Upsize Minnesota January/February 2020 by Upsize Minnesota

FINDING FUNDING: several options available if banks arenâ&#x20AC;&#x2122;t one of them

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owner and founder of Mercury Mosaics

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CONTENTS January • February 2020 • Vol. 19 No. 1 • www.upsizemag.com

PAGE 14

Cover story

Finding financing: Getting turned down for a bank loan isn’t necessarily the end. Small business owners and alternative lenders talk about finding other forms of financing that can keep entrepreneurs in the game. BY ANDREW TELLIJOHN Cover photograph by Tom Dunn

PAGE 4

From the editor:

Bb BUSINESS BUILDERS

Editor Beth Ewen interviews Abilitech CEO Angie Conley about moving from Medtronic PAGE 6 to a med-tech start-up LAW

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 paid at St Paul, MN and additional mailing offices. Postmaster: Send address changes to Upsize Minnesota, 3033 Excelsior Blvd., Suite 10, Minneapolis, MN 55416

Business implications from the changing landscape around hemp

PAGE 18

ROUNDTABLE: A panel of experts shares thoughts on building, compensating and utilizing boards of advisers and directors

by Jeffrey O’Brien, Chestnut Cambronne PA

PAGE 22 PAGE 10

MANAGEMENT Promoting a safe work culture and protecting employee mental health by Dr. George Vergolias, R3 Continuum

PAGE 12

SALES

CATCHING UP: Stephanie and Tom Meacham, who own Landmark Creations, discuss giving employees more responsibility and the evolution into newer, more complex inflatables that have accelerated their growth

Maximize sales by finding your Grand Slam clients

PAGE 28

by Todd Eberhardt, Dynasty Leadership Consulting

True North Advisors, soon to be a part of the Business Broker Investment Corp., talks about the importance for small business owners of its acquiring tech platform Peak Development

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.

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PUBLISHER

Wes Bergstrom wbergstrom@upsizemag.com

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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“In a big corporation you’re a cog, and now in a start-up you’re the wheel.” That’s how Angie Conley, CEO of the threeyear-old Abilitech, described the change from her former life as an executive at Medtronic. She found her calling in a classic entrepreneurial way: “I learned of a great need that was unmet,” she said. In between leaving the corporate world and starting her company, which is developing a device that uses a spring and motor to allow people with low strength to move their arms, she worked as executive director at Magic Arms. The non-profit was trying to commercialize a 3D-printed exoskeleton to help children with a rare disease called arthrogryposis. “The kids moved their arms for the first time ever, and the parents looked like they saw a ghost and they wept,” Conley recalled. “We were able to help kids turn the pages of books and hug their parents.” But there were three complaints: the exoskeleton was hot and heavy; the arms loaded out in the air like a Frankenstein; and the rubber bands used in the device were either set to either high or low with no ability to move between the two. “Meanwhile, people were begging me,” asking for help. Conley had never pitched to venture capitalists before, so she applied to the Minnesota Cup, the state’s annual business competition, for mentorship. “What if I found a larger market,” was some of the best advice she received, and put together a business plan and a pitch deck. Within a month of the semi-finals she founded the company. By late 2019, Conley’s company won the Minnesota Cup’s grand prize and its top woman-owned business category, and had attracted $10.8 million in capital. She went through the Texas Medical Center accelerator program, for one, and found intense interest from stroke patients and many more. “Because of the unmet need we’ve had tremendous clinical interest,” including from HealthPartners and Mayo Clinic in Minnesota. Her company is working side by side with patients to perfect the device. “That’s really, really unique,” she said. “That amplifies our ability to understand

UPSIZE JANUARY • FEBRUARY 2020

Angie Conley

the patient needs.” The device is “remarkably different” from before, said Conley, and her name is on two patents associated with it. It’s a soft, wearable vest made of breathable material. “We provide a support and assist at the shoulder and the elbow,” which allows movement from different levels. A spring and a motor have replaced those rubber bands. “It’s controlled by the patient. They have to provide about 10 percent” of the lift and the device does the rest. The other big difference: “We have the ability to adjust for the load of the lift,” she said, pointing out it’s different to pick up a pair of glasses than a full cup of coffee, for example. Conley is thinking much bigger than her original group of patients. “The economics,” she muses, if only 5 percent of people with spinal cord injuries today are back to work in 10 years, are huge. “If we can get back to work faster,” she says, think of the “physical impact, the social impact, the economic impact.” Abilitech is “pre-revenue,” as the saying goes in venture capital circles, and is set to launch its device in June of 2020. “You get a little antsy. I can’t wait to get going,” she said, once more sounding like the wheel she has become rather than the cog she was before. “This is such a huge opportunity to make a difference.” Beth Ewen Editor and co-founder Upsize Minnesota bewen@upsizemag.com

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law

BUSINESS BUILDERS

Cannabis, hemp and CBD: Exploring the new frontier by Jeffrey C. O’Brien

TIPS 1. The 2018 Farm Bill reclassified hemp from a controlled substance to an agricultural product, setting off a surge of businesses involving hemp and hemp-derived cannabidiol (CBD) products. 2. Products that add CBD to food or label CBD as a dietary supplement remain not legal for interstate commerce. 3. Consumer demand for CBD-based products not under Federal Drug Administration purview is rising, but banks, insurance companies and merchant services companies are leery of providing services for those providing such products and services. 4. The U.S. Department of Justice issued guidance stating it would not enforce prohibition in states that legalized marijuana in some form though it was later rescinded by Attorney General Jeff Sessions. 5. Cannabis businesses will encounter barriers to growth as long as the product remains illiegal at the federal level.

ON DECEMBER 20, 2018, President Trump signed into law the Agriculture Improvement Act of 2018, aka the 2018 Farm Bill, which reclassified hemp from a controlled substance to an agricultural product. This law change set off a surge in businesses involving hemp and hempderived cannabidiol (CBD) products ... and a wave of legislative proposals at both the federal and state levels to transition laws away from prohibition and instead into regulation of this new industry. Legalization of hemp and CBD under the 2018 Farm Bill The 2018 Farm Bill changed certain federal authorities relating to the production and marketing of hemp, defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Most importantly, these changes include removing hemp from the Controlled Substances Act, which means that cannabis plants and derivatives that contain no more than 0.3 percent THC on a dry weight basis are no longer controlled substances under federal law. The 2018 Farm Bill, however, explicitly preserved the authority of the Food & Drug Administration (“FDA”) to regulate products containing cannabis or cannabis-derived compounds under the Federal Food Drug & Cosmetic Act (“FD&C Act”) and Section 351 of the Public Health Service Act (PHS Act). FDA treats products containing cannabis or cannabis-derived compounds as it does any other FDAregulated products — meaning they’re subject to the same authorities and requirements as FDA-regulated products containing any other substance. This is true regardless of whether the cannabis

UPSIZE JANUARY • FEBRUARY 2020

or cannabis-derived compounds are classified as hemp under the 2018 Farm Bill. What can legally be produced using hemp and/or CBD? In the wake of the legalization of hemp at the federal level, the FDA is currently evaluating CBD’s safety with respect to a variety of products. For now, its stance is that products that add CBD to food or label CBD as a dietary supplement are not legal for interstate commerce. With respect to drug products, to date the FDA has approved only one CBD product, a prescription drug product to treat two rare, severe forms of epilepsy. As for other CBD-based products not falling under the purview of the FDA such as soaps, lotions, and the like, as well as CBD oil and tinctures, consumer demand for such products is on the rise. However, a significant challenge to those entering into this industry remains that many banks, insurance companies and merchant service companies are leery of providing services for national CBD companies and of the FDA stepping in to see whether the claimed CBD levels are present in the products and issuing warnings to companies making “egregious and unfounded claims that are aimed at vulnerable populations,” such as saying they cure Alzheimer’s, cervical cancer, fibromyalgia and more. What about CBD-infused alcoholic beverages? While some in the craft beverage industry pondered the idea of a CBDinfused beer or distilled spirit, the U.S. Alcohol and Tobacco and Trade Bureau (“TTB”) – the Federal agency with authority to regulate the manufacture and sale of alcoholic beverages in the United States – foreclosed such speculation in May 2019. When dealing with the infusion of non-traditional ingredients into

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Congratulations to Richard S. Brown

Barron’s Top 1,200 Financial Advisors 10 Consecutive Years

An advocacy-first philosophy: that’s how JNBA Financial Advisors has operated since our founding days 40 years ago. During that time we have been recognized for our client and community work, including Barron’s ranking CEO Richard S. Brown and JNBA as one of the top independent financial advisors in country. But what’s most important to us is that since we began tracking in 2001, JNBA has maintained a client retention rate of more than 97 percent.

