Upsize Minnesota January/February 2019 by Upsize Minnesota

“ It really helps to bond, to get to know people outside of work, which is so important. Culture is really important. We have not figured it out, but we’re giving it our best try.” —K ristin Geer, CEO of Bleachr LLC

RETAINING EMPLOYEES Small businesses discuss strategies for keeping workers happy when massive salaries are not a viable solution

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CONTENTS January • February 2019 • Vol. 18 No. 1 • www.upsizemag.com

PAGE 14

Cover story

Retain your key employees: The labor market is tight and hiring is competitive. When you find the right employees you don’t want to lose them. Several Twin Cities businesses share the strategies that have helped them keep the brightest and best around. BY ANDREW TELLIJOHN Cover photograph by Tom Dunn

PAGE 4

From the editor:

Bb BUSINESS BUILDERS

Editor Beth Ewen talks to Finnegans CEO PAGE 6 Jacquie Berglund about staying focused, FINANCING donating 100 percent of profits and solving Navigate an unpredictable market for the world’s problems over beer. interest rates.

PAGE 18

WORKSHOP: A panel of experts talked about navigating the active mergers and acquisitions market and getting the best deal for your company in a sale.

by Marc Keepman, KLC Financial

PAGE 4

Staff list: Who’s who at Upsize magazine, and how to reach us. Upsize Minnesota (USPS 024-029) is published bi-monthly for $20 by Upsize Minnesota, 3033 Excelsior Blvd, Suite 10, Minneapolis, MN 55416. Periodicals postage rates at Minneapolis, MN and additional mailing offices. Postmaster: Send address changes to Upsize Minnesota, 3033 Excelsior Blvd., Suite 10, Minneapolis, MN 55416

PAGE 24 PAGE 8

CATCHING UP:

Make your company attractive to potential marketing talent. by Jennifer Zick, Authentic Brand

Mary Leonard, owner of Chocolat Celeste, talks about trusting her instincts and returning to her initial vision in building her company’s sales.

PAGE 10

PAGE 28

Avoid litigation by solving disputes through mediation instead.

The Entrepreneur Fund opens a new Women’s Business Alliance in Little Falls, MN.

HIRING

LAW

by Charles Modell, Larkin Hoffman

PAGE 12

RETENTION Look beyond salary and benefits to keep employees happy and employed. by Kyle O’Keefe, Robert Half

BACK PAGE:

Planning now means peace of mind later.

What happens if… THE ECONOMY WEAKENS

RETIREMENT LOOKS VERY TEMPTING…

A DIVORCE OCCURS IN THE FAMILY

YOU DESIRE A CHANGE IN LIFESTYLE

YOUR KID DOESN’T WANT TO RUN THE BUSINESS

THERE’S AN UNEXPECTED HEALTH ISSUE

YOUR BUSINESS PARTNER WANTS TO SELL

CK&Co. can help you proactively prepare your transition with our 4-step action plan. Visit us at lp.ckco-cpa.com/upsize to learn more.

Download our free Succession Planning Guide Online lp.ckco-cpa.com/upsize

tax • audit • accounting business consulting (952) 345-2500 www.ckco-cpa.com

Member of

swimmingly

EDITOR

Beth Ewen bewen@upsizemag.com

MANAGING EDITOR Andrew Tellijohn atellijohn@upsizemag.com

DESIGN DIRECTOR Jonathan Hankin jhankin@upsizemag.com

CIRCULATION MANAGER Georgene Bergstrom gbergstrom@upsizemag.com

PHOTOGRAPHER

Tom Dunn tom@tomdunnphoto.com

HOW TO REACH US To subscribe email Georgene Bergstrom, gbergstrom@upsizemag.com or visit www.upsizemag.com With story ideas email Andrew Tellijohn, atellijohn@upsizemag.com To advertise email Wes Bergstrom, wbergstrom@upsizemag.com To order reprints email Georgene Bergstrom, gbergstrom@upsizemag.com To order extra or back issues email Georgene Bergstrom, gbergstrom@upsizemag.com To suggest Web resource links, links@upsizemag.com

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UPSIZE JANUARY • FEBRUARY 2019

“I was the only brewery in Minnesota without a taproom,” as the number of licenses grew past 190 from just a handful when she first got started. “That put us at a huge disadvantage.” With help from people at the Paul Newman Foundation, the largest, oldest and most well-known “100 percent profits to charity company,” she set up her model so she could attract outside investors to put up about $2 million to build the new Finnegans brewhouse and still keep the 100 percent charitable mantle. Asked what lesson she could pass on to other entrepreneurs, she doesn’t hesitate. “Swim in your own lane. It’s easy to lose your focus on who and what you are.” Berglund regularly makes a point of going back to a foundational question: What is your purpose? For her, it’s the $1.3 million Finnegans has donated since 2003, with much more to come as the new operation brings both higher expenses but also the potential for greater profits. “It gets me out of bed every day,” she says, even when she is in “the depths of despair,” as every entrepreneur will be from time to time. I’d like to raise a glass to Berglund and her mighty cause, along with every other entrepreneur who’s found a reason for being. Beth Ewen Editor and co-founder Upsize Minnesota bewen@upsizemag.com

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PHOTO BY JONATHAN HANKIN

PUBLISHER

Wes Bergstrom wbergstrom@upsizemag.com

f you need a kick in the pants to start the new year, may I present Jacquie Berglund, CEO and, as she calls herself, “Rambunctious Social Entrepreneur,” at Finnegans Brew Co. I spent a delightful hour with her the other day at her stunning new brewhouse and taproom in the Elliot Park neighborhood on the south edge of downtown. Finnegans opened last St. Patrick’s Day. It quickly became a community gathering place, with an R&D lab brewing new beers to test before the winners are rolled out for contract production and distribution. In the summer, the fun spills into the large lot behind the brewhouse, with games to play and tables to gather around. “We could solve the world’s problems if we could grab a beer and sit around a picnic table,” she declares. Well, maybe not all the world’s problems. But with Berglund behind the charge you could definitely take a good crack at some of them. In fact, Berglund has been working for 18 years to solve some of the thorniest ones by setting her company up from day one to donate 100 percent of its profits to charitable causes. In the beginning, Berglund was the venture’s sole employee, running around town trying to convince beer distributors that her business model was sound, or at least not insane. “The 100 percent idea, they thought I was crazy,” she says with her booming voice and hearty laugh. “I do everything inside out and backwards.” By Finnegans’ 10-year anniversary, she took a hard look at those donations, and although she was proud of contributing to a variety of causes aimed at reducing poverty, she had trouble crisply stating the impact the efforts were making. “My own family was confused,” she says, and she thought, “I’ve got to figure out a different way.” She came across a food bank that purchases organic produce for a dollar a pound and it goes to food shelves, so now in every community where her beer is sold, profits from her company go straight into local hands. “That is so tight,” she says. “It is truly scalable giving.” In fact, “Drink Local, Give Local” is Finnegans’ now-succinct motto. By about 2016, Berglund realized,



finance

BUSINESS BUILDERS

How to navigate an unpredictable interest rate environment by Marc Keepman

TIPS 1. There’s a solid chance interest rates will rise at least once in 2019, so if you’re thinking of purchasing equipment, it might make sense to lock up financing now. 2. Pay off or refinance credit card debt, short-term loan agreements with daily payments or adjustable rates with fixed rate financing options that have longer terms. 3. In an unpredictable interest rate environment, keep cash for short-term needs and growth. Financing for this purpose usually carries variable rates and shorter pay back periods 4. Federal tax law allows businesses to deduct the full purchase price of qualifying equipment, software and vehicles (if used for business purposes more than half the time) from gross income in the current tax year. 5. Tariffs are driving up costs for equipment manufacturers, meaning consumer costs are going up, as well. Keep this in mind when deciding to buy now or later. 6

