Upsize Minnesota January/February 2023

“It’s sharing that you help people look for jobs, because everybody knows someone that’s looking for a job. You have to activate and cultivate those relationships.”

ANN BOARMAN, Versique Search and Consulting

In a climate of uncertainty, we make the possible, possible.

Maybe you can’t predict the future of inflation, interest rates, or supply chains. But a good banking partner can still help bring the possibility for growth, expansion, or whatever goal a business owner might have to life. What can we make possible for your business?

CONTENTS

January • February 2023 • Vol. 22 No. 1 • www.upsizemag.com

PAGE 14

Cover story

The labor market remains tight and many of the easy-to-find options are off the market. But small businesses can still find talented workers who match their culture. Sometimes it just takes looking in different places.

BY ANDREW TELLIJOHN Cover photograph by Tom Dunn

PAGE 4

Founder’s Forum:

The founder of Fortitude Ranch, discusses with Upsize his views on the end times, outlining a business concept like none other

PAGE 4

Staff list: Who’s who at Upsize magazine and how to reach us.

Upsize Minnesota (USPS 024-029) is published bi-monthly by Broad Axe Media, 2908 W 71 1/2 St., Richfield, MN 55423. Periodicals postage paid at St. Paul, MN and additional mailing offices.

Postmaster: Send address changes to Upsize Minnesota, PO Box 23238, Richfield, MN 55423-0238

BUSINESS BUILDERS

PAGE 6

ADVERTISING

Taking the steps you need to maximize your 2023 media buy by Tracy Call, Media Bridge Advertising

PAGE 8

HUMAN RESOURCES

Helping your employees become more resilient can build loyalty and boost your bottom line by Courtney Patt, Marsh McLennan Agency

PAGE 10

MERGERS & ACQUISITIONS

Maximizing the effect of your social media plan involves getting top executives active by Peggy DeMuse, Sunbelt Business Advisors

PAGE 14

MANAGEMENT

Could the Enterprise Operating System (EOS) get your business on the right track by Barbara Voorhees, BCV Consulting and Visionary Integrator Solutions

COLUMNS

PAGE 20

FEATURE

With some flexibility and preparation, second chance workers leaving the prison system can be a viable source of quality — and loyal — talent

PAGE 22

CATCHING UP

Jeff Taxdahl, the 2011 Upsize Business Builder of the Year, continues reaping the benefits from transitioning Thread Logic into an e-commerce business

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A business for the end times

Acareer in business reporting turns up many unusual ideas, but in 30 years I’ve never seen anything like Fortitude Ranch.

On a visit last summer to its central Wisconsin location, which I had to swear to keep secret, I found the ultimate in pandemic-era concepts: a members-only survival community equipped to ride out any type of disaster and long-term loss of law and order. “Prepare for the worst but enjoy the present,” is their motto.

“I’ve been a prepper for a long time but figured out a decade ago I’m not going to survive on my own,” said Drew Miller, CEO and founder of Fortitude Ranch, who earned a doctorate from Harvard and is a retired colonel in the U.S. Air Force.

Miller seems oddly cheery as he ticks off all the disasters coming our way: Avian flu, meteor strikes, nanotechnology blow-ups or artificial intelligence gone rogue. “You can’t do it by yourself. If you’re a lone wolf, and especially if you’ve stockpiled a lot of food, a marauder comes, you’re going to get killed.”

Members will pay a few thousand dollars per person per year and they’ll store personal items and weapons on site — one AR-15-style rifle each is recommended. Plus — don’t forget your prescriptions, the operating manual says in one of many examples of mixing the banal and the existential.

In peace time, members can use the camps for outdoor retreats. In a disaster, they’ll have to serve guard duty, forage for food and shoot at intruders. Compounds have features with dual purposes, like a gazebo in the West Virginia Fortitude Ranch. “It’s wine and cheese, in good times,” Miller explained. “But in bad times, we can shoot down from that gazebo.”

Even in the apocalypse, things will normalize. “We’ll have movie nights and eventually we’ll get to the point where we’ll have some good times,” Miller says.

Five compounds were operating as of last summer, with a sixth in the works, and Miller said demand was so high he began offering franchises. His goal is to have enough compounds so every member is only one gas tank away.

I’ve never interviewed anyone with a world view like Miller’s, nor do I share it. An eternal optimist, I believe entrepreneurs like those we cover in Upsize will innovate our way out of future disasters. I also believe I’d rather go out enjoying wine and a meal with good friends, like the “regular” people in the movie “Don’t Look Up,” rather than escaping into space millions of years into the future (or is it the past?) with the elites, only to be eaten instantly upon emerging naked upon landing (Sorry, I should have said spoiler alert).

But as always when I encounter entrepreneurs with what seem like crazy ideas, I appreciate a different point of view, like the Fortitude Ranchers’. Maybe it does make sense to reserve a place in that survivalist compound, store your weapons and prescriptions, take shooting practice and prepare to hunker down, waiting out nuclear winter for years with movie nights. There’s only one way to find out who’s right. Obviously, if it’s Miller, you won’t be hearing it from me.

—Beth Ewen founding editor bewen@upsizemag.com

www.upsizemag.com

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advertising

banking

Make media buying your secret weapon

by Tracy Call

Manage your cash flow in a few simple steps

by Craig Veurink

When most small business owners think about advertising, they focus on what they want to say. But in a crowded and chaotic media environment where the average American is now bombarded with 4,000 to 10,000 ads a day, the “where” can be even more important than the “what.”

specific demographics of over-the-top (OTT) media service? Or are you content with simple anecdotal evidence that people are paying attention?

2. DON’T discount “traditional media.”

TIPS

TIPS

1. Set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future

1. Know what you’re looking for. Is personal brand awareness enough? Or are you looking for a specific count of clicks, phone calls or product sales in order to determine success?

2. Put cash flow before profits. It might seem counterintuitive, but if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix

2. Always customize media buys by first defining your campaign objectives, identifying specific target audiences, researching how they consume media and determining which channels reach them efficiently.

3. Secure credit ahead of time. Most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected

3. Media buying isn’t a transactional business; it’s relational. The best media buys come from quality relationships between media buyers and sellers.

4. Consider using a payroll service. Having the professionals take care of collecting payroll taxes saves them an enormous amount of time, helps streamline their cash flow

4. Take the time to communicate discrepancies to media organizations if they don’t run as they are supposed to.

This fact should be a huge consideration as you allocate your 2023 marketing dollars. Gartner found that the average 2022 marketing budget comprised 9.5 percent of total corporate revenues, up nearly 50 percent from 2021. If you want to get maximum bang for those additional marketing bucks, then smarter, more strategic media buying is your best bet.

Here are seven do’s and don’ts to get the most out of your annual media-buying budget.

1. DO recognize the difference between “direct response” and “awareness.”

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully running a small business requires rolling up your sleeves and putting in significant time on more mundane, day-today matters.

We’ve run a billboard campaign for one of our clients stressing the tagline “Don’t Sell Without the Intel.” The owner knows it’s working because people walk up to him on the street and recite it back to him. His goal is personal brand awareness and the message and medium are delivering that perfectly. Is that what you’re looking for or do you need direct response: a certain number of clicks, phone calls, product sales or appointments?

You can be driven, impassioned and have a great idea to fill a niche or serve customers in new ways, but if you don’t attend to the details of the business, you can create for yourself a heap of problems.

Here, we’ll look at one of the most important of these business details: managing cash flow. Especially for early startups, knowing how much cash is coming in and going out, and accurately forecasting sales and expenses, is key to maintaining your company’s health.

“When do I start to turn a profit?” Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.

2. Put cash-flow management before profits

As evidenced last spring by the Harvard Business Review, the death of traditional media has been greatly exaggerated. In addition to print seeing increased spending, marketers are steadily realizing that their choice isn’t between TV, radio and print versus social and digital; it’s a “yes and” situation. In my experience, the best campaigns work across multiple mediums to reach consumers wherever they are during a typical day. That might mean serving them an OTT spot on their smart TV while they eat breakfast, a radio ad during their commute, Facebook ads during the day, and a commercial during their late local news broadcast.

