Upsize Minnesota May/June 2019

SURVIVING A RECESSION Preparing during good times means minimizing bad times, even when the economy hits a downturn

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You sometimes have to limit growth to a certain degree. Too much growth too fast is not good. It comes back to haunt you.”

— Dennis Von Ruden, president of General Equipment Co.

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CONTENTS May • June 2019 • Vol. 18 No. 3 • www.upsizemag.com

PAGE 16

Cover story

Preparing for a recession: Recessions are tough and companies should prepare in advance, saving, cutting costs and monitoring overhead. But tough times can also provide opportunities for businesses to invest and improve their outlook for the future.

BY ANDREW TELLIJOHN Cover photograph by Tom Dunn

PAGE 4

From the editor:

Bb BUSINESS BUILDERS

Editor Beth Ewen unveils the inspiration PAGE 6 behind HabitAware co-founder Aneela COACHING Idnani Kumar’s award- and contest-winning Get help with personal and business Keen smart bracelet. challenges with the help of a peer group.

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

by David Hagford, Creative Business Coaching LLC

PAGE 10

KEY EMPLOYEE Incent vital employees to stay during transitions with a stay bonus plan.

by Dyanne Ross-Hanson, Exit Planning Strategies LLC

PAGE 12

LEGAL

The best way to handle difficult endings to partnerships is by planning upfront.

by Joshua M. Feneis, Lommen Abdo Law Firm

PAGE 14

MANAGEMENT Understanding and considering the Entrepreneur Operating System.

by Barbara Voorhees, BCV Consulting

PAGE 20

WORKSHOP: An expert panel shares its best lessons learned in the areas of intellectual property, exit planning and implementing the Entrepreneur Operating System.

PAGE 24

CATCHING UP: Adrian Coulter, owner of XL Feet, discusses breaking $1 million in sales and making his company an expert on largesized footwear.

PAGE 28

BACK PAGE: University Enterprise Laboratories discusses the expansion of its offices and its ability to connect small businesses with government, academia and local and statewide contacts.

Planning now means peace of mind later.

What happens if…

THE ECONOMY WEAKENS

RETIREMENT LOOKS VERY TEMPTING…

A DIVORCE OCCURS IN THE FAMILY

YOU DESIRE A CHANGE IN LIFESTYLE

YOUR KID DOESN’T WANT TO RUN THE BUSINESS

THERE’S AN UNEXPECTED HEALTH ISSUE

YOUR BUSINESS PARTNER WANTS TO SELL

CK&Co. can help you proactively prepare your transition with our 4-step action plan.

Visit us at lp.ckco-cpa.com/upsize to learn more.

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

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

Member of

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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The co-founder of HabitAware, Aneela Idnani Kumar, was clearly emotional as she pitched her company’s concept to a panel of judges and audience members at MEDA’s $1 Million Challenge for Minority Entrepreneurs earlier this year. And that was a big part of her power.

“At around age 12 I started pulling out my hair. Weird, right?” she told the audience, disclosing her condition, trichotillomania, that left her feeling ashamed.

“It’s that fear of judgment and shame that keeps you looking like this — no eyebrows or eyelashes,” she said. “Hair pulling is a lonely condition.”

When her husband and HabitAware co-founder, Sameer Kumar, finally asked her what was up, they ultimately created the Keen smart bracelet, which senses the behavior in question and sends a vibration.

“Once aware, choose healthier activities and retrain your brain,” the St. Louis Parkbased company’s website says.

The intriguing company sits squarely in the mental health tech space. It also addresses skin picking, nail biting and thumb sucking disorders. And here’s where Aneela began choking up onstage. “For 20 years I thought I was alone, but 21 million Americans suffer from body-focused repetition behaviors,” she said. “We have shifted the conversation from shame and blame to love, compassion and healing.”

The company has $1.7 million gross sales to date, has achieved profitability and has secured $300,000 in federal funding through the National Institutes of Health.

The funding will be used to improve the algorithm, develop SAAS or software as a service product, and gain clinical validation.

They’ve also done well on the business competition circuit, winning the $50,000 grand prize at the Minnesota Cup last year and $400,000 in the MEDA challenge in January.

In an interview after the pitch, Aneela acknowledged that entering contests is work. “It is time-consuming, but the right organizations and competitions are valuable,” she said. “Minnesota Cup forced us to put it on paper. MEDA put us in front of VCs and their connections.”

As newcomers to Minnesota from New York City a few years ago, the couple found

contests a good way to crack the code.

“We’ve been told there’s a secret society here. I’m like, where is it?” she said.

Onstage, Sameer could rattle off statistics and growth plans with ease, talking venture-speak fluidly. But in conversation he became thoughtful about the company’s roots. When he one day noticed that Aneela had no eyelashes or eyebrows, “It was the beginning of that journey. At the time I wish I could say I understood it.

I didn’t understand why it was a big deal,” he says.

They are grateful for the move to Minnesota. “I’d still be pulling out my hair in New York because it was work, work, work,” says Aneela, already an award-winning app developer before she co-developed Keen. “We would be on opposite schedules, which means he would not have caught me” pulling out her hair. In Minnesota, “we had the freedom of time to come up with the solution.”

I like the combination of business savvy and personal story that HabitAware’s founders display. I salute their grit in pursuing the competition path for more than the prize itself, as they recognized the route would lead to new connections.

I admire their listening and adapting skills, as they have obviously honed and tailored their pitch in response to judges’ and investors’ questions along the way.

These are two founders who serve as an example of a winning combo, head and heart.

Beth Ewen Editor and co-founder Upsize Minnesota bewen@upsizemag.com www.upsizemag.com

PHOTO BY JONATHAN HANKIN

from shame to love

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coaching

BUSINESS BUILDERS

Outlining the benefits of a peer group

by David Hagford

• taking action based on what we feel should be done (i.e. firsthand experience), • learning from others directly through observation or instruction, or • learning from others through written material.

• some combination of the above As we go through life, we generally find it much more efficient to move forward standing on the shoulders of experience gained by others rather than starting each time with a blank sheet of paper.