Will the Federal Reserve raise interest rates again this quarter? Over the past three years the Fed has been steadily raising rates to push a return to “normal” after nearly a decade of almost zero percent rates. 2018 was no exception, it saw a hefty increase. At the end of last year and into 2019, the mood toward continued quarterly rate hikes has cooled a bit based on the current economy, inflation, trade tariffs and employment rates. Most economists are predicting slower economic growth ahead and believe it would be crazy (not prudent or irresponsible) if the Fed raised rates again at this point. What does this mean for your business strategy and planning? Slower growth does not mean no growth and there is a good chance rates will go up at least one time this year. Does this mean you should hold off on borrowing money to invest in your business? No, quite the opposite. Lock in a fixed monthly payment — buy now If you are thinking about making an equipment purchase but are waiting to see what rates do, there is a good chance they are going up. So, it would be smart to get financing now. Time is money when it comes to securing capital for your business. The longer you wait, the greater the chance you will pay more interest. Lending institutions are sometimes able to delay passing some of the rising costs of money on to their customers but after a certain point, they have no choice. It would be advantageous to lock in a rate now. Additionally, fixed-rate financing adds stability to your balance sheet. This is important when seeking additional financing as lenders want to see consistent historical trends they can point to and say: “I think this business will make its payment every month.” Refinance your debt — free up cash Given the upward pressure on rates, it is also important to evaluate the

UPSIZE JANUARY • FEBRUARY 2019

debt already on your balance sheet and reorganize it into appropriate terms and rates. If you are currently charging business expenses on a credit card, have a short-term loan agreement that requires daily payments, or have an adjustable-rate loan, now is the time to pay off this debt, if possible, or refinance it into a fixed-rate, longer-term financing facility. You want to steer clear of variable rates that will increase when the Fed raises rates or loans that have aggressive payback periods that put a crunch on cash. By refinancing to a more stable financing structure, you will free up cash to pay for short-term investment needs with daily cash flow. For example, we recently refinanced a new customer’s existing debt obligations into a longer-term, fixed-rate structure. “This lowered his monthly payments and freed up more cash flow to be able to make some big moves in his business,” says Spencer Thomas, our president. “He is considering an acquisition to expand and actively increase his internal capabilities.” Select the right financing option — structure matters Equipment leases and finance agreements typically offer 100 percent financing and include soft costs, such as delivery, installation, training and other services. They also are based solely on the equipment purchase, thus keeping other assets free-and-clear. Some structures provide off-balance sheet options as to not affect borrowing limits and covenants on your bank loans. Bank loans are also a stable option. They typically require some money down and additional collateral to be pledged but rates can be lower. It is important to talk to lenders about options and then decide what best fits your needs. As mentioned previously, in an unpredictable interest rate environment, ideally you keep cash for short-term needs and growth since financing for this purpose usually carries a variable rate and needs to be paid back over a short period of time.

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True hourly production cost of equipment EXAMPLE Total equipment purchase

$100,000

2018 Section 179 deduction (total 1st year deduction 100%)

$100,000

Cash savings on purchase (assuming 35% tax bracket)

Cash cost of equipment

$65,000

Yearly financing payment on cash cost (assuming 5.5% interest; 5-year term)

$14,902

Hourly cost of equipment purchase

$7.16

(assuming 2080 hours/year)

Take advantage of Section 179 Tax Savings — true cash savings Section 179 of the federal tax code allows businesses to deduct the full purchase price of qualifying equipment, software and vehicles (if used for businesses purposes more than 50 percent of the time) from the business’s gross income in the current tax year. At the beginning of 2018, Congress signed into law an increase in the deduction amount. It doubled from $500,000 to $1 million for 2018 and beyond. The law also allows for bonus depreciation after the $2.5 million equipment spending cap has been reached. In 2018, the bonus depreciation increased from 50 percent to 100 percent and now includes both new and used equipment. It was made retroactive starting Sept. 27, 2017 and runs through 2022. When partnered with a properly structured equipment lease or an equipment finance agreement, your tax savings through Section 179, in many cases, will exceed your yearly cash outlay. In other words, the deduction will be more than your payments in the year you purchase the equipment. It is a true cash savings. So, make sure you talk with your tax adviser about your specific situation. For more information on these rules, check:

IRS: https://bit.ly/2tzHfJy and Congress: https://bit.ly/2CpbIMk Something else to consider — increasing cost of equipment Lastly, we can’t talk about rising cost of money and capital equipment investments without talking about trade tariffs. The increase in tariffs on steel and aluminum is directly affecting equipment manufacturers. Some of them increased their prices to the consumer the minute the increased tariffs went into effect. Others have been able to absorb the cost increases. But they won’t be able to do this forever. Eventually, the consumer will be paying more for the same equipment. It is important to take this into consideration when deciding when to buy. Whether or not the Federal Reserve raises or lowers rates at any given time is anyone’s guess. During this volatile period, as a business owner, it is advantageous to create stability in your organization, so you can strive forward during any situation.

“Whether or not the Federal Reserve raises or lowers rates at any given time is anyone’s guess. During this volatile period, as a business owner, it is advantageous to create stability in your organization, so you can strive forward during any situation.” Marc Keepman KLC Financial

Marc Keepman is chairman and CEO at KLC Financial: 952.224.4302; marc@klcfinancial.com; www.klcfinancial.com.

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JANUARY • FEBRUARY 2019 UPSIZE



hiring

BUSINESS BUILDERS

Attracting marketing talent in a tight labor market by Jennifer Zick

TIPS 1. Hone in on a handful of specific characteristics you’re seeking that would make a candidate successful in a role rather than posting generic job postings. 2. Try finding inexpensive perks you can provide that people love but that also don’t cost you a lot of money. 3. If you can’t compete on compensation, create a culture that people have a hard time finding at large organizations. 4. Apply for awards. If a candidate sees you’ve been recognized for culture, your company will be more attractive. And marketers will value a well-positioned brand. 5. Make sure your website presents your company in its best light. It will be important to candidates and is the first place they’ll look for information.

IN JUNE 2018, the unemployment rate nationwide dipped below 4 percent and it has hovered below that point ever since. The situation is even tighter in Minnesota. Because we’re overachievers in the Bold North, our unemployment rates are nearly a full percentage point lower than the national average. At less than 3 percent unemployment, basically everyone who wants to be working currently has a job or soon will. If you’re a business leader who’s looking to expand your team, you’re certainly feeling the staffing crunch, particularly if you’re looking for marketing talent. I recently ran an internet search for “most in-demand jobs” and scanned the top six articles. Each of those six included at least one type of marketing role, such as Digital Marketing Manager, Marketing Analyst, Marketing Strategist or SEO/SEM Specialist. The market for skilled marketers is hot right now. In addition to the hyper-competitive market established by record-low unemployment, small businesses often find it difficult to compete with the high salary and benefit demands that accompany the most in-demand workers. So, what can you do? As a small business owner, I have seven suggestions that are helpful for recruiting any talented individual to your team, with a specific focus on marketers: Focus specifically on what your organization needs. Instead of putting out a generic job posting, try to hone in on the four or five characteristics you’re looking for in your next hire. The traits or skills you’re looking for should include the areas that will make a candidate successful in the position and within the

UPSIZE JANUARY • FEBRUARY 2019

culture of your organization. Additionally, don’t cram your posting full of every wish under the sun hoping you’re going to find that “marketing unicorn.” That person does not exist. By highlighting the areas that are unique to the position and to the company, you’ll help potential candidates envision themselves in the role. Get creative. It might be difficult to offer some of the financial perks that large corporations do but there are inexpensive things you can do that people love that also don’t cost a lot of money. From pet-friendly offices to remote-working flexibility to office Friday beer carts, your small business has the ability to create a workplace culture that people can’t always find in larger organizations. Many times, candidates will be willing to take lower salaries if they feel they are going to love going to work. Get creative in how you develop and highlight your company culture. Apply for awards. There’s debate out there when it comes to submitting for the “best places to work” type awards. Some organizations love them. Others feel these awards are braggadocios. Many of the awards cost money to apply for and require that employees fill out lengthy surveys. I recommend you look past the effort and expense, repress that Minnesotan reserve and throw your company into the mix. If a candidate sees that you’ve won several awards for culture, it’s going to make your company more attractive. Marketers, more than most candidates, will also value that your company is well-positioned for brand recognition in your market.

