Thinking Bigger Business—June 2017 by Thinking Bigger Business Magazine

VOL. 26 // ISSUE 6 // JUNE 2017

CORRALLING CONTENT DivvyHQ’s Brock Stechman and Brody Dorland created an award-winning content hub.

GIG IS BIG

Should you embrace it as a workforce model?

SPECIAL FOCUS

Trends in Kansas City Construction Activity

» iThinkBigger.com

Grow your dental practice and your world. We know in the world of dentistry, every decision counts. That’s why at Commerce Bank we ask you the right questions, listen to your answers and help you streamline and increase efficiencies in your revenue cycle. Get more time to focus on patient care while we work together to provide customized financing solutions and the latest in payments products and technology to help foster smart, sustainable growth for your world. ·

Practice acquisition financing

Equipment loans and leases

Real estate financing

Payments processing

Let’s talk business. 816.234.1985 | commercebank.com/dentistry

Seeking strong, talented, local partner interested in a long-term relationship. Long walks on the beach optional. Making clients successful across the globe is a pretty big job. We couldnâ&#x20AC;&#x2122;t do it without the right, committed partners helping us deliver complex projects every day. Visit our profile at burnsmcd.com/ThinkingBigger.

Offices Worldwide

CONTENTS

JU NE 2017 VOL. 26 // ISSUE 6

F E AT U R E

28 The Gig Economy Big Solution—or Big Headache—for Small Businesses?

D E PA R T M E N T S

07 The Bigger Picture 08 Legislative Briefs 10 BIG | deals 12 25 Under 25 ® Updates 13 Biz Bits 50 BIG | shots

OUTLOOK

26 KC Futures Grant will give Blue River Valley Corridor new life

44 Construction

Industry Trends

Government and private enterprise intent on keeping Kansas City in the forefront of Midwest growth

S M A R T S T R AT E G I E S

20 | KC ENTREPRENEURS

32 BIGGER | growth Partnerships can be key to growth strategy

34 BIGGER | finance Using SBA financing for acquisitions

36 BIGGER | hr Setting up an internship program

HE ON T R E V O C

MANAGING

CONTENT DivvyHQ’s tools and services may be cloud-based,

38 BIGGER | sales

but its success is tied to its owners staying grounded.

Stop doing these things NOW!

40 BIGGER | tech Understanding Facebook Insights 4

THINKING BIGGER BUSINESS // June 2017

B IG I N F LU E NC E

| 16

B IG S TA R T S

| 16

MADE TO LAST

C O M PA N Y T O WAT C H

KC M A D E I T

ENTREPRENEURIAL JOURNEY

Edcoda

Valomilk

Joe and Judy Roetheli

Clarence Tan makes learning fun in 3D.

A happy accident created the popular candy.

Their entrepreneurial journey continues. SMART COMPANIES THINKING BIGGERÂ®

CONTENTS

JU N E 2017

ON THE WEB // iTHINKBIGGER.COM Web Columnists

PRODUCED BY

Visit www.iThinkBigger.com for articles full of insights and strategies from our exclusive Web columnists.

Thinking Bigger Business Media Inc. ADMINISTRATIVE

Kelly Scanlon Publisher Megan Scanlon Operations and Events Manager EDITORIAL

Terry Wooten Content Development PRODUCTION & GRAPHICS

Carolyn Addington Production and Traffic Manager Kevin Fullerton Design Consultant

aspire for more

whitespace revenue zone

Shawn Kinkade

Elizabeth Usovicz

Business Done Right: The Local Pig

From Expert to Owner

Business Calendar

Find out about hundreds of business events, networking opportunities, classes and workshops. Article Archives

Did you miss an issue? Search our archives for thousands of articles. 25 Under 25 � Awards

Learn more about the 25 Under 25® Awards Program for businesses with fewer than 25 employees. www.25Under25.com

S M A R T C O M PA N I E S / / P O D C A S T

Dan Videtich Photographer CONTRIBUTING WRITERS

Jeff Beals, Dawn Bormann, Mark Brigman, Nancy Dzurko, James Hart, Ben Olsen, Megan J. Zander P.O. Box 754, Shawnee Mission, Kansas 66201-0754 (913) 432-6690 (888) 432-6444 FAX (913) 432-6676 editor@ithinkbigger.com sales@ithinkbigger.com iThinkBigger.com A WBENC-Certified Women’s Business Enterprise See our SRDS listing at www.SRDS.com FOR ARTICLE REPRINTS

Produced by Thinking Bigger Business Media Inc.

Contact ReprintPros Jeremy Ellis (949) 702-5390 or www.reprintpros.com

Smart Companies Radio is on SmartCompaniesRadio.com Also available as a podcast

iTHINKBIGGER.COM // EXTRA

reserved. The information gathered and opinions expressed by the authors are intended to communicate information and are not necessarily the views of this publication. The intent of this

You don’t have to wait until the next issue to get more valuable

publication is to provide business professionals with informative

strategy articles! Go to iThinkBigger.com and subscribe to

and interesting articles and news. These articles, and any opinions

iThinkBigger.com Extra. You’ll get weekly updates about news,

intended to provide specific advice or recommendations for any

expressed in them, are for general information only and are not individual or business. Appropriate legal, accounting, financial or

events and information that will help you grow your business.

medical advice or other expert assistance should always be sought from a competent professional. We are not responsible for the content of any paid advertisements. Reproduction or use, without permission, of editorial or graphic content, in any manner is prohibited. Thinking Bigger Business(ISSN 1068-2422) is published

Twitter

Follow @iThinkBigger 6

THINKING BIGGER BUSINESS // June 2017

Join the Thinking Bigger Business Media Group

Facebook

Like Thinking Bigger Business Media

12 times a year by Thinking Bigger Business Media, Inc. Subscriptions are $24.99 per year. This amount includes varying sales taxes, which are contingent upon the location in which the publication is sold. Standard Mail Postage Paid at Shawnee Mission, KS.

THE BIGGER PICTURE

The Three R’s of Business How do you measure up?

raduation posts overran my

Take some time to think about whether this “R”

Facebook feed the last couple of

needs improvement.

weeks of May as many students

Relevancy. We live in a fast-paced world. In

advanced to the next level of their educa-

business, the market can change quickly. Do you

tion or prepared for their first career job. Of

have mechanisms in place to ensure your business

course, before they could claim their diplomas,

is keeping up with the times?

these students had to pass finals on the three R’s and whatever else they’re expected to know these days. That got me to thinking about the three R’s of business. As business owners we don’t have to take final exams in May or June, but what if we did? What would we measure ourselves on? After 25 years of working with business owners, I’ve heard many of you name the following three R’s (in one form or another) as being critical to business.

Relevancy also has a personal aspect. As the leader of your organization, are you still relevant? It’s a tough question, but it’s one you have to ask yourself from time to time. Has your business outgrown you and your skills? Or, have you outgrown your business, leaving you bored and frustrated? In either case, you’re probably holding your business back. It won’t graduate to the next level under those conditions. Reputation. This is a biggie. Reputation isn’t pass/fail.

Relationships. Every business owner needs a great support system. Our employees, our vendors and our clients matter, especially the straight shooters who tell us the things we sometimes don’t want to hear. Face it, we wouldn’t make it without all these people. And don’t overlook your relationships with family and friends.

Ke lly S can lon

You need to score an “A” here. Your reputation is YOU. If you have a questionable one, people won’t trust you or your business. If it’s honorable, no one can take it away from you. So, there you go … Relationships, Relevancy and Reputation. Have you earned your diploma?

// Publisher // kscanlon@iThinkBigger.com

SMART COMPANIES THINKING BIGGER®

L E G I S L AT I V E B R I E F S

MISSOURI Missouri Passes Labor and Tort Reform Measures in Historic Session

Expect Accept the Unexpected. As a business owner, you’ve come to expect the unexpected. At Twin Financial, we offer specialized expertise focused on helping closely-held businesses make sure they’re protected from unfortunate and unpredictable events like the death, divorce or disability of an owner or key employee. Because, with the right financial strategies in place, you don’t just have to expect the unexpected – you’ll be prepared to better accept them with strategies that protect the business you’ve so worked hard to build.

Specialized Expertise for Personal & Business Financial Solutions 816-333-2334 www.twinfinancial.com rhlang@twinfinancial.com kdegen@twinfinancial.com

Katheigh Degen and Raleigh Lang are registered representatives of and offer securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. Supervisory office: 1300 N Walker, Suite 200, Oklahoma City, OK 73103. Phone (405) 486-1400. Twin Financial, Inc. is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. SOC4042e_6_Lang 417

CRN201812-207385

THINKING BIGGER BUSINESS // June 2017

FEDERAL Senate Takes Up House Healthcare Bill

In early May, the United States House of Representatives passed H.R. 1628, the American Health Care Act of 2017. While many have criticized the bill, the Senate has begun its task of revising the bill to address concerns related to costs and pre-existing conditions. While little is known about the Senate version of the bill, it is expected to greatly differ from the bill passed by the House. The Senate has further suggested that repealing the Affordable Care Act may occur in a two-step process aimed at cutting consumer costs in the interim, while focusing on long-term sustainability in a later bill.

Bipartisan Bill to Provide Clarity for Contractors

Rep. Steve Chabot (R-OH) has introduced H.R. 1773, the Clarity for America’s Small Contractors Act of 2017. The bill, co-sponsored by Rep. Nydia Velázquez (D-NY) is viewed as a bipartisan effort to create new opportunities and add clarity for small contractors and other entrepreneurs wishing to bid on government contracts. The bill reforms government contract rules and attempts to make the federal marketplace accessible to small business owners.

Missouri lawmakers got to work following the 2016 election by passing bills that will likely affect the state’s business climate. As one of his first acts as Governor, Eric Greitens signed a right-to-work bill that has long been a goal of the Republican legislature. The new right-to-work law allows employees the right to choose whether to join a labor union and whether to contribute to the union’s collective bargaining arrangement. Further, the legislature passed and the Governor signed a tort reform bill that changes the standard for state court expert witness testimony, bringing it in line with the federal standard used in the majority of states.