TIPS 1. Business owners’ biggest worries often come from areas in which they lack background and have no one with whom they can bounce around ideas.

2. Developing a network of peers broadens ones’ experience and provides contacts with whom difficult challenges can be discussed.

3. Peer groups must maintain a strict confidentiality policy in order to build the trust necessary to have deep discussions about business and personal issues.

4. Regular and punctual attendance is key to maximize the impact and combined knowledge peer group members share.

5. A facilitator plays the role of conducting meetings with individual members between monthly group meetings to identify issues and prioritize them for large group discussion.

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LET’S BEGIN BY LOOKING at how one gains knowledge. We gain knowledge by either:

UPSIZE MAY • JUNE 2019

Exposure to new thinking Building and sustaining a growing business is not for the faint of heart. It taxes a person’s abilities beyond what a single individual can bring to the task.

It’s when a business owner begins to share knowledge and experiences with other owners that the result is several multiples of what each would be capable of individually.

Conceptual thinking One of the crucial things that we as business owners must have is the ability to think conceptually about our businesses. We must develop the ability to step back from the day-to-day operations and view the overall business from a conceptual standpoint. What is the value we provide and how is it received in the marketplace? We have to periodically be challenged to conduct a complete physical of both our focus and our organizations to assess our vulnerabilities and what corrections are required to assure we remain on a successful path.

Help in navigating the blind spots When we look at what we most struggle with in running our business and where our biggest worries and concerns are, they tend to be in the areas where we have blind spots, lack of background, and no one with whom we can bounce ideas off of and then be held accountable by for the decisions we’ve made.

The Concept of Peer Groups In getting to know some of the best business owners, one finds that they have learned to reach out to other owners, not necessarily in the same type of business, as an important way to enhance their own abilities. Developing these networks broadens and extends their experience, allowing them to avoid setbacks that would otherwise occur. In order for these networks to be effective, there needs to be some regular contact where issues are identified and discussed. With a casual network relationship, the issues tend not to be addressed in a timely fashion, plus accountability is lacking.

This is where the concept of a Peer Group enters the picture. A peer group provides the structure of regular monthly meetings, a consistent group of members and an outside professional facilitator with a strong business background to keep the sessions organized and on target. The facilitator plays the important role of conducting meetings with individual members between monthly meetings to identify issues and prioritize them for discussion. These issues then become the basis in developing the agenda for the next monthly peer group meeting.

Unbiased critique and accountability Members must have a high level of

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trust to allow them to participate in crucial conversations, delve deep into questioning the underlying basis for proposed decisions, and hold each other accountable for their subsequent actions and responsibilities without becoming defensive.

These elements form the foundation of the group and the very chemistry that must exist between members in order for the time invested to prove worthwhile.

Building on the experience of others By participating in such a group, one gains a much wider bandwidth of knowledge and experience through exposure to other leaders of great businesses and how they have addressed similar issues to the ones you are facing. It provides you with the processing power of an experienced advisory group to dissect and identify solutions to problems you are addressing. Likewise, in working with one another’s problems and challenges, one begins to see the different situations and how they may apply to their company.

Support in your personal life We all deal with not just business issues, but personal issues as well. It becomes very reassuring to be part of a group that is also balancing their personal and business lives and responsibilities with whom you can share your thoughts and see things from different perspectives.

What to look for in a Peer Group In looking for a group, it is important that you find one where:

• The group is relatively small, around six to 10 members, to assure there will be sufficient time for everyone to periodically get their issues addressed.

• Members understand that regular and punctual attendance is key to getting the full impact from the combined knowledge of the group.

• Members are willing to approach issues with an open mind, setting their biases aside, and participating in the discussion at hand.

• The group maintains a strict policy of confidentiality. As the group gets to know one another, the superficial discussions will turn to deep confidential discussions, both from a business and personal standpoint. This is crucial for the group to be extremely valuable. But, obviously, this can only happen with the trust and confidentiality of its members.

The tough issues that reach the desk of a business owner aren’t easy to solve with regard to the impact they may have on the business down the road. There are numerous options to consider that involve both financial and legal considerations. It is at these times that it becomes crucial to have a peer group that is able to assess the situation and understand the impact various solutions may have on the company downstream. It is at times like this that the return on investment of one’s time and dollars yield benefits far out of proportion to the investment made.

“It’s when a business owner begins to share knowledge and experiences with other owners that the result is several multiples of what each would be capable of individually.”

David Hagford Creative Business Coaching LLC

• All the participants, including yourself, are coachable. That is, they are able to listen with an open mind to input from others.

David Hagford is CEO and founder of Creative Business Coaching LLC: 612.250.2487; dhagford@creativebusinesscoaching.org; www.creativebusinesscoaching.org.

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key employee

BUSINESS BUILDERS

Maximize your sale price by offering stay bonus plans to key employees

by Dyanne Ross-Hanson

TIPS 1. Stay Bonus Plan provides recognizable incentive for your key employees to stay on board and help your business through an ownership transition period.

2. You determine the length of time the participants need to remain with the company after a sale in order to receive a bonus. Such agreements typically last one to three years.

3. Escrow a portion of the purchase price to fund your key employee’s stay bonus. You own those funds, so they are outside the acquiring party’s possession.

4. Have the agreement written up by a qualified attorney.

5. Determine what portion, if any, of the bonus an employee is entitled to should they leave or be terminated by the new owner before the bonus vests.

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MANY BUSINESS OWNERS envision one day transitioning ownership of their company to an “outside” buyer. It could be a “financial” buyer (think, private equity group) or a “strategic” buyer (think, acquirer in the same industry or business). Regardless of the description, potential buyers look to reduce risk associated with their investment in your company. The predictability and reliability of continued cash flow, for example, is one variable that reduces risk. Diversified customer base is another. Operating systems that generate above industry margins, may be another. Growth opportunities, another. The list goes on.

But one value driver, often overlooked by owners, is the existence and continuity of their key management team.

It is often stated, that when an owner represents the “face” of an organization, the organization has less value in the marketplace. That’s because it concentrates talent, customer relations, operational knowledge, etc. Just as potential buyers look for a diversified customer base within an organization, they also look for a diversified leadership team.