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To learn more about how advice driven by advocacy™ could help you, begin a conversation with our team by calling 952.844.0995 or visiting JNBA.com.

MINNEAPOLIS: 952.844.0995 | DULUTH: 218.249.0044 | JNBA.COM *As seen in the 07/20/07, 07/11/08, 2/22/10, 2/21/11, 2/20/12, 2/18/13, 2/24/14, 2/23/15, 8/24/15, 3/7/16, 8/29/16, 3/6/17, 9/18/17, 3/12/18, 9/17/18, 3/11/19, & 9/16/19 issues of Barron‘s magazine. Barron‘s is a trademark of Dow Jones & Company, Inc. All rights reserved. Limitations: Neither rankings and/or recognition by unaffiliated rating services, publications, or other organizations, nor the achievement of any designation or certification, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if JNBA Financial Advisors, Inc. is engaged, or continues to be engaged, to provide investment advisory services Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers. No ranking or recognition should be construed as a current or past endorsement of JNBA Financial Advisors, Inc. by any of its clients. ANY QUESTIONS: JNBA Financial Advisors, Inc.’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including providing the criteria used for any reflected ranking. For complete disclosure information, please visit https://jnba.com/disclosure. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by JNBA Financial Advisors, Inc. (“JNBA”), or any non-investment related services, will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement.

alcoholic beverages, the TTB defers to the FDA as to its interpretation of the FD&C Act and has thus issued guidance that use of CBD in alcoholic beverages is not legal. What does this mean for legalization of cannabis? At the same time as federal and state laws have changed to allow for legalization and exploitation of hemp and CBDbased products, several state legislatures have taken steps to legalize the use of cannabis (i.e., marijuana), either for medical or recreational use. At the federal level, however, the regulatory posture remains one of prohibition. During the Obama Administration, the U.S. Department of Justice issued guidance to all U.S. Attorney Offices known as the “Cole Memorandum” which stated that given its limited resources, the DOJ would not enforce federal marijuana prohibition in states that “legalized marijuana in some form and ... implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana,” except where a lack of federal enforcement would undermine federal priorities. The Cole Memorandum was rescinded by Attorney General Jeff Sessions in January 2018 and, while President Trump has at times indicated support for federal legalization of medical marijuana or allowing the states to decide how to regulate marijuana use, no further progress has been made to date at the federal level. And so long as marijuana remains on Schedule I of the Controlled Substances Act, cannabis businesses will continue to encounter barriers to growth. For example, marijuana companies aren’t able to take any deductions on their federal income taxes, save for cost of goods sold. If profitable, this can mean paying an effective tax rate of 70% to 90%, which leaves little income left over for reinvestment and hiring. Further, and most importantly, U.S. cannabis

companies have minimal access to basic banking services, including loans, lines of credit, and even checking accounts. Since financial institutions report to the Federal Deposit Insurance Corporation (FDIC), and the FDIC is a federally created agency, banks and credit unions fear possible financial and/or criminal repercussions for aiding cannabis companies. This has made marijuana an industry dominated by cash, which is both a security concern and an expansionary constraint. Minnesota’s legal landscape Having legalized medical cannabis in 2014, the Minnesota Legislature is now poised to follow the lead of other states and act on recreational marijuana laws. With an upcoming legislative session occurring during an election year with divided government, look for recreational marijuana to be a hot topic of debate. What does the future hold? As noted herein, the developing legal patchwork which has replaced the prior system of prohibition when it comes to hemp, CBD (and on a state level, cannabis) requires thoughtful and comprehensive regulation from legislative bodies, as opposed to the current environment which leaves all authority for determination of what is permitted and what is not in the hands of the regulatory authorities. Much like the craft beverage boom that gave rise to increased jobs, tax revenue and economic growth, removing unnecessary restrictions on this new industry where appropriate will continue to present business opportunities in the years to come.

“Much like the craft beverage boom that gave rise to increased jobs, tax revenue and economic growth, removing unnecessary restrictions on this new industry where appropriate will continue to present business opportunities in the years to come.” Jeffrey C. O’Brien Chestnut Cambronne PA

Jeffrey C. O’Brien is an attorney with Minneapolis-based Chestnut Cambronne PA: 612.336.1298; jobrien@chestnutcambronne.com; www.chestnutcambronne.com. 8

UPSIZE JANUARY • FEBRUARY 2020

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Thursday, March 19th

A Luncheon Workshop at the Minneapolis Club

MERGERS & ACQUISITIONS Due Diligence and Valuations

Once again in 2020, Upsize Minnesota and Club Entrepreneur join forces to provide information vital to smallbusiness owners. On March 19th, the focus will be on M&A, due diligence and business valuations. Workshop attendees will enhance their chances for success, whether buying or selling a business, making investment decisions or researching a company to work for. A panel of experts will discuss the local M&A market, the elements that determine what a business is worth and the mistakes buyers and sellers often make. The workshop will discuss all aspects of due diligence and valuations, and introduce local experts who can serve as trusted resources. Cost: $34.00, which includes the program, lunch and parking during the event. Location: The Minneapolis Club, 729 Second Ave. S. Enter the parking ramp from the 8th Street side. SPACE IS LIMITED! REGISTER NOW, go to bit.ly/30M09Mz 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 2020 UPSIZE



management

BUSINESS BUILDERS

Promoting employee mental health through a culture of safety and wellbeing by Dr. George Vergolias

TIPS 1. Promote a culture of respect and integrity by demonstrating such in everyday interactions, no matter how small. 2. Educate employees on understanding healthy emotional functioning, recognizing signs of behavioral health symptoms, and how to self-regulate emotions. 3. Help employees recognize when they or co-workers are struggling emotionally and teach them what resources are available to help. 4. Empower employees to find their role in your community in ways that help them feel valued, and be open and direct with them so they have the information they need to thrive. 5. Build a culture of candor through which you provide honest feedback people can use to selfassess and improve. Don’t water down feedback.