KANSAS Kansas Second Attempt to Raise Tax Revenue Fails in the House

The Kansas Senate once again attempted to raise the state’s tax revenue this month. While efforts have been vetoed in the past by Governor Sam Brownback, the Senate aimed to solve a budget deficit and fully fund K-12 education by raising the upper rate of the state’s income tax while reducing the lower bracket. The Senate bill also would have repealed the so-called LLC loophole, an income tax exemption for approximately 330,000 business owners. While the bill passed the Senate, it faced heavy opposition from certain lawmakers who argued that the bill was not the correct means of solving the state’s budget woes. After little debate, the bill was ultimately voted down in the chamber by a vote of 53-68. While the House killed the bill, the legislation likely had little success of surviving a Brownback veto as it would have been in direct opposition to his signature and controversial tax policy.

BIG | deals

AWARDS/RECOGNITIONS

Alpha Energy and Electric Wins Mr. K Award Alpha Energy and Electric is the Greater Kansas City Chamber of Commerce‘s 2017 Mr. K Award winner. The company also won International Small Business of the Year. In addition, several other companies were recognized in specialty categories: » Diverse Small Business Award // Webb Technology Group » Entrepreneur Award // J. Rieger & Co. » Legacy of Kansas City Award // Andrews McMeel Universal

Mycroft AI Advances in Competition Local startup Mycroft AI joins a group of 147 teams from 22 countries that have advanced to the next stage of the IBM Watson AI Xprize competition. The competition challenges teams to develop and demonstrate how people can collaborate with powerful AI technologies to tackle the world’s big challenges. MyCroft, founded by Joshua Montgomery, is the world’s first open source voice assistant. The competition runs through 2020, with three finalists. The grand prize winner will be awarded $3 million, with $1 million going to the second place winner and $500,000 to the third place winner.

THINKING BIGGER BUSINESS // June 2017

accessories, including hometown favorites from Union Horse, Tom’s Town, S.D. Strong, Restless Spirits, Lifted Spirits, Mean Mule and J. Rieger & Company.

Fishtech Wins Cornerstone People’s Choice Award When the Economic Development Corporation of Kansas City made their Cornerstone Awards presentations on May 9, Fishtech emerged as the People’s Choice Award winner. More than 1,000 votes were cast online in a public vote held from May 2 through May 8 to determine the winner. SCORE Salutes Four KC Entrepreneurs Four Kansas City entrepreneurs have been named American Small Business Champions by SCORE, the national organization that provides free business mentoring. The national competition’s local winners are Sally Barchman, State Line Animal Hospital; Martha Childers, Childers Counseling Service; Beth Dowell, Tall Grass Toffee; and Heidi Faith, stillbirthday. They each received a $1,000 gift card from Sam’s Club, a contest sponsor. They’ll also get free SCORE coaching for a year and a free trip to Dallas for an elite training event. NEW BUSINESSES Libations Brings Old-fashioned Spirits to Downtown Lee’s Summit Libations & Company recently opened in downtown Lee’s Summit. The store, located at 23 S.E. Third Street, is owned by Seth Allen. It features spirits, bitters and

Mixx Founder Plans New ‘Caffetteria’ Eatery Concept Jo Marie Scaglia, the restaurant entrepreneur who introduced The Mixx, is working on a new concept that will debut this fall at the Shops of Prairie Village. Caffetteria will be a “modern café and marketplace” in a 4,000-squarefoot space previously occupied by Bruce Smith Drugs. The restaurant will feature made-fromscratch, high-end meals produced in an open kitchen, delivered with a quick-casual approach. Guests will order at the counter, and servers will take their food to them. EXPANSION The Sundry Debuts Beverage Bar, Sunday Brunch The Sundry hosted a re-grand opening on May 5 to debut a beverage bar and new small plates menu. In addition, The Sundry now offers a Sunday brunch from 9 a.m. to 3 p.m. The centerpiece of the beverage bar is a 32-foot walnut bar where patrons can enjoy full-service coffee, craft beer on draft, wine, kombucha and house-made craft sodas. The small plates menu will be available from 4 p.m.-close Tuesdays through Saturdays, and a happy hour will run from 4 p.m. to 6 p.m. featuring discounted drinks and small plates. FUNDING ELIAS Animal Health Gets Investment Thanks to the Mid-America Angels, ELIAS Animal Health is armed with a significant

injection of new funding. Thirty investors were part of the deal with the Olathe company. The funding will allow ELIAS, a subsidiary of TVAX Biomedical, to continue and expand testing of its immunotherapy for canine cancers. So far, ELIAS has shown that its treatment can let dogs with bone cancer live longer. The company wants to see if its solution will also be effective against lymphoma and other types of cancer. ON THE MOVE Grand Opening for Mission Business Promotional products company 3 Cups Media hosted a grand opening at their new location at 5106 Johnson Drive in Mission, Kan., in May. Owner Serena Schermoly noted that the company will be able to better showcase the company’s products in the new space. The company also offers website design and corporate branding.

Former CEO of Cramer Products Joins MedZone MedZone has tapped Thomas Rogge, who merged Cramer Products with Performance Health in 2013, for a role on the company’s advisory board. Rogge brings 23-years’ experience in sports medicine and the fitness industry to the board. During his time at Cramer, Rogge grew the company through a series of acquisitions. MedZone is a manufacturer of topical skin solutions. As an advisory board member, Rogge will offer insight to the company with strategic counsel on business development, operational efficiencies, as well as key industry issues in this market. SPIN! Neapolitan Pizza Founder Retires Gail Lozoff, a founding partner of popular SPIN! Neapolitan Pizza, will retire on July 1. Lozoff founded the restaurant with her

husband Richard Lozoff and Edwin Brownell in 2005. Brownell will remain with the company as CEO. The restaurant has won numerous awards and recognitions, including a number one ranking from Zagat among Kansas City area pizza restaurants. The fast-casual restaurant grew from its initial location in Overland Park to 10 Kansas City area restaurants. Eventually, corporate franchises were also opened in Lawrence, Kan.; Dallas, Texas; Omaha, Neb., and Alameda, Calif. James Beard Award-winning Chef Michael Smith, who is also a partner in SPIN!, helped to develop SPIN!’s recipes. He will continue to be involved in that role. The Lozoffs and Brownell also founded Bagel & Bagel, which became Einstein Bros. Bagels.

Ribbon Cutting for Tailor Todd’s Clothiers & Tailor Shop held a ribbon cutting and grand re-opening on May 16 at their new location at 10328 Mastin in Overland Park, Kan.

OTHER BUSINESS Pastry Chef Joins The Reiger Amy Beeman is the new pastry chef at The Rieger. After working for several years at top bakeries in Boston, Beeman has returned to her native Kansas City, where she had previously worked at Dolce Bakery. Some of her newest additions include a Rhubarb and Buckwheat Shortcake and a variation of midwestern Grits Cake that is topped with a Rieger Whiskey Caramel Sauce and Honey Crème Fraiche Ice Cream.

SMART COMPANIES THINKING BIGGER®

2 5 U N D E R 2 5 ® U P DAT E S

Avatar Engineering Acquired Avatar Engineering (Class of 2010) has

been acquired by Lenexa-based Pivot International. Pivot offers product development, engineering and manufacturing services to clients around the world. Avatar has earned a reputation for technology design and manufacturing and will increase Pivot’s ability to produce circuit boards, box-builds, software and hardware quickly and efficiently.

Steve Pierce Honored American Funeral Director magazine has recognized Steve Pierce, the owner of Muehlebach Funeral Care (Class of 2016) and Skradski Funeral Home, as a Funeral Director of the Year Runner-Up.

The annual nationwide award program selects the top funeral directors in the country based on community involvement; being a role model for funeral service; having an innovative approach to funeral service; displaying outstanding business acumen in sales, marketing and customer service; and demonstrating a compassionate approach to working with customer families.

Harmon Construction Hires Project Manager Harmon Construction

(Class of 2002) has hired Steven Kern as senior project manager. Kern has more than 15 years of construction industry experience, ranging from project management to estimating.

RADIO RENTAL IS A QUICK AND EASY COMMUNICATION FIX

kathleen schulte as the vice president for economic opportunity as the company expands its service offerings. She brings more than 12 years of nonprofit executive leadership experience to the newly created position. Most recently, she served as president and CEO of Communities Creating Opportunity.

Original Juan Specialty Foods BBQ Sauce Wins Gold

K12itc Snags First Colorado Customer

+ Low cost

k12itc (Class of 2014) has added its first

+ No additional FCC license + Referral discounts available Call and ask Jeff about details, including our big referral program savings.

816.753.2166 Commenco.com/Rental THINKING BIGGER BUSINESS // June 2017

Travois (Class of 2010) has hired eva

Original Juan Specialty Foods (Class of 2003) won a gold sofi award in the BBQ Sauce category at the Specialty Foods Association 2017 sofi awards competition. The company’s Kettlewood Combustion Co. Pecanwood Smoke Bourbon and Vanilla BBQ Sauce received top honors, making it Original Juan’s second sofi for a barbecue sauce. The Specialty Food Association is a community of food artisans, purveyors, importers and entrepreneurs established in 1952.

I’LL LET YOU IN ON A SECRET

Travois Plans Expansion

Colorado customer. The company began work in May on a five-year contract with Addenbrooke Classical Academy, a tuition-free public charter school located in Lakewood, Colo. The project includes all new voice over IP phones and ongoing service. K12itc also has clients in Kansas, Missouri, Nebraska, Oklahoma, Michigan and Florida.

BIZ BITS

Martin City CID Hires New Executive Director

Smart City Initiative Wins Gold Kansas City’s Smart City initiative was recently recognized with a gold Edison Award in the Connected Collaboration category. The international competition honors excellence in new product and service development, marketing, human-centered design and innovation. Awards presented in the Connected Collaboration category honor a group of organizations that work together to conceive and develop “transformative innovation through collaboration and co-creation.” The organization(s) applying for this category may be established corporations, startups, social enterprises, as well as public or nonprofit entities that have undertaken the challenge of working collaboratively with partners to create transformative innovation and market disrupting new solutions. According to the awards website, “Kansas City is deploying the most extensive coordinated suite of connective Wi-Fi technology and analytical platforms in the world to enhance the citizens’ experience and improve delivery of city services.” For example, using real-time data delivered through interactive digital kiosks along the 2-mile streetcar route, citizens and visitors can find available parking and the location of the streetcars. Smart streetlights and sensors as well as free public Wi-Fi are also features of the initiative. As the infrastructure expands, city officials hope to use the data to improve services such as street repair.