Having both reduces a buyer’s perceived risk.

And while mentoring, recruiting and rewarding key personnel are subjects worth exploring, this piece will cover one technique used to retain those key performers during ownership transitions.

This strategy comes with the caveat, of course, that you have already taken your key managers into your confidence and have shared your intent to eventually transition ownership of the company to an outside buyer, thereby avoiding the quagmire of them learning of your intent over the water cooler. Being left with the all too familiar sentiment of, “Wait a minute…. he/she is going to take off with the money that I/we helped create?” Again, when, what and how you share your intentions with key personnel appears to be another topic, for future discussion.

Presuming all are “on board,” the question becomes, “How do I motivate my key managers to stay during a transition period?”

The answer: A “Stay Bonus Plan” A Stay Bonus Plan provides a recognizable incentive for your key employees to stay on board and help your business through an ownership transition period. It is designed to offer substantial financial benefit (cash) within a short period of time, contingent upon the business being sold. It represents a promise from you – not the new owners. It also provides a level of stability and certainty for your company and its employees to succeed.

Steps to developing a stay bonus plan Step 1.

You identify which of your key personnel has direct or indirect impact on company growth and profitability and who will be considered essential to a new owner. Criteria can be left to your discretion solely or can be managed by a committee designated by you.

Step 2.

You determine the length of time the participants need to remain with the company after a sale in order to receive a bonus. Typically, these plans are shortterm in nature and are designed with time periods of one to three years. The vesting schedule is also the payment schedule for the Stay Bonus Plan. For example, a participant becomes vested in his or her share at the closing of the sale and receives one-third of the payment at that time, one-third at the first anniversary, and the remainder at the second anniversary of the closing date. Again, vesting and payout are open to owner discretion.

Step 3.

You agree to escrow a portion of

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the purchase price to fund your key employee’s stay bonus. As a seller, you own the monies held in escrow, thereby keeping those funds outside the acquiring party’s possession. In effect, you will own the monies in the escrow account, subject to the key people’s attainment of their vesting schedule. If they should leave prior to becoming fully vested, they relinquish undistributed amounts. Any funds remaining in the escrow will revert to you. If the key employee is involuntarily terminated by the new owner, he or she may be eligible to receive the balance of the escrow amount. Again, the design is left to seller’s discretion.

Step 4.

Plan Presentation. This step is critical. It involves communicating the plan design, benefit and purpose at a key employee educational meeting. This meeting is conducted by the owner(s) and adviser(s) in order to offer an objective resource and to field participant feedback.

Key employee benefits In contrast to typical key employee incentive/retention plans the Stay Bonus Plan accomplishes several vital objectives for your key management team.

These include: Cash The key employee’s economic reward is separate from the rise or fall in the value of the acquiring company’s stock.

Rather, it is based upon the value of the company at the date of sale. Payments are in cash, not in the new company’s stock.

Accelerated vesting and pay out Payment will be made from the escrow account when the key employee vests in that account. Unlike most incentive plans that vest over an extended period and pay only after vesting is completed, this program provides a rapid reward for

your key employees — provided they remain with the new organization.

Minimal risk Because the monies are held in escrow, for the exclusive benefit of your key employee participants and are not controlled or owned by the acquiring company, the chance that they will leave the new organization is minimized or eliminated. The key employees must simply remain employed for a period designated within the plan. As they stay, they receive their entire benefit amount, in cash.

Documentation Formalizing a Stay Bonus Plan via legal documentation is advised and necessary. And the plan should be drafted by a qualified business attorney.

At minimum, the document should: • Name all the parties to the agreement.

• State that the Stay Bonus is not an employment contract.

• Describe what the Stay Bonus is and how it is funded.

• Describe how much is paid out and when.

• Indicate whether the employee is entitled to undistributed bonus should an involuntary termination occur under new ownership Conclusion Maximizing company value and eventual sale price, is a multi-year endeavor for most business owners. And while focusing on financial/operational “metrics” is common, don’t forget the most important “intangible” asset you possess, your key personnel. Developing a Stay Bonus Plan early, and communicating it, will help to create the “wealth multiplier” effect most owners/key personnel strive for.

“Just as potential buyers look for a diversified customer base within an organization, they also look for a diversified leadership team.

Having both reduces a buyer’s perceived risk.”

Dyanne Ross-Hanson Exit Planning Strategies, LLC.

Dyanne Ross-Hanson is president and CEO of Exit Planning Strategies, LLC., which assists business owners in developing ownership transition plans: 651.426.0848; drh@exitplanstrategies.com; www.exitplanstrategies.com. www.upsizemag.com

MAY • JUNE 2019 UPSIZE

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legal

BUSINESS BUILDERS

Preparing for and surviving a business divorce

by Joshua Feneis

TIPS 1. If no buy-sell agreement exists in a business separation, Minnesota courts look to the reasonable expectations of shareholders.

2. A comprehensive buy-sell agreement plans for all types of contingencies with regard to the transfer of shares, including the death, divorce or bankruptcy of said shareholder.

3. Such agreements also help govern what happens in the event of an unresolvable impasse between shareholders.

4. Buy-sell agreements should be updated regularly. Companies often find doing so burdensome when no sale is imminent.

5. Including a provision regarding steps for resolving disputes can help shareholders avoid protracted litigation.

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JUST LIKE IN A MARRIAGE, no one at the outset of a closely held company expects things to go south and end in divorce. But just like in a marriage, the best time to address what will happen if things do not go as hoped is at the outset, when everyone is excited and working together.

Instead of a pre-nuptial agreement, shareholders in a closely held company will want to include provisions regarding separation in a written buy-sell agreement (sometimes called a shareholder agreement, member control agreement, etc.).

A good reason to plan for a separation in advance is that in business divorces where no agreement on separation exists, Minnesota courts look to the reasonable expectations of the shareholders. In one landmark Minnesota case, the court awarded a minority shareholder both the value of his shares in the company and his lost wages for the remainder of his working life, as the court determined that those were the reasonable expectations of the shareholders in forming the company.