ACCORDING TO THE CENTERS for Disease Control and Prevention (CDC), mental health disorders are among the most burdensome health concerns in the United States. Nearly one in five Americans age 18 or older reported a mental illness in 2016. Since approximately 63 percent of Americans are part of the U.S. labor force, supporting employees’ mental health in the workplace is vital. Not only is taking care of our employees the right thing to do, mental health issues can also have a direct effect on businesses’ bottom lines. Unfortunately, in addition to the everyday stressors affecting employees’ mental health, over the past few years, workplaces have increasingly had to address a host of concerning behaviors, including bullying, sexual harassment, increased incidence of suicidality, anger/hostility, and overt acts of predatory violence in the form of mass shootings. Recently, California Occupational Safety and Health Administration (OSHA) passed a regulation requiring healthcare facilities to have a formal workplace violence plan, and we are seeing movement that similar requirements will expand to many other industries across the country. Behavioral health and workplace violence are top concerns impacting the work environment. As employers, we have much to be concerned about, yet there are some key areas we can focus on to promote workplace safety and wellbeing: Promote a culture of respect and integrity This seems easy, but perhaps is the most difficult outcome to achieve. Respect and integrity are not taught or

UPSIZE JANUARY • FEBRUARY 2020

trained, they are demonstrated, daily, in everyday interactions that can seem minimal and across all levels of an organization. Nothing erodes a culture of respect and integrity as much as when leadership allows disrespectful and inappropriate behaviors to continue. Promoting respect and integrity begins at the time of hire and continues through every interaction of an employee’s pathway in the organization. Lack of these cultural values often leads to conflict, withdrawal, fear of taking risks, and, in the most extreme cases, overt violence. In fact, the single most common reason that disgruntled employees who returned to their workplace to commit violence give for their actions is their perception of not being treated fairly and with respect. Educate employees to improve behavioral health literacy and wellbeing Given generational differences in attitudes around mental health, most adults in the workforce were not raised with heavy attention placed on wellbeing, self-care, emotional regulation and conflict resolution. These are learned skills. Educating employees on understanding healthy emotional functioning, recognizing early signs of behavioral health symptoms and how to self-regulate emotions is energy well spent toward building an emotionally healthy and thriving work culture. Recognize when co-workers are struggling emotionally Help employees recognize when they or their co-workers are struggling emotionally, to identify these problems upstream prior to the issue becoming a full-blown crisis or behavioral health disorder. Some early

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warning signs might include: changes in mood, emotional withdrawal, increased anxiety, irritability, hostility, growing distrust of others, rapid onset or escalation of substance use, developing apathy and loss of interest in previously enjoyable activities. Early intervention is always more effective than later intervention, but that starts with awareness of the problem. Provide useful tools to assist others in crisis Once employees recognize a developing problem within themselves or in others, they then need to know what to do next. Where do they go? Who do they talk to? What resources are available? It’s very important to provide them the tools and pathways to get the help they need, at any level of a crisis. These can be contacting peer support groups, calling employee assistance program (EAP) resources, engaging community resources, and/or using digital support applications to assist. An example: At R3 Continuum, where I work, we saw such a high need for this in the workplace that we developed R3SILIENCY, an artificial intelligence (AI) smartphone/tablet app that assists employees and organizational leaders navigating an emotional crisis. The app helps people maximize internal resilience by accessing bestpractice treatment guidelines, offering education and training on self-care techniques, enhancing organizational connectedness at times of crisis and increasing adaptive coping at both the individual and organizational levels. Empower employees and promote environmental mastery “Environmental mastery” refers to how we interact with the world and to what extent we can shape our experiences to fit our values and priorities. It is essentially “finding your communi-

ty,” and then finding your role in it in a way that helps one feel valued. That can only come through empowering employees to reach further and seize opportunities. To be clear, this does not mean giving away responsibility, authority or power to those who are not ready for such or have not earned such. Rather, it is believing enough in a person’s capabilities, strength and resilience to be open, honest and direct with them, thus allowing them to make informed choices to thrive. Build a culture of candor There is a great quip about resilience: “Every time you told yourself you couldn’t go on, you did.” We don’t always recognize our resilience, and far too often in the workforce we erroneously assume others don’t have it. We assume they can’t take candor or honesty. For me, nothing is more insulting. Empowerment and candor are related. Empowerment is about honest dialogue — at times tough dialogue — that can help the person self-assess and improve. I recall years ago receiving some feedback from a supervisor, which I perceived as harsh. It was certainly negative, and I had much to improve, but the delivery was open, honest and matter-of-fact. My supervisor did not coddle me or water down the feedback and, in the process, told me “I’m sharing this because I know you can do better, you’re strong enough to take the constructive criticism, and it will help you to grow.” The above recommendations are not an exhaustive list but serve as high-level guidelines for developing and promoting a workplace culture of respect, integrity and safety, and one in which employees thrive.

“ We don’t always recognize our resilience, and far too often in the workforce we erroneously assume others don’t have it. We assume they can’t take candor or honesty. For me, nothing is more insulting.” Dr. George Vergolias R3 Continuum

Dr. George Vergolias is medical director of R3 Continuum: 952.641.0645; george.vergolias@r3c.com; www.r3c.com.

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JANUARY • FEBRUARY 2020 UPSIZE



sales

BUSINESS BUILDERS

Maximize sales by identifying your grand slam clients by Todd Eberhardt

TIPS 1. Start by understanding what you are spending to bring in new clients and determining which ones are the ones you want. 2. Determine the demographics, including employee or revenue size, industry and geography of the clients you most want to work with. 3. Get to know the psychographics of your best clients. Figure out how they think, behave and feel. 4. Pull this information together into a metric that will help you determine the clients you should seek out. Consider both the best and worst experiences you have had with current clients. 5. Bring your team into the process. Those who contribute are far more likely to use the resulting process and be committed to its success.

WHAT IS YOUR NEW YEAR’S resolution? To grow your business? To stop working harder than you have to for better results? To begin working with more of your best customers? This is the formula that worked for me in achieving all of these while also finding more enjoyment in my business. The cost of new business Start by understanding what you are spending to bring in new clients. To figure that out add up all the money you spent on sales last year (salaries, commission bonuses, etc.) and your total marketing spend for the year (trade shows, mailers, website, brochures, etc.). Then divide that by the total number of new clients you onboarded in the year. Example: $475,000 spent on the sales force + another $600,000 marketing expenses divided by 47 new clients in 2019 equals a cost of $22,872 per new client. This doesn’t distinguish the costs to bring in a profitable, loyal client from an abusive, money-losing customer. So why not focus on the ones we want? Whether your new business comes from a sales force or by referral, using the “Grand Slam Clients” approach makes it crystal clear which customers are best for your company. The baseball reference isn’t accidental. To get Grand Slam Clients, we can learn from Ted Williams of Boston Red Sox fame. He was the last player to hit over .400 in the majors for a season. He mapped out

UPSIZE JANUARY • FEBRUARY 2020

every pitch from every at bat to see which pitches he should swing at and which ones (even some strikes) he should let go by. Hitting singles — demographics Demographics are the easiest to identify. This includes the employee or revenue size, industry, geography and role of the prospects you would like to have as clients. Most companies can identify these attributes reasonably well. Some still struggle because they don’t want to lose out on any opportunities. A lawyer once told me that “anyone with a checkbook and a heartbeat” will make a good client. That can make for expensive marketing and painful customers. Hitting doubles — timing triggers To drastically improve your own batting average, understand your clients’ timing triggers. Simply put, what is different today than yesterday that led to your client answering the phone, clicking the “BUY NOW” button on your website or signing off on the contract that had been sitting on their desk for the past three months? The challenge here is that we all make rational decisions for emotional reasons. We hear “it was an annual review” or “they did an exhaustive interview process” or “they went with the low bidder.” In reality it often comes down to an emotional trigger “I didn’t want to work an-

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other weekend to fix mistakes from my vendor” or “he’s the dad of my daughter’s best friend.” Hitting triples — psychographics If you want laser-sharp focus on your best clients, get to know their psychographics. The master marketer Seth Godin framed it this way: “people like us do things like this.” What are common beliefs your clients hold? “I’m terrible with being on time” or “punctuality is a hallmark of success.” “Tesla’s are a gigantic waste of money” versus “Tesla’s will help save the planet.” How do your best customers think, behave and feel? Pulling it all together For me, the best way to get those details out is through storytelling. Creating the stories requires someone to lead the discussions who can be an active listener and who can ask good questions, but who won’t finish your story for you. Start with the stories about your best clients. The ones that love you, challenge you and pay you well (and on time). What makes them special? What makes them work with you versus your competitor down the street? Was it a large sale? Were you doing your best work? Get all the stories down that describe your greatest successes. In other words, what makes for a great victory lap? Now you need to switch gears and talk about your worst client experiences. The ones who cost you money. The ones who logged numerous hours with your customer service team. The ones who complained about every bill. We look past these stories because they don’t paint a very flattering picture, but they are key building blocks to your process. Document these so you are

not forced to repeat them. Once you have exhausted all the stories, step back and start to look for common themes. What do all your successes share? What are the key points that separate you from your competition? Grand slam clients A few years ago, I assessed my best and worst client experiences to create my own Grand Slam Clients filter. As a result, now I have seven key points I look for in a good prospect. In our first conversation I can ask some easy questions that identify if we are a fit. Their answers help me determine if they could be a Grand Slam Client where I can add value to their business and help them get where they want to go. I even added a scoring rubric for each question to make it easier to know “what good looks like.” Score 25 or higher on the 35-point scale and we will do great things together. Score 24 or lower and I will make a good referral to someone who will be a better fit. Making it work for you (Workshops — call to action) Are you ready to take action? There’s no time better than now to grow and improve your customer mix. Don’t do this exercise in a vacuum. Over time it’s been proven that the best results come from bringing your team together to build your own Grand Slam Clients filter in a workshop. People who contribute to the process and the solution are 10 times more committed to using it and seeing it through to success.