3. DON’T “spray and pray.”

This might seem counterintuitive, since profits are how you survive. However, if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix. Keep things organized and well managed so you can be ready for whatever success comes your way.

3. Secure credit ahead of time

5. Short-term strategies fail to account for the constant ebbs and flows in results that ads generate. You’ll benefit more by taking a longer view.

5. Schedule your payments. Don’t go delinquent but do divide your payments into categories such as “must pay,” “important to pay” and “flexible payment terms.” This can help keep sufficient cash on hand.

No matter where you are in your business, keep these things top of mind:

Some marketers assume that advertising is a numbers game like sales: The more ads you run, the more responses you’ll get. They saturate the market and then wonder why it doesn’t work. Always customize media buys by first defining your campaign objectives, identifying your specific target audiences, researching how those audiences consume media and determining which media channels reach them most efficiently.

1.

Know when you will break even

Every small business owner keeps at the front of their mind the question:

Media organizations measure their performance differently, so “awareness” vs. “direct response” informs both your message and how you approach your media buy. Will you be satisfied with the traditional ratings numbers that TV stations provide? Do you want the “impressions” favored by digital and social outlets? The

Too often, small business owners wait until they need it to secure credit. This can cause a lot of unnecessary stress, or worse. Talk to experienced business owners in your area and industry ahead of time to know how much revenue you’ll need up front. Take a realistic look at the situation and plan. You might have sufficient cash reserves or a rich uncle who is only a call away, but most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected.

For example, you might assume that the best radio strategy for your medical device is to run a spot on the most popular morning drive-time radio show. A little detective work might reveal that a DJ on the No. 2 show suffers from the exact condition your device solves. Doing a paid

endorsement with that DJ will give you far better results than plastering a generic ad on the “higher-rated” station.

4. DO recognize that relationships matter.

Media buying isn’t a transactional business; it’s relational. The best media buys come from quality relationships between media buyers and sellers — not from hardball tactics that burn bridges instead of building them. With an established level of trust, each side can help the other navigate potential issues and succeed. Over time, you might also earn better rates, more desirable ad spaces and more accurate measurement data. Make the effort to build relationships with media reps. It’s much more pleasant and productive than shaking them down for every last cent.

5. DO make sure your media buys run like they’re supposed to.

Once you finalize a media buy, you can assume that it’s going to run exactly as planned, right? Wrong. Your ad might use the wrong creative, run in a different time slot or not run at all. Most companies don’t have the time or resources to “reconcile” their ads (that’s the inside baseball term). And that’s a shame because they’re leaving money on the table. Take the time to communicate discrepancies to media organizations. They need to make you whole through pro bono spots or other added-value opportunities.

6. DON’T play the short-term game.

In our instant gratification world, companies often structure their me-

dia buys to deliver quick wins. This can look impressive on a Q4 financial chart, but short-term strategies fail to account for the constant ebbs and flows in results that ads generate. You’ll benefit more by taking a longer view, making more reasoned decisions, riding out the natural ups and downs of media, and managing for steady growth over time.

7. DO pull in outside expertise when needed.

As you’ve probably figured out from the previous six items, media buying is an increasingly complicated and specialized process. It can take years to master and it’s also constantly changing. If your company doesn’t have strong in-house mediabuying expertise, then consider bringing in an outside professional. But keep in mind that this is also a complicated process. Your return on investment depends on the fee structure of that outside person or agency. Will all of your media-buying dollars go toward the actual buy or will the outside buyer take a huge cut?

Today, more than ever, strategic media buying is your secret marketing weapon. Combined with the right messaging, it can deliver a one-two punch resulting in more awareness, leads, referrals, engagement and sales.

I’ve seen lazy media plans lead to incredible waste. I’ve also seen smart media plans help regional businesses go national, enable private companies to go public and give entrepreneurs overnight name recognition. In a world where media buying can be your secret weapon, make sure you do it right.

Contact: Tracy Call is the founder and CEO of Media Bridge Advertising: 612.210.9438; tracy@mediabridgeadvertising.com; www.mediabridgeadvertising.com; in/

“The best media buys come from quality relationships between media buyers and sellers

— not from hardball tactics that burn bridges instead of building them.”

Tracy Call Media Bridge Advertising

banking

human resources

Beyond stress management: How

Manage your cash flow in a

few simple steps

fostering well-being can improve your business

by Craig Veurink

by Courtney Patt

TIPS

TIPS

1. Helping employees become resilient and agile has been shown to create engagement and improve employee retention, which can lead to better margins and overall performance.

1. Set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future

2. You can use available data from company policies, human resources information reports, employee engagement surveys and healthcare claims, among others, to begin identifying areas of focus.

2. Put cash flow before profits. It might seem counterintuitive, but if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix

Everyone talks about stress, especially since the pandemic hit. There’s no doubt that managing stress is vitally important for your employees to stay physically and emotionally well. But simply dealing with stress isn’t the whole story. The real opportunity is helping employees become more resilient — and improving your company’s ability to manage change and grow profitably.

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully running a small business requires rolling up your sleeves and putting in significant time on more mundane, day-today matters.

The American Psychological Association defines resilience as “the process of adapting well in the face of adversity, trauma, tragedy, threats or significant sources of stress — such as family and relationship problems, serious health problems or workplace and financial stressors.”

“When do I start to turn a profit?” Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.

2. Put cash-flow management before profits

ployee well-being. Experts recommend taking a holistic approach to well-being to ensure each employee can enjoy complete well-being. This includes, but is not limited to, physical well-being. Physical well-being is what most people assume well-being is all about. Employees need to care for their bodies through proper nutrition, movement or exercise and regular visits to the doctor. There’s also financial well-being, which concerns creating financial security — a key factor in reducing stress. When employees aren’t focusing on their financial problems, they can concentrate more on work and family.

3. You could align policies and procedures with organizational needs to help develop a wellbeing mission statement with measurable objectives. A communication strategy may also be helpful.

3. Secure credit ahead of time. Most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected

4. Consider using a payroll service. Having the professionals take care of collecting payroll taxes saves them an enormous amount of time, helps streamline their cash flow

4. You can leverage often free local and national resources to help build a resiliency plan.

5. Approaching employee well-being from a broader perspective can help create a culture that focused on positivity, not where you just ignore problems, but where you “lean in” to the positives to help engage employees.

5. Schedule your payments. Don’t go delinquent but do divide your payments into categories such as “must pay,” “important to pay” and “flexible payment terms.” This can help keep sufficient cash on hand.

You can be driven, impassioned and have a great idea to fill a niche or serve customers in new ways, but if you don’t attend to the details of the business, you can create for yourself a heap of problems.

Adversity is present in everyone’s life to varying degrees. It’s how we deal with it that defines us.

This might seem counterintuitive, since profits are how you survive. However, if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix. Keep things organized and well managed so you can be ready for whatever success comes your way.

Here, we’ll look at one of the most important of these business details: managing cash flow. Especially for early startups, knowing how much cash is coming in and going out, and accurately forecasting sales and expenses, is key to maintaining your company’s health.

No matter where you are in your business, keep these things top of mind:

1.

Know when you will break

even

However, many of us lack the skills that allow us to effectively move through a bad situation and come out the other end alive and well — or even stronger and better than before. Agility is a term often used in discussing resilience. Much like an athlete whose agility lets them escape onrushing linemen or slice their way through defenders to reach the basket, personal agility helps employees pivot. So, rather than obsessing over a problem, they innovate to solve it.

Every small business owner keeps at the front of their mind the question:

Resiliency and stress management both begin at the same place: em -

Equally important is social well-being. “Social” doesn’t mean connecting only on Facebook. It’s about truly feeling connected to others. This is sustained by building a healthy, diverse, supportive community within your organization. Finally, there is mental wellbeing. If you’re able to cope with the challenges of life — family, work, personal or financial — you tend to be physically healthier and generally happier and more engaged. You can help create and sustain mental health by building an environment that’s free from any stigma around behavioral health concerns.