To avoid a court determining what the original reasonable expectations of the shareholders were years later, shareholders should strive to eliminate confusion by spelling out the reasonable and agreed-upon expectations in a buy-sell agreement.

Terms to include in buy-sell agreement A comprehensive buy-sell agreement plans for all types of contingencies with regard to the transfer of shares.

This includes planning for the death, divorce, or bankruptcy of a shareholder, and what to do when a shareholder chooses to sell shares. A comprehensive buy-sell agreement should also contain terms concerning what will happen if the shareholders come to an unresolvable impasse, including:

• Deadlock — The buy-sell agreement should contain a description of what constitutes an unresolvable deadlock and the process for determining that such a deadlock has occurred. Further, the buy-sell agreement should include what is to be done when a deadlock is reached, including whether a shareholder needs to sell his or her shares.

• Valuation — Oftentimes a buy-sell agreement will include a manner in which the company is initially valued, and then will include a term regarding an annual renewal of the valuation. Unfortunately, because it requires a meeting, evaluation, discussion, and agreement, our experience is that the annual valuation rarely occurs, as shareholders find it burdensome when no sale is imminent. So, a buy-sell agreement should include a term regarding the valuation of shares upon a transfer, whether that be through a formula, an agreed upon price, or through the selection of a trusted outside valuation expert.

As an example, some buy-sell agreements will allow the company and the selling shareholder to each select their own valuation expert, then the two selected valuation experts will choose a third person to serve on a three-person panel that will work together to determine the value of the company.

• Dispute Resolution — If the shareholders wish to avoid protracted litigation that may end up in court, they will include a provision regarding the steps they must take to resolve disputes. The first step is often the discussions the shareholders must have together to resolve a dispute. Should that fail, the

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next step is generally a mediation requirement, which will also include an agreement on how the shareholders must select a mediator. Should all of this fail, most shareholders nowadays prefer arbitration as opposed to the court process. The reasons for this vary, but arbitration allows the parties to select a qualified arbitrator with experience in business disputes. Of course, the courtroom is always an option for resolving disputes between shareholders should an alternative process not be agreeable.

A comprehensive buy-sell agreement that spells out the reasonable expectations of the shareholders reduces the likelihood that the optimistic start of a business will result in protracted litigation.

Steps to take when divorce is forthcoming Of course, just like in a marriage, some disputes cannot be overcome and divorce is the necessary path. When divorce is likely, here are a few steps for a shareholder to take: • Talk to an experienced commercial litigation attorney — Nothing will help you sort through the options and prepare you better for litigation, if necessary, than someone who has been there before. One thing to keep in mind, though, is that the attorney that set up the company and drafted the buy-sell agreement represents the company and not the shareholders and will likely have a conflict in representing any of the shareholders in a dispute. That attorney would likely be disqualified under the professional rules of ethics from representing any of the share-

holders individually.

• Avoid unnecessary communications — While this can be tricky when shareholders are trying to work things out amongst themselves, this is also the period when parties are most likely to make statements that can be held against them during litigation. The best way to avoid that is to communicate with the other shareholder only when necessary, and to document every such communication as thoroughly as possible.

• Preserve documents — After speaking with you, the next thing your attorney will want to do is review important company documents. On top of this, a party to any potential legal dispute should take steps to retain any documentation, including electronic files and communications.

This is critical because if you are found to have caused the loss of necessary documents, a court can limit your ability to present evidence or even dismiss your claims or defenses.

• Attorney fees — Litigation is expensive. All parties to a lawsuit know this. And while Minnesota statutes, or even the buy-sell agreement, might allow for a shareholder to recover attorney fees if successful in the litigation, such recovery of attorney fees is not assured, and even when awarded, is usually far less than the actual attorney fees expended.

If a business divorce is forthcoming, be prepared to spend significant money while anticipating little chance of recovering attorney fees.

“To avoid a court determining what the original reasonable expectations of the shareholders were years later, shareholders should strive to eliminate confusion by spelling out the reasonable and agreed-upon expectations in a buysell agreement.”

Josh Feneis Lommen Abdo

No one wants a business to end in divorce, but like most things in life, the best way to deal with a business divorce is through good preparation.

Joshua M. Feneis is an attorney with Minneapolis-based Lommen Abdo Law Firm: 612.336.9353; jfeneis@lommen.com; www.lommen.com.

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management

BUSINESS BUILDERS

Visionary and integrator tandem creates mix for EOS success

by Barbara Voorhees

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

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

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

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What is EOS and why your business should consider it 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.

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.

Key Players EOS revolves around three critical roles: • 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.

• 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.

• 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.

The role of the integrator 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.

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.

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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.

2.

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.

3.

4.

5.

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

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.

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.

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.”

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.

“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.”

Barbara Voorhees BCV Consulting and Visionary Integrator Solutions

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

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Be prepared Early planning, constant monitoring help lessen effects from potential recession

I

n mid-2008, Owatonna-based General Equipment Co. was going gangbusters. The construction equipment maker had a 12-week lead time on projects and life looked good. President Dennis Von Ruden remembers going into a staff meeting around that time and sharing his plans to downsize the company.

“They looked at me like I was crazy,” he says.

But Von Ruden was monitoring economic indicators that indicated a tremendous economic crash was coming. He knew his industry’s ties to housing, roads and home improvement projects meant it would be among the first to feel the effects. And he realized the company had too much staff and that efficiencies were going down. He needed to start planning.

“Customers were still wanting stuff so you have to figure out how you’re going to balance things,” he says.

Conservative by nature, Von Ruden says he’s always keeping an eye on things, making sure the company doesn’t grow unsustainably fast and prioritizing purchases.

“We watch out debt load very closely,” he says. “You sometimes have to limit growth to a certain degree. Too much growth too fast is not good. It comes back to haunt you.”

Ultimately, Von Ruden was proven correct. By early 2009, the market was tightening and by year’s end, times were tough. General Equipment Co. was hit hard, with an employee count of about 60 people being cut nearly in half and sales dropping by about 45 percent.