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Peacock your website. When someone is looking to make a job change, the first place they go to is your website. Marketers will give particular attention to how you represent your brand online. Take some time to jazz up your site. Get some new, high-quality photos of the office and your employees. Have your existing employees tell their story about what it’s like to work there. Write a blog on why you love your company culture. And certainly, post those award logos when you win them. Make sure your website presents your company in its best light, as this will be extremely important to potential candidates. Stake your claim on company rating sites. Most small businesses don’t think to create (and maintain) profiles on sites like Glassdoor or CareerBliss. I strongly caution against making this oversight. If you don’t create your company profiles on these sites, someone will. You should also go in from time-to-time and try to respond with empathy and transparency when current or previous employees leave a negative review. Don’t let one or two disgruntled former employees shape the narrative that doesn’t accurately reflect the truth about your company. Hit the networking scene. Making the rounds at the networking events can be challenging and networking isn’t easy for everyone. That’s why I recommend avoiding the events that are purely for networking’s sake. Make an effort to go to events that are related to your industry or that attract the talent you’re looking to recruit. In my experience, the types of people who invest their time at industry events are often the best kind of people to recruit and hire, especially when it comes to marketing roles. Professionals who network are keeping

up on trends. They’re learning new things. They’re meeting other people. These are the kinds of marketers you want to know, who will go beyond their desk-job to represent your brand outside the walls of your business. Consider an alternative talent model. For many organizations, it might not be the right time to invest in a full-time marketing hire, especially in an economy where low unemployment is driving up salary and benefits expectations. If your business needs strong marketing leadership, but you’re not ready to make a full-time executive salary commitment, you may want to consider a fractional chief marketing officer on a contract basis. Fractional CMO’s are experienced marketing leaders who work in your organization on a part-time, flexible basis. They combine experience with a cost-effective model to build and scale your marketing program, until it makes sense to hire full-time talent. For many small businesses, a fractional CMO is the perfect solution to marketing talent scarcity issues. There are many ways small businesses can compete and win in the talent war. You just need to think a little outside the box in how you set yourself apart and in how you source the right talent at the right time.

“If a candidate sees that you’ve won several awards for culture, it’s going to make your company more attractive. Marketers, more than most candidates, will also value that your company is wellpositioned for brand recognition in your market.” Jennifer Zick Authentic Brand

Jennifer Zick is founder and CEO of marketing consultancy Authentic Brand: 612.670.0772; jennifer.zick@authenticbrand.com; www.authenticbrand.com.

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JANUARY • FEBRUARY 2019 UPSIZE



law

BUSINESS BUILDERS

Save your business: mediate, don’t litigate by Charles Modell

TIPS 1. Defending a relatively routine lawsuit via litigation can cost $50,000 or more and can go much higher in a larger suit. Mediation offers a less expensive option for resolving disputes. 2. Cases can be brought to mediation even after a lawsuit has started. 3. There are costs related to mediation, but they’re often a fraction of going through litigation and the process allows 50/50 or better odds of a successful resolution. 4. Commercial parties typically don’t consider mediation until recommended or required by a judge. Consider it sooner before your costs start adding up. 5. Some contracts include mediation clauses because the process has a better chance of resolving disputes in a manner in which the parties can continue working together in the future.

APART FROM A PUBLIC relations nightmare, the single biggest obstacle in the path of a growing company, particularly a small one, is the prospect of a lawsuit. This is particularly true if the lawsuit is brought against you, because you have no ability to simply make it go away. Never underestimate the cost of a lawsuit. It is not unusual for a company to spend $50,000 or more defending a relatively routine lawsuit, and much more for a large one. Add to that the time you will spend away from your business dealing with the lawsuit, from the distractions, to having depositions taken, to having to prepare to go to trial. Win or lose, litigation can derail and even destroy a growing company. Avoiding a fight to the death So, how can you avoid a lawsuit? Doing the right thing and trying to avoid disputes is a start. However, sometimes disputes are inevitable, and the ugliest ones arise when both sides feel they are right. When that happens, many clients tell us they do not care what it costs — they simply want justice. That sounds good, but unlike in television, where lawsuits are filed and resolved in an hour, justice moves at a snail’s pace in real life. After about six months, the bills mount, no end is in sight and the distractions take a toll. Fortunately, or unfortunately, depending on your viewpoint, duels became unlawful a few hundred years ago. Our system of justice resolves disputes in the courts. However,

UPSIZE JANUARY • FEBRUARY 2019

if you find yourself headed in that direction, there is an alternative — mediation. Mediation is a process whereby people take a dispute to an independent third party to whom the issues are described. That third party helps the parties reach a resolution. Mediation is a way for someone to have his or her story heard, which sometimes is as important as the resolution. It is a way to better understand both your and your adversary’s position. In addition, it is a way, through an independent negotiator, for each party to offer concessions only if they know those concessions will resolve the matter, rather than finding their position compromised with no resolution. When a dispute arises, either party can suggest mediation. Even after a lawsuit has started, and at any time before trial, you can agree to submit the case to mediation. It does not show weakness to suggest mediation, but rather the understanding that in most lawsuits, the only winners are the lawyers. I have been a mediator, I have represented clients in mediation and I have gone to mediation on behalf of my own law firm. In each situation, I have usually found it more beneficial than the alternative. The mechanics and benefits of mediation In a typical mediation, the parties to a dispute will agree on a mediator. Either they or their lawyers may know someone who is experienced or is well known in the area of the

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dispute — preferably both — who can serve as the mediator. Both sides will present their positions to that person in writing. The mediator does not make a decision or decide who is right or wrong. Rather, after considering both positions, the mediator will schedule a meeting with all the parties and conduct “shuttle diplomacy,” going from one room to another, talking to each party about the weaknesses of their positions (you will already know your strengths) and trying to find a common resolution. Often, a creative mediator who has heard and understands everyone’s position, will suggest his or her own proposal to the parties, with the understanding that if it is not acceptable to both, then neither will have to acknowledge they would have accepted it, thus not compromising their position. Mediation is common in many fields. In Minnesota, most divorce and child custody cases are required to go through mediation. Mediation is very common in the construction industry, where small disputes get resolved before they become big disputes. When I prepare franchise agreements for clients, I routinely include a mediation clause, knowing that the parties will have an ongoing relationship and it is better to resolve disputes through mediation than in a hotly contested court case in which things often will be said that keep the parties from ever working together in the future. However, most commercial disputes are not submitted to mediation. Why? One answer is that in most situations, mediation is voluntary and the parties may not even consider the question until they are well down the path of litigation and the judge suggests or requires they submit to mediation. You should consider it sooner.

Go with the odds Mediation is not a perfect solution. The concept of mediation involves compromise, something that will initially be of little interest to either party, but something both parties will ultimately wish they had considered. Mediation does come at a cost. Because you will likely have a lawyer representing you in the mediation and you will share with the other party the cost of the mediator. However, most studies show, and my experience as a mediator confirms, that the majority of disputes submitted to mediation are settled there. Think about that for a moment. Imagine you are faced with the prospect of having your business destroyed in litigation. You are offered a chance, for let’s say $10,000 in legal and mediation costs, to save your business, with the odds being better than 50/50 you will succeed. That is $10,000 against potentially more than $100,000 of expenses you’d likely rack up in a lawsuit — potentially even as much as the value of your entire business. That’s at least a 50/50 chance of a reasonably successful outcome. I wish I could get those odds the next time I go to Las Vegas!

“Even after a lawsuit has started, and at any time before trial, you can agree to submit the case to mediation. It does not show weakness to suggest mediation, but rather the understanding that in most lawsuits, the only winners are the lawyers.” Charles Modell Larkin Hoffman

Charles Modell founded the franchise group at Larkin Hoffman Law Firm: 952.896.3341; cmodell@larkinhoffman.com; www.larkinhoffman.com.

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JANUARY • FEBRUARY 2019 UPSIZE



retention

BUSINESS BUILDERS

Is the grass always greener? Why workers leave for new jobs by Kyle O’Keefe

TIPS 1. Companies that offer in-demand nonmonetary perks in addition to a competitive salary and benefits are likely to land and keep top performers. 2. Recruiting efforts may be enhanced by hiring managers whose job is knowing the reasons why workers leave their jobs. 3. Make sure direct reports feel valued by thanking them when they go the extra mile, if not through a formal program, then by offering at least a sincere email, a gift card or extra time off. 4. Burnout is real. A healthy work-life balance is essential, and people need to know that management understands its importance. 5. Assess employee retention strategies at least once a year. Stay current on market salary rates and benefits and best practices in developing workplace culture and manager-employee relations.