Marla Duck has been named the new executive director of the Martin City Community Improvement District. The Martin City CID is a business district in South Kansas City that encompasses over 300 acres. More than 80 businesses are located within its boundaries. Duck replaces Missy Wilson, who became the economic development administrator for the City of Raytown. Duck plans to continue focusing on CID initiatives such as completing construction along 135th Street to Hwy. 150. She plans to aggressively recruit prospective new businesses and developers to invest in Martin City.

“My goal is to continue improvements to livability, beautification, publicity and tourism to this incredible neighborhood,” said Duck. “I look forward to working with and receiving input from the businesses and community that are part of Martin City.”

Nominations Open for STEMMy Awards The Central Exchange’s WiSTEMM Committee is accepting nominations for the 4th Annual Central Exchange STEMMy Awards. The awards are designed to celebrate the accomplishments of Kansas City women who are setting trends and breaking barriers in their STEMM fields. Applicants must live and work in the Kansas City metropolitan area or surrounding region, work or be pursuing an education within a STEMM field (science, technology, engineering, mathematics, or medicine)

Shorthanded in the office? Last minute or scheduled needs, Staffing Kansas City has you covered!! Ask about our College Student and Teacher discount!

“Personnel Services with a Personal Touch” Call Roses, Shelley, Marie, Michelle or Ashley for ALL your staffing needs!

913-663-JOBS (5627) • www.staffingkc.com SMART COMPANIES THINKING BIGGER®

BIZ BITS

and commit to attending the WiSTEMM luncheon on Sept. 21. The awards include Groundbreaker Leadership Award, Rising Trendsetter Award, Enterprising Innovator, Corporate Hero, WiSTEMM educator and WiSTEMM Student Achiever. You can find the nomination form and more information at http://cxstemmys.com.

Northland Angel Investor Network ‘Making Headway’ The three-year-old Northland Angel Investor Network (NAIN) is making progress towards its goal to reduce risks for local investors and provide opportunities for entrepreneurs. NAIN works with the Clay County Economic Development Council to match financial capital and assistance with

qualified companies willing to locate in Clay County, Mo. The EDC affiliate now has programs to provide funding for both startups and expanding businesses, while reducing risk for investors. To date, NAIN has funded four companies for a total of $850,000. Two other deals that are undergoing due diligence are expected to be closed soon, bringing the total funding to more than $1,000,000. The investment group’s interests tend to be focused on companies involved in the areas of artificial intelligence and Internet of Things (IoT) devices, software, and human and animal health sciences. Not all applicant companies are located in the Northland, but Palmstein noted that priorities are available for investors that want to emphasize local economic development.

Entrepreneurial Winning Women Program Accepting Applications EY is currently accepting applications for its Entrepreneurial Winning Women program. Now in its ninth year, EWW is a national competition and executive leadership program that targets women entrepreneurs who own businesses that have potential to scale. The program offers year-round educational and networking opportunities for the women entrepreneurs who are selected. Applicants must be at least a 51 percent owner and founding CEO of a privately held, for-profit business in the U.S. or Canada that is less than 10 years old. If a company was co-founded by multiple women, they may apply as a group. Additionally, the company must have at least $2 million in sales for each of the last two fiscal years. Former EY Entrepreneur Of The Year Award winners are ineligible. The applications will be reviewed by a panel of independent judges that includes successful entrepreneurs, investors and business leaders. Up to 12 Entrepreneurial Winning Women will be selected. Applications are due by June 9, and selections will be made by September 8, 2017. The program is supported by Babson College, Golden Seeds, The Ewing Marion Kauffman Foundation, the National Association of Women Business Owners, Women’s Business Enterprise National Council and Women Presidents’ Organization. If you’re interested in applying, you can get more details and the application at https://go.ey.com/2m4RovV.

THINKING BIGGER BUSINESS // June 2017

BIG INFLUENCE | HITCH FIT

Transforming Children and Communities Hitch Fit Founders Change Lives Micah LaCerte and Diana Chaloux-LaCerte started Hitch Fit Gym to help people transform their lives through physical fitness. Through their philanthropy, they have taken transformation to another level, by supporting schools in Haiti. After opening Hitch Fit, the couple had wanted to give back, believing “if God called us to give, then he would provide everything that we needed,” Diana said. They were familiar with Love in Motion, a Christian ministry active in Haiti. A new school was opening in Croix-des-Bouquets, and Diana decided to sponsor a couple of children. But when she saw how great the need was, she knew she and her husband had to do more. “God was clear that these were our children,” she said. When she told Micah, “he just smiled and said, ‘Well, we need to get some more clients!’” By the following year, both the school and Hitch Fit’s business had grown. Of the several hundred children the Christian ministry sponsors, Diana and Micah now sponsor about 100 students. Most are at Croix-des-Bouquets, although 15 are in other Love in Motion schools. Diana and Micah are also active as fundraisers for Big Brothers Big Sisters of Greater Kansas City. They were recognized as part of KC’s Most Wanted class of 2016 for that work.

C O M PA N Y T O WAT C H K C

EDCODA

E N T R E P R E N E U R S

Reading, Writing and Arithmetic in 3D og on to your learning game!” Students may soon hear that instruction in schools around the country if Clarence Tan has his way. Tan’s company Edcoda has developed an education program that is delivered as a 3D video game. The premise is that since young people are absorbed with video games, an educational program presented in that format should make it easier for students to learn. So, Tan, a UMKC graduate who hails from San Francisco, developed Coda Quest, an online role-playing game for students in elementary and middle school.

ENTREPRENEUR

Clarence Tan C O M PA N Y I N F O R M AT I O N

1513 Oak St. Kansas City, MO 64108 (816) 582-3253 www.edcoda.com

LESSONS LEARNED

Tan discovered early on that kids don’t like educational games and that educational games were not considered measurable. He also learned that only the most tech-savvy teachers were comfortable using them. He quickly realized the program would need to not only offer questions that meet state educational standards but also let the teachers enter their own lesson plans and questions easily. And to make things more interesting for students, he created wizard avatars in Coda Quest, allowing students to cast spells, mine, chop wood and fish as they complete their “lessons.” Practice items and questions, based on an algorithm that tracks a student’s progress to determine the lesson’s difficulty, are baked into this experience. On the back end, an easy-to-use web

application gives teachers and parents immediate feedback on student performance. TESTING AND VALIDATION

Tan said he has tested a demo version with about 400 students at 80 schools and received positive feedback on the game experience. Students have said the game makes it more exciting to do math and that it makes homework much more fun, he said. Hurdles remain. Tan still needs validation and data support before he can market the program commercially. A full program trial in summer school sessions before 15 to 20 students would furnish that information. “We would get a controlled group to compare with one that has not used the game,” he said. “We have to show there is increased engagement on how much the students are interacting with the educational content,” he said. “There also must be data to support increased test scores.” Tan developed the program and questions with a grant from Digital Sandbox KC, a program for startups through the Economic Development Corporation of Kansas City. The company is also launching an Indiegogo campaign slated for this summer in order to develop and release a home/ parent version. Terry Wooten is content development manager for Thinking Bigger Business Media. SMART COMPANIES THINKING BIGGER®

AT A G L A N C E K C

E N T R E P R E N E U R S

BIG STARTS | SOCKATUDES

MADE TO LAST | MICHAEL’S

Socks That Sock Some Attitude

Passion and Tradition Suits a New Generation

SockAtudes aims to add flair to footwear.

Since 1905, Michael’s has been a fine clothier for men.

STARTUP // SockAtudes ENTREPRENEURS // Barbara Zimmerman and Keith Zimmerman WHAT THEY DO // SockAtudes sells socks with colorful and

striking designs. The company can create any sock design, and they require only a 24-piece minimum. The company partners with Rock Em Socks, an Orlando, Fla., business operated by a friend of the Zimmermans. Rock Em buys blank socks for both groups and concentrates on e-commerce trade, while SockAtudes handles mostly brickand-mortar trade. THE INSPIRATION //

Barbara Zimmerman observed that most socks were dull, and she wanted to create footwear that offered some pizazz. She turned an everyday essential into a colorful design piece. SockAtudes creates a variety of designs, including custom socks bearing corporate logos. Sockatudes also has licenses to produce socks for sports fans of several colleges and universities, including the University of Kansas and Kansas State University. Fans can keep their feet warm and show their loyalty as well. WHAT’S NEXT? // The Zimmermans will continue

to seek licenses to sell themed socks for teams. Visit the website at www.sockatudes.com or call (913) 991-5233.

To operate a high-quality clothing store for 112 years, one must put customers and employees first. And you can’t just care a little. There must be genuine passion, according to Keith Novorr, third-generation owner of Michael’s Clothing. Michael’s has been at 19th and Main streets since 1905. Passion for quality and customer service has existed since Novorr’s grandfather, Michael, opened the doors. Keith’s father, Eugene, and Uncle Howard kept that passion as secondgeneration owners. Keith is in the “meetand-greet business.” He makes customers feel at home with great service. So do his employees, another reason for Michael’s success. His advice to other businesses looking for longevity? “Be happy where you are. Stay in one location.” Michael’s isn’t planning on going anywhere: Novorr is already planning for the store’s 115th anniversary in 2020. Not only is Michael’s attracting fourth-generation patrons, the store’s average customer age has declined by 10 to 15 years due to downtown streetcar service. Keith eschews trends like internet buying and drone delivery, which sacrifice contact with customers. He’s not a fan of bargain selling, either. A sign in the store quotes Benjamin Franklin: “The bitterness of poor quality remains long after the sweetness of low prices are gone.” That’s not something Michael’s customers, new or old, have to worry about.

THINKING BIGGER BUSINESS // June 2017

Hungry for Knowledge? Register for the next BIG Breakfast. Learn behind-the-scenes stories from business owners featured on the cover of Thinking Bigger Business magazine.