But planning ahead helped. He used savings to purchase some higher-tech equipment to replace older machinery – and some people who had left -- and used the downturn as an incentive to diversify into new markets and add new features on existing products.

“We went into it having some capital to work with, that’s what got us through,” he says. “The interesting thing is we actually added to the bottom line. We actually grew as a company financially through that mess just with some watching of pennies.”

A conservative financial approach and preparing in advance helped General Electric Co. grow profits during the last recession even when sales dropped by around 45 percent.

— DENNIS VON RUDEN, General Equipment Co.

by Andrew Tellijohn

PHOTOGRAPHS BY TOM DUNN

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www.upsizemag.com

www.upsizemag.com

17

COVER STORY Rainy day funds/ Setting aside money in “buckets”

While the economy is still humming along as of mid2019, economists have been hinting that sometime in the next couple years, growth could slow and a recession could hit. And besides, experts say, the time to start planning ahead is now, not when the economy does take a turn for the worse.

David Benusa, CEO of accounting firm Froehling Anderson, says he talks with companies during good times about setting aside money to protect against a recession or prepare for some other opportunity.

“Having a nest egg can really provide opportunities,” he says. “Not just for recessions, but for a lot of different things.”

He suggests utilizing the “bucket strategy” utilized by a financial adviser some years back. In one bucket you keep enough cash or liquid assets on hand to survive the next six to nine months. In another bucket, invest a bit more aggressively in bonds, mutual funds or other instruments where the bottom will not fall out in the event of a recession.

In a third, you keep an amount that isn’t going to be touched for several years in case opportunities for acquisitions, expansions or other transitions take place.

“We definitely have conversations with clients about what do you do in the good times to survive downturns,” Benusa says. “If businesses are well-heeled coming out of the run we’ve had, as frustrating as they can be, economic downturns can be opportunities.”

But definitely don’t wait until a recession hits to start planning. “It’s too late at that point,” he adds.

CONTACT: Michelle Beck-Howard is human resources adviser and client advocate at G&A Partners: 713.784.1181; mbhoward@gnapartners.com; www.gnapartners.com.

Kim Brown is president and Richard Brown is CEO and chairman of JNBA Financial Advisors: 952.844.0995; kim.brown@jnba.com; richard.brown@jnba.com; www.jnba.com.

David Benusa is CEO of Froehling Anderson: 952.979.3100; dbenusa@fa-cpa.com; www.fa-cpa.com.

Greg Loeschke is managing principal at Lingate Financial Group: 763.546.8201; gloeschke@lingate.com; www.lingate.com.

Jason Schilling is a manager with Cummings, Keegan & Co., P.L.L.P.: 952.345.2500; jschilling@ckco-cpa.com; www.ckco-cpa.com.

Dennis Von Ruden is president of General Equipment Co.: 507.451.5510; dvonruden@generalequip.com; www.generalequip.com.

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Study your customers, look for opportunities

Kim Brown, president, and Richard Brown, chairman and CEO of JNBA Financial Advisors, say procrastination when preparing for a downturn can be disastrous. They deal with recessions from both sides, advising clients on how to best prepare while also making sure their own small business is taking the steps necessary to survive and thrive. Richard Brown says it’s important for companies to know whether their customers and strategic partners can be counted on to survive a downturn.

“The theme is, if you, over a period of time, are running a business and are looking at things the right way, you’ll be ready for a recession,” he says. “It won’t be as much of a swing for you. … It should be part of your ongoing best practices.”

Kim Brown adds that companies should at least try to find some opportunities to invest in the business in hopes that when the downturn ends, they’ll be ready to start rolling again.

“I remember the conversation Richard and I had,” she says about the days leading into the 2008 recession. “‘This would be the time. … ‘Let’s go strong in technology. Things are going to turn around. Let’s take this time to rebuild in terms of how we’re using technology so when the turnaround comes, we’ll be prepared.’’”

So, the company invested in customer service management software and in a sophisticated research program, among other things. “That actually turned out to be great for us,” she says.

Kim Brown also says that when a recession hits is when you’ll find out if you’ve built a strong company culture. Employees will wonder if “you are a strong enough leader that you are going to get us through this,” she says. “Culture is important, especially in a recession. People are scared.”

Plan early and focus on expenses

Jason Schilling, a manager with Cummings, Keegan & Co. P.L.L.P, agrees that business owners should have started thinking ahead about a recession as early as yesterday.

“You know it will eventually come,” he says. “One thing I like to talk about and think about is the best time to plan for it is when you are having great years.”

Part of that planning involves saving cash or investing in technology to make your company more efficient through downturns. Clients that carry inventory, he says, should try running a bit leaner.

“When times are bad you can reap the benefits,” Schilling says.

He tries to meet with his clients two or three times each year to hear what they are working on or to get their outlook on the future. It’s a fine balance, he adds.

“You want to be in growth mode,” he says. “You also want to protect on the other side. Finding the good balance is great.”

In addition to potentially investing, Schilling suggests meeting with advisers to see what expenses could be cut. Don’t, he

www.upsizemag.com

COVER STORY says, cut into technology investments or, for some companies, research and development activities. “If you cut back there it will be to the detriment,” he says. But look to trim discretionary spending.

“Start seeing where we could be more efficient,” Schilling says.

Narrow the focus, evaluate employees

Small businesses should take the eventuality of a recession coming as a reason to do some big-picture analysis of what is working and what isn’t, says Michelle Beck-Howard, human resources adviser and client advocate at G&A Partners.

Where is the business going to stay? Are there areas the company might want to start phasing out? How can you make the strong points even better? And look at your employees the same way. Can you create a more agile workforce with cross-training?

“How can you make the most out of the workforce you have,” she says. “What are those types of things that will make your business even stronger now, so if the recession does hit, you’re going to come out stronger anyway. You’ll really come out ahead.”

From a staffing perspective, try to avoid laying people off, if possible. Some companies that did in 2008 suffered a hit to their reputation for how they handled layoffs during the last recession. It’s always better to try coaching, counseling and disciplining before firing for performance reasons. And with an economic downturn, a better approach might be seeking or implementing a temporary salary cut.