“ A few years ago, I assessed my best and worst client experiences to create my own Grand Slam Clients filter. As a result, now I have seven key points I look for in a good prospect. In our first conversation I can ask some easy questions that identify if we are a fit.” Todd Eberhardt Dynasty Leadership Consulting

Todd Eberhardt is founder and CEO of Dynasty Leadership Consulting: 612.845.2076; todd@dynastylc.com; www.dynastylc.com.

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JANUARY • FEBRUARY 2020 UPSIZE

finding financing Know where to look when banks aren’t an option

ercedes Austin was a photography and psychology student 23 years ago. She was taking an art class for her sanity’s sake, but wasn’t planning on it providing a career. But a sign she regularly drove by advertising a high-end tile company kept catching her eye and one day she stopped. She ended up working there for three years, collecting nothing more than her own tiles as a paycheck the first several months. Then, after attending one of the tile industry’s larger trade shows, Austin all of a sudden found a career. “I went from being an irresponsible kid to seeing this huge possibility in tile,” says Austin, who is founder and CEO of Mercury Mosaics. “It was never something I thought I would have any interest in at all. It just kept me up at night.” So, when a significant tax refund came around the same time she got prepaid for a job she’d been hired for, she added that to funds raised by selling her jazz CD collection and she bought her first kiln. At first, she started simple, working on ceramic light switch covers, accent mirrors, one-of-a-kind tabletops and the like. She’d put them in consignment shops in Minneapolis, where there is no money up front and no system for tracking overall sales, but she was hoping to get noticed. “That’s how I got my start,” she says. “One thing led to another, where a client gets delighted about a little thing and they

want to have you do something else, which led to me being a kitchen backsplash designer. Then you get a photo of it and you can say you’re a kitchen backsplash adviser.” Growth brings success and struggles Austin grew the business little by little. She focused on residential projects through 2010, then got noticed by a prominent commercial client and started doing the same. She’d do well on one job, get noticed by another client and, very intentionally, she was growing her business. In 2015, she started refining her product offerings, focusing on three shapes and 20 colors, down from 130. That ended up being successful and she started looking at funding for expansion. Initially, she hoped to expand where she was located, but she’d also moved her administrative offices to a work sharing location, so that didn’t work. “I was intending to add more equipment there,” she says. “It was a very intelligent plan, but it wasn’t thinking as big as it was going to get.” She sought bank financing and was initially approved, but as the legal issues dragged on, the bank option disappeared. Enter Lesley Farmer, who does business development for KLC Financial, a capital equipment financing and leasing company. Despite a recent knee injury, Farmer went out to the company’s Minneapolis offices, met Austin and hit it off quickly. It helped,

by Andrew Tellijohn photographs by tom dunn

UPSIZE JANUARY • FEBRUARY 2020

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Mercury Mosaics used financing from a capital equipment lender, KLC Financial, to find new space that allowed it to expand rapidly.

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COVER STORY Austin says, that the response was fast — after several months of back-and-forth with the banker. Farmer looked at Mercury Mosaics’ financial documents, learned about the business, met the employees … and signed her up. It took about an hour. KLC funds a fair number of business expansions. The company also has funded everything from website development to trucks to trampolines, she says. “It’s really anything that a business could use that is going to provide them a benefit that has a capital tie to it,” Farmer says. “It’s not just people who are struggling.” What is different, Farmer says, is that KLC isn’t regulated, which allows the company a bit more flexibility in how it assesses businesses than banks have. Banks, Farmer says, look at financing a piece of equipment once they have 20 percent down and the right cash flow ratios. With KLC it’s more of a collateral-based transaction. Character also is important – if someone has a good business but doesn’t have good character, there’s a risk they may not pay even if they do well, Farmer says. “We think differently about how we price deals,” she says. “I go spend time with them. … I saw her, I saw her business, I saw

CONTACT: MERCEDES AUSTIN, owner and founder of Mercury Mosaics: 612.400.7649; mercedes@mercurymosaics.com; www.mercurymosaics.com. RICK BURNTON, CEO of Aspen Research: rick.burnton@aspenresearch.com; www.aspenresearch.com. JUSTIN ERICKSON, principal at Essex Capital LLC: 612.281.4648; justin@essexcapitalllc.net; www.essexllc.net. KRISTIN ERICKSON, senior vice president at North Mill Capital: 952.259.6222; kerickson@northmillcapital.com; www.northmillcapital.com. LESLEY FARMER, does business development for KLC Financial: 952.224.2901; Lesley@Klcfinancial.com; www.KLCFinancial.com.

UPSIZE JANUARY • FEBRUARY 2020

the people she had employed there, her growth potential and we were able to overcome.” Farmer wants to build a relationship with her clients. “We really try to make sure the clients we are working with are people who, at the end of the day, I can call my friend,” Farmer says. Austin remains a fan. “I am forever indebted to KLC,” she adds.

Asset-based lending

Along similar lines, Aspen Research found a successful financial partner in North Mill Capital, which focuses on invoice-based or asset-based lending. Aspen had been around for decades as the research and development arm of Andersen Windows. The business unit created the Fibrex material used in its parent company’s Renewal by Andersen product. It has two units: One involves testing plastics and metals for the medical device industry and food contact specialists in plastics and metals. The other is the development and manufacturing of custom compounds for the plastics industry, with a special emphasis on bioplastics called PLA. “We’ve been developing bioplastic solutions for different applications for the last six or seven years,” says Rick Burnton, who led an investor group that bought Aspen from Andersen in 2012. The company had $5.5 million in revenue in 2019 and projects to $6 million this year, but he says the company is on the brink of finalizing the production and commercializing a new bioplastic material that could help replace polystyrenes and PVCs, plastic materials which are petroleum-based resins that work really well but have toxicity issues. “It’s very hard to hit the characteristics you need in order to supplement and change over to a new material from the current ones,” he says. “The current materials are flexible and cheap and they do an amazing job, but there are environmental impacts that go along with them. In today’s world that’s becoming a bigger issue.” If Aspen arrives at the finish line first — Burnton says they hope to have their first products on the market this year — the upside is potentially nine-figure huge for the company. Retail customers currently are clamoring for a bio-model. “That’s our goal,” he says. “That’s what we’ve been working on for the last eight years.” North Mill has allowed Aspen to use asset-based lending to fund its receivables over the last couple years. The process is simple and straightforward. “They’ve been a good partner for us,” he says. “It’s been a hard stretch for us to get to commercialization, but we’re just about there.”