» Chris Gorney // Second Life Studios » Kevin Staley // Integrated Health Systems » Brock Stechman // Divvy HQ

Thursday, June22 // 7:30 -9 a.m. Kauffman Foundation Conference Center, 4801 Rockhill Road, Kansas City, Mo.

RSVP TODAY AT ITHINKBIGGER.COM | (913) 432-6690 FOR SPONSORSHIP OPPORTUNITIES

sponsored by

KC MADE IT K C

VALOMILK

E N T R E P R E N E U R S

Round, Messy But Delicious AN ACCIDENT CREATED VALOMILK n astute entrepreneur turns accidents into opportunities—and sometimes, a treat for the ages. That’s how VALOMILK became a great American candy. The business’s founder was Samuel Mitchell Sifers, great-grandfather of Russ Sifers, who’s now the president of Sifers VALOMILK Candy Company. Their family started making candy in 1903 in Iola, Kan.

THINKING BIGGER BUSINESS // June 2017

The company later moved to Kansas City and created penny marshmallow candy during the 1920s and 1930s. One day, the story goes, one of their candymakers sipped a bit too much of the real vanilla they used in the production process. His batch of marshmallow didn’t set up as it should have and stayed runny. But Russ’ grandfather was inspired to turn the accident into a sticky success.

“My grandfather, Harry Sifers, was always looking for new ideas for candy, so they dipped scoops of the runny marshmallow into chocolate cups,” said Russ. “It was messy but so delicious—a simple taste of heaven!” INVENTED BY ACCIDENT

In 1931, the company began making the new candy, called VALOMILK DIPS, and

A TREASURE HUNT

selling it for 5 cents. “So the Original Sifers VALOMILK Candy Cup was invented quite by accident,” said Sifers. Russ learned the VALOMILK trade from his father, Clarence Russell Sifers, and Dave Denton, who was the factory manager in the 1970s. Russ also graduated from the National Confectioner Association’s candymaking school at the University of Wisconsin in 1970. It is easy to identify the company’s end users. “Anyone who enjoys fine, old-time candy,” Russ said. The company gets a lot of fan mail with stories ranging from surprise engagements involving VALOMILK DIPS to a childhood crush sweetened by the candy.

Although VALOMILK isn’t in every store’s candy aisle, it’s worth a search. It’s available at Cracker Barrel, the Vermont County Store, Candy Favorites, Groovy Candies and Bitterman Family Confections. VALOMILK was sold in 1970 to a Los Angeles company with the intent of gaining national distribution. Russ joined the company then, the fourth generation to make VALOMILK. The venture didn’t succeed, and in 1981 the Kansas City factory was shut, ending VALOMILK after half a century. Russ acquired his great-grandfather’s original copper kettles and other equipment in 1985 and reopened the plant in Merriam. He had help from wife Julianne; and children Tim, Wendy, Dave and Sarah and many church friends. Russ said Kansas City’s central location is perfect for shipping, and ingredients and packaging materials are available. VALOMILK is still made by hand, with the original family recipe and much of the original

equipment. (You can see how the candy is made in a video on the company website.) “The process is slow and difficult, but the results are truly old-fashioned, hand-made quality you can taste,” Russ said. ‘YOU GET TO BE THAT LITTLE KID AGAIN’

Russ is proud that VALOMILK has been a family-owned-and-operated company for 114 years. And they are planning to keep that streak going: Son Dave, a fifth-generation Sifers candy-man, will take over the management. Russ remembers the time he asked his daughter Sarah, then 6-years-old, what she liked about the family’s candy. “Well, Dad, they are round,” she replied. “And they are messy, but that makes them fun.” Russ said adults want to be neat rather than messy. “However, when you eat a VALOMILK DIP as an adult, you get to be that little kid again and have fun,” he said. Terry Wooten is content development manager for Thinking Bigger Business Media. SMART COMPANIES THINKING BIGGER®

AWARD-WINNING SOLUTION DivvyHQ won an Audience Choice Award at last yearâ&#x20AC;&#x2122;s Content Marketing World, one of the largest events of its kind. It was named best platform for content creation, workflow and experience.

20 THINKING BIGGER BUSINESS // June 2017

KC ENTREPRENEURS

MANAGING THE CONTENT ECOSYSTEM DivvyHQ’s tools and services may be cloud-based, but the company’s success is tied to its owners staying grounded.

ENTREPRENEURS

Brody Dorland, Brock Stechman C O M PA N Y I N F O R M AT I O N

DivvyHQ 117 W. 20th St., Ste. 202 Kansas City, MO 64108 (877) 573-4889 www.divvyhq.com TYPE OF BUSINESS

Content planning and workflow platform for marketers YEAR FOUNDED

2011 E M P L OY E E S

16 KEYS TO SUCCESS

“We believe in fine-tuning everything.”—Brock Stechman, co-founder

ore than 250 of the world’s biggest brands—names you most definitely will recognize—rely on a Kansas City company for a critical part of their marketing. Aflac, Lowe’s, Unilever, Mercedes-Benz, Pfizer, DuPont and many others all use DivvyHQ. It’s a cloud-based tool for planning, organizing and producing content marketing. To promote their products and services, DivvyHQ’s clients publish a staggering number of blog posts, videos, white papers, infographics and social media posts every single day. Hundreds of people may be involved. Not all of them are in the same city or even on the same continent. “Divvy serves as a hub to help manage that entire content ecosystem, all the resources, all the projects,” said Brock Stechman, who co-founded DivvyHQ with Brody Dorland in 2011. Since then, Dorland and Stechman have earned notice from major industry analysts such as Gartner and Forrester. They’re also finalists for the 2017 EY Entrepreneur Of The Year for the Central Midwest region.

And they’ve raised $3.1 million in investment. Among other things, the money has helped fund a series of new features and upgrades—Divvy 3.0— that will debut this summer. Their competitors include heavyweights like Oracle, but their team is relatively modest in size—just 16. The crazy thing? When they started, DivvyHQ’s founders weren’t trying to win over the world’s best-known brands. They really just needed a software solution that would help them run their own small marketing agencies. When Stechman and Dorland couldn’t find the right tool, they decided that, well, they’d build it themselves. HOW DIVVYHQ WAS BORN

Before we go any further, there’s an important question we should answer: Just what is content marketing? It’s a strategy where businesses produce valuable, relevant content to attract and engage customers. So, a real estate agent who blogs about house-hunting tips? That’s content marketing. Or let’s say a tool company publishes YouTube videos

left // Brody Dorland, Brock

Stechman, co-founders

by James Hart // photography by Dan Videtich SMART COMPANIES THINKING BIGGER®

that show you how to use its product for DIY home repairs. That’s content marketing, too. Ideally, customers who are interested in a company’s area of expertise will discover its blog or YouTube channel, then consume the content they find there. The customers get free, useful information. They also learn to trust the company. So when they’re ready to buy, that company is the first place they go. It takes a lot of effort and coordination to succeed in content marketing. Before they founded DivvyHQ, Brody and Brock built successful small businesses to help clients do just that. Brody was the owner of Something Creative Inc., which developed strategies for companies’ content marketing efforts. He regularly teamed up with Brock and his agency, Brockton Creative Group, to build websites, apps, marketing campaigns and other deliverables. Business boomed, but there was a problem. For most clients, Brody and Brock would set up a starter “editorial calendar.” It showed them all the blogs, social media and other content they’d need to create over the next three months. Constructing one calendar could be a challenge because of all the moving parts and partners involved. “Multiply that scenario by, say, 20 clients,” Brody said. “And we’ve got spreadsheets going back and forth, all kinds of collaboration happening every day. Man, that was painful.” They looked for software that would help them manage the workflow. They found nothing. Sure, there were project management tools like Basecamp. But most of those were designed to handle short-lived campaigns 22

THINKING BIGGER BUSINESS // June 2017

with defined start and end dates. Content marketing isn’t like that. Once you start a blog, you always have a blog, and it always needs to be fed. Brock and Brody realized they had pretty much everything they needed to build a planning tool like the one they envisioned, so they did. Two months and a little angel capital later, DivvyHQ was born. FROM ZERO TO FORTUNE 100

“We’ve always said that the most valuable asset anybody

could have, especially an entrepreneur, is their network,” Brock said. The power of professional networks certainly made a difference in DivvyHQ’s infancy. Back when Brody and Brock were getting ready to launch DivvyHQ, they scored an opportunity to present their company at the first-ever Content Marketing World, thanks to their connections to the organizers. (The event has since become one of the biggest and best known for content marketers.)

“And the cool thing was, in the audience at that time were some of the biggest brand marketers in the world, from Fortune 500, Fortune 100 companies,” Brody said. The pitch was a hit, and the DivvyHQ team walked away from Content Marketing World with two notable wins. One, they acquired a team of beta-testers from several major companies. Those testers were happy to put DivvyHQ to work under real-world conditions. “Those months were just nuts because we were trying to get as much feedback as we could get and make tweaks as fast as we could,” Brody said.

“We started getting these huge brands with huge global teams producing tons and tons of content on a daily basis across all different types of outlets.” Brock Stechman // Co-Founder

And two, the co-founders saw the market was keenly interested in their idea. “We realized that we absolutely have a fit here,” Brody said. “We’re getting amazing traction from all these big brands around the country and around the globe. So let’s go and get a serious round of funding.” They soon connected with Dundee Venture Capital of Omaha, which supplied $600,000. That money would pay for the next big upgrade of the platform, Divvy 2.0, and help them build a sales team. Meanwhile, each founder exited his old agency business so he could focus on scaling up the new company.