3. Secure credit ahead of time

Too often, small business owners wait until they need it to secure credit. This can cause a lot of unnecessary stress, or worse. Talk to experienced business owners in your area and industry ahead of time to know how much revenue you’ll need up front. Take a realistic look at the situation and plan. You might have sufficient cash reserves or a rich uncle who is only a call away, but most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected.

Approaching employee wellbeing from this broader perspective can help you create a culture that focuses on positivity. We’re not talking about what’s known as “toxic

positivity,” where you ignore the problems and only talk about how wonderful everything seems to be. But “leaning into the positive” helps engage employees and sets the stage for productive results.

Resilience and learning to be more agile have been shown to create engagement and improve employee retention. Becoming more resilient and agile puts the employee in the driver’s seat and often correlates with better margins, growth rates and overall performance. Research indicates that helping employees become more resilient and more agile leads to improved engagement.

According to a study published in “Leadership Institute Faculty Publications,” businesses that invest in engagement enjoy 2.1 times average revenue, 4.2 times average profit, 2.8 times profit per employee and regularly outperform the companies in the S&P 500. A study in “Human Resource Management” found that engaged employees are four times more likely to stay, 16 times more likely to refer someone to the company and more than three times more likely to feel empowered to solve a customer’s problem.

To help organizations create a whole person well-being strategy, start by asking three fundamental questions:

Why should you implement a well-being strategy? We’ve already shown you some statistics that demonstrate why fostering wellbeing is not only good to do but smart to do. Some other business drivers could include cost control, quality improvement and customer

satisfaction, generating revenue and growing the business, improving efficiency in operations, risk management, and employee engagement and retention.

What opportunities exist within your organization? Use available data to identify areas of focus. Consider reviewing company policies; organizational stressors; human resources information system (HRIS) reports; employee engagement, healthcare claims, risk scores and health screenings; workers’ comp and safety reports; and workplace environmental assessment results.

How will health and well-being be improved? Determine the tactics — programs, resources and tools you’ll use to address well-being. For example, you could create a supportive, caring workplace culture where employees can thrive — mentally, financially, socially and physically. You could align policies and procedures with organizational needs to develop a well-being mission statement with measurable objective. A well-being communication strategy may be helpful. Finally, explore and leverage valuable and often free local and national resources

Improving resilience and wellbeing can benefit your employees, your culture and your business results. It’s a great investment in the future of your people and your company.

Agency

Contact: Courtney Patt is health management consultant manager in the Minneapolis office of Marsh McLennan Agency. She can be reached at: 763.746.8509; courtney.patt@marshmma.com; www.marshmma.com; in/courtney-patt

“Improving resilience and well-being can benefit your employees, your culture and your business results. It’s a great investment in the future of your people and your company.”

Courtney Patt Marsh McLennan

banking

mergers & acquisitions

Manage your cash flow in a few simple steps

The power of seller financing

by Peggy DeMuse

by Craig Veurink

When a business owner is planning their exit strategy, they should seek to minimize risk and maximize net proceeds from the sale. Seller financing can be a powerful tool in this regard.

the table — a bank. Buyers want leverage and bank financing gives them that leverage. Unfortunately, along with the banks’ capital comes a lot of requirements.

Seller financing drives higher prices

TIPS

TIPS

1. Seller financing can generate higher prices because buyers have confidence that those sellers are confident in the future of the business and will still have skin in the game.

1. Set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully running a small business requires rolling up your sleeves and putting in significant time on more mundane, day-today matters.

“When do I start to turn a profit?”

2. Seller financing does not require underwriting like banks do, meaning debt-to-equity ratios and expense add-backs are not an issue.

2. Put cash flow before profits. It might seem counterintuitive, but if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix

Business buyers are also looking to reduce risk. And the fact is, an all-cash deal has more risk than a deal where the seller finances a portion of the transaction. The mere existence of seller financing shows a buyer that the seller has confidence in the future. The seller still has skin in the game. If there are postclosing issues, the buyer is confident the seller will be responsive if their feedback is needed.

With seller financing, the business does not need to go through underwriting at the bank. Occasionally, banks can put doubt in buyers’ minds. Some examples where bank financing might not be the best option are:

Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.

2. Put cash-flow management before profits

You can be driven, impassioned and have a great idea to fill a niche or serve customers in new ways, but if you don’t attend to the details of the business, you can create for yourself a heap of problems.

• Bank financing requires certain debt-to-income ratios, seller financing does not. There are many discretionary expenses that owners will run through their business that can be added back to arrive at the profitability of the business. The banks do not consider all of these expenses, which in turn, results in a lower valuation.

3. With banks having less lending capacity now than in recent years, seller financing provides an alternative — sometimes the only alternative available — to getting deals completed.

3. Secure credit ahead of time. Most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected

This reduction of risk leads to higher offers. Deals are typically financed for five years or fewer. And it is well known in the deal making world that cash offers are often discounted by buyers.

This might seem counterintuitive, since profits are how you survive. However, if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix. Keep things organized and well managed so you can be ready for whatever success comes your way.

4. Consider using a payroll service. Having the professionals take care of collecting payroll taxes saves them an enormous amount of time, helps streamline their cash flow

4. Seller financing rates are typically fixed, providing predictability for buyers usually unavailable through banks, which typically offer variable-rate loans.

5. In seller financed deals, the seller becomes like the bank and should think like one. They need to look for a strong buyer with transferable skills, a strong credit score and a reasonable cushion in case of a down year.

5. Schedule your payments. Don’t go delinquent but do divide your payments into categories such as “must pay,” “important to pay” and “flexible payment terms.” This can help keep sufficient cash on hand.

Seller financing allows for creative deal making

Here, we’ll look at one of the most important of these business details: managing cash flow. Especially for early startups, knowing how much cash is coming in and going out, and accurately forecasting sales and expenses, is key to maintaining your company’s health.

No matter where you are in your business, keep these things top of mind:

1. Know when you will break even

Most business owners only sell a business once. And they usually start the process with a bias against seller financing because of the risk. What they don’t understand is they are likely leaving dollars on the table if they insist on all cash as discussed above.

What they also don’t realize is that all cash deals invite another party to

Every small business owner keeps at the front of their mind the question:

3. Secure credit ahead of time

• Banks also shy away from businesses with significant customer concentration, even if strong long-standing relationships are in place.

• If there has been a recent drop in revenue, this can also be a problem for bank financing. In the current environment, banks are getting tighter with lending and don’t have as much capacity as they have had in recent years. This has, in many cases, made seller financing the only option.

While a buyer will generally be required to pay a larger down pay -

Too often, small business owners wait until they need it to secure credit. This can cause a lot of unnecessary stress, or worse. Talk to experienced business owners in your area and industry ahead of time to know how much revenue you’ll need up front. Take a realistic look at the situation and plan. You might have sufficient cash reserves or a rich uncle who is only a call away, but most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected.

ment for seller financed deals than bank financing would require, there are some benefits to the buyer as well. Banks will typically have variable loan rates, whereas seller financed notes tend to have a fixed rate, making payments predictable for a buyer. In addition, with SBA financing, if a buyer has equity in their home, the bank will require the home to be put up as additional collateral on the loan, regardless of the strength of the business.

Seller financing drives ROI, saves on taxes

Another appealing benefit of seller financing is that Interest rates are currently running between 7-8 percent for seller financed businesses. This is a great rate of return for most sellers (see table above).

Additionally, by taking the sale proceeds over time, the seller can be taxed on the sale as the proceeds are received. This can result in significantly lower taxes than if all proceeds were recognized in the year of sale, which could push the seller into a much higher tax bracket.

Risk mitigation

If seller financing sounds like the right option for a business owner, they will need to look for a strong

buyer with transferable skills, a strong credit score and a reasonable cushion in case of a down year. The seller is now the bank and should think like a bank. Is the deal structured in a way that allows for reasonable repayment of the debt structure? Does the buyer have enough cash flow to allow for capital expenditures and unexpected one-time expenses? What reserves does the buyer bring to the table for investment?