North Mill provides short-term help

Kristen Erickson, senior vice president with North Mill Capital, says the company tries to help businesses that aren’t cur-

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COVER STORY rently bankable, through invoice-based or asset-based lending. Where banks are largely focused on historical cash flow, she says North Mill focuses on the ability to convert collateral to cash for repayment. The company might lend to a start-up, a company that has grown really quickly or one that is distressed. And the relationships are typically short, occasionally around six months but more typically a year or two, and involve helping them through fast growth or a time of distress. The relationship can involve providing hands-on support for business owners in addition to the working capital. That could mean providing help with credit limits for customers or in making collection calls, introducing them to a consultant who can help with cash flow projections or renegotiating terms with vendors. “Our goal is to get them to be bankable,” she says. “We’re helping them develop that track record they need in order to be bankable.” The financing is more expensive than what traditional banks offer. Some will stay anyway because of the side services North Mill offers, Erickson says, but most move on when they can, though they often do so with more discipline and a sharper business sense. “Most borrowers are looking to lower their cost of financing over time,” she says. “That’s why they’re not with us forever.”

Further alternatives exist

So, don’t give up if your first attempts at finding financing don’t succeed. There are ample sources available to businesses that can make a strong case. Don’t forget about economic development options, as well. All has worked out well for Mercury Mosaics since it found the capital it needed for the first expansion — a fabulous space that Austin says has tons of natural light and alone acts as an employee retention tool. She’s now growing fast and on to another project and economic development perks helped her get there. Several municipalities were interested in the project. Three greater Minnesota cities were finalists after 16 initially bid. More than 60 communicated interest. The company will soon build a warehouse in Wadena, about three hours from its current space in Minneapolis. Wadena was selected from a handful of communities that offered up packages to try and lure the company. Justin Erickson, a principal with Essex Capital LLC, which owns the Community Venture Network (CVN). CVN has been helping small- and mid-sized businesses explore locations across the Midwest since 1991. He says communities tend to be competitive and want to attract businesses to grow. It takes a little time to put incentive programs together, which businesses need to be mindful of, Erickson says. “If expansion is something a company is even contemplat-

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Alternative sources of financing have helped Mercury Mosaics expand twice. Opposite: Founder Mercedes Austin worked with Lesley Farmer of KLC Financial to arrange financing for her first expansion and economic development sources on her second.

ing in the early stages, it’s time to start the conversation on the economic development side,” Erickson says, adding that the market is generally good right now and a trip to talk with local municipal or economic development officials in the area where the company wants to be can help get business owners started. Mercury Mosaics’ Austin is happy with the results. The bidding communities really made her feel welcome. “I’m not an Amazon or Google. So, I don’t register on anyone’s radar in Minneapolis,” she says. “Out there, I feel like I might as well be Michael Douglas arriving in town. They treat you like a Hollywood celebrity.”

JANUARY • FEBRUARY 2020 UPSIZE

ROUNDTABLE: BUSINESS BOARDS

SEEKING to SERVE

Business boards provide more than counsel to entrepreneurs seeking help

By Andrew Tellijohn

Photographs by Jonathan Hankin

ntrepreneurs often feel alone on an island when dealing with the pressures and problems they encounter running their businesses. But there usually are a number of resources they can turn to for help — including others like themselves. For many reasons, from the altruistic desire to give back to the need to put a few more dollars in their pockets, current and former business owners are willing sit on informal boards of advisers or, in some

cases, more formal boards of directors. They’re a resource that too often goes untapped, says John Francis, founder and CEO of Next Level Franchise. “Boards may be among the more underutilized tools business owners have available to them for feedback on various issues,” he says. “A board is a powerful thing that can really add value to an organization with really little or no risk for the owner.”

Determining the right format

So, what kind of board is right for your business? The

“Having someone with the opposite in terms of skills and knowledge and style is a good thing — as long as the values match. They have to have a philosophy match. That’s the foundation of making a decision on who to bring in.” —Julie Keyes, KeyeStrategies

UPSIZE JANUARY • FEBRUARY 2020

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ROUNDTABLE: BUSINESS BOARDS “For some of these owners if the guy got hit by a bus, the board might have the ability to keep the wheels on things and either sell the company or hire somebody or do something else. If you don’t have the board, that isn’t going to happen." —John Francis, Next Level Franchise

biggest difference between a board of directors and board of advisers is the level of formality and legal risk, says a panel of experts who gathered for a discussion in early January. Boards of advisers are just that, says Jon Schindel, partner with SeilerSchindel PLLC. They offer advice business owners are free to follow or ignore. Boards of directors, on the other hand, are legal entities that have powers and responsibilities as defined by Minnesota statutes. “If you say this is a board of directors that actually means something under Minnesota business law that has duties and consequences to it,” he says. “You just want to be a little cautious there.” A board of directors is more permanent, harder to change and liable for the actions they take. “They hire and fire and review the CEO, which is probably one of the most critical functions of a board of directors,” says Francis, an entrepreneur and consultant who sits on several of each. “And they have liabilities. Shareholders can sue a board of directors if they screw it up or do something wrong or don’t do something they are supposed to.”

Reducing infighting, buying time

Mike Porter, a professor and director in the Opus College of Business at the University of St. Thomas, spent 10 years on the advisory board of a publishing company that grew significantly during a difficult time for the industry. The organization started as an advisory board and it technically remained that way throughout his tenure, though senior management had taken much of the board’s advice and used it to grow. The company’s shareholders included siblings who weren’t always

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in agreement with the decision to let the board make decisions, but it ended up being a good move. “It pushes the leadership to a limit and it’s a limit that for long-term success is really important,” he says. Having a board recommendation to fall back on actually can be a significant advantage in tamping down infighting. “The president is the youngest brother,” he says. “The dynamics we had was in order to get him to have shareholder permission to bring somebody in to help with M&A, he needed to be able to say ‘the board says.’” Acting as an intermediary is one of the unsung advantages boards can offer, adds Francis. “A board is someone you can blame. You can blame decisions on the board,” he says. “‘Oh, the board made me do it.’ A board can give you credibility. ‘Let me run that past my board.’ Whether or not you ever do doesn’t matter. It buys you time to make a better decision.”

Contingency, transition planning

It's less common for smaller companies to have boards of directors. Even when they do, the board’s function is primarily going to be keeping the business going strong through a transition, says Julie Keyes, founder and owner of KeyeStrategies LLC. So, when working with a small business owner who is looking to sell a company, one of the first things Keyes recommends is forming a board of advisers. “You need other outside advisers to actually help put a transition plan together and implement it,” she says. “I advocate for boards of advisers as much as I can.” Involuntary exits from a business are common, but they’re also likely to go undiscussed, Keyes says. The five “Ds” that put enterprises at risk — death, disability, disaster, divorce and disagreement — happen to more

JANUARY • FEBRUARY 2020 UPSIZE

ROUNDTABLE: BUSINESS BOARDS “The board can be there so that Bobby doesn’t take the place just because he’s the next family member. It keeps the wheels on and makes sure there is a process for deciding whether Bobby is the right person or, maybe Cindy is the right one.” — Mike Porter, University of St. Thomas

than half of businesses. Boards provide at least the potential for some kind of safe landing. “Where business owners are sorely lacking is in contingency planning,” she says. “They don’t look at the what-ifs, we all know the five Ds occur to at least half, if not more, of all business owners and the older they get the higher the likelihood. “ Francis agrees. An insurance policy is one thing that can help cover the individual and his or her family. What about employees, customers, vendors and others in the organization, he says. “For some of these owners if the guy got hit by a bus, the board might have the ability to keep the wheels on things and either sell the company or hire somebody or do something else,” Francis says. “If you

CONTACT THE EXPERTS JOHN FRANCIS is founder and CEO of Next Level Franchise and a business adviser who sits on several boards: 612.868.0745; john@johnnyfranchise.com; www.johnnyfranchise.com. JULIE KEYES is founder and owner of KeyeStrategies LLC: 763.350.5563; julie@keyestrategies.com; www.keyestrategies.com. MIKE PORTER is a professor and director in the Opus College of Business at the University of St. Thomas: 651.962.4376l mcporter@stthomas.edu; www.stthomas.edu. JON SCHINDEL is a partner with SeilerSchindel PLLC: 952.358.7406; jschindel@seilerschindel.com; www.seilerschindel.com.