DivvyHQ’s platform has the potential to achieve massive growth. But its founders have been careful to focus on more than just product and marketing. They’ve devoted time to lining out the bookkeeping, insurance, hiring—all the nuts-and-bolts that aren’t necessarily fun, but are essential to building a strong, sustainable and healthy company. “You can’t just focus on a couple areas of your company and expect to be successful,” Brock said. “You have to build a sound, well-rounded business.” ‘GUYS, DIVVY IS BROKEN’

Nobody enjoys getting bad news from clients. But

sometimes, it can clue you into issues you need to address in your business. For DivvyHQ, an early wakeup call came courtesy of Nokia. “Their head of content in the U.K. called up one day: ‘Guys, Divvy is broken,’” Brody recalled. And sure enough, it was. Brock and Brody logged into Nokia’s account, and it looked like a jumble—partly because the company had more than 250 users on its account. And they were juggling about, oh, 50 to 100 pieces of content per day. “We didn’t build it for that size company, for that scale, for that scope,” Brody said. They had designed DivvyHQ to solve a problem they were having. They assumed most of their customers would be small to midsize agencies like theirs. “We ended up not getting a lot of small agencies to sign up,” Brock said. “We started getting these huge brands with huge global teams producing tons and tons of content on a daily basis across all different types of outlets.” DivvyHQ adapted, of course, and has continued adapting. They’ve had to—it’s a fact of life when you’re a technology company. The tech world moves a lot faster than other types of businesses, certainly faster than life in the agency world was for the company’s founders. While DivvyHQ was the first of its kind, several competitors have popped up, many of them very well-funded.

“It’s amazing what software companies can do in a year— in a few months—if they’re well-funded,” Brock said. ‘COMING AT IT FROM A DIFFERENT PLACE’

But DivvyHQ possesses strengths that are hard to beat. Its platform is still the most intuitive and the easiest to use—an important selling point for its customers. Another asset for DivvyHQ? Earlier this year, one of the founding fathers of content marketing, Robert Rose, agreed to join the company’s board of directors. Rose had been a longtime supporter and advisory board member, but now he’ll play a part in shaping business strategy, too. (A healthy professional network pays off again!) And finally, unlike their competitors—who are mostly tech companies that decided to build a tool for marketers—Brody and Brock are marketers who experienced their clients’ pain firsthand and already possess a deep well of industry knowledge. They actually understand how content marketing works. The other guys? “They’re just a tech company that saw, ‘Hey, this content marketing thing is hot, let’s build a tool and see what happens,’” Brody said. “We’re coming at it from a very different place, from a place of passion, a place that we know and love.” James Hart is a freelance writer based in Kansas City. SMART COMPANIES THINKING BIGGER®

ENTREPRENEURIAL JOURNEY K C

E N T R E P R E N E U R S

Dogged Determination actual production until we’d done $1 million in product sales the month before.” Joe and Judy both agree that one of the motivators to keep going was the belief that if they gave up, someone else would pick up the idea and run with it.

Solving a dog’s halitosis was only the beginning of the journey.

udy Roetheli urged her husband Joe to clean up their dog Ivan’s bad breath. But she didn’t know it was the beginning of an entrepreneurial journey that would put the couple at the helm of an award-winning company that spanned 60 countries and several continents. Their journey continues today, even after the sale of their company, through the work they do with their foundation. A Fresh Start When Judy asked Joe to do something to freshen their dog’s breath, the family was in the midst of a fresh start too. Joe, an agricultural economist for the US Department of Agriculture, had been asked to relocate to Washington, DC. After a family meeting, Joe declined the offer and resigned. But the Roethelis noticed that Ivan’s breath was improving after eating Joe’s product. So Joe enlisted the help of a nutritionist and a dentist to refine it. By 1996, the Roetheli’s had founded S&M NuTec in North Kansas City to manufacture Greenies®, the name they gave to the new dog treat. 24 THINKING BIGGER BUSINESS // June 2017

A Viable Product—With No Funding The Roethelis knew they had a viable product, but the company struggled to find funding. “We went to almost every bank in a wide metro area and gave them our proposals,” said Judy. “We felt like they were laughing at us because we were a school teacher and a government worker with no business experience or collateral trying to start a pet business with a green treat,” Judy said. Joe added: “These kinds of situations require a lot of persistence and passion. Judy would keep a spreadsheet of credit cards and their introductory periods, and she would roll them to a new card when the introductory rate was up.” Joe said he doesn’t recommend that approach for most situations though. As the company grew, Joe looked for equipment lease financing for an injection molding machine. Everyone told him “no.” “In the end, I out-persisted them, and we ended up with 17 equipment leases,” he said. “We also had a good relationship with our primary ingredient supplier and they gave us very lenient terms.” Between the credit cards, equipment leases, a lenient supplier and the cash flow from product sales, the Roethelis were able to bootstrap the business. “We didn’t get our first loan for

Sale to Mars Eventually, S&M NuTec grew to 95 employees, launched numerous other products for pets and racked up dozens of awards. The defining moment came in March 2006 when they got a call from Mars saying the corporation was interested in purchasing their company. When asked to describe that experience, Joe said, “Fast! The short story is that one week after we got the first call from Mars, the two private companies had all the paperwork signed for the transaction.” It took the government about 45 days to approve the acquisition of the eighth largest pet food company by the largest. The Roethelis retained no financial interest in Greenies®. Life After Mars The sale put the Roethelis in a position to do just about anything they wanted. Judy said, “We knew we wanted to help people. We could have money, furnish our home elegantly, have vacation homes, but that didn’t interest us. We wanted to help change some lives.” They used the money from the sale to start the Lil’ Red Foundation, a 501 (c) (3). The funds target third world housing and education, entrepreneurship, inspirational storytelling and pet therapy. In Guyana, for example, their work has contributed to the building of five villages, 325 houses, several schools, improved sanitation facilities, worship and recreational facilities, and a few microenterprises. So how can small business owners who desire to give back get started? “Think seriously about what you want people to say about you at the end of your life,” said Joe. “Then put together some stepping stones to get there. That gives you a decision making tool for your life goals.”

KC FUTURES

( by Terry Wooten )

FEDERAL GRANT WILL HASTEN ECONOMIC DEVELOPMENT.

A New Beat for the Blue River Valley Corridor ndustrial activity once pulsated in the Blue River Valley Corridor, with automobile assembly plants churning out cars and a steel mill making road barriers and culverts. That created a vital means of employment for many East Side residents. Activity is less hectic now, but redevelopment plans are underway to reinvigorate that vitality. If all goes well, the Corridor could once again be a center for business and industrial bustle, now and for a long time. The aim is to shape a diverse business base to spur employment and to generate tax revenue and other benefits.

BRINGING BACK JOBS

The redevelopment thrust is enabled by two grants from the U.S. Economic Development Administration totaling $350,000. With the grant, the Economic Development Corporation of Kansas City will plan an economic strategy for the corridor as well as examine infrastructure problems. The 3,500-acre corridor generally overlaps the Little Blue River from the Missouri River downtown to just south of 1-70. The Greg Flisram Leeds District is a significant part of the area. Once a major job center for the East Side, the sector declined and lost jobs when heavy industries left for overseas, said Greg Flisram, senior vice president, business and real estate development for the EDCKC. Ford and General Motors once had assembly plants in the area, as did Armco Steel Co. Flisram said the area was devastated when Armco left, costing thousands of jobs. 26 THINKING BIGGER BUSINESS // June 2017

Flisram said the strategy study will identify which businesses to target, what public intervention will be needed on infrastructure and how to attract jobs that would be accessible to East Side residents. The EDCKC also will determine the right types of incentives to entice companies to the sector. “We are not talking about a tech park, or office developments,” Flisram said. “It is at the production level—factories and distribution.” Flisram said there is no guarantee of a return to the job density and wage levels of the heyday when GM and Armco were there. But the quest is to reposition the tired, damaged real estate and make it attractive to companies again. LOADED WITH POWER, GREAT ACCESS

There are strong reasons for redevelopment of the Blue River Valley Corridor.

“It is loaded for bear with infrastructure,” he said. “It is the most heavily-powered part of the metro.” That’s because of the huge amounts of electricity required by the auto and steel companies located there in the past. There also is excellent rail, highway and air access. Access to labor is most important, Flisram said, noting that many industries that have located farther from the metro area have problems finding workers. “This area is proximate to a lot of untapped workforce potential,” he said. Some companies already have made major investments into the area, such as Custom Truck and MolyCop USA, creating hundreds of jobs. The area has been plagued with failed water pipes, costing multiple shutdowns by businesses there. A new water main will be built later this year with a $250,000 EDA infrastructure grant.

Has your company been featured in Thinking Bigger Business magazine?

VOL. 25

// ISSUE

6 // JUNE

2016

VOL. 25 // ISSUE 7 // JULY 2016

ReprintPros, a full-service custom reprint supplier, is Thinking

SKY’S

FASHION FORWARD

THE

The com LIMIT ing boom in Continuing a local legacy. commercial drones.

Bigger Business magazine’s authorized reprint service.

THINK

WE MADE IT

Why manufacturing How to build EAD a business endures in KC. you can sell.

In addition to high-quality printed reprints, ReprintPros provides related products, including digital reprints and commemorative plaques.

» iThink

Bigge

» iThinkBigger.com

r.com

TRUE WIL SBREW UCCEL TO ED KC Bier Co. makes GermanWil l Shie ldsright style beer makhere. es the football jump legend from to entr epreneu r.

Get a free, no-obligation quote from ReprintPros today.

Jeremy Ellis // (949) 702-5390 // www.ReprintPros.com

LONG-TERM VISION

Momentum is developing on other fronts, which helped to push the Corridor project to the forefront, Flisram said. For example, there was the encouragement over the $800 million bond issue for infrastructure, sidewalk and buildings repair and construction and the one-eighth cent sales tax for development in parts of the East Side. A $400 million Blue River Valley flood control project recently completed also was a contributing factor for the redevelopment plans because it mitigated flood risks in the Corridor. EDCKC is working on multiple fronts to reverse a lengthy stagnation trend in this area. Flisram said there will be short-term projects to attract additional business firms and jobs now, but the long-term vision is the crucial focus. “This is a long-term commitment to redevelop and to reposition the Blue River Valley Corridor,” he said.

Building Businesses Making Memories

Join us for round-tables, speakers and networking events to gain powerful insight and support from some of KC’s most accomplished women. Terry Wooten is content development manager for Thinking Bigger Business Media.