“You want to be transparent in your reasoning for doing it because you need to get to a certain sustainable bottom line,” she says. “Focus on sustainable, not just staying profitable.

That kind of message can be disheartening.”

While that may help get employees on board in the shortterm, Beck-Howard advises that being a good employer that provides dignity, respect, advancement opportunities, challenges and communication during good times have a better chance of finding their workers loyal when they turn tough.

“It’s those kinds of things that really start to connect employees to work for your organization,” she says. “Being connected then, in that deeper sense, really helps people stay committed and work even harder to make the organization successful during the downturn.”

Prepare but don’t panic

Greg Loeschke, managing partner at Lingate Financial Group, works with a lot of manufacturing companies. Many of his clients have weathered several recessions. For a newer owner who hasn’t been through it before, he suggests taking the time to really know the business, to understand its cash flow and to run a tight ship for planning purposes.

“Focus on the basic blocking and tackling in the business,” he says.

www.upsizemag.com

A lot of small businesses, Loeschke adds, can’t afford a chief financial officer or controller. So, it’s important for them to make sure they work with advisers to ensure they are on track.

“Have an outside accountant that is doing more than just doing their taxes or their annual statements and can give some insight into their business,” he says. “Rely on a team of advisers.”

On the other hand, Loeschke adds, don’t prematurely give in to the gloom and doom. Currently the market is doing well.

“All the lights seem to be green,” he says.

It’s important to prepare, but don’t go into a shell before necessary.

“Sometimes it might be easy to almost paralyze yourself getting so worried that it’s going to come that you miss opportunities for growth and expansion,” he says. “I sure wouldn’t want to see that be the case.”

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WORKSHOP: Lessons Learned

LESSONS LEARNED Experts share insights on EOS, IP and exit planning

By Andrew Tellijohn Photographs by Tom Dunn

Whether it’s implementing the Entrepreneurial Operating System (EOS), protecting intellectual property or figuring out how to exit gracefully and with the maximum profit possible, it’s easier to learn from others’ mistakes than experiencing them yourself.

Experts in each of those three areas shared the lessons they’ve picked during a March panel at the Minneapolis Club, jointly sponsored by Upsize and Rick Brimacomb’s Club Entrepreneur.

Ouch — costliest mistakes

The owner of a local brewery recently came up with its name and filed the paperwork to protect it, only to have the application denied when it was discovered that a Canadian wine company used the same name on its bottles.

Trademark laws, says Stephen Baird, who at the time of the discussion was chair of the brand management group with Winthrop & Weinstine (he has since moved to a new firm), are broad enough where wine and beer can be construed as overlapping enough products 20

UPSIZE MAY • JUNE 2019

Rick Brimacomb, ClubE where having two companies sporting the same name could result in confusion.

“Entrepreneurs, when they are starting out, are understandably wanting to do as much as they can on their own,” he says. “I’ll pick up a lot of clients after they’ve tried to go down a path and run into a brick

www.upsizemag.com

WORKSHOP: Lessons Learned “They couldn’t be more opposite roles. To be able to go toe-to-toe with a strong visionary it takes a strong integrator. It’s not just an admin person doing your bidding, its someone who can really push back.”

—Chris Naylor, B. Better Success Coaching LLC

wall or fallen into a ditch.”

In this particular case, the business owner saw that refusal and sought out the owner of the wine company in Canada to see if they would be willing to consent.

“I always tell business owners don’t ask for permission unless you are prepared to live with no and then follow that,” he adds. A law firm can “start to identify scabs that might be associated with those rights” or find other leverage points that may convince the winery to go along.

“That never happens right out of the chute,” Baird says. “There is no incentive to say ‘yes.’ Why would I limit my rights just to be nice?”

Julie Keyes, owner of exit planning consultancy KeyeStrategies, grew up in an entrepreneurial family and has seen a lot, both first- and second-hand. She cautioned attendees to be careful about taking on a lot of debt to finance growth.

“We always had a cash rich business. I didn’t believe in debt,” she says. “I still don’t believe in debt. … I saw too many companies go down because they had too much debt. There are times when you do need to utilize lines of credit and other people’s money. I try to help my clients think that through and make good decisions about money.”

She’s also seen a lot of business owners overvalue their companies as they are getting ready to sell.

www.upsizemag.com

Keeping a regular eye on valuations is key to avoiding that disappointment.

“It ends up they need to stay engaged in the business and grow in the business longer than they planned to,” Keyes says.

With EOS, one of the biggest problems arises when there isn’t someone within the organization to keep the visionary – often times the founder with a wandering attention span – focused and accountable to the business’ plan for success, says Chris Naylor, a certified EOS implementer and founder of B. Better Success Coaching LLC. Naylor cited Walt Disney Co. as an example. Walt was a genius, but he needed his brother, Roy, to come along and systemize his ideas before the company thrived.

“We need that integrator to keep holding us accountable, to keep us focused on the plan,” she says.

“They couldn’t be more opposite roles. To be able to go toe-to-toe with a strong visionary it takes a strong integrator. It’s not just an admin person doing your bidding, it’s someone who can really push back.”

One key is building teams

Each panelist indicated that finding the right partners to move forward with growth in an intelligent manner is a key to success.

That means both internally and externally. Having the right people on staff and in the proper roles to best

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WORKSHOP: Lessons Learned

“If you talk to any investment banker or business broker out there, they will tell you they’ve had deals where the owner actually sabotaged their own deal because they are afraid.”

—Julie Keyes, KeyeStrategies

capitalize on their strengths, is vital, Naylor says, adding that success starts with a great leadership team that can pull that entire workforce together.

“As the leadership team goes, so goes the rest of the organization,” she says. “If the leadership team doesn’t trust each other, people can’t be open and honest.”

Externally, both Keyes and Baird argue for establishing a team of strong advisers early on.

Keyes acknowledges that when running her first business, she did not have a great advisory group.