UPSIZE JANUARY • FEBRUARY 2020

don’t have the board, that isn’t going to happen.” That’s particularly important, Porter says, in familyowned situations where the unexpected death of an owner might create the need for some checks and balances. “The board can be there so that Bobby doesn’t take the place just because he’s the next family member,” he says. “It keeps the wheels on and makes sure there is a process for deciding whether Bobby is the right person or, maybe Cindy is the right one. … Only the board is going to do that in a family-owned company.”

So, where do you find board members?

There are a few websites out there that look to match businesses with board members. They include Women in the Boardroom, founded by former Twin Citian Sheila Ronning, along with other sites like BoardSource and AdvisoryCloud. “My experience is it's personal and professional networking,” Francis says. “It’s people you know and respect and trust. … I think you’d be surprised the talent level you can recruit to a board. It's usually higher than you expect.” Don’t be afraid to ask a respected mentor or other person you think highly of, the experts say. “To some degree it can be like an angel investor seeing themselves in those people,” Porter says. “The intrinsic value comes from helping like a shepherd.” Make sure, they add, that the makeup has people who think and view the world differently and that it matches up with where the company is at in its lifecycle. Diversity is good, Francis says. “Not just demographic diversity, but diversity of thought, experience, age — old people, young people,” he

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ROUNDTABLE: BUSINESS BOARDS “Get the corporate documents together. They will dictate how you elect board members, what steps you have to take to call a meeting, how you vote, voting percentages to pass anything and will also define what the purview of the board is and what’s left to the shareholders. — Jon Schindel SeilerSchindel adds. Keyes agrees that networking and mining those you know is part of building a good board. “Your network is your net worth,” she says. But while hearty discussion is good, any search has to start with ensuring the members and owners share like values. “Look at their expertise, make sure they are not a cookie cutter of the owners, I don’t think that’s ever a good thing,” Keyes says. “Having someone with the opposite in terms of skills and knowledge and style is a good thing — as long as the values match. They have to have a philosophy match. That’s the foundation of making a decision on who to bring in.” And unanimously, the panel says board members should be compensated. It can be around $500 per meeting at the low end for a board of advisers or a few thousand for a more complex board of directors or for those serving in leadership roles.

informal, non-board settings. It’ll help build trust and collaboration for when they are working together on business issues. Adds Schindel: board members don’t have to agree on everything, but do have to be respectful of each other. He’s worked with one company that has each prospective board member do a year-long internship before actually joining to ensure they are a fit. “It’s okay to have a probationary period,” Schindel says. Finally, facilitation is key. Make sure meetings are run well, Francis adds and make sure board members get agendas and supporting information far enough in advance of meetings so they have time to review “If I don’t have the deck a week before I may not have a chance to get into it,” he says. “If you send it to me the night before, I’m not going to look at it on purpose. If you really want me to spend the time give me the time to do it.”

Additional advice

It’s important for businesses to make sure the processes, procedures and responsibilities of their boards are spelled out in advance. “Get the corporate documents together,” Schindel says. “They will dictate how you elect board members, what steps you have to take to call a meeting, how you vote, voting percentages to pass anything and will also define what the purview of the board is and what’s left to the shareholders. All that should be somewhere formal. It’s rules, it’s guardrails. That way nobody gets out of their lane and everyone knows what rules they are playing by.” Schindel and Francis say board members should have the opportunity to get to know each other in

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JANUARY • FEBRUARY 2020 UPSIZE

catching up by Andrew Tellijohn

Landmark Creations growing with tech-aided, interactive inflatables

hen Landmark Creations, owned by the husband and wife tandem of Tom and Stephanie Meacham, appeared in Upsize in 2004, it had 12 employees, a little over $1 million in revenue and it produced fun, large inflatables for many businesses, sports teams and the occasional musical tour. Though computer-aided design (CAD) and 3D were starting to take off, the bulk of the products were pretty basic. “They would inflate and that’s it,” Stephanie says. “They were just statically there.” That’s changed dramatically, say the Meachams, who talked with Upsize a few days before Tom was getting ready to head to Los Angeles to put up a project for the Grammy Awards. “One of the things that has changed since 2004 is we have

done a lot of stage productions, we’ve done a lot of work with A-list artists, and music awards shows,” she says. “The demand from our customers over time has really ramped up over the last five years. What our products do rather than just being giant static displays is they have to be interactive. They have to be able to perform on stage.” That could mean having fabricated parts or internal lighting systems. It might mean they need to quickly inflate or deflate so they can appear to magically show up on a set or interact with other mechanical components of a display. “Back then, we basically did everything by hand,” Tom says. “We’d do a clay model, we’d paint by hand, we’d sew by hand. Today, the transition of the digital influence is we’ve replaced doing clay models with 3D models.

UPSIZE JANUARY • FEBRUARY 2020

The painting is all digitally printed.” Its work with top celebrity performers has put Landmark inflatables on the Country Music Association Awards, MTV Video Music Awards, and other high-profile shows. The Grammy’s project is for a performance by Ariana Grande, whose tour has also featured a different inflatable. Landmark still does a lot of its more static, bread-and-butter inflatables, too. The sales split is about halfand-half throughout any given year, Stephanie says. But the newer, more complex makeup of its larger-scale work has required a shift in the couple’s management structure and style. The more complex projects mean Tom is often required to be on site to help users learn to operate the inflatables. Recently, Stephanie took over dayto-day management of the company’s Burnsville offices, which freed Tom up to be more available for those trips. The company, which has tripled its revenue since 2004 and now has 23 employees, has also started providing more opportunities for growth to those workers, many of whom have been around a long time and understand the market. “It’s a balance,” she says. “You have to let go a little bit. You have to let your employees grow.” One thing that has lessened over the years is the need to pound the pavement to attract sales. Tom and Stephanie say between repeat business, word-of-mouth referrals and online leads, the company stays more than busy. They think that’s due, at www.upsizemag.com

Landmark Creations’ inflatables have evolved from static displays to interactive, responsive figures

least in part, to providing great service and making sure they help find something that really makes sense for customers. “We never try to sell somebody something that doesn’t make sense,” Stephanie says. “The industry is so small, the minute we burn somebody, there’s going to be trouble for us.” There have been opportunities to grow more quickly at times, but the Meachams remain as committed as they were in 2004, to making sure they control the business rather than being controlled by it. That means occasionally saying no when time and resources don’t allow them to do a job up to standard. “A little bit of you dies inside when you have to do that, but it’s still a matter of we only have so many resources,” says Tom, adding that he’d rather not take on a project than not be able to do it well. “We just keep staying on that razor’s edge as far as

Landmark Creations Owners: Tom and Stephanie Meacham Description: Builder of premier custom inflatables Headquarters: Burnsville Employees: 23 Website: www.landmarkcreations.com

we stay busy without being manic and trying to outrun our headlights.” The Meachams didn’t have any experience in the industry when they bought the company in 1993, but he had a mechanical background and they inherited experienced employees. Stephanie says one lesson learned over the years is making sure when you increase your staff count, you do so carefully. “The people you choose make a big difference,” says Stephanie. “Be very picky about the people you hire and don’t be afraid to develop them early on. If we had started that earlier it would have been even better for us. We have been successful but maybe we wouldn’t have had to work quite as hard as we have for the last 15 years if we had started this trajectory a little earlier.” Building long-term relationships with customers and making sure you meet or outperform your promises to them is also key. “Listen to your customer and understand what value you are bringing to them,” adds Tom. “It’s not magic. It’s a relationship. And we’re not in this for the one-time sale, we’re in it for the long-term. They’re a customer just like you are a customer to somebody else.”