The seller should request regular financial statements and annual tax returns from the buyer until the note is paid in full. The note should also be secured by the assets of the business and personal guarantee of the buyer.

Maximizing your life’s work

Properly structured seller financing will drive higher offers, allow for creative deal making, create significant return on investment for the seller on interest earnings and create tax mitigation opportunities. Work with an experienced business broker or mergers and acquisitions adviser to understand if seller financing is right for you.

Lisa Meyer, licensed business broker, Sunbelt Business Advisors, contributed to this article

Contact: Peggy DeMuse is a licensed business broker at Sunbelt Business Advisors: 651.288.1627; pdemuse@sunbeltmidwest.com; www.sunbeltmidwest. com; Lisa Meyer is a licensed business broker at Sunbelt Business Advisors: 612.361.4918; lmeyer@sunbeltmidwest.com; www.sunbeltmidwest.com

www.upsizemag.com

DeMuse Sunbelt Business Advisors

“The seller is now the bank and should think like a bank. Is the deal structured in a way that allows for reasonable repayment of debt structure? Does the buyer have enough cash flow to allow for capital expenditures and unexpected onetime expenses?”

Peggy

banking

Manage your cash flow in a few simple steps

Visionary and integrator tandem creates mix for EOS success

by Craig Veurink

by Barbara Voorhees

What is EOS and why your business should consider it

TIPS

EOS (a registered trademark of EOS Worldwide) stands for Entrepreneurial Operating System. It comes from the book “Traction: Get a Grip on Your Business” by Gino Wickman. EOS lays out a complete set of simple concepts and tools designed to help business owners and their teams clarify and execute their vision, become a healthier and more functional team, and successfully grow their business.

1. Set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future

TIPS

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration, successfully running a small business requires rolling up your sleeves and putting in significant time on more mundane, day-today matters.

• The integrator is a hands-on member of the leadership team who listens to the visionary’s ideas and then works with the team leadership to make that vision a reality. Integrators orchestrate the business functions and ensure accountability. Integrators free the visionary from the day-to-day, allowing them to focus on strategic initiatives and relationships. Integrators rank high in operations skills, marketing/sales expertise, and financial acumen.

“When do I start to turn a profit?” Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.

The role of the integrator

1. The role of the integrator is to free the visionary from the dayto-day allowing them to focus on what they do best.

2. Put cash flow before profits. It might seem counterintuitive, but if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix

2. If you are feeling trapped by day-to-day operations or feel you are missing opportunities, consider talking to an integrator.

3. Secure credit ahead of time. Most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected

3. Find the right integrator to fill your needs, business size and budget. If you are not ready for a full-time integrator, consider a fractional integrator.

4. Consider using a payroll service. Having the professionals take care of collecting payroll taxes saves them an enormous amount of time, helps streamline their cash flow

4. Visionaries and integrators are very different. They complement each other in order to create a harmonious relationship built on trust, clarity and vision.

There are more companies using EOS to run their organizations in Minnesota than in any other market. Business owners are attracted to its easily relatable concepts and tools. Whether a business tries a few tools for its particular situation, implements EOS by itself, or hires a trained implementer to work with its team, EOS has grown a strong following in Minnesota.

You can be driven, impassioned and have a great idea to fill a niche or serve customers in new ways, but if you don’t attend to the details of the business, you can create for yourself a heap of problems.

Key Players

EOS revolves around three critical roles:

Here, we’ll look at one of the most important of these business details: managing cash flow. Especially for early startups, knowing how much cash is coming in and going out, and accurately forecasting sales and expenses, is key to maintaining your company’s health.

• The visionary, typically the business owner, is the person with the vision and ideas for the business. They typically have that big picture ability to solve problems and those big relationships that get companies to the next level.

No matter where you are in your business, keep these things top of mind:

2. Put cash-flow management before profits

This might seem counterintuitive, since profits are how you survive. However, if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fix. Keep things organized and well managed so you can be ready for whatever success comes your way.

3. Secure credit ahead of time

Many companies are founded by visionaries and, as the company grows, the visionary fills the integrator role. However, few are able to do this successfully for long because the skill sets are so different. These visionaries find that operating the business with its many details is not for them and that having someone who can lead the major company functions, maintain accountability and manage the day-to-day is the right answer.

5. Schedule your payments. Don’t go delinquent but do divide your payments into categories such as “must pay,” “important to pay” and “flexible payment terms.” This can help keep sufficient cash on hand.

5. Seek out organizations that have an integrator and ask them how their business has benefited since adding someone in that role.

1.

even

Know when you will break

Every small business owner keeps at the front of their mind the question:

• The implementer is an external coach, teacher and facilitator. Through a set of meetings with exercises, an implementer helps get the EOS tools in place. With quarterly sessions the implementer gets the team into a rhythm to achieve their goals.

Like a chief operating officer or general manager, the integrator supports the visionary by directing the team. Integrators are well-versed in business operations and processes. They understand how each of the functions works individually and also how they work together. This knowledge creates alignment that gets everyone rowing in the same direction.

Integrators get to the root of issues and resolve them effectively. Integrators act as the tiebreaker while maintaining unity within the organization.

Too often, small business owners wait until they need it to secure credit. This can cause a lot of unnecessary stress, or worse. Talk to experienced business owners in your area and industry ahead of time to know how much revenue you’ll need up front. Take a realistic look at the situation and plan. You might have sufficient cash reserves or a rich uncle who is only a call away, but most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected.

With profits and losses in mind, they remove obstacles so employees can do their work efficiently. Integrators run on logic and obsess over focus, simplicity and clarity.

Full-time or fractional integrators

A visionary may think they don’t have the budget to hire an integrator. If you are a visionary, ask yourself these three questions:

• Do I feel trapped by day-to-day operations?

• Do I have a pressing problem that isn’t being addressed?

• Are we missing out on opportunities?

If you answered yes to these questions, you are ready to dive deeper into having someone fill the integrator role.

The next question that comes up is affordability. Hiring a full-time or a fractional (part-time) integrator is based on needs, business size and budget. A full-time integrator provides someone on-site, 40-hours-per-week, while a fractional integrator can help a company bridge the gap until they are ready for a full-time integrator.

Making it Work

When a visionary works with an integrator, it will allow the visionary to let go of some control and stressing issues. The trust of an integrator gives the visionary freedom and the ability to work fewer hours or move their focus to what they do best.

Finding the right fit is critical to the success of your visionary/integrator relationship, and in the book “Rocket Fuel,” by Gino Wickman and Mark Winters, there are five rules to making this critical relationship work.

1. Stay on the same page — It is essential that the visionary and

integrator are always on the same page. This requires trust, open and honest communication and the visionary’s willingness to let go.

2. No end runs — In other words, if mom doesn’t say yes, then ask dad. Employees need to understand the integrator’s level of authority and not go around him or her to the visionary, and the visionary needs to make it clear that this sort of end run will not be tolerated.

3. The integrator is the tiebreaker — There are times when issues result in split factions. A good integrator will guide decision-making and act as the tiebreaker when necessary.

4. You are an employee when working in the business — If you are an owner, you must maintain your role within the business and act accordingly, and not exercise your right to play the “owner card.”

5. Maintain mutual respect — Respect is built with trust, which must be earned. The visionary and integrator need to develop a deep level of mutual respect in order for the relationship to work.

Is EOS for you? If you are a visionary, is it time to consider an integrator? Could a fractional integrator get you started? It’s easy to learn more in Minnesota — just ask an owner who is using EOS to get what they want from their business.

This Business Builder article was originally published in the May-June 2019 issue of Upsize Minnesota.

Barbara Voorhees BCV Consulting and Visionary Integrator Solutions

Barbara Voorhees is founder of BCV Consulting and Co-Founder of Visionary Integrator Solutions: 612.247.3189; barb@bcv-consulting.com; www.bcv-consulting.com

“When a visionary works with an integrator, it will allow the visionary to let go of some control and stressing issues. The trust of an integrator gives the visionary freedom and the ability to work fewer hours or move their focus to what they do best.”