MINNESOTA IS HOME to one of the lowest unemployment rates in the country, a statistic that has many local job seekers beaming with confidence. For businesses, a low unemployment rate suggests a tight hiring market where skilled workers are harder to find and competition for those workers is high. Once companies have hired a top professional, retention is crucial. In May 2018, the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey reported the quits rate, which measures the number of quits as a percentage of average employment, reached 2.4 percent, its highest level in more than 17 years. More than 3.5 million people quit their jobs that month. Since then, the quits rate has dipped only slightly. When employees jump ship To strengthen recruiting and retention efforts, it may help hiring managers to know the reasons why workers choose to leave their jobs. In a recent survey by staffing firm OfficeTeam, a division of Robert Half, professionals were asked the most likely reason they’d quit their job. The top answer? More money, according to 44 percent of Minneapolis workers. Other reasons cited by Minneapolis workers include being bored or unchallenged at work (15 percent), not feeling appreciated (13 percent) and leaving for a company with a higher purpose (8 percent). New year, new career resolutions For many professionals, the start of a new year signifies a time to set new

UPSIZE JANUARY • FEBRUARY 2019

career goals and to create an action plan for seeing them through. Those goals may include asking for a raise or finding a new job. As workers strategize on how to broach these topics, managers may want to prepare for these conversations ahead of time by doing their research. For instance, in the event an employee wishes to discuss pay, it’s best to benchmark salary using any number of dependable resources. Some websites show average pay for certain roles based on area. Other tools, such as salary guides, can be helpful in drilling down further and evaluating salary ranges based on skill level. Salary guides help managers customize compensation for individual roles based on title, location and experience. For a quicker assessment, online salary calculators can also be useful. The rights and wrongs of retentions Even professionals earning healthy salaries may still feel undervalued or underappreciated for their contributions. Pay alone does not guarantee employee satisfaction or happiness. In fact, many companies are offering higher salaries to workers who announce they’re planning to quit for a better job opportunity. Our research suggests this method serves only as a stop-gap retention strategy for employers and isn’t a long-term career solution for employees. Employees who accept counteroffers typically end up leaving the company within two years. Counteroffers are typically a knee-jerk reaction to broader

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staffing issues and while they may seem like a quick fix for employers, the solution is often temporary. In today’s hiring environment, it’s critical for employers to offer solid benefits, perks and incentives, along with a positive corporate culture, to attract and retain top performers. Another survey from Robert Half revealed that flexible work schedules, a compressed workweek and the ability to telecommute are the most sought-after nonmonetary perquisites for workers. However, while many companies offer flexible work schedules, fewer than one in five offer shorter workweeks or remote work options. The big picture While pay is still king, there’s clearly more to puzzle. In today’s competitive hiring environment, job candidates seek more than just salary and bonus. They’re looking for the complete package and place added emphasis on quality of life. Companies that offer in-demand nonmonetary perks in addition to a competitive salary and benefits are likely to land and keep top performers. Here are a few tips and key takeaways for employers to consider: • Employee compensation — It’s essential in this competitive labor market for companies to offer attractive compensation packages. That includes salaries, of course, but also bonuses, paid time off, health benefits, retirement plans and all the other perks that can distinguish one workplace from another. • Recognition and rewards systems — Every person wants to feel appreciated for what they do. At the minimum, managers and leadership should be thank-

ing direct reports when they go the extra mile, whether it’s with a sincere email, a gift card or extra time off. You may also want to consider putting a more formal reward system or program in place. This could involve an award, a special title or simply bragging rights. It all boils down to showing appreciation for employees, which is key in this tight hiring market. • Work-life balance — What message is the company culture sending? If staff are expected to regularly work long hours, the company will likely run into issues with employee retention. Burnout is real. A healthy work-life balance is essential, and people need to know that management understands its importance. Encourage staff to take vacation time and, if late nights are necessary to wrap up a project, see if you can offer late arrivals or an extra day off to compensate and increase job satisfaction. Many companies offer telecommuting or flexible schedules to improve work-life balance for their employees. • A final tip: Remember to assess employee retention strategies at least once a year. Stay current on market salary rates, benefits and best practices in developing workplace culture and manager-employee relations. Doing so will help keep staff morale high and turnover low.

“In today’s competitive hiring environment, job candidates seek more than just salary and bonus. They’re looking for the complete package and place added emphasis on quality of life.” Kyle O’Keefe Robert Half

Kyle O’Keefe is senior regional vice president at Robert Half in Minneapolis: 952.831.6633; kyle.okeefe@roberthalf.com; www.roberthalf.com.

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JANUARY • FEBRUARY 2019 UPSIZE

TRUST COMM UNICA TION& FUN

by Andrew Tellijohn

PHOTOGRAPHS BY TOM DUNN

UPSIZE JANUARY • FEBRUARY 2019

ristin Geer is trying to add to her current staff some senior software developers who would be tasked with helping Bleachr LLC add some new features to its mobile apps in 2019, but she’s finding the job market a challenge. Unemployment remains low and her 25-employee company is competing with the likes of Target Corp. for talent. “The market is dry out there,” says Geer, CEO. “It’s really tough. There is so much need right now. Every company is trying to up their game in the mobile space. … It’s challenging and highly competitive.” So, when she does find talented employees, she doesn’t want to lose them. She doesn’t claim to have all the answers when it comes to retention, but she has found some worthwhile tactics. It helps, Geer says, that the company makes “really cool stuff” that helps naturally attract creative people who enjoy sports and want to combine that interest with a career in technology. Once employees are on board, Bleachr does attempt to be competitive in benefits and compensation. And the company offers equity-like participation in the form of LLC membership units, which are like stock options — a perk Geer says aligns with long-term business goals. “It’s meaningful to the employees. They realize they are working hard to develop something that is going to benefit them, not just in the short-term, but in the long-term,” she says. “That has really been a key for us.”

Communication, culture make a difference

But it’s not just about compensation. Geer spends significant time listening to her employees to find out what’s important to them. When the company outgrew its first office near Target Field, Geer surveyed her team on what would be important to them in a new space and tried to meet the wants and needs of a staff with widely varying preferences. When requests came in for remote work time, Geer found that allowing everyone to work outside the office every day inhibited collaboration. But staff has been given the opportunity to work outside the office one day per week. When employees suggested a hackathon, Geer initially was worried about the time that would be spent away from immediate client priorities. As it turned out, the creative time helped develop two new features that will become part of the company’s app going forward. While a well-stocked break room refrigerator and competitive compensation help, Geer adds that communication and spending time together, not just for work but socially in an effort to build a team-like atmosphere. So, now, there are monthly happy hours or casino nights or other activities designed just for that. “It really helps to bond, to get to know people outside of work, which is so important,” she says, adding that she knows she

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KRISTIN GEER LLC membership units, a stocked kitchen and a leader who listens helps Bleachr LLC keep its employees.

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COVER STORY doesn’t have all the answers yet. “Culture is really important. We have not figured it out, but we’re giving it our best try.”