“What our products do rather than just being giant static displays is they have to be interactive. They have to be able to perform on stage.” — Stephanie

Meacham, Landmark Creations

Contact: Tom and Stephanie Meacham own Landmark Creations: 952.895.0947; steph@landmarkcreations.com; www.landmarkcreations.com.

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JANUARY • FEBRUARY 2020 UPSIZE

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

BANK Flagship Bank Minnesota

BUSINESS BROKER Sunbelt Business Advisors

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

Andy Schornack, CEO | 952-358-2522 Brian Wagner, President | 952-358-2513 952-944-6050 | flagshipbanks.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.

Today’s entrepreneur brings creativity, passion, and flexibility to the task of achieving success. Flagship Bank can help because these are precisely the qualities that we bring to each customer of our bank, and their community. With six convenient locations and a staff of experts, we are ready to offer our support. Let’s talk today. Member FDIC. Equal Housing Lender.

1300 Godward St. NE, Suite 6000 Mpls MN 55413 Contact: Peggy DeMuse, pdemuse@sunbeltmidwest.com 651-288-1627 www.sunbeltmidwest.com

ACCOUNTING Eide Bailly LLP

BANK Highland Bank

BUSINESS TRAVEL Professional Travel Service

800 Nicollet Mall, Ste. 1300 Minneapolis, MN 55402 612-253-6500 | www.eidebailly.com Contact: Brad Theisen, Partner-in-Charge

Rick Wall, CEO | 952.858.4753 Troy Rosenbrook, President | 952.858.4810 952.858.4888 | www.highland.bank

Andy Chaussee | 763-577-2307 andy@professionaltravelservice.com 3545 Plymouth Blvd Ste 114 Mpls, MN 55447 www.professionaltravelservice.com

We’re a business advisory and accounting firm, helping our clients embrace the opportunities that change and innovation bring to the evolving business landscape and personal financial decisions. We offer our clients inspired ideas and solutions to tackle risk and spur growth.

Founded in 1943, Highland Bank is focused on 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.

Thinking about buying or selling a business? Sunbelt is the world’s largest seller of private companies. We work with business owners to help them understand the current value of their business and how to maximize their net proceeds at the time of sale. Sunbelt will provide business owners with a completely confidential, no-obligation value range. www.sunbeltmidwest.com.

Business travel platforms should be affordable and painfree. Today’s business travel programs are complex and restrictive. With Concur Travel and Deem Travel our clients gain valuable insights into travel spend before it’s just a number on an expense report. Our deep expertise and innovative approach help your company Professional will understand today’s business Tra ve l S e r vice traveler mindset.

ADVERTISING • MARKETING Risdall

Bank North American Banking Company

COMMERCIAL PHOTOGRAPHER Tom Dunn Photography

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

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

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.

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.

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.

Member FDIC

BANK 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.

Member FDIC

UPSIZE JANUARY • FEBRUARY 2020

BUSINESS BROKER Calhoun Companies

COMMERCIAL REAL ESTATE The Ackerberg Group

7600 Parklawn Ave, Suite 225 Edina, MN 55435 952-831-3300 www.CalhounCompanies.com Andy Kocemba

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

For more than 100 years, Calhoun Companies has served as matchmaker for buyers and sellers, guiding both into the next phases of their lives. We focus on small- to mid-sized businesses, helping them leverage their assets and realize their goals through business brokerage, commercial real estate, mergers and acquisitions, and business valuation services.

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.

ADVERTISING SECTION

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UPSIZE RESOURCE DIRECTORY computer consulting Intertech

insurance O’Rourke Agency, Inc.

mailing services Braemar Mailing Service Inc.

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

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

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

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.

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.

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!

EXECUTIVE RECRUITING Lyman Executive Search

LAW FIRM Avisen Legal, PA

MANAGEMENT & OPERATIONS BCV Consulting

Twin Cities 612-812-3263 www.lymanexecutivesearch.com David Lyman

Lisa Holter Ankel, shareholder 612.584.3401 www.avisenlegal.com

Lyman Executive Search is a highly focused boutique search firm where getting to know a client’s culture and team is at the heart of a successful search. Focused on C-level and Board searches for mid-size, private equity-owned and family-owned organizations.

We are a boutique business law firm, with 10 highly seasoned and experienced lawyers, who practice with common sense, collaboration and commitment. At Avisen, we bring our deep knowledge of business to the table to assist you with just about any aspect relating to business including the laws that govern how to start, buy, manage or sell any type of business.

Greater Twin Cities Area Fractional Integrator | COO Barbara Voorhees | 612-247-3189 www.bcv-consulting.com | Barb@bcv-consulting.com

EXIT STRATEGIES Exit Planning Strategies, LLC

LAW FIRM Lommen Abdo

MANAGEMENT & OPERATIONS Visionary Integrator Solutions

p. 651 426 0848 — www.exitplanstrategies.com Dyanne Ross-Hanson: President e. drh@exitplanstrategies.com

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

Contact: Barbara Voorhees, Mark Francis, Roger Scherping, Suzanne Lyon integrator@integrator-solutions.com www.integrator-solutions.com

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.

Don’t be a Trapped Visionary! ™ Work on your big ideas. Develop your big relationships. Get out from under the day-to-day. Leverage part-time leadership and enjoy day-to-day order. Your team can be focused, aligned and accountable. We provide Fractional Integrator/COO/GM services for EOS® companies. We help Visionaries get un-trapped.

FINANCIAL PLANNING Goff Investment Group

LAW FIRM Winthrop & Weinstine, P.A.

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

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

MARKETING & PRINT SOLUTIONS Allegra — Marketing • Print •Mail STRATEGIC Greater Twin Cities Area SOLUTIONS FOR&YOUR Your local marketing print consultant SUCCESS

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.

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.

Exit Planning Strategies, LLC, a firm dedicated to offering business owners objective, fee based, financial consulting in the development of intentional ownership transition plans. We direct an interdisciplinary process to explore planning options, map realistic exit strategies and to develop an Action Checklist, to accomplish an owner’s unique objectives.

www.upsizemag.com

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Transform something strong into something superb! Hitting the ceiling is inevitable and timing is everything in business growth. As a Fractional Integrator/COO, orchestrate day-to-day business functions to engage people in problem solving and integrating solutions. Committed to providing the Visionary with trust, clarity and accountability for your team.

Arden Hills – 651.484.5000 Whether you need help developing a new marketing campaign, ideas to improve the Blaine –of763.780.0792 effectiveness an existing project or you just want to save time and money, we can help. Allegra is the Eagan – designed 651.645.1224 single source to assist organizations just like yours with: Eden Prairie – 952.835.2720 Printing Services • Minneapolis/Downtown – 612.332.8669 • Signs, Banners, and Posters • Complete Mailing Services St. Paul/Downtown – 651.222.8004 Design Center • Creative • Full Bindery Services Full service marketing & print communication expert. • Web-to-Print Solutions and Trade Show Graphics • Display A one-stop shop, to help you with a high quality project, • Promotional Products more... • Much, much,on delivered time & on budget.

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UPSIZE RESOURCE DIRECTORY MERGERS & ACQUISITIONS Lingate Financial Group

PEER GROUP Creative Business Coaching, LLC

SBA LENDER Sunrise Banks

7575 Golden Valley Road, Suite 100 Minneapolis, MN 55427 763-546-8201 www.Lingate.com Greg Loeschke — Managing Principal

Ted Williams /C: 612-413-2735 O: 952-927-8796 twilliams@creativebusinesscoaching.org www.creativebusinesscoaching.org

(651) 265-5600 | SunriseBanks.com Chris Albrecht, Director of SBA Loans Sunrise is a preferred SBA lender in Minnesota focused on working with our clients as partners, not transactions. Give us a call to discuss how we can help make your business goals a reality.