Quality workers available for those willing to look

DIGGING E E P

by Andrew Tellijohn photographs by Tom Dunn

Storm Creek develops high quality, eco-friendly apparel for people to wear outdoors. It’s a socially conscious company that donates significantly — to the tune of more than $1 million in 2022 — to organizations ranging from the American Cancer Society to Secondhand Hounds. It’s built a following among its customers and owner Teresa Fudenberg taps that regularly when it comes to hiring.

“We have a warehouse sale every year and thousands of people come to that,” she says. “And so, we’ll let people know at the cashier’s [stand] that we’re recruiting. They interact with our staff. And, so, people go ‘oh my gosh, these people seem like they have so much fun working.’”

She’s had salespeople who arrived at interviews wearing a Storm Creek wardrobe and retirees approach her who say they don’t want to work full-time anymore but would like to be around her company part-time to stay busy.

Fudenberg also actively recruits while sponsoring visible outdoors events like the Twin Cities Marathon or Grandma’s Marathon in Duluth.

“We’re super visible in a community that is all about dressing active, being active outdoors, giving back and performance apparel,” she says. “So, we have people that say ‘you have been on my radar because I’ve interacted with this. So, I follow your organization, I watch what’s going on’ and they throw their hat in the ring.”

Using what you have

Storm Creek also will post positions-for-hire

in standard places like LinkedIn and Indeed. But in a crowded market with low unemployment and staffing shortages that are only projected to worsen in the years ahead, the company also proactively uses its notoriety and public face to find employees off the traditionally beaten path. Fudenberg says she’s had recruiting firms call offering services but hasn’t needed them to fill positions that offered multiple quality candidates.

“It seems like kind of a 101 class, but I think managing our employer brand and talking about the types of people we want to have working here, it’s super important,” she says. “We’re really transparent.”

Having people on staff who have wanted to work there and who are happy doing so also helps gain referrals. One warehouse picker remembered hearing in a meeting that the company would eventually need a human resources manager. That person passed a resume along to his manager who passed it along to Fudenberg. The potential applicant ended up hired and the existing employee earned a healthy bonus.

“We brought her in and, as of last October, we have an HR director that has been a life changer for me personally and a game changer for the company,” she says.

Employees can come from many places and

Ann Boarman, a managing director at Versique Search & Consulting, sets up individual meetings with people she meets at events and always tells people she helps others find jobs, whether at networking events or hockey games

COVER STORY

it’s important to be keeping an eye out, even when you’re not necessarily hiring. Versique Search & Consulting might seem like it has an advantage because it’s helping clients recruit for their own interim, direct hire and executive leadership roles and, thus, has a database of potential applicants at its fingertips. But the company has been rapidly adding employees of late and Ann Boarman, managing director of recruiting, finance and accounting interim solutions, is always keeping her eyes open for people who might be a good fit internally.

Versique, too, uses strong employer branding and social media to communicate to potential employees. “These are so important, as we spend so much of our time at work that candidates want to know they’re joining a great company that aligns with their values,” she says. “We’ve had great success with this, as we’re constantly hearing from candidates that ‘we see all the great things Versique is doing everywhere.’”

Boarman meets a lot of people who end up working at Versique when out meeting with recruits for other opportunities. One important thing in hiring, she says, is building relationships. So, when she’s out, whether it’s networking events for professional and volunteer organizations or hockey games or meeting with people from her son’s school, she’ll tell people she helps others find jobs. She meets people without having an agenda in mind and often meets individually with people she meets at events to learn about their plans and goals whether a job is open immediately or not.

“This is a long-game approach,” she says. “Often times it’s not the people you meet when you are there, but it’s the people

CONTACT:

ANN BOARMAN is managing director of recruiting, finance and accounting solutions at Versique Search and Consulting: 952.737.6543; aboarman@versique.com; www.versique.com; in/ann-boarman-08173814

TERESA FUDENBERG is owner of Storm Creek: 651.480.3000; info@stormcreek.com; www.stormcreek.com; in/Teresa-fudenberg-64555a24

MELISSA JOHNSON is director of veteran services with Cardinal Consulting Solutions: 218.770.9402; www.cardinalconsulting solutions.com; in/melissa-j-johnson

GWEN MARTIN is a partner with Scouts Talent: 612.308.1100; gwen@scoutstalent.com; www.scoutstalent.com; in/gwenmartin

STEVE SCHAD is president of Optima Advisory LLC: 651.587.0588; sschad@optimaadvisoryllc.com; www.optimaadvisoryllc.com; in/steveschad

STACEY STRATTON is founder and CEO of True Talent Group: 612.860.0307; stacey@truetalentgroup.com; www.truetalentgroup.com; in/staceystratton

that they know. It’s sharing what you do. It’s sharing that you help people look for jobs, because everybody knows someone that’s looking for a job. You have to activate and cultivate those relationships.”

One final credo: If you help someone, they remember it. “It always pays off in the end,” she says. “If you help people, it’ll come back and, in turn, it’ll help me as well.”

Open minds

Gwen Martin, a partner with Scouts Talent, says companies need to be more open-minded about the opportunities that are available than in past years when talent was more readily available.

That might mean embracing hybrid or remote working arrangements, it might mean diversifying benefits offerings. The answers are going to look different for a finance and accounting firm than they will for a distribution or a manufacturing company. Either way, flexibility is key.

“Meeting the talent where they are at to ensure their company goals are being met is really what we’re recommending,” she says.

Scouts Talent works with many professional service firms. With the busy tax season approaching, CPA firms, for example, might look to piece together two or three fractional workers with accounting experience to help round out staff instead of one fulltime worker as they’d done in the past.

At least one of the big four accounting firms, Martin adds, has started offering finding bonuses to sophomores in college. Retirees uninterested in full-time work but who still want to put in a few hours are another source of help.

“So, tapping into the talent pool, both the younger and the older, are two ends of the continuum we see pulled into the workforce in ways we haven’t seen before,” she says.

Don’t forget culture

Companies large and small are having to find new ways to compete for talent, but smaller entities have to get particularly scrappy, says Stacey Stratton, founder and CEO of True Talent Group.

“You don’t have to be a large company or offer trips to the Caribbean to find great talent, it’s really about transferable skills,” she says.

That means a lot of things, but for small businesses, it might not make sense to look at employees who have worked at large companies where they had a ton of resources and worked in a silo. Smaller companies have fewer resources and often need people to pitch in outside their typical skill set.

Companies also have to relax their requirements a bit, Stratton adds. The laundry list of “must have” skills and bachelor’s degrees from the past have gone by the wayside, replaced by looking at the three to five most important characteristics a new

COVER STORY

Versique Search & Consulting plays the “long game” in its own hiring efforts, figuring even if one person they meet isn’t interested in a job, someone they know may be their next hire.

hire might bring.

“A lot of companies have really thought outside the box,” she says. “Is this person with the bachelor’s degree and all these awards really the best person? They might not be. You have to wear a lot of different hats. You might be helping at things you haven’t done before.”

And don’t forget about culture, she adds.

“One day is a long time to work with people you don’t get along with,” Stratton says. “Culture can’t be taught. I like to hire for potential.”

Finally, look in different places than you have in the past. True Talent Group placed one woman who had been a stay-at-home mom. While her resume, in the past, might have been perceived to have holes, Stratton points out that she had tons of volunteer experience and had been managing events and communicating widely about events all along.

“She had all that volunteer experience at her child’s school,” she says. “If you think of all those people who were out of work to take care of their parents, take care of their health, take care of their kids — a lot of those people are willing to come into the workforce for a lesser salary because they haven’t been doing the day in, day out. But have they been doing any side gigs or anything that shows potential?”

Other untapped workers

Stratton and Steve Schad, president of Optima Advisory LLC, both add that remote and hybrid work open up opportunities via greater geographic spans.

“You might have something to offer somebody in St. Cloud, for example, that they know they can’t get locally,” Schad says. “Maybe it’s access, maybe it’s a leg into a new industry in the marketplace that will make it easier to go on to another position.”

But Schad definitely agrees that small businesses need to open their minds to untapped markets.