Ping pong and advancement opportunities

BKBM Engineers tries to mitigate some retention-related challenges as early as its hiring process. Matt Ricker heads the company’s structural group, which makes up more than threeProfessor Connie Wanberg, industrial relations faculty excel- quarters of its employee count. lence chair in the Work and Organizations Department at the “We tend to try to hire most of our people right out of school,” University of Minnesota’s Carlson School of Management, he says. “If you go and grab somebody from another company and reminds business owners that not all turnover is avoidable nor entice them with some money or something upfront, what’s to is it always bad. say that person isn’t going to go for the next best offer somewhere “Some individuals leave for issues such as illness, to follow else later. It’s our theory. I don’t know if it’s right or wrong, but a spouse, or other issues that are difficult to control,” she says. we’re starting with a different person.” “And some turnover is very functional. It is good to have fresh During his four-plus years with the company, fewer than 10 ideas in house and to have people who fit less well into a role colleagues have left, while the employee count has grown from leave for a new job.” around 30 during the recession to more than 60. That said, with unemployment low, hiring and retention are The company works to keep people happy. BKBM moved on business owners’ minds. And, Wanberg adds, it is vital to do into a newly renovated building in late 2017. Before the move, what is possible to keep key, valuable employees. That often management surveyed staff to learn what their preferences would comes down to factors such as the management and leadership be for a new space, many of which were provided. Other perks include weekly massages and a lounge area with a ping pong table. within an organization, co-workers, and characteristics of the Company President Ronald LaMere, Ricker says, once strongly day-to-day work and culture. “Business owners can do a lot to influence turnover decisions suggested that everyone take a break from work to participate in a of valuable employees,” Wanberg says. “Ensuring that managers tournament. BKBM covers the cost of continuing education opportunities have the proper training to lead employees is very helpful.” and helps those going back to school with tuition reimburseTeam building activities, giving individuals task variety and ment. That is important, Ricker says, particularly in a day and age making sure there is some fun mixed in can help, too. “When employees take true pride in their work and how they serve when younger workers care as much or more about feedback and customers, they want to go to work every day,” she says. chances for advancement than about the size of their paychecks. He emphasizes the advancement opportunities within BKBM while interviewing candidates and, during reviews, managers discuss with employees their career goals, so everyone is on the same page. Bleachr LLC recently moved to a new office with “We don’t want people to be stagnant,” Ricker says. “We want plenty of collaborative space. Employees also gather them to continue to develop.”

Turnover happens, but keep the good ones

regularly outside of work to get to know each other.

Flexibility and communication

Since David Dourgarian started running TempWorks Software as CEO in 2008, the average age of the company’s employees has gone up one year each year. Early on, he says, it resembled a Silicon Valley start-up with its early-20s culture. Today those employees are a decade older. And TempWorks also has had to add some more experienced people to add expertise in certain areas of the business. So, the culture has changed significantly. “Today our employees are at another stage of their lives,” he says. “They have families or they are starting families. The types of things you do for employees to engage them with the company really change as that happens.” TempWorks has tried to keep up. A decade ago, it had happy hours and parties. “As soon as somebody has a child, doing that stuff outside work 16

UPSIZE JANUARY • FEBRUARY 2019

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COVER STORY hours becomes a chore,” Dourgarian says. Now the company does things like service projects to build rapport. That fits well not just for employees with families, but for today’s millennial workers who, generally speaking, are motivated by knowing they agree with the company’s mission. TempWorks also has added a human resources department that monitors the hiring process to ensure no market is being missed and meets with employees to ensure their needs are being met. “As people’s expectations change, we have somebody in the office whose job is effectively to listen to them,” Dourgarian says. Among the company’s priorities is offering a robust health care plan, especially important for parents with young kids. TempWorks makes available a solid retirement plan and also provides flexible work schedules or other temporary accommodations to employees starting families or facing other personal issues. “People are going to go through periods in their lives where they need scheduling adjustments that are temporary in nature, for say 18 months out of a 10-year career with the company,” Dourgarian says. “If you don’t offer that you lose those employees because there are others who will.” The company will lose the occasional younger employee who wants to move somewhere TempWorks doesn’t have an office or a longer-term staffer who is relocating with a spouse for work. Otherwise, “I don’t lose non-entry-level employees,” Dourgarian says. “By and large I don’t have a problem right now with my employees walking out the door because they are getting better deals.” Flexibility also is a corporate value at Bellmont Partners. Whether it’s the hours or location an employee wants to work or navigating the occasional maternity leave in an office where 12 of 13 employees are women, the company makes a point of treating employees like adults and trusting them to get done what must get done, says Brian Bellmont, president. “We know that it is really important to work with our team members through whatever is important to them and whatever potential challenges they are going through,” he says. “One of those is really making sure they are welcomed back after a maternity leave in a way that works for them.” Bellmont also allows employees to work where they want. The company built an office in Edina that incorporates a lot of glass and collaborative spaces to facilitate communication. But if an employee wants to work from home or somewhere else, that’s fine too. “We’re going to sit down with you and figure out what works best for you to help you deliver the best work for our clients,” he says. Bellmont says the company has sacrificed some profitability for flexibility over the years, but also has seen measured growth each year. He puts significant trust in his employees, all of whom

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have more than 10 years of experience. Each is a significant contributor, both to Bellmont Partners and to the community. Health, wellness and sustainability are important to team members and Bellmont provides time for each to do volunteer projects during the work day and provide pro bono work for nonprofit clients. Being that flexible while also being a small business, Bellmont says, simply requires two-way communication. “We absolutely value everybody’s input, certainly not only for what our clients need, but for the direction our business is going or could be going,” Bellmont says. “Everyone is invested in what the company built and what happens going forward.”

Retention starts at hiring

Kurt Rakos, a partner with SkyWater Search Partners, has seen a lot of employees come and go at other firms and he knows his industry has a reputation for being a “revolving door” for employees. The company wanted to be different. The effort starts, he says, by hiring people the company truly believes will be successful recruiters over the long haul. SkyWater doesn’t oversell the benefits and sets realistic expectations and reachable performance and income expectations. SkyWater also celebrates all successes and all staff members, whether they have started yet or not. The weekend before a new hire starts, that person receives a fun, friendly email from their future co-workers welcoming them to the company. “We take onboarding very seriously,” Rakos says. “We want our new hires to feel welcome and to have a strong sense of community when they join.”

CONTACT: Brian Bellmont is president of Bellmont Partners: 612.255.1111; brian@bellmontpartners.com; www.bellmontpartners.com. David Dourgarian is CEO of TempWorks Software: 651.452.0366; davidd@tempworks.com; www.tempworks.com. Kristin Geer is CEO of Bleachr: 612.760.0806; info@bleachr.co; www.bleachr.co. Kurt Rakos is a partner at SkyWater Search Partners: 952.767.9000; krakos@skywatersearch.com; www.skywatersearch.com. Matt Ricker is associate principal/structural group manager with BKBM Engineers: 763.843.0449; mricker@bkbm.com; www.bkbm.com. Connie Wanberg is a professor and industrial relations faculty excellence chair in the Work and Organizations Department at the University of Minnesota’s Carlson School of Management: carlsonschool.umn.edu.

JANUARY • FEBRUARY 2019 UPSIZE

WORKSHOP: Mergers & Acquisitions

GET YOUR PRICE Plan ahead, get organized for competitive, fruitful M&A process

By Andrew Tellijohn Photographs by Tom Dunn

he mergers and acquisitions market has been hot for a while now, meaning buyers are in a potentially prime situation to get what they want and need in order to sell their business. So, what does it take to maximize the return on a sale? A panel of experts convened at the Minneapolis Club in November to discuss M&A in an event co-sponsored by Upsize and Rick Brimacomb’s Club Entrepreneur.

Prepare well ahead of time

It’s often said that failing to prepare is akin to preparing to fail. That’s true in the mergers and acquisitions space, according to panelists who say business owners should always be thinking about what their transition might look like, even if they have no intention of a near-term sale. When they get a sense their timeline is within three to five years, that planning should become an even bigger focus. Andy Schornack, president and CEO of Flagship Bank, says business owners should take stock of the metrics buyers might focus on in considering a purchase of their company and ensure their financial statements accurately and convincingly make the case for a sale. “Maybe the metric for our business is a multiple of 18

UPSIZE JANUARY • FEBRUARY 2019

Rick Brimacomb, ClubE EBITDA or it’s a customer diversification or reach,” he says. “Maybe we need to diversify our revenue stream a bit to drive a bit more value.” Schornack adds that if the metric is subscriptions, the company should break out those revenues on financial statements and make them trackable and reportable. It’s never too early to start thinking ahead, says David Latzke, managing director and partner at Cherry Tree & Associates. “Even if you have no aspirations of ever selling your

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WORKSHOP: Mergers & Acquisitions “Your buyer will pay you less if they are not confident what you are presenting is accurate. And they will come in after the fact and start auditing the information, if they don’t do that ahead of time in their due diligence period.” —Andy Schornack, Flagship Bank

business, at some point it’s going to transition,” he says. “Why not spend some time thinking about it and planning for it.” There typically is plenty that can be done to get ready for a sale, some of which, left unaddressed, will reduce the return in a sale, says Maxwell Bremer, an attorney at Gray Plant Mooty. For example, dealing with customer concentration issues or locking up key suppliers or customers to contracts all help. “There is a whole bunch of stuff you can clean up today to get ready to sell your business that will generate value for you as you go through the process that if you don’t do, you miss out on,” he says.