Founded in 1945, Lingate Financial Group is a leading provider of lower middle market merger & acquisition advisory services, representing privately held businesses of all types with revenues of $5 – 50 million. Lingate helps business owners with market-based valuations, business sales, mergers, acquisitions, recapitalizations, and internal transitions among family members, partners and management. We get deals done.

Access to a close group of peers is an incredibly valuable resource for any Business owner/leader, especially when dealing with issues where there are no clear solutions. Sharing ideas with others on similar tough issues accelerates your thinking toward new and innovative ideas. It’s like multiplying your options tenfold, which is so valuable you can’t put a price tag on it. If interested in exploring further...let us know.

MERGERS & ACQUISITIONS SealedBid Marketing, Inc.

SBA LENDER Highland Bank

SBA LENDER 21st Century Bank

5151 Edina Industrial Blvd., Suite 140 Minneapolis, MN 55439 (952) 893-0232 • www.sealedbid.com Gerald R. Clark — Founding/Managing Officer

Troy Rosenbrook, President | 952.858.4810 Kim Storey, SBA Lending Manager | 952.858.4590 952.858.4888 | www.highland.bank

17 Washington Ave N. Suite 200 Minneapolis, MN 55401 612-372-2178 www.21stcb.com

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.

At 21st Century Bank, we know what it takes for businesses to survive, grow, and prosper in today’s market. For over 100 years, we have been your community partner. A family-owned bank, with expertise in all SBA and conventional lending programs covering all stages of your business. We tailor solutions and respond to your unique business and banking needs.

SealedBid Marketing, Inc. is a Minneapolis, Minnesota based Mergers & Acquisitions firm focused on lower mid-market companies with revenues ranging from $2 million to over $50 million. Founded in 1993, SealedBid represents clients in the sale, merger, purchase and valuation of closely held private businesses across the state of Minnesota, the Midwest region and the United States.

EXIT PLANNING: Directing the Process! Have you determined: When you want to leave your business? To whom you want to transfer your business? What your business is worth? How “Inside Buyers” are going to finance a purchase? Your “back up” plan should the unexpected happen?

e. drh@exitplanstrategies.com w. www.exitplanstrategies.com p. 651 426 0848

UPSIZE JANUARY • FEBRUARY 2020

Member FDIC

Offering IT development work for less. For a limited time Nova Horizons is offering a group of no more than four small businesses an IT development collaboration opportunity for on-going development work. This is an opportunity for a few small businesses to get the expert IT development resources they need to navigate the digital age; getting more of their development projects completed on time and for far less money. “Small businesses with big development projects need outside development expertise at below market rates.”

jonny@novahorizons.io www.novahorizons.io 952.888.7541

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John Thwing

"The SBA Guy"

With over 30 years in the industry, John Thwing, SVP Head of Lending, locally known as the “The SBA Guy” is a recognized Twin Cities lender that entrepreneurs know and trust.

Specializing In

Owner-occupied Commercial Real Estate Business Acquisition Expansion Partner Buyout Franchise Construction Financing 612-505-9751 sbaguy@21stcb.com 17 Washington Ave N Suite 200 Minneapolis, MN 55401

www.upsizemag.com

UPSIZE RESOURCE DIRECTORY STAFFING Scouts Talent

TRANSITION PLANNING KeyeStrategies

WEALTH MANAGEMENT JNBA Financial Advisors

1600 Utica Ave S, #900 Minneapolis, MN 55416 (952) 484-6947, www.scoutstalent.com Gwen Martin, Mark Flaherty, Susan Haugen, Partners

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

8500 Normandale Lake Blvd. Suite 450 Minneapolis, MN 55437 952.844.0995 www.jnba.com Cärin Viertel, Director of Client Services

Scouts is an accounting and finance talent firm in Minneapolis - St. Paul. Financial hiring managers count on Scouts to provide consultants when they need specific expertise to fill interim roles or complete projects. Scouts represents highly-marketable financial consultants, from senior accountants/analysts to CFO’s, who depend on Scouts to find them projects that best leverage their talents and interests.

“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.”

As a pioneer of an independent approach to wealth management that allows advisors to sit on the same side of the table as clients without being influenced by commissions and other conflicts of interest, JNBA has been providing advice driven by advocacy™ for more than 40 years.

SUCCESSION PLANNING Lommen Abdo

venture capital Brimacomb + Associates

WEB DESIGN/DEVELOPMENT ThermoDynamo

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

601 Carlson Parkway #1050, Mpls, MN 55305 612-250-2828 | www.ThermoDynamo.com Alex Levin | alex@thermodynamo.com

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.

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.

ThermoDynamo is a Web Design + Development + SEO + Marketing company. Our business first approach creates highly visible, compelling digital content that captivates audiences and produces measurable outcomes for our clients. We also specialize in website re-designs, website maintenance and repair. Excellent customer service, fast turnaround times and great outcomes are our modus operandi.

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

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JANUARY • FEBRUARY 2020 UPSIZE

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True North Advisors’ acquisition adds tech tool for business brokerages and advisers

rue North Advisors will soon be one of a dozen or more entities swept up by newly formed, Minneapolisbased Business Broker Investment Corp. (BBIC). But in the meantime, small- and medium-sized business owners across the country will have greater access to a technology platform aimed at helping them prepare to sell their business due to a recent True North acquisition. The company has agreed to acquire Peak Development, a technology platform for marketing business brokerages and advisers. Brian Slipka, who is managing partner of True North and will be president and CEO of BBIC, shared his thoughts on the importance of this transaction with Upsize Managing Editor Andrew Tellijohn. Tellijohn: Could you explain the entities involved in this deal? Slipka: The BBIC is a separate entity I created with another individual

their business to market. It is more of a relationship-based checklist. It’s what small business owners need. Instead of writing big checks to have a consultant come ready their business for sale, often where we are trying to defragment and they just need someone like Peak to tell aggregate the best business brokerage them the steps to take to get your business ready. offices in the nation and Canada. The I’m excited about being able to leverBBIC will be a coalition of at least 12 age their expertise and reach with small or 13 offices around the country that business owners so when they are ready have sold their business into the BBIC to sell, or if they are a strategic acquirer, in exchange for stock. we have the right advisers at that point True North Advisors is the parent of to come along and help them. We’re Sunbelt Business Brokers and it now trying to standardize the industry. has Peak under its umbrella. It’s the There are a lot of business advisers and platform business that will run the consultants and expensive resources BBIC. What I’m trying to do is bring out there. What business owners need together the best platform businesses, is someone willing to go at their pace, which facilitate transactions between two or more parties, under True North low-touch and high-impact. Tellijohn: What’s the timeframe for Advisors so when it joins the BBIC we this BBIC transition? have an off-and-running enterprise Slipka: We’ve already got 12 offices that can quickly bring on other busithat have signed legal agreements to nesses around North America. Tellijohn: Why was acquiring Peak contribute their business into the BBIC. They’re saying we’re better together important? than trying to do this individually across Slipka: Peak Development, a freeof-charge omnichannel tech platform, North America. I’m throwing resources into helping them. The acquisitions works with buyers and sellers to provide counsel to them to bring them to will be finalized in the second and third the point where they are ready to bring quarters of this year, but we are allowing them to engage in our best practices now. The Peak transaction was important to do now so those employees could start focusing on the markets where we are going to be invested.

True North Advisors acquired Peak Development, a tool small business owners can use to ready their businesses for sale.

UPSIZE JANUARY • FEBRUARY 2020

Contact: Brian Slipka, managing partner of True North Advisors and CEO of Business Broker Investment Corp.: 612.454.6221; brian@bbicnow.com; www.bbicnow.com.

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DEAN D. WILLER P / 612.604.6633 E / dwiller@winthrop.com

Our Corporate & Transactions attorneys use the law to help you reach your goals for your business. We work with clients at all stages of growth, from business formation to succession planning and everything in between, focusing on creative solutions and practical advice that helps you move your business forward.

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