“What I like to tell people is ‘the easy talent is taken,’” Schad says. “They’ve got jobs, they’re highly employable, if they’re moving, they’re going to land. Now you’re into more difficult labor and you have to put your creative thinking cap on.”

COVER STORY

operations. So, in many cases, they’re coming to the U.S. with undergrad or graduate degrees in a variety of different fields. They have the ability to come here and work. They are perfectly legal and are a really viable source of talent for small organizations that businesses really should be looking at.”

One client, Schad says, hired a couple people from the Hmong community in St. Paul, became known as a place where people from that population could get jobs and ended up being recruited by others in the same community.

“The dynamic can happen if you become known as a place where individuals from a particular community can find work and stable employment, all of a sudden it opens up a stream of people who are interested in working there,” he says.

There might be a few challenges, such as the need for second language translation or tutoring, but “if you’re ready for that and you plan for this change and help your organization accept people that might look and talk different … you can make that really work in your favor.”

Veterans and their spouses

Veterans, whose resumes are often filled with military jargon and whose skills don’t always align with what companies are seeking, also continue to be an oft-overlooked source of talent, as well, says Melissa Johnson, director of veteran services with Cardinal Consulting Solutions.

“When you don’t understand someone’s knowledge, skills and ability, it’s hard to know where to place them,” she says. “When you don’t understand what they did or what they didn’t bring to the table … you’re left with a desire to not interview a veteran because you don’t understand what they are saying.”

Johnson runs workshops for human resources professionals, hiring managers and owners aimed at helping translate veterans’ skills into terms they understand “so you’re less likely to put it in the ‘no pile,’” she says.

She also helps those professionals know where to find military members who, Johnson adds, typically come with a number of characteristics employers would find desirable, such as working well on a team, excellent organizational skills, strong sense of duty and adaptability to change.

Tapping the retiree market, for example, for experienced laborers who may be more limited physically than they once were but who still want to stay engaged and contribute on lighter duty work is smart, he says.

Among other potential markets are second-chance citizens returning to society after serving prison terms (see story on page 20) and the local refugee market, which has grown since the U.S. military’s involvement in Afghanistan and from the ongoing war in Ukraine.

“What’s interesting about the refugees coming to Minnesota is they are highly educated,” he says. “They partnered with the United States in Afghanistan in carrying out military

“I have not met someone who is not team oriented,” she says. “They are quick and creative problem solvers. The military is constantly throwing problems at you because unfortunately you can’t always plan, you have to react.”

Military spouses, Johnson adds, also are an untapped market. Because they move around a lot, many have gaps in their resumes too. There long have been tax credits for hiring military members. The Military Spouse Hiring Act circulating right now would extend Work Opportunity Tax Credits to include spouses, incentivizing their hiring.

“The military network is huge,” Johnson says.

Storm Creek CEO Teresa Fudenberg says the company proactively sources potential employees at sales and at events it sponsors, such as the Twin Cities Marathon or Grandma’s Marathon in Duluth

Unlocking a

Music producer and environmental innovator Mike Martin

started r.Cup with the idea of partnering with cities to reduce trash and reuse the cups attendees use when attending sports, concerts and other events.

The company has wash hubs active via partnerships in Denver, Seattle and Los Angeles with San Francisco beginning operations this month. Headquartered in Minnesota, he hopes to begin operations here this year too.

“We work with them about where it would be beneficial for the city to build a wash hub,” Martin says.

The company has gone from four employees to almost 40 in a year’s time and will be hiring many more in the months ahead, as r.Cup navigates the 10-plus additional cities asking for its services.

And as part of the company’s hiring, r.Cup has looked deliberately toward hiring for work at its wash hubs second-chance citizens who have just finished serving time.

helps inmates learn life skills that will help them get work and stay out of prison.

zone. We get our materials all domestically rather than shipping them from China. We want to create jobs in communities, we want to help people get on their feet who are having a hard time. So, it’s all part of the overall package.”

How it works?

From r.Cup’s perspective, the company has partnered with the Center for Economic Opportunities, an organization that specializes in helping people transition from prison back to society, in its Denver operations. In Seattle, its partner is Weld Seattle, which provides safe transitional recovery housing as part of a pathway toward reconnecting in society.

Managers are trained to provide second-chance workers with a bit of extra support and they know there may be some flexibility needed to help them deal with drug tests or parole meetings. Across its operations, r.Cup has about a dozen people working in its wash hubs, two of whom are secondchance employees. Another started in a wash hub and has been promoted. A couple of the workers did not work out, Martin says.

“I designed our company to be focused on creating positive societal change,” Martin says. “That’s the whole premise of it. I gave 10 percent of the company to non-profits focused on tackling the waste crisis. We built an economic development

by Andrew Tellijohn

“We haven’t had any problems with any of the people that we’ve brought in,” he says. “Sometimes it’s just not a good fit.”

Martin does think second-chance workers are an untapped population that employers should consider as they are filling

Dwight Tostenson, cofounder and CEO of the Redemption Project,

their labor needs.

“I would encourage companies to pursue this,” he says. “These guys and women need help getting back on their feet. And you know, you might have a couple challenges, but you’ll have challenges even if they are not coming from a secondchance organization.”

The Redemption Project

One program working with incarcerated people in Minnesota prisons to help them prepare to reassimilate is the Redemption Project. CEO and co-founder Dwight Tostenson says there are millions of prisoners across the country who want to do right and whose chances of not ending up behind bars again would improve with the opportunity to work.

He was inspired by talking with a friend who went to prison for 14 months. The friend went with preconceived notions that prisoners were bad people but left feeling like a considerable percentage weren’t “bad dudes,” but rather people who had made mistakes and who wanted to avoid returning to prison.

“They wanted to do good, but because of circumstances and whatever else, they always seemed to get sent back,” he says.

One of the main factors, Tostenson says, is inability to find a job. The Redemption Project has partnerships with facilities where it teaches 14-week classes on life skills to inmates and matches those people with companies willing to give second-chance workers a try.

“They develop a relationship with them and then once they get released, the idea is that they’ll get their interview and get employed,” he says.

In discussing the benefits of offering second chances, Tostenson referenced “Untapped Talent,” a book by Jeff Korzenik, who researched such opportunities for seven years. Korzenik concluded that for companies that put in some resources in advance that allow employees accommodations for court dates, probation officer meetings, drug tests and other things formerly imprisoned individuals may need to do will reap huge rewards in the end.

“The inmates will be more loyal, they’ll promote faster, they work harder and they are more productive,” Tostenson says.

His own research is not yet quite as detailed, but early returns are good. Of nearly 40 who took the organization’s classes, left prison and placed in positions, only three have gone back into the system. With a talent shortage expected to last decades, he adds, it’s time for businesses to look to this market for workers.

“If you put money in on the front end, they’ll pay dividends on the back end,” he says. “Businesses are beginning to recognize that … We’re hopeful this will be a standard practice and be looked at as a pipeline of high-quality employees.”

Prepare in advance

Steve Schad, president of Optima Advisory, says he’s seen statistics indicating that up to one-third of working adults have some kind of criminal record. That’s 70 million people, so “the challenge for businesses is they often have an automatic disqualifier for people with a criminal background,” he says. “That creates a barrier that some businesses have figured out is unnecessary.”

That said, if you are considering hiring ex-offenders, Schad says you do need to take some time to prepare. You need to keep your existing employees safe and communicate with them while balancing the privacy and personal lives of those potential hires.

In addition to potential drug tests and parole meetings, those immediately off a prison term may encounter housing, childcare or transportation issues or just struggle for a while with the noise of reentry.

“The hustle and bustle are really unsettling for somebody who comes out of a prison system where it’s just boredom all day long,” he says. “They spend their days doing nothing and they spend their days trying to occupy themselves and pass the time. Then they come out of the prison system and everything is moving, everything is noisy and it’s just overwhelming.”

So, try to put yourselves in their shoes, he says. Get to know the individuals. Try to help them find resources in the community to help formerly incarcerated people reenter the world. Be clear with them upfront about expectations and about what happens in the case of a violation.

