEO, HealthBio AI; Jody Trietch, executive director, Northern Michigan Angels; and Kenneth Davies, CEO, Takanock, at the summer social for Northern Michigan Angels held at Black Star Farms in Suttons Bay.
True North Legal Group founder Josh Traeger recently celebrated his promotion to Lieutenant Colonel in the U.S. Air Force Reserves at Traverse Connect. He was joined by his wife Maggie and children Violet and Beau. The ceremony also included a ribbon cutting for True North Legal Group with several in attendance including (l-r): Michael Brood, Jeremy Harnish, Lisa Baker-Lorincz, Pat Ellis, Dr. Erin Eatough, Dr. Jim Cooley, Bill Paladino, Dan Smith, former State Sen. Jason Allen; Peter Lane, Suzanne Allen, Christian Fuller, Seth Johnson and Nathan Hartmann.
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