NAWBO KC

NAWBOKC.ORG

SMART COMPANIES THINKING BIGGER®

FOR A LIMITED TIME ONLY THE GIG WORKFORCE IS BECOMING A PERMANENT PART OF THE U.S. WORKPLACE. ( by James Hart )

28 THINKING BIGGER BUSINESS // June 2017

RAJ NAIR KNEW HE NEEDED HELP WITH MARKETING. But he wasn’t sure that he needed a marketer. Or at least not a full-time one. Last year, Nair’s company—Yotabites Consulting of Fairway— was gearing up for a big conference, and he wanted banners, brochures and an e-book to share with prospective customers. So, he contracted with a freelance writer and a marketing specialist to create the items over the span of a few months. “The way I see it, as a startup, I need to keep my focus on the core of what I am doing, and as a service startup, cash flow is the biggest concern,” said Nair, managing partner and CEO of Yotabites, a Big Data consultancy. “I can’t afford to put a full-time marketing person or other supporting staff on payroll just yet.” More companies like Yotabites, instead of hiring full-timers, are farming out projects on a gig-by-gig basis. Need someone who can make a delivery or do an afternoon’s worth of work on your website? A couple months of programming? Short-term assistance is out there, and it’s often as close as an online search.

Thanks to web-based marketplaces like Amazon Mechanical Turk, TaskRabbit, Upwork or Fiverr, you can quickly find help for a few hours or a few days. Some of these sites are even devoted to a particular line of work, like Field Nation, which specializes in on-demand field service technicians. At the same time, a growing number of Americans are operating as independent contractors who stay on the job for months at a time. In 2014, there were 24 million “nonemployer firms”—one of the better barometers of contractors and freelancers. That figure comes from the Brookings Institution, which studied data from the Census Bureau and Moody’s. The 2014 head count was up from 22 million in 2007 and 15 million in 1997. Smaller businesses, of course, are no strangers to soliciting help on a limited basis. “It’s actually quite common,” said Belinda Waggoner, founder of People People, which provides outsourced expertise in human resources. SMART COMPANIES THINKING BIGGER®

15.8

of the U.S. employee base is made up of independent contractors, freelancers, temps, on-call help and contract workers.

“They will generally utilize an independent contractor when there’s a special skill needed that they don’t have, if they have an uptick in work that isn’t expected to last a long time, or if they have a spot that is hard to fill or someone is out on leave.” If you’re thinking about tapping into the “gig economy,” here are some of the most important things to know. THE SIZE AND SHAPE OF THE GIG WORKFORCE

Just how big is the gig economy? Depends on how you define it. The National Bureau of Economic Research, a nonprofit think tank, estimated that only 0.5 percent of the U.S. workforce found jobs via online sites like TaskRabbit or Upwork in 2015. But what if you expand the definition a little? The NBER studied the larger “alternative workforce,” which includes independent contractors, Er i freelancers, temps, on-call c a B r u ne help and contract workers. And that population is sizable. In 2015, “alternatives” made up 15.8 percent of the U.S. employee base— almost 1 in every 6 workers—compared to 10.2 percent in 2005.

30 THINKING BIGGER BUSINESS // June 2017

Last year, the McKinsey Global Institute studied what it calls the “independent workforce” in the United States and Europe. McKinsey estimated that roughly 20 to 30 percent of the working-age population was involved in some form of short-term, project-based work. Echoing the NBER, McKinsey discovered that only a fraction of respondents (15 percent) had ever used a platform like Uber, Upwork or Fiverr. “But the rapid growth of the largest platforms suggests we have only just begun to see their impact,” wrote the authors of the McKinsey study. About 66 percent of freelancers said they’re finding more of their jobs online, according to the most recent “Freelancers in America” report from the Freelancers Union and Upwork. Not that you have to go online to find gig or contract help. Sometimes it’s as simple as asking your friends. “I have mostly found them through my network and community,” Yotabites’ Nair said. “On occasion, I have just polled someone I know who has a full-time job and asked if they were interested in a ‘short gig,’ and initially to my surprise, everyone I talked to was interested. I guess it’s a good way to make some side income.” THE PROS AND CONS OF GIGS

The gig economy offers some tempting advantages to small businesses. Erica Brune, president of professional employer organization Lever1, laid out the following scenario:

Let’s say you own a flower shop and need an extra set of hands to make deliveries on a single day, like Mother’s Day. A gig worker is an ideal solution. You get temporary help during your crunch time but without a long-term commitment. You don’t have to offer benefits. “As an employer, the benefit is that you are only paying for labor when needed and are not stressed over layoffs,” said Brune, whose company assists businesses with a range of HR, payroll and employee benefit-related services. But gig workers and independent contractors aren’t magic. “The downside is that you never know what you are going to get,” Brune said. “There would be virtually no training, no reassurance that these individuals would actually show up or handle your business in a manner that you found acceptable. When you hire an employee, you have the opportunity to provide training, evaluation and feedback on their performance.” After all, not everyone is in the “alternative workforce” by choice. According to McKinsey, 14 percent of independent workers are “reluctant”—they’d rather have a regular 9-to-5. Another 16 percent have day jobs, but are only taking extra work because they’re financially strapped. “Of course, you can outline deadlines, and you can give expectations, but I’ve seen many a contractor relationship go south when they’re offered a full-time job, or a better-paying gig, and your work is tossed to the sideline without getting done,” Waggoner said. “It’s all well and good to terminate the contract or agreement, but the work still needs to get done.”

WHEN A CONTRACTOR ISN’T A CONTRACTOR

Small businesses also must be careful not to call someone an independent contractor when that person is really being treated like an employee. “The biggest challenge is knowing who is an independent contractor, and we find that companies aren’t always sure or doing the right thing,” Waggoner said. The IRS has published a set of guidelines to help businesses test if someone’s really an independent contractor (www.bit.ly/1ULFS0i). Generally speaking, contractors have more control over how, where and when they do their work. The stakes of misclassification are high enough that it may be worthwhile to consult an expert. “You’ll want to be sure that the relationship you have with a contractor really is that, and not that of an employee, because penalties can be steep if you fail to characterize the relationship correctly,” Waggoner said. If you misclassify an employee as an independent contractor, you’re probably failing to pay FICA and unemployment taxes for that person. “Some employers have been known to

“This is one area that you really should seek professional help in—creation of the agreement,” Waggoner said. BUILDING A FUTURE TO SUPPORT GIG WORKERS

Small businesses should also understand any state or local laws that could affect their relationship with a gig or contract worker. “Many states have more specific rules regarding benefits, and employers should

20-30

understand where these gig workers are going to conduct the work,” Brune said. For example, New York City just adopted the Freelance Isn’t Free Act, which strengthens legal protections for freelancers. Any job that costs more than $800 must be set down in a written contract. Employers could be liable for damages if they try to force a freelancer to accept less than the agreed-upon amount or threaten them with retaliation for seeking payment. As the number of gig workers and freelancers grows, it’s reasonable to think there will be more call for laws like New York’s. The Freelancers Union, which backed the Freelance Isn’t Free Act, wants to take it national. Meanwhile, states such as New York and Washington have taken a few early steps toward “portable benefits.” el e in da Wag gon Websites or offline brokers that line up work for gig workers and independent contractors would pay into a fund serving those workers, who would enjoy access to paid time off, health care or other benefits wherever they go. Other policy changes might be necessary, but it makes sense for elected officials and entrepreneurs to support this growing corner of the workforce. According to McKinsey, more independent workers could boost the nation’s productivity and help more people participate in the labor force. They could also provide your company with the expertise and manpower it needs to grow—without the need to commit time and resources to a full-time position. “Hiring an expert short term,” Waggoner said, “can help you get where you need to be without a hire.”

There are other drawbacks mistakenly classify workers to working with someone to avoid paying employment who isn’t in your office every taxes or offering benefits,” day, Nair said. What if you’re Brune said. “If discovered, halfway through a project and employers are not only need to make a hard pivot? required to pay the back taxes R a j Na i r “You may not be in a position on those wages, but may also face to make a change if you wanted to, penalties and interest on those fees.” without entering into another contract One way to protect yourself, Waggoner with the gig worker—and they may not be said, is to have a written agreement with your available,” he said. contractor. It should detail: • Duration or term Before you entrust a gig worker with a • Pay or compensation project, Brune recommends that you: • Review the amount of time you plan to • How hours will be accounted for • Scope of work to be performed use the gig worker. Gig projects should • Protections regarding confidentiality, be short-term projects. • Ask yourself if any full-time W-2 employees nondisclosure, nonsolicitation and have the same job responsibilities as the intellectual property (and who it belongs gig worker. The gig worker should be to if developed on paid time) • Termination provisions doing something different from what • How to contact one another your existing, traditional staff is doing. • How feedback will be given or how work If you do go the gig-worker route, review will be evaluated your business insurance policy and ask if it • Anything else that’s unique to the covers independent contractors. agreement

James Hart is a freelance writer based in Kansas City.

of the working-age population was involved in some form of short-term, project-based work. SMART COMPANIES THINKING BIGGER®

BIGGER | growth S M A R T

( by Mark Brigman, Ph.D. )

S T R AT E G I E S

The Right Kind of Partner for Business Growth It all depends on time and commitment.

he number of partnerships has continued to rise over the past three decades, and the trend doesn’t look like it will end in the near future. According to PwC’s 2016 Global CEO Survey, 59 percent of U.S. CEOs planned to initiate a new business growth partnership within the next year, an increase of 15 percent over the 2015 survey results. It’s understandable why partnerships are popular: They can be a powerful, cost-effective strategy for growing a business. The term partnership is very “wide,” so let me clarify. The broadest classification for business partnerships is an alliance. This includes arrangements such as equity joint ventures, mergers, capital investments, R&D cost sharing, outsourcing, vendor agreements, cooperatives and referral relationships. Time and Commitment All partnerships can be characterized by two elements: time and the level of commitment involved. The first dimension, time, speaks to the speed at which we can generate revenues and enhance our products or services. For example, a vendor partnership allows your company to purchase goods that you sell this quarter, benefiting you in the short term. The other end of the time spectrum might include a product development partnership that requires years to bring a new product to market—a long-term play. 32 THINKING BIGGER BUSINESS // June 2017

The second dimension of a partnership, commitment, speaks to the level of obligation that each partner has to the joint initiative. As an example, equity ownership ventures require a much greater level of commitment than partnerships involving informal sales referrals. By better understanding the types of business partnerships available, we can begin to build a plan based upon our specific needs. Transactional vs. Collaborative Another way to categorize partnerships is transactional versus collaborative. Consider the Business Growth Continuum in the accompanying chart. The left side focuses on the transactional approach to business growth. These arrangements tend to have a short-term view.