“You can’t set yourself up for failure by just doing things the way you’ve always done them,” he says.

Those who take the time to do it right, Schad agrees, set themselves up for a potentially big payoff. Those who successfully navigate getting a second chance often are great workers and tremendously grateful for the opportunity. “The gratitude and becoming a part of that community becomes a really strong bond,” he says.

Mike Martin is CEO and founder of r.Cup: mm@rcup.com; www.rcup.com; in/michael-martin-09b490

Steve Schad is president of Optima Advisory LLC: 651.587.0588; sschad@optimaadvsoryllc.com; www.optimaadvisoryllc.com; in/steveschad

Dwight Tostenson , co-founder of The Redemption Project: 952.388.0839; info@redemptionproject.org; www.redemptionproject.com; in/dwight-tostenson-0336378

catching up

by Andrew Tellijohn

Thread Logic still sewing its own way

In the early days of Thread Logic, Jeff Taxdahl had no interest in becoming an e-commerce company. He figured if the internet was going to work for an embroidered product company that someone would already be doing it.

But he also had told his wife, Wenda, who also is his co-owner of the business, that failure was not an option, that Thread Logic would work, had to work.

And, so, a few years later, when the company had reached a level of growth that would have required him to hire a salesperson, he instead made the switch to e-commerce. He realized a few things: He’d rather not hire a salesperson who was likely to build up some business, then leave with those clients. He also realized moving to e-commerce would expand his potential customer base. And, with his background in marketing, he felt he had the necessary skills to succeed in selling on the internet.

His revenue more than doubled in the first year and, by the time a panel of judges named him the Upsize Business Builder of the Year for 2010, 90 percent of his sales were generated outside the state of Minnesota.

That has remained true. The bulk of his customers come from population centers, like California, Texas, Florida, Illinois and New York. But the numbers are significantly larger — Thread Logic’s sales have increased from about $1.2 million in 2010 to more than $8 million in 2022.

And, while the steady growth has been satisfying, he’s also had some fun brushwith-fame moments that have both provided stories and affirmation that his e-commerce strategies are working.

He’s received orders from high-ranking government officials and agencies in Washington, D.C., including the Depart-

ment of Homeland Security and the Federal Aviation Administration.

He did 200 hats for actor Carol Burnett, whose husband directly responded via phone to an email from Taxdahl asking to confirm the copyright for her caricature. He’s got a signed polo shirt from that experience.

And apparel designed by Thread Logic has appeared in the movie “The Help” and in TV shows “Naked and Afraid,” “Ghosts,” “The Following” and “Dirty John.”

Jeff Taxdahl, co-owner and CEO of Thread Logic, switched to an e-commerce sales model in 2005, adding to his customer base and significantly driving sales.

Burnett, Taxdahl says, told him found Thread Logic via search engines, where he spent a lot of time internally and with partners fine-tuning his pay-perclick advertising and search engine optimization efforts.

Not just a price leader

When asked what lessons he’s learned over the years, Taxdahl emphasizes Thread Logic’s focus on internet sales. Getting into the traditional apparel business had long required participants to compete on price. He’d

After Jeff told Wenda early on that failure wasn’t an option, the Taxdahls have grown Thread Logic into an e-commerce apparel company generating $8 million in sales

PHOTO COURTESY OF THREAD LOGIC

Thread Logic

Description: Producer of custom logo embroidered apparel

Headquarters: Jordan

Founded: 2002

Owner/CEO: Jeff Taxdahl

Employees: 28

Website: www.threadlogic.com

never wanted to do that even before making the jump to e-commerce and, when he moved online, he found that the internet allowed him to create a model where he was instead competing on service and quality.

“If you go to the homepage of our website, the first message you see is ‘expertly crafted, proudly worn,’” he says. “We’re trying to put a message out there of quality and service and that you know we’re really good at what we do and your employees, your staff, whoever you give these items will wear them proudly. Twenty years ago, that would have been a more difficult message.”

It’s led to a lot of return customers. Though lower than the 90 percent repeat business that a company with a retail storefront and a local focus might have, he’s got 60 percent of his customers making additional orders, a metric he admits is hard to compare against because his model is so different.

“I have no idea if that is good or bad,” he says.

Recession proof business?

Regardless, that e-commerce move made all the difference back in 2006 and it’s still paying dividends.

“The companies I was competing against 13 years ago largely haven’t changed,” he says. So, while Taxdahl is still located in Jordan, he can no longer look out each window in his office and see a cornfield as he could when he was interviewed in 2011. He’s had to move to a larger building and buy more machines to increase capacity. He’ll probably have

to add more space in the building soon and he is getting ready to hire a couple more people, as well, anticipating a big year ahead, even as the economy remains in flux.

E-commerce, Taxdahl says, set him up not only with a larger pool of customers, but some insulation from the worst of market downturns. So, while many are sweating inflation that might lead to a recession, Taxdahl is confident he’ll stay strong, much as he did in 2008 and 2010 during difficult economic times.

Contact: : Jeff Taxdahl is co-owner of Thread Logic: 952.492.4060; jeff@threadlogic.com; www.threadlogic.com; in/jeff-taxdahl-40336115

“We grew those years,” he says. “One of the reasons I think we did is because we were swimming in such a big pool. I mean, the whole country is my potential market. And there’s always somebody doing something.”

Stayed focused, stayed strong

Taxdahl says he’s also learned to stay focused. Thread Logic has had the chance to expand into other areas, such as screen printing or hard goods, such as putting logos on coffee mugs and tumblers, but has instead chosen to stick with custom logo embroidered apparel.

Had he decided to get into hard goods, for example, he’d have been buying products from other companies that would have been doing the actual decorating. He didn’t want to lose control of the manufacturing process.

With him owning the machines that make all his product, he can decide when a customer calls with an urgent

PHOTOS COURTESY OF THREAD LOGIC

need, if that’s an order he can fill or not.

“If I don’t control that manufacturing process, then I lose control and flexibility,” he says. “In a previous career, I worked in a smaller community bank. One of the lessons I learned is the really successful companies focus on doing something well and they don’t get distracted trying to diversify into other things. Then you just don’t do anything well.”

Thinking about a transition

At 59 and with the business in fine shape, Taxdahl is starting to think a bit about the future. An exit isn’t imminent, but he and his wife, Wenda, are starting to ponder plans. Options could include continuing to own the company but hiring someone else to manage it, selling to an employee, finding out if adult children are interested in taking over or finding the highest bidder.

“It’s an issue I’m starting to think

about,” says Taxdahl, who adds that he’s still a half-dozen years from stepping away completely. But he feels he’s got a sellable business and he’s taking the time to start putting in place some changes that might help maximize the value when retirement does arrive. “My wife is my partner and she’s involved in the day-to-day. So, it’s a conversation I think we’re going to start having over the next year.”

Part of that planning involves what he would do next. He’s seen a couple friends sell businesses and get bored. He doesn’t want to be in the same boat.

“I can only play so much golf and my wife isn’t going to want me around the house that much either,” he says. “It’s a real problem for a lot of entrepreneurs and business owners, because you’re just used to always working on something and being busy and thinking about something. To just go cold turkey doesn’t often turn out well.”

catching up H R

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“One of the lessons I learned is the really successful companies focus on doing something well and they don’t get distracted trying to diversify into other things. Then you just don’t do anything well.”

BANK

Crown Bank

6600 France Avenue South, Suite 125

Edina, Minnesota 55435

Ph: (952) 285-5800

www.crown-bank.com • Jeff Wessels, President & COO

At Crown Bank, we want to be partners in your possibilities. Because possibilities are what the future is made of. From something as personal as growing your savings, to something as big as growing your business, our bankers and staff have the expertise and energy to partner with you to make that happen.

MidCountry Bank

7825 Washington Ave So, Suite 120, Bloomington, MN 55439

Phone (952) 698-6274

We help business owners achieve their exit goals. True North Mergers and Acquisitions serves companies with $5 million to $150 million in revenue and their strategic advisors. We specialize in business owner exits, business valuations, and acquisition services in the lower middle market. If you are considering exiting your company, contact our team today.