Build the right team

One thing that will help ensure these factors are addressed properly is putting the right team in place. Business owners typically have accountants, lawyers and bankers in place. But panelists repeatedly suggested that when it comes to selling, they need to add to that team with experts well versed in transitions. And they should do so early in the process. In the experience of Julie Keyes, owner of KeyeStrategies, business owners often try to work with the same advisers they always have. But they might not be the best help during a sale, she says. Keep long-time partners involved, but make sure there is a mix of people with M-and-A backgrounds, as well. “It doesn’t mean you have to let go of an adviser you’ve worked with forever,” she says. “But you definitely want to have good advice from someone who knows and understands transition.” And start early, she agrees. The longer the team is in place, the more knowledge and trust is built. If an offer

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catches a business owner by surprise, “you already have those relationships established,” Keyes says. The additional expertise will probably include an investment banker who can properly assess the landscape to find multiple potential buyers. Latzke says his company and many other investment banking firms will meet with business owners several times free of charge to build relationships. Bremer agrees that sellers shouldn’t skimp on a good investment banker. He knows the legal ins-and-outs of a deal, but isn’t versed on finding competing bids. “I can’t identify buyers,” Bremer says. “Investment bankers can identify not just strategic buyers, but private equity buyers and sometimes other strategics who aren’t really in your space but who are looking to get in. By virtue of that you create a competitive marketplace that often results in a much more attractive price than you ever thought possible.” Bremer says a seller might wait a bit on bringing its mergers and acquisitions attorneys to the table, but should engage a trust and estates lawyer early to ensure maximum value from estate and gift plans. Don’t wait too long on the M&A folks either, he adds, as negotiating and signing letters of intent without consulting an attorney could be detrimental. “We can add so much more value on the front end helping you think through how to structure the transaction in the most tax efficient way,” Bremer says. Long-time partners have a role too. Schornack says as potential deals approach, a company might want to spend a bit more with its accountants to do a reviewed or audited statement to reassurance buyers of the accuracy of the financials. “Your buyer will pay you less if they are not confident

JANUARY • FEBRUARY 2019 UPSIZE

WORKSHOP: Mergers & Acquisitions

“Even if you have no aspirations of ever selling your business, at some point it’s going to transition. Why not spend some time thinking about it and planning for it.” — David Latzke, Cherry Tree & Associates

what you are presenting is accurate,” Schornack says. “And they will come in after the fact and start auditing the information, if they don’t do that ahead of time in their due diligence period. … If you focus on the details and you organize it correctly the closing will go smoothly, the transition will go more smoothly and you’ll probably maximize the value of your company.”

Build a competitive process

The goal of preparing early and building the right team is ensuring a competitive bid process. A big buyer pool is important in negotiating the highest price, Latzke says. “If you have one buyer, that’s a lot different than having more than one buyer,” he says. “Whatever you are trying to sell — if you are trying to sell your

motorcycle — if you have more than one buyer the price is going to be higher than if you have one buyer.” It’s also important because it speeds the process and keeps the seller in control. Many times, Latzke says he’s seen potential buyers drag out a potential deal for months when there was no competition at the table. Ultimately, he adds, those deals often fall through. “If you have multiple buyers you as the seller get to set the timeline,” he says. “You control the meetings and when things happen and when you get offers. If you have one buyer, they control the timeline. … It’s not just price, it’s price, momentum, timing and all the other terms of the purchase agreement. All are impacted by the competitive situation.” So, what drives the value it will take to create a company several suitors will get in line to buy? Latzke and Keyes

“There is a whole bunch of stuff you can clean up today to get ready to sell your business that will generate value for you as you go through the process.” — Maxwell Bremer, Gray Plant Mooty

UPSIZE JANUARY • FEBRUARY 2019

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Tuesday, March 19th

A Luncheon Workshop at the Minneapolis Club

LESSONS LEARNED Best advice. Best practices

Trial and error is not the best teacher. A quicker, less painful way to learn is from the experience of others. Workshop attendees will benefit from the lessons learned and shared by local experts who serve as trusted advisers. Panel of experts: UPSIZE and CLUB E will assemble a panel of experts — people who make their living serving and advising growing companies — to present helpful information and answer questions from the audience. Who should attend: Entrepreneurs, CEOs, presidents, small-business owners and executive managers. Questions from the audience will be encouraged.

Cost: $34.00, which includes the program, lunch and parking during the event. Location: The workshop will be held at the Minneapolis Club: 729 Second Ave. So. — in downtown Minneapolis — at the corner of 8th Street (one way headed east) and 2nd Ave. Enter the parking ramp from the 8th Street side, on the south side of the building.

SPACE IS LIMITED! REGISTER NOW, go to https://www.brownpapertickets.com/event/3923705 For questions, please contact the Front Desk team of The Minneapolis Club 612.332.2292 or concierge@mplsclub.org

SCHEDULE: 11:00 – 11:30 — Registration & Networking | 11:30 – 1:00 — Introductions, Lunch & Workshop | After 1:00 — Networking

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JANUARY • FEBRUARY 2019 UPSIZE

WORKSHOP: Mergers & Acquisitions “It doesn’t mean you have to let go of an adviser you’ve worked with forever, but you definitely want to have good advice from someone who knows and understands transition.” — Julie Keyes, KeyeStrategies

suggested that business owners with an interest in selling immediately get a company valuation and perform a SWOT (strengths, weaknesses, opportunities, threats) analysis to determine where they might have opportunities to strengthen their position. Knowing what the business is worth now, Latzke adds, will provide time for the owner to make up any gap between that and the seller’s desired value. “Every private business is going to transition,” he says. “It may be to family, it may be to management, it may be an ESOP, it may be a sale, but every private business is going to transition.” Strong revenues, particularly if they are subscription or recurring, will generally drive a higher multiple in a sale, as will growth rate, stable profits, a strong customer list and the potential to grow in the market, Latzke

CONTACT THE EXPERTS MAXWELL BREMER is an attorney at Gray Plant Mooty: 612.632.3056; Maxwell.bremer@gpmlaw.com; www.gpmlaw.com. JULIE KEYES owns KeyeStrategies: 763.350.5563; julie@keyestrategies.com; www.keyestrategies.com. DAVID LATZKE is managing director and partner at Cherry Tree & Associates: 952.253.6032; dlatzke@cherrytree.com; www.cherrytree.com. ANDY SCHORNACK is CEO at Flagship Bank: 952.944.6050; aschornack@flagshipbanks.com; www.flagshipbanks.com.

UPSIZE JANUARY • FEBRUARY 2019

says. A diverse customer base and the retention of key employees also help, Keyes adds. Furthermore, Schornack says, a buyer is going to be most interested in what they can do with the company in the future. Well organized books that call attention to the right data will help make that case, he adds. There also are significant intangible factors, Keyes says, that drive value, such as culture and brand. “All of those things take time,” she adds. “That’s the piece that is generally the most time consuming, is getting the business ready.

Bad deals have consequences

Despite all the advice available to business owners, many still neglect to plan for their transition. Many business owners get buried in their work or they aren’t ready, both financially to maintain their existing lifestyle without the business or for the length and tedious nature of the sale process. “They’re mired in the day to day with the business and they need to have outside people say ‘hey, let’s get going,’” Keyes says. But a failure to plan, she adds, can have dire consequences, not just for the owner, but for family members, clients, employees, vendors and, potentially, entire communities. “You’re really going to end up exiting, transitioning on someone else’s terms,” she says. “That’s a huge risk. … The ripple effect of the impact it makes when a business doesn’t transition well is very large.”