CONTACT THE EXPERTS STEPHEN BAIRD, formerly with Winthrop & Weinstine, can now be reached at: 612.259.9718; bairds@gtlaw.com; www. gtlaw.com.

JULIE KEYES owns KeyeStrategies: 763.350.5563; julie@ keyestrategies.com; www.keyestrategies.com.

CHRIS NAYLOR is a certified EOS implementor, founder of B. Better Success Coaching LLC and owner of OECS Workplace Safety Experts: 612.802.9137; chris@bbetternow.com; www.b-betternow.com.

MICHAEL OLSEN is an intellectual property attorney with Winthrop & Weinstine: 612.604.6718; molsen@winthrop. com; www.winthrop.com

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“The term business coach or business adviser wasn’t very popular in those days,” she says. “You didn’t really hear a lot about people who did work like that. You certainly didn’t hear about exit planners. If I could do it over again. I think I would make sure I have someone on the outside who is a fit for me.”

Often times, she says, owners don’t know where to start the search for qualified assistance. So, they end up calling their CPA. “The CPA is someone who needs to be on that exit planning team, but there are other people who need to be on that exit planning team,” Keyes says. “And there needs to be someone who drives the process.”

Baird says that team of outside advisers should include an intellectual property attorney who can proactively ensure that names, designs, products and other distinguishing features are protected. It’s even more important today, during a time when people are searching the Internet regularly, proactively looking for people infringing their marks.

“If you haven’t done the proper things to clear the name before you launch, it’s so much easier for companies who are actively looking for targets to enforce their trademark right,” he says. “You are visible in ways you weren’t before. Companies need to bear that in mind.”

One other thing: start early, Keyes says. “I find business owners have resistance to working with people

www.upsizemag.com

WORKSHOP: Lessons Learned

“Entrepreneurs, when they are starting out, are understandably wanting to do as much as they can on their own. I’ll pick up a lot of clients after they’ve tried to go down a path and run into a brick wall or fallen into a ditch.”

—Stephen Baird

they don’t know. I think it’s important to establish those relationships as early as possible.”

Factors for success

As part of the team, Baird says, an IP attorney can not only protect a company from losing money on picking a previously protected name, but can also start adding value by helping identify and protect other property that sets the organization apart.

“It’s important upfront to think about an IP audit so the company can identify what are the intangible assets the company has, what is the secret sauce that makes your business different from others, and what would really bother you if a competitor started to do,” he says.

Naylor has identified three factors that will help EOS businesses gain the traction they are seeking. The first is building a great culture. Some organizations do it so well that even tight labor markets aren’t a problem.

“They might even have a talent pipeline, where you don’t have to worry about hiring people because there are people sitting in jobs at other companies waiting for an opening in your company,” she says.

The second factor is establishing core processes, something small businesses are more known for not doing. But it’s vital, Naylor says, to create checklists that will help drive consistency in performance management, onboarding new hires and other areas of the business.

www.upsizemag.com

Finally, she says, organizations need to get past “death by meeting,” where time is wasted, there never is an agenda, there’s no end time and nobody is held accountable on action items.

EOS calls for weekly 90-minute meeting that are well organized, kept on track and lead to a well-informed, cohesive workforce.

“If you can nail these three in small businesses you will gain the traction you are looking for,” Naylor says.

For Keyes, talking with owners about selling or otherwise transitioning their business is about more than making sure they have their finances, management team and other financial factors in order. The process also includes discussions of what the future will look like. Often entrepreneurs have not taken a lot of time to figure out how they plan to remain relevant after moving on from the company they built.

“Many owners have a hard time looking into the future and imagining what their life would be like without their business,” she says. “If you talk to any investment banker or business broker out there, they will tell you they’ve had deals where the owner actually sabotaged their own deal because they are afraid.”

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23

catching up

by Andrew Tellijohn

W

hen Adrian Coulter, founder of XL Feet, participated in the Upsize Growth Challenge in 2014, his goal was reaching $1 million in sales.

Mission accomplished.

Growth has come steadily in the five years since he took part and much of it, he says, has been a result of more efficient systems. Previously, Coulter says, every time there was growth, the increased workload fell on him.

When he hired a part-time person to help with invoicing, bringing in bar code technology and other inventory management tasks, it improved the company’s processes and freed him to do other things.

“That enabled us to pick, pack and ship way faster,” Coulter says of the new barcoding system. “And it allowed us to start using a bar code scanner during that process, which pretty much eliminated the possibility of shipping the wrong item to the wrong customer. That was a game changer for us.”

Another area of growth for XL Feet is the sale of large-sized socks. He’ll give away a pair to new customers and those folks frequently revisit.

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PHOTO COURTESY OF XLFEET

Big feet turning into big business Adrian Coulter, founder and owner of XL Feet, enjoys being able to provide jobs that help other people experience success.

some of the advice he was given. For example, the company has established and regularly updates a blog aimed at establishing XL Feet as the expert on large-sized footwear, though he chose “I jokingly tell people I’m waiting to brand it after the company’s name, for the [Drug Enforcement Agency] not himself. to break down the door and raid the “I’ve noticed with a lot of other place because these things are selling companies that they’ve shifted away like drugs,” he says. “Ninety percent from having a spokesperson and of the time they get hooked. They focused more on just building the cannot believe how comfortable it is brand,” he says. “Humans are fallible. to have socks that fit. They just keep It’s easy in today’s news cycle that coming back and coming back.” somebody could be crucified in the While growth is steady, Coulter, media and if the brand is attached to who started the company with no for- that person, there goes that brand.” mal business training, acknowledges Other advice he did not take. Some he’s also learned some tough lessons suggested he close the St. Paul brickalong the way about reading the fine and-mortar store to focus on building print in contracts and about avoiding the business solely via the web. The cost overruns because he thought he website has improved dramatically, could start and complete projects in but the store isn’t going away, for unrealistic time periods. multiple reasons.

“You can’t just stop running your One, he likes the ability to build business even though you need that expertise through interacting with software or that thing built,” he says. customers in the store. Two, and “But, at the same time, you need that perhaps more importantly, the brands software. … You have to be really care- he sells require him to maintain a ful.” physical store.