The vendor partnership I described above is a good example of the transactional approach. Here, in collaboration with your vendorpartner, your procurement manager purchases inputs (commodities) that feed your production process. These daily activities allow your sales team to close transactions (or enable field teams to deliver services) that generate revenue. The time horizon of these activities is usually less than one year—relatively short. The right side of the continuum describes the collaborative approach to partnering. This side offers the risk-taker a shot at exponential business growth. Here, your business development professional puts his or her entrepreneurial skills to the test by finding a market-leading partner that can deliver unique resources that fuel significant growth. The time horizon for the collaborative side varies, but it is generally one to two years before any meaningful revenues are realized.

Business Growth Continuum Transaction Approach Incremental Growth Short Term View Lower Risk

Collaborative Approach Exponential Growth Long Term View Higher Risk

Traditional Sales Traditional Procurement Complete Contracts

Business Development Partner Leadership Incomplete Contracts

COMMODITIES Low Value-Add Off-the-Shelf

FUNCTIONAL

STRATEGIC High Value-Add Fully Customizable

Look for Wild Cards The “wild card” strategy of partnering with another company can be a very effective way to grow your business. A successful partnership can allow your company to mitigate risk, reduce cost, increase speed to market and leverage the expertise of another company. I use the term “wild card” to describe partnerships because great partners will provide the exact, but often unique, element that you need to grow. As the business leader, your challenge is to find the company that can efficiently provide the resources you need. If the collaborative approach takes one to two years to generate meaningful revenue,

why would a business want to pursue those kinds of projects? We want revenue now—right? The collaborative approach brings an exceptional opportunity: the ability to combine best-inclass resources from multiple companies to create a gamechanging product, service or process. When this occurs, your strategic partnership is primed to reap the rewards that come from achieving a competitive advantage—exponential revenue growth. Earlier this year, I had a conversation with Bernie Brenner, co-founder of TrueCar, a website that shares pricing and other information on vehicles. Bernie said that strategic

partnerships with large brands such as USAA and American Express allowed their young company to grow at exponential rates. He added that it is not uncommon for small businesses to achieve ten-fold growth if they find the right partner. As business leaders, we need to remember that both partnership types, transactional and collaborative, are essential ingredients for maximum business growth. Great partnerships allow both companies to become better as a result of the relationship, regardless of scope. The success of a partnership is limited only by one’s ability toMARKETING lead. MANAGEMENT PLATFORM

SYNCHRONIZ™ IS A LEAD

There’s simply no smarter way to organize, manage and distribu your marketing assets than with Synchroniz™. Our powerful marketing management platform will meet any of your marketing, logistics financial needs. Mark Brigman, Ph.D., and is founder of Fidelis One, a national business consulting firm, and author of “Partnernomics: The Art, Science and Processes of Developing Successful CONSOLIDATE Strategic Partnerships.” processes into a single tool.

SYNCHRONIZ™ IS A LEADING MARKETING MANAGEMENT PLATFORM

www.fidelisone.com ur Compa

STORE all ofny your marketing products in a single Yo storefront and give customers and partners access to them from anywhere.

SYNCHRONIZ™ IS A LEADINGMANAGE your orders and inventory through Synchron comprehensive and easy-to-use interface. SYNCHRONIZ™ IS A LEADING SYNCHRONIZ™ IS MINIMIZE A LEADING

There’s simply no smarter way to organize, manage and distribute your marketing assets than with Synchroniz™. Our powerful marketing management platformMANAGEMENT will meet any of your PLATFORM MARKETING marketing, logistics and financial needs.

There’s simply no smarter way to organize, manage and distribute your marketing assets than with Synchroniz™. Our powerful

MARKETING MANAGEMENT PLATFORM CONSOLIDATE marketing management platform will meet any of your

Users

r Compan y You Com

rUserspan Marketing y YouProducts

waste, and optimize spending using Synchroniz's™ robust reporting and budgetary controls.

MARKETING MANAGEMENT PLATFORM

logistics and financial processesmarketing, into a simply single tool. There’s no smarter way to needs. organize, manage and distribute

SYNCHRONIZ™ A LEADING STORE all of your marketing products inIS a single CONSOLIDATE all of your Synchroniz™ Benefits your marketing assets than with Synchroniz™. Our powerful marketing management platform will meet any of your CONSOLIDATE storefrontmarketing, and give customers andtool. partners logistics and financial needs. access to processes into a single

Users Marketing Products r Compan y You

MARKETING MANAGEMENT PLATFORM

marketing and fullfillment them fromThere’s anywhere. simply no smarter way to organize, manage and distribute STORE all of your marketing products in a single CONSOLIDATE

Centralize and Consolidate Technologies Marketing Products Delivery

SYNCHRONIZ™ IS A LEADING

processes into a Synchroniz™. single assets than with Our powerful storefront andinventory give customers andtool. partners access to MANAGEyour yourmarketing orders and through Synchroniz's™ processes a single tool. marketing platform will meet any of your themmanagement frominto anywhere. comprehensive and easy-to-use interface. marketing, logistics and financial needs.

MARKETING PLATFORM STORE allyour ofMANAGEMENT your products in aSynchroniz's™ single MANAGE ordersmarketing and inventory through

STORE all give ofway your marketing storefront and customers and partnersand access to MINIMIZEThere’s comprehensive simply no smarter to organize, manage distribute and easy-to-use interface. CONSOLIDATE them from anywhere. products in single storefront and waste, and optimize spending Synchroniz's™ your marketing assets thanausing with Synchroniz™. Our powerful processes into a single tool. MINIMIZE marketing management platform meet any of your robust reporting and budgetary controls. MANAGE your customers orders and will inventory Synchroniz's™ give your and through partners

Commercial . Industrial Data/Comm Design Build Utility . Prime

Users r Compa YouDelivery ny

Target

Personalize Marketing Marketing ProductsMaterials Users Target Delivery

Control Your Brand

waste, and optimize spending using Synchroniz's™ marketing, logistics andyour financial needs. interface. STORE all of marketing products in a single comprehensive and robust reporting andeasy-to-use budgetary controls. access to them from anywhere. storefront and give customers and partners access to Target EmployMarketing Dynamic User Access and Budgets Products Synchroniz™ Benefits MINIMIZE them from anywhere. CONSOLIDATE Delivery waste, and optimize spending using Synchroniz's™ Synchroniz™ Benefits processes into a single tool. MANAGE your orders and inventory through Synchroniz's™ Centralize and Consolidate Technologies robust reporting and budgetary controls. Superior Real-Time Reporting MANAGE your orders and Synchroniz™ Features Centralize andofConsolidate Technologies Superior Real-Time Reporting comprehensive and easy-to-use interface. STORE all your marketing products in a single inventory through Synchroniz’s™ storefront andBenefits give customers and partners access to Target Synchroniz™ Inventory Control Marketing Operations MINIMIZE Inventory Control them from anywhere. and easy-to-use comprehensive Delivery waste, and optimize spending using Synchroniz's™ Personalization Engine Centralize and Consolidate Technologies Superior Real-Time Reporting robust reporting andMaterials budgetary controls. MANAGE your orders and inventory through Synchroniz's™ Personalize Marketing Materials Reduce Operating Cost interface. Personalize Marketing Reduce Operating Cost Warehousing Brand Standard Control comprehensive and easy-to-use interface. Inventory Control Returns Management Print on Demand Target Control Your Brand Synchroniz™ Benefits Decrease Time to Market Control Your Brand Time to Market MINIMIZE Procurement MoreDecrease than Print MINIMIZE carrying costs, Personalize Marketing Materials Reduce Operating Cost Inventory Planning waste, and spending using Synchroniz's™ Intuitive User Experience Centralize andoptimize Consolidate Technologies Superior Real-Time Reporting Employ Dynamic User Access and Budgets Flexible Integrations reporting and budgetary controls. Employ Dynamic robust User Access and Budgets Flexible Integrations maximize order flow, reduce Inventory Alerts Direct MailDecrease Control Your Brand Time to Market Inventory Control 3PL Integrations waste, and optimize spending Project Tracking

Synchroniz™ Features Benefits MO: 909 Troost, KCMO 64106Synchroniz™ Serialization Employ Dynamic User Access and Budgets Dynamic Kitting Flexible Integrations Features using Synchroniz’s™ Personalize Marketing Materials robust, Reduce Technology Operating Cost Marketing Operations Finance QR Codes/Maps Lot Control KS: 3236 N. 7th St, KCKS 66115 Centralize and Consolidate Technologies Superior Real-Time Reporting Call Now 816-421-0298 reporting and budgetary Finance controls.Budgetary Control Technology No InstallationOrder Consolidation Marketing Synchroniz™ Operations Personalization Features Control YourEngine Brand ∙T

ENTY-FIV

E∙

UNDER

∙T

E∙

816-842-7023 www.markone.com

Decrease Time to Market

Warehousing Budgetary Control Consolidate Systems Brand Standard Control Inventory Control For Your Free Demo No Installation Shipping Personalization Engine Returns Management Finance Superior Reporting Secure PrintEmploy on Demand Operations Technology Dynamic User Access and Budgets Warehousing Consolidate Flexible IntegrationsSystems Brand StandardMarketing Control Procurement Customizable Dashboards Flexible Integrations More than Print Personalize Marketing Materials Cost No Installation Budgetary Control Reduce Operating Engine Returns Superior Reporting Secure Print on DemandPersonalization 1916 Clay Street Management • North Kansas City, MO 64116 Inventory Planning Inventory Control Automated Intuitive User Experience Warehousing ConsolidateUpdates Systems Brand Standard Control Procurement Flexible Integrations Customizable Dashboards More than Print Synchroniz™ Features Inventory Alerts Multiple Price Lists High Availability Direct Mail Control Your Brand Decrease Time to Market Returns Management Superior Reporting Secure Print on Demand mike@proprintdigital.com • www.proprintdigitial.com Inventory Planning Inventory Control Automated Updates 3PL Integrations Flexible Payment Options Automate Processes Intuitive User Experience Project Tracking Procurement Customizable Dashboards Flexible Integrations More than Print Marketing Operations Finance Technology Serialization Order Proprietary Technology Dynamic Kitting Employ Dynamic User Access and Budgets Inventory Alerts Multiple Price Consolidation Lists High Availability Integrations Inventory Planning Inventory Control Flexible Automated Updates Direct Mail Intuitive User Experience No Installation Budgetary Control Personalization Engine Lot Control QR Codes/Maps ® Inventory Alerts Multiple Price Lists High Availability Mail 3PL Integrations Flexible Payment Options Automate Processes Project Tracking Direct SMART COMPANIES THINKING Warehousing Consolidate Systems BIGGER 33 Brand Standard Control Order Consolidation 3PL Integrations Flexible Payment Options Proprietary Automate Processes Project Tracking Serialization Order Consolidation Technology Dynamic Kitting Synchroniz™ Features Returns Management Superior Reporting Secure Print on Demand Shipping Serialization Order Consolidation Proprietary Technology Kitting QR Codes/Maps Dynamic Customizable Dashboards Flexible Integrations More than Print Lot Control Procurement Lot Control QR Codes/Maps Marketing Operations Finance Technology TY-FI