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catching up by Andrew Tellijohn

Trust your instincts

Return to original plan spurred growth at Chocolat Céleste

TIPS 1. Recognize your weaknesses and add people to your staff who complement your skillset. 2. Stay aware of shifts in company culture. It will inevitably change as the company grows, b if you stay on top of it, you can plan it and better help shape it. 3. Bring on staff who can compensate for skills you lack. 4. The availability of qualified staff is down at crisis levels and it could get worse, but remember that it’s cyclical and won’t last forever. 24

hen Upsize caught up with Mary Leonard in 2004, she was coming to the realization that she needed to believe in her instincts. Leonard had started Chocolat Céleste in 2001 with the intention of serving the high-end business gift market via the Internet with an artisanal product created for a less price-conscious consumer. Along the way, as people asked where her brickand-mortar store was, she decided to capitulate and open one. “I got swayed,” she told Upsize Editor Beth Ewen back then. She feels even more strongly now, 15 years later, as her business expands significantly through the channel she initially signed on to serve. “More than anything, what I’ve learned over the years, the most important thing I would do would be trust my own instincts,” she says. “Next would be that I would focus my efforts in one direction — and the direction I should have focused on the entire time I’ve been in business was the corporate customization market. That was my original plan that is what I believe I should have done the entire time.” She still will open her doors to customers, especially around Christmas and Valentine’s Day, the times of year during which she takes in a significant amount of her revenues. “Many business customers, their intention is they want to see it and buy it that way,” she says, adding that 65 percent of her sales come from business-to-business gifts. That’s up from between 30 percent and 40 percent back in the days when she had a storefront. At Christmas, that B-to-B

UPSIZE JANUARY • FEBRUARY 2019

focus rises to 80 percent. The upscale product line is the reason she says her focus makes sense. Someone coming in to browse generally isn’t aware of what she’s got for sale. She sells upscale chocolates set to be boxed. There are no novelties — no gummies, no chocolate-covered Oreos or pretzels. “It’s a different kind of customer that knows what they want to do,” she says. “The person who comes in the door generally thinks this is a candy store.” They are looking for a different price point and a series of products that are what they would find at a different venue. “That person is coming in to browse, and they find that when they are here, there isn’t enough here to browse,” she says. “The chocolate is specifically set to be boxed. There are gift boxes. I don’t have novelty things. I avoid anything that is novelty. … You come here when you want to buy a fine box of artisan chocolates and you enjoy that yourself because you are a connoisseur or a foodie or you are buying it for someone you want to impress.” After coming to the realization that the corporate focus was where she should have stayed, Leonard moved Chocolat Céleste to an industrial park in St. Paul just north of Interstate 94. She stayed close to the highway in order to make it convenient for a customer who wanted to pick up their product in person, though she offers delivery through a courier service for a nominal fee. She’s more private about the company’s financial situation than she was 15 years ago, but Leonard says www.upsizemag.com

Mary Leonard, owner of Chocolat Céleste, sells high-end chocolates primarily for corporate gifts.

business is going well. In 2004, she told Upsize her 2003 revenue was $320,000. She no longer discloses those figures, but indicates that her profits went up more than 500 percent in 2018. One of the drivers was the creation of a website in which her corporate customers could answer a series of questions about what they wanted, submit it to Chocolat Céleste and receive, in return, a personal proposal from the company. Only about 20 percent of sales come through the Internet. But many customers make their purchases after looking at the site to figure out what Chocolat Céleste offers before filling out the form and getting the quote.

Chocolat Céleste Description: Provider of artisan chocolates largely to the corporate gift market. Owner: Mary Leonard Headquarters: St. Paul Founded: 2001 Website: www.chocolatcéleste.com

“That has taken off,” she says. “People in the Twin Cities know that is what I focus on.” That doesn’t mean her business is limited to Minnesota. She received significant publicity nationwide in 2008 when Chocolat Céleste created bonbons bearing the Republican logos and hired a political consultant to place those in media kits at the Republican National Convention when it was in St. Paul. And she has been featured in the Wall Street Journal, the New York Times and the USA Today. And the business continues to evolve. She created a Shopify website with some high-end photography that better shows off the product. And she’s working on creating a portal on the website where customers can go online and have a page specifically dedicated to that company’s desires. “I expect that to be developed by the end of summer so it would be available for next Christmas,” she says. “Things are going very well. This was my 18th Christmas and it was the most profitable one of all.”

“More than anything, what I’ve learned over the years, the most important thing I would do would be trust my own instincts.” — Mary Leonard

Owner of Chocolat Céleste

Contact: Mary Leonard, owner of Chocolat Céleste: 651.644.3823; mary@chocolatceleste.com; www.chocolatceleste.com. www.upsizemag.com

JANUARY • FEBRUARY 2019 UPSIZE

UPSIZE RESOURCE DIRECTORY accounting Cummings, Keegan & Co., p.l.l.p

BANK Highland Bank

commercial real estate The Ackerberg Group

St. Louis Park, MN • Apple Valley, MN 952-345-2500 • www.ckco-cpa.com Kathy J. Klang, CPA/ABV

Rick Wall, CEO | 952.858.4753 Jay Hammond, President | 952.858.4810 952-858-4888 | highlandbanks.com

Business owners in all phases – new and emerging, established, and those planning a succession or exit strategy – rely on Cummings, Keegan & Co., P.L.L.P. for a complete range of tax, accounting and auditing, and business management needs. Clients receive a tailored client experience – driven by client preferences, needs, and goals.

Founded in 1943, Highland Bank is focused on small business lending and is an SBA “Preferred” Lender, making us uniquely qualified to help your business obtain the financing it needs expeditiously. Work directly with the decision-makers who will treat you like a business partner. Member FDIC.

Lake Calhoun Center, Suite 10 3033 Excelsior Boulevard • Mpls, MN 55416 612/824-2100 • www.ackerberg.com Stuart Ackerberg • stuart@ackerberg.com

The Ackerberg Group creates vibrant neighborhoods in Minneapolis’ urban core by combining astute development, renovation, investment, management and brokerage services with passion for social and ecological sustainability and the arts. Since 1964, Ackerberg has created office, industrial, retail, residential and mixed-use projects that have transformed neighborhoods through the development of long-standing relationships with neighbors and tenants alike.

ACCOUNTING Olsen Thielen CPAs

Bank North American Banking Company

computer consulting Intertech

Roseville, 651-483-4521, Michael Bromelkamp Eden Prairie, 952-941-9242, Thomas Pesch www.otcpas.com

Offices located in: Roseville, Minneapolis, Woodbury, Hastings Brad Huckle, President and Chief Lending Officer www.nabankco.com

1575 Thomas Center Drive • Eagan, MN 55122 www.intertech.com • Ryan McCabe at rmccabe@intertech.com or 651.288.7001

We strive to provide an exquisite client experience that is dedicated to building strong relationships while providing a hands-on approach to business consulting. In addition to the traditional CPA services, we provide valuations, employee benefits, HR, and back-office accounting. We also have extensive experience working with start-up companies, mergers, recapitalizations and financing.

Our goal at North American Banking Company is to give business owners all of the banking services they need and make it a great experience. Our bankers are seasoned professionals in all areas of business banking. You will find it’s easy to do business with bankers who are focused on you. We’re not your average bank.

Depend on Our People. Count on Our Advice. SM Member FDIC

Intertech consultants are leading software developers who focus on more than simply “heads down” programming. We provide comprehensive software services – consulting, project delivery and mentoring – for all leading technologies, most notably Java, .NET and mobile. Intertech consultants are highly experienced and among the IT industry’s top contributors at conferences, technology journals and user groups.

ADVERTISING • MARKETING Risdall

business machines Coordinated Business Systems, Ltd.

FINANCIAL PLANNING Goff Investment Group

851 W. 128th Street• Burnsville, MN 55337 (952)894-9460 (p) (952)894-9238 www.coordinated.com • Jim Oricchio – President

5201 Eden Avenue, Suite 130 • Edina, MN 55436 952-836-2745 • www.goffinvestmentgroup.com Janel M. Goff, CRPC®

With over 40 years of success, Risdall is one of the longest-standing marketing agencies in Minnesota. We harness creativity, technology, and data to help brands live fully and effectively online- creating vital digital visibility that drives engagement and business growth. Our experienced team can provide your organization with the strategy required to create integrated programs that drive bottom line success.