Coulter looked back at his experi“Unique to my industry, and becomence participating in the Growth ing more common in other industries, Challenge with appreciation. He took I am required by many of my brands www.upsizemag.com

PHOTOS THIS PAGE BY JONATHAN HANKIN

XL Feet sells about 50 brands of footwear via its website and a store in St. Paul.

to have a brick-and-mortar presence,” he says. “If I end the brick-andmortar, I will no longer be able to sell my top accounts. … That would be a business-ending decision.”

In fact, he remains interested in opening additional locations, though the strategy has changed a bit. If he does, the new locations would actually be fulfillment centers with a store attached.

“That’s years down the road,” he says. “We’ve been working on making things more efficient out of this location.”

At present, XL Feet offers around 50 brands, up from around 35 in 2014.

XL Feet Retailer of large-sized men’s footwear Founder: Adrian Coulter Headquarters: St. Paul Founded: 2009 Employees: Three full-time, one part time Website: www.xlfeet.com

Among the most popular are Dunham, New Balance and Carolina. The big three shoe makers – Nike, Reebok and Adidas – are not among them, but Coulter is fine with that. Their sizing is different than most other brands, which complicates Internet sales, he says.

Although people have driven long distances to try on his footwear, he says the vast majority of his business comes from the company website. And he has to pay for shipping when customers return their purchases, cutting into his bottom line.

Coulter’s company is still small, but it’s growing. He’s exploring third-party fulfillment, which could lead to substantial growth. He has three full-time employees and one part-timer with plans to add a couple more positions.

And he maintains the initial enthusiasm he had in starting his own business. He finds exciting the ability to create jobs that allow for his employees to experience success. Two of his colleagues recently bought new cars, something Coulter found rewarding.

“It’s really exciting that I was able to make an impact on someone’s life,” he says.

The challenges of finding shoes for his own size 16 feet led Adrian Coulter to start XL Feet, now a growing large-sized footwear company.

— Adrian Coulter

XL Feet

Contact: Adrian Coulter is founder and owner of XL Feet: 651.797.6000; customercare@xlfeet.com, www.xlfeet.com

www.upsizemag.com

MAY • JUNE 2019 UPSIZE

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

BANK Highland Bank

COMMERCIAL REAL ESTATE The Ackerberg Group

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

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

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

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

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

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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 • MARKETING Risdall

Bank North American Banking Company

computer consulting Intertech

Contact us: 651.631.1098 and www.risdall.com Ted Risdall, Owner Dave Schad, General Manager

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

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

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.

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.

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business machines Coordinated Business Systems, Ltd.

FINANCIAL PLANNING Goff Investment Group

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

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

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

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

BANK Flagship Bank Minnesota

COMMERCIAL PHOTOGRAPHER Tom Dunn Photography

insurance O’Rourke Agency, Inc.

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

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

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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.

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ADVERTISING SECTION

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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.

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MAY • JUNE 2019 UPSIZE

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BACK PAGE

University Enterprise Laboratories’ life science incubator adds physical space, expands service focus

S

t. Paul-based University Enterprise Laboratories opened in 2005 with 125,000 square feet of space and 21 wet labs for life science companies. It was founded as an incubator for new businesses and for the last 15 years it’s been nearly full.

In May, UEL opened the doors on a $6.4 million, 19,000 square foot expansion that opens the doors for new growing businesses and enhances the organization’s reach. Diane Rucker, executive director, joined Andrew Tellijohn, Upsize managing editor, to discuss the transition. The conversation has been edited for length.

Tellijohn: What does the expansion mean for UEL and its tenants, current and future?

Rucker: UEL has been about 125,000 square feet, primarily lab space with some office and dry labs as well. We’ve also been 95 to 98 percent occupied for the last four years or so.

It opens up the question of how do we serve this market a little bit better, are we serving the right market and who needs us the most.

The expansion was designed with that in mind. We added 12 new wet labs, six dry labs, some additional con-

ference and office space and expanded our office area.

UEL primarily serves early stage and growth companies that are coming to us with needs for lab space, office space and connections within the community.

The key difference is not only serving the market we need even better but focusing even more on the early-stage companies and trying to enable the types of connections they need.

Tellijohn: Is the focus the same?

Rucker: That will expand a little bit.

When UEL was envisioned it was life sciences which steers us toward biotech and pharma. We also have some companies that are working on medical health or med-device work. We have a couple that are focused on food and agriculture. And then a couple focused on materials engineering.

There also is an interesting crossover when you see the analytics side of things being equally important to the science and tech focused companies. So, we have expanded our IT infrastructure to try to work with that. Analytics started out as its own separate entity. Now, there is such as extraordinary amount of data that any business, small medium or large, can benefit from using it.

University Enterprise Laboratories in St. Paul in May opened a 19,000 square foot expansion to its original space.

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UPSIZE MAY • JUNE 2019

Diane Rucker

Tellijohn: What’s the status of leasing?

Rucker: We have about 75 percent leased with several other companies talking with us. Moving some companies around opened up a couple spaces in the original building, so overall occupancy is around 75 percent.

To talk about leasing, people can get in touch with me. Earlier would be better, so we can work with them on what is the right space rather than what is left.

Tellijohn: How can organizations like UEL help create opportunities for startups and expanding small businesses?

Rucker: Groups like UEL can really forge connections between small businesses, corporations, government and education. Minnesota has nearly 20 fortune 500 companies. A group like UEL is a connector across multiple industries and groups. We work with the University, with investors, directly with entrepreneurs, and we have some strong links to the state of Minnesota and the cities of St. Paul and Minneapolis contact: DIANE RUCKER executive director of University Enterprise Laboratories: 612.770.9023; diane@uelmn.org; www.uelmn.org.

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WE MOVE IN ONE DIRECTION

FORWARD. C O R P O R AT E D E PA R T M E N T C H A I R

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.

Investing in you.

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 member 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.

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Brian Wagner 952.358.2513 Eden Prairie | Isanti | Minnetonka | Ramsey | Wayzata North Oaks | flagshipbanks.com |