E S T. 2 0 0 1

Finan

Bud

Sup Cust Inve Mult Flex Orde

BIGGER | finance S M A R T

( by Ben Olsen )

S T R AT E G I E S

lenders. Find out who is in your area and go talk to them. When you do, here are some good questions to ask: » How many SBA deals has the bank done in the past two years? » How many SBA deals has the loan officer done in the past two years? » What was the average size of those SBA deals? » Did the loan include real estate? (This will help you know how they expect to collateralize the deal.) 2 Understand the distinction between PLP vs. CLP. // There are two main SBA programs

Tips for Navigating SBA Financing for Acquisitions If acquisitions are in your future, SBA loans might be a viable source. Securing Financing SBA loans have a reputation for being hard to access, for good reason. They can be particularly tricky to secure if you’re using that capital to acquire a business. If you’ve never gone through the SBA financing process before, it can be confusing. Here are five tips 34 THINKING BIGGER BUSINESS // June 2017

for navigating the complex process of gaining SBA financing for a business acquisition: 1 Shop around for the right bank. // Although you may want to secure an SBA loan from your current bank, limiting your options may lower your chances of success. The SBA website has a list of the 100 most active SBA

that banks can be a part of: Preferred Lenders Program (PLP) or Certified Lenders Program (CLP). Knowing the distinctions between each program can help you understand what type of lender is right for you. In the Preferred Lenders Program, a PLP bank reviews and approves its loans without SBA intervention. The SBA doesn’t need to approve these loans, meaning you’ll only have to go through the bank (instead of the bank and a random SBA reviewer). This makes for a faster process. On the other hand, banks often use the Certified Lenders Program for complex initiatives or deals that the bank doesn’t want to accept full liability for because of some obscure issue or request. CLP banks will need to pass off the loan to the SBA for the final decision to receive the government guarantee. Because of that additional step, it could take a bit longer to get approvals. 3 Expect to provide a personal guarantee. //

If you are going to hold 20 percent or more of the company’s equity, the SBA requires a personal guarantee. If you default on the loan, your personal assets are on the line. Because of this risk, most SBA loans are refinanced within three to four years. You usually only have prepayment penalties of no more than 3 percent for the first three years of the loan, so refinancing at four years carries no additional fees. And don’t try to be clever here— 10 people each holding 10 percent equity doesn’t mean you’ve sneaked past this. Someone always has to guarantee the loan. 4 Experience matters // The bank and the SBA will take your management team’s

experience as well as the business’s experience in the industry into account when evaluating your loan. A lack of direct experience in the industry doesn’t mean you won’t qualify for a loan, but it will likely require you to explain more about your qualifications. It’s also key that you have an attorney with some experience in SBA loans on your side, if possible. That said, your loan officer will be the biggest determinant of success.

2 Coverage Ratio // Calculate coverage ratio as the sum of debt payments and estimated taxes due, divided by the EBITDA of the business. Banks are generally satisfied with a debt service coverage ratio of 150 percent. You could go lower in certain circumstances (e.g., if the bank is hungry, you have a lot of collateral, etc.). But plan to hit 150 percent to make life easier.

3 Collateralization // You don’t need to have 100 percent collateralization of the loan using 5 Be prepared. // Remember: Banks want to your business and personal assets. A coverage see concrete plans for the deal you want to do. ratio over 150 percent can and should make Don’t expect them to help you craft the deal up for your lack of assets to pledge against the structure from thin air. Go loan. We’ve done deals with to them when you have a service businesses that have If you are going to hold good idea of your proposed had fewer than $500,000 20 percent or more of deal structure and then ask of assets on the balance them to respond. Have the sheet, but they were able the company’s equity, following ready to take to borrow several million the SBA requires a with you: dollars of term debt because » Letter of Intent of the experience of the borpersonal guarantee. » Three years of tax rower and their cash flow returns and financials coverage. That said, every (plus any year-to-date information) bank is a bit different in what they can do, and » Your personal financial statement collateral matters more to some than others. » A chart of your desired financing sources 4 Buydowns // Buydowns aren’t an option and uses with SBA loans. The SBA wants you to take

Getting an SBA loan for a business acquisition is far from impossible. It just requires some front-end homework. Seek out SBA lenders at banks you trust, or find a friend who has secured SBA financing, or research advisors who have experience putting SBA deals together. Bring these tips to conversations with those experts and you’re well on your way. Terms and Conditions for SBA Loans Once you’ve found a lender, you’ll need to understand terms and conditions for SBA loans. Being realistic about the terms and conditions is a good first step to increase your chances of success with SBA financing. 1 Expected Rates and Terms // SBA loans offer interest rates at a maximum of 2.75 percent over prime. The rate floats for most loans and adjusts quarterly. You can get up to 10-year terms (amortization) for growth capital and/or business acquisitions. Terms are longer for real estate and certain kinds of equipment. Your loan officer should explain how to adjust and/or blend amortization to get the best loan for your situation.

Kansas City SCORE

4747 Troost Ave., Suite 101 Kansas City, MO 64110 https://kansascity.score.org/ 816-235-6675

it all right away or not at all. A 100 percent buyout of the owner is required. Whatever amount is owned, you have to buy all of it. 5 Balloons and Earnouts // These creative options would be nice, but neither are allowed in SBA lending. The standard operating procedures can be found at https://bit.ly/2pV0I3r Here’s a secret: inventive ways around these limitations are found all the time. For example, you can use an escalating interest rate on seller financing to incentivize repayment on or prior to a significant increase in rate; this can substitute for a balloon or bullet requirement that is otherwise not allowed. As always, seek out professionals—financial advisors, attorneys, bankers, and/or M&A advisors—who have expertise in this area when seeking a loan. They can help you work through the kinks and oddities of structuring an SBA deal.

Ben Olsen is managing partner at The DVS Group, a boutique M&A firm specializing in businesses with at least $1 million in annual profit. (913) 713-4156 // ben.olsen@thedvsgroup.com SMART COMPANIES THINKING BIGGER®

BIGGER | hr S M A R T

( by Nancy Dzurko )

S T R AT E G I E S

Tools for Creating a Winning Internship Program Follow these best practices for a winning experience for your intern and your team.

or many companies, it’s the most wonderful time of the year: Intern Season! As you prepare to onboard new or returning interns, keep a few things in mind to ensure the experience will be an enjoyable and productive one for all involved. Plan Everyone is already busy with the day-today business responsibilities, so hold a brief planning meeting to get your team focused on the arrival of your intern. Consider what you would like your intern to experience and work on during their time with you. Don’t plan the schedule the day your intern arrives. A small investment in planning can yield big payoffs for interns and the team they will be working with. Avoid pointing to a stack of filing or assigning mundane tasks; the experience should be informative and balanced. Yes, filing and other routine or repetitive tasks may be part of everyone’s workday, but don’t try to make a whole day or even an entire internship about busy work. An intern is not meant to be a replacement employee. Your internship program should give participants an opportunity to align formal education and career choice with real-world experience. Launching this program also gives you a chance to assess possible future employees. You can both determine if this is a good fit. Identify Projects Identify a couple of short-term projects ahead of time that your intern can work on. Consider something that will last more than a couple of days but can still be completed during the time frame the intern will be with you. Don’t assign something that is urgent or

36 THINKING BIGGER BUSINESS // June 2017

a “must have” since the intern may not have the knowledge and experience to complete the work. Consider assigning research or an “if we had time” project since the intern is an additional resource who can help with back burner projects the core team can’t get to. Assign a Supervisor or Mentor An intern will likely have more questions and need more guidance since he or she will not have a great deal of company knowledge to pull from. This is also a great opportunity for a new supervisor, or an experienced team member, who wants to develop supervisory skills. Details, Details, Details Finally, be sure you have worked out all the details surrounding scheduling, attire, conduct and pay. In general, regulations surrounding intern employment is driven at the federal level through Department of Labor (DOL) guidelines. Although most internships should be paid, the following is a snapshot of factors to consider in determining if your intern should be compensated.

Size of your company // Larger companies may be subject to more scrutiny and often have the means to pay interns, so it is encouraged that you do so. Company benefits from work performed //

Unless the internship is purely educational and for the intern to acquire knowledge, the intern must be paid if your company benefits from the work performed. Incurred expenses // If your intern will incur travel and living expenses to participate in your program, it is recommended to pay the participant to create a more positive experience.

Although pay is not usually a deciding factor for most interns, it may be a legal concern for your company if not handled appropriately. Consult your HR professional or visit the DOL website for the most up-to-date information to help guide your decision on pay. Nancy Dzurko is the HR manager at Lever1, a professional employer organization that helps businesses outsource HR, payroll and employee benefits. info@lever1.com // 816-994-1300 // www.lever1.com

Join Us! Brew :30 is a quarterly Happy Hour event where you can meet new business owners, make valuable connections and discover some of Kansas City’s local wineries, breweries and distilleries!

» Thur., July 20, 2017 // 5:30-7:30 p.m.

Stockyards Brewing Co. 1600 Genesee St., Kansas City, Mo.

RSVP TODAY AT ITHINKBIGGER.COM | (913) 432-6690 FOR SPONSORSHIP OPPORTUNITIES