Coordinated Business Systems is Minnesota’s premier independently owned and managed provider of document imaging technology and managed IT and network services. In addition to providing the latest hardware and software, our mission is to offer custom designed managed print services, document management and managed I.T. and Network services programs to help business of all sizes improve profitability, increase productivity, lower costs and maintain their competitive edge.

The Goff Investment Group team helps clients invest and manage wealth for retirement and legacy planning. They take pride in building long-term relationships with their clients. For over twenty five years they have specialized in retirement planning for individuals and small businesses. The team has tremendous passion for educating investors about their financial future.

BANK

COMMERCIAL PHOTOGRAPHER Tom Dunn Photography

insurance O’Rourke Agency, Inc.

308 Prince Street Studio 242 Saint Paul, MN 55101 651-368-2047 www.tomdunnphoto.com Tom Dunn tom@tomdunnphoto.com

41 North 10th Avenue Hopkins, MN 55343 952-932-7219 (phone) 952-932-2820 (fax) www.orourkeagency.com Tim O’Rourke

Crown Bank 6600 France Avenue South, Suite 125 Edina, Minnesota 55435 Ph: (952) 285-5800 www.crown-bank.com Tom Healey, founder Imagine a bank that actually helps you get what you want. Instead of red tape, loan committees and canned lending formulas. Work with a decision-maker who can back you up from start to finish.

Tom is a commercial photographer who has been helping businesses tell their unique story with photographs for websites and marketing materials since 2006. Tom works closely with his clients to understand their business and branding strategy and creates images that support their mission and success.

Our agency has provided personal and business insurance services for the past 30 years. We proudly represent a number of outstanding insurance carriers, including Chubb, Metropolitan, Progressive, Travelers and Kemper. Call us for all your insurance needs!

Member FDIC

UPSIZE JANUARY • FEBRUARY 2019

ADVERTISING SECTION

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UPSIZE RESOURCE DIRECTORY LAW FIRM Lommen Abdo

mailing services Braemar Mailing Service Inc.

TRANSITION PLANNING KeyeStrategies

1000 International Centre, 920 Second Avenue South Minneapolis, MN 55402 612-339-8131 | 800-752-4297 www.lommen.com | Contact: Jesse Beier

7379 Washington Ave S • Edina, MN 55439-2417 tel: 952-767-0300 fax: 952-767-0345 www.braemarmailing.com cu@braemarmailing.com

Minneapolis, MN Keyestrategies.com 763-350-5563 Julie Keyes, Founder/CEPA

Looking for a business lawyer who speaks plain English and not legalese? Contact Lommen Abdo where we focus on small, medium-sized, family and closely held businesses. Our attorneys operate like your outside general counsel – providing you effective legal advice and sound business strategies. We are upfront about our costs and will work with you to budget legal expenses.

Since 1985 business mailers who value personal service and meticulous attention to detail have found one company rich in both. We are postal experts and list brokers who offer a full service lettershop and data management services. Your mailing, unique or ordinary, in large quantities or small, receives Braemar-style attention to detail. We are proud of the work we do and the customer service we provide.

LAW FIRM Winthrop & Weinstine, P.A.

SUCCESSION PLANNING Lommen Abdo

venture capital Brimacomb + Associates

Capella Tower, Suite 3500 225 S. Sixth St. • Minneapolis, MN 55402 Tel: 612.604.6400 • www.winthrop.com

1000 International Centre, 920 Second Avenue South Minneapolis, MN 55402 612-339-8131 | 800-752-4297 www.lommen.com | Contact: Cameron Kelly

TCF Tower, Suite #1600, 121 South Eighth St., Minneapolis, MN 55402 612-803-3169 * www.brimacomb.com Rick Brimacomb, rick@brimacomb.com Chief Strategy and Relationship Officer

Winthrop & Weinstine has a long tradition of representing entrepreneurs and rapidly growing private and public companies across the Upper Midwest and the United States. Our mission is to help fuel the growth of great companies. We are committed to providing outstanding service, sound advice and strong execution. We offer flexible fee arrangements including fixed fees, “success” fees, hourly fees, blended fee arrangements and performance-based agreements.

You owe it to yourself, your family, your co–owners and your employees to have a business succession plan in place in the event of incapacity or death. Every business and every family is unique and your succession plan needs to fit your goals for your business and your family. Contact us to design a plan that meets your goals.

“KeyeStrategies LLC advises business owners in Transition and Exit Planning. Julie Keyes is both a Certified Exit Planning Adviser (CEPA) and Value Growth Adviser. She is also a faculty member for the Exit Planning Institute’s Global organization and President of its local Chapter.”

Results-oriented advisory firm with unparalleled access to executive suites and financing sources. Emerging companies and established professional services firms rely on our depth of knowledge and deep-network connections to grow client lists, assemble project resources and secure new sources of funding.

GROW OR DIE Move your business forward with investment capital generation, deep-level network connections and strategic refinement consultation from Brimacomb and Associates. We partner with emerging companies and professional services firms to offer unparalleled access to professional resources, executive suites and financing sources.

www.brimacomb.com 612.803.3169 • rick@brimacomb.com www.upsizemag.com

ADVERTISING SECTION

JANUARY • FEBRUARY 2019 UPSIZE

BACK PAGE Women’s Business Alliance office opens in Little Falls

omen business owners in central Minnesota gained access to new tools, trainings and peer groups late in 2018 when the Entrepreneur Fund opened a Women’s Business Alliance location in Little Falls. The 30-year-old Entrepreneur Fund also has a Women’s Business Alliance location in Duluth. The Entrepreneur Fund received a grant from the U.S. Small Business Administration to open the location, which provides access to services and resources to help women business owners and leaders. Sandy Voigt, director of the Little Falls location, joined Upsize’s Managing Editor, Andrew Tellijohn, to share some insight on how the alliance can help women business owners. Tellijohn: What services does the Women’s Business Alliance offer entrepreneurs? Voigt: First and foremost, we do a lot of one-on-one technical assistance consulting, mentoring, business advising, and really talking to women. The SBA has the Small Business Development Centers, the SCORE chapters and the Women’s Business Centers, so all three of those organizations come out of the same department. We are offering some workshops and training. We do not discriminate, but our programs are all pretty female-focused in what we are trying to offer as far as topics, workshops and classes — things like dealing with stress and balancing work life/ family life — topics and subjects that tend to be more women-based. We’re also working to create some peer councils — we call them mas28

The Entrepreneur Fund’s Women’s Business Alliance venue in Little Falls opened in late 2018.

termind groups — where women entrepreneurs can get together to talk about their businesses and goals. Tellijohn: What is the Entrepreneur Fund and what’s its role? Voigt: The Women’s Business Alliance is a program being hosted by the Entrepreneur Fund. The Entrepreneur Fund has been serving the Iron Range portion of the state for the last 30 years and has hosted a Women’s Business Alliance for the last 15 years in Duluth. The Fund was approached by the SBA to see if it would be interested in hosting a second location to serve Central Minnesota. They said yes. Tellijohn: When you say the center is “hosted” by the Entrepreneur Fund, what does that mean? Voigt: That means the Entrepreneur Fund wrote the grant and it serves as the fiscal host. It also means we can tap into resources the Entrepreneur Fund offers, such as trainings on topics like Entre-

UPSIZE JANUARY • FEBRUARY 2019

preneurial Operating System (EOS). The organization also can do some gap financing or offer other creative financing options for start-up businesses. One reason the SBA created the Women’s Business Alliance centers is that women are an underserved market for capital financing. Most women’s businesses start without any capital financing. They usually start by using personal savings or family and friends. Tellijohn: Where can people go to get information about the Centers? Voigt: They can go to the Entrepreneur Fund website and click on Women’s Business Alliance to find information on offerings at both the Little Falls and Duluth offices.

contact: SANDY VOIGT, director of the Women’s Business Alliance in Little Falls: 218.735.6033; sandyv@entrepreneurfund.org; www.entrepreneurfund.com.

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Upsize Minnesota January/February 2019

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