BOOKKEEPING

Three Pillars Bookkeeping

838 S Lake Street, Forest lake, MN 55025 Office 651-899-2002 www.threepillarsbookkeeping.com

We offer a full range of bookkeeping, Payroll and accounting services, such as entering and paying bills, invoicing, recording deposits, reconciliation and updating vendors and customers. We’re your outsourced CFO, affordable to retain with no loss of quality.

BANK

BANK

U.S. Bank

Tesh Patel

Email: pritesh.patel1@usbank.com Phone: 720-667-7578

At U.S. Bank, we help you earn more without asking you to do more. That means more money, more purchasing power and more expertise, so you can focus on running your business. Let us find the best business credit card for you and turn your hard work into easy money.

Highland Bank

Rick Wall, CEO | 952.858.4753

Troy Rosenbrook, President | 952.858.4810 952.858.4888 | www.highland.bank

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 decisionmakers who will treat you like a business partner. Member FDIC.

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BUSINESS BROKER

Sunbelt Business Advisors

Peggy DeMuse, pdemuse@sunbeltmidwest.com 651-288-1627

Lisa Meyer, lmeyer@sunbeltmidwest.com 612-361-4918 www.sunbeltmidwest.com

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.

Member FDIC

UPSIZE RESOURCE DIRECTORY

CFO SERVICES

Integrated Consulting

Cathy Sedacca, managing director 612-802-1784 (c)

Cathy.Sedacca@integrated-consulting.net www.integrated-consulting.net

Integrated Consulting delivers Chief Financial Officers to small businesses on a fractional basis. From projections to cash flow tools to assistance with all things financial. We provide 30 years of expertise on a small business budget.

COMMERCIAL PHOTOGRAPHER

Tom Dunn Photography

651-368-2047 www.tomdunnphoto.com

Tom Dunn tom@tomdunnphoto.com

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.

HR Solutions for Small Business

EXIT STRATEGIES

Exit Planning Institute

Twin Cities Metro Area chapter 763-208-9119 exit-planning-institute.org Jessica Hawthorne, Administrator admin@e-officeconnection.com

Through the Certified Exit Planning Advisor (CEPA) credential, the Exit Planning Institute provides professional advisors with the content, tools, and training needed to gain more access to business owners, strengthen relationships, and become the most valued advisor.

EXIT STRATEGIES

Exit Planning Strategies, LLC

p. 651 426 0848 — www.exitplanstrategies.com

Dyanne Ross-Hanson: President e. drh@exitplanstrategies.com

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 inter-disciplinary process to explore planning options, map realistic exit strategies and to develop an Action Checklist, to accomplish an owner’s unique objectives.

LAW FIRM

Bassford Remele

100 South 5th Street, Suite 1500 Minneapolis, MN 55402 www.bassford.com 612.333.3000

Bassford Remele is in the business of meeting legal challenges. Our trial lawyers solve disputes for corporate clients in Minnesota and across the nation and we have a depth of experience in many industry areas. When businesses seek solutions, from the conference room to the courtroom, they seek Bassford Remele.

LEADERSHIP DEVELOPMENT

Prouty Project

6385 Old Shady Oak Road, Suite 260 Eden Prairie, MN 55344 952.942.2922 | www.proutyproject.com Kari Baltzer | stretch@proutyproject.com

Our leadership development engagements and cohort-based leadership programs – Prouty L3 and Prouty i•will – link behavior to team performance in your workplace through the lenses of Leading Self, Leading Others and Leading the Business. We focus on STRETCHing participants to lead business within internal and international divisions. Give us a call or stop by.

MERGERS & ACQUISITIONS

Lingate Financial Group

7575 Golden Valley Road, Suite 100 Minneapolis, MN 55427 763-546-8201 www.Lingate.com

Greg Loeschke — Managing Principal

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 marketbased valuations, business sales, mergers, acquisitions, recapitalizations, and internal transitions among family members, partners and management.

MERGERS & ACQUISITIONS

True North M&A

Peggy DeMuse, pdemuse@tnma.com; 651-288-1627 Lisa Meyer, lmeyer@tnma.com; 612-361-4918 www.sunbeltmidwest.com

We help business owners achieve their exit goals. True North Mergers and Acquisitions serves companies with $5 million to $150 million in revenue and their strategic advisors. We specialize in business owner exits, business valuations, and acquisition services in the lower middle market.

If you are considering exiting your company, contact our team today.

UPSIZE RESOURCE DIRECTORY

PEER GROUP

Coalition9

PO Box 834

Lester Prairie, MN 55354-7832 www.coalition9.com

Aaron Eggert | aaron@coalition9.com

Leadership is lonely. We build your tribe. Coalition9 memberships provide peer advisory groups with an emphasis on personal and professional growth. As a member, you will experience interactive learning while connecting to the resources and people that will help you be your best. Our vision: Changing business nine leaders at a time™

PUBLIC RELATIONS

Bellmont Partners

3300 Edinborough Way, Suite 700

Edina, MN 55435

Brian Bellmont, President 612-255-1111, info@bellmontpartners.com www.bellmontpartners.com

Bellmont Partners helps growth-focused Minnesota organizations solve complex challenges. Our experienced communications strategists generate results that build brands, drive engagement and support business objectives.

TRANSITION PLANNING

KeyeStrategies

Minneapolis, MN

Keyestrategies.com 763-350-5563

Julie Keyes, Founder/CEPA

“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.”

WEALTH MANAGEMENT

JNBA Financial Advisors

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

Being a small business we understand the needs of small business owners. And with 40+ years of experience in providing conflict-free advice, our proactive and integrated approach allows our multi-generational teams to put clients first when delivering customized financial life planning and investment strategies to help maximize their resources.

SBA LENDER

21st Century Bank

2335 Highway 36 W Suite 202 Roseville, MN 55113 612-372-2178 • www.21stcb.com

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 that respond to your unique business and banking needs.

STRATEGIC PLANNING

Prouty Project

6385 Old Shady Oak Road, Suite 260 Eden Prairie, MN 55344

952.942.2922 | www.proutyproject.com

Kari Baltzer | stretch@proutyproject.com

We start with a blank sheet of paper to elevate your clarity on vision and purpose, create alignment in your strategy to achieve your vision and gain commitment to execute. What are your “market, product/ service, people, and financial” strategies over the next 1-5 years? Can you articulate your strategic plan on one page? Join us in our Creative Think Tank to stretch your thinking and ignite your creativity.

VENTURE CAPITAL

VENTURE CAPITAL

WORKPLACE WELLBEING

Brimacomb + Associates

Brimacomb + Associates

R3 Continuum

TCF Tower, Suite #1600, 121 South Eighth St., Minneapolis, MN 55402 612-803-3169 * www.brimacomb.com

TCF Tower, Suite #1600, 121 South Eighth St., Minneapolis, MN 55402 612-803-3169 * www.brimacomb.com

7825 Washington Ave. S., Suite 500 Bloomington, MN 55439

Rick Brimacomb, rick@brimacomb.com Chief Strategy and Relationship Officer

Rick Brimacomb, rick@brimacomb.com Chief Strategy and Relationship Officer

R3c.com 866-927-0184 toll free

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.

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

R3 Continuum (R3c) is a global leader in workplace behavioral health, crisis, and security solutions. We help enhance workplace behavioral health and performance, speed recovery from disruption, and maintain safety and security on all levels, with our best-practice, human-centered, and technology-enabled continuum of solutions.

Minnesota’s Largest Seller of Companies

Business owners get 15% more than the market average when they sell with Sunbelt Business Advisors.

Sunbelt has more brokers and more buyers, which means more offers and higher sale prices at the closing table.

Get a No-Cost, Confidential Business Valuation today.

Peggy Demuse

Business Broker

Cell: 612-730-8921

Direct number: 651-288-1627 email: pdemuse@sunbeltmidwest.com

Lisa Meyer

Business Broker

Cell: 612-801-2299 Direct number: 612-361-4918 email: lmeyer@sunbeltmidwest.com