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Turning complicated legislation and difficult situations into business advantages
“I did look at this with the lens of A, how can we be compliant, but B, how do we make this a benefit or a unique perk to my unique distributed team.”
— Justin Bieganek, founder and brand advisor, Mercury Creative Group
ALSO: FINE-TUNING YOUR STRATEGIES AROUND GENERATING SALES LEADS A BUNDLE OF RETIREMENT OPTIONS FOR THE SELFEMPLOYED CATCHING UP: EOS BENEFITING A COUPLE OF GURUS A BUNCH OF YEARS LATER
In business the word “power” gets thrown around a lot – from power brokers and power moves, to power lunches and power players. At Crown Bank the power we value most is the power of possibilities. Getting to know a client’s business is how we discover what ideas are possible, and then marshal the power to bring them to life. It’s how we make the possible, possible. What can we make possible for your business?
December
16
Small businesses did not universally embrace new legislation requiring safe and sick leave for employees. But crafty business owners and experts are finding ways to streamline those rules to go above and beyond, giving them a hiring and retention competitive advantage
BY ANDREW TELLIJOHN
Cover photograph by Tom Dunn
PAGE 4
Founder’s Forum:
Ashley Mooneyham, founder of Momease Solutions, tells founding editor Beth Ewen how her personal struggle to pump breast milk is leading to a promising new venture
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
PAGE 6
Small businesses can adopt bitcoin and here is how it will work by Alex Schoephoerster, Moss & Barnett
PAGE 8
Calm your short-term fears by focusing marketing efforts on the long-term by Bonnie Harris, Wax Marketing
PAGE 10
Self-employed individuals have plenty of options for preparing to retire by Christopher Mastley, JNBA Financial Advisors
PAGE 12 SALES
Tweak your lead generation strategies to bring sales to new levels by Mike Huey, Scalable Sales Solutions
PAGE 22
A Couple of Gurus founder and CEO Keith Schoolcraft talks about the impact EOS had on communicating his vision for the company to employees and other lessons learned on his entrepreneurial journey
PAGE 24
The first ever Upsize on Tap event featured a discussion on M&A and exit planning with Jeff O’Brien, Husch Blackwell; Dyanne Ross-Hanson, Exit Planning Strategies and Jay Sachetti, Bundl Home Cleaning & Maintenance
Activate your purchasing power with a business credit card that optimizes your cash flow. With the right card program, you’ll have the tools you need to purchase equipment, hire that new employee or take on the building expansion you’ve been dreaming about.
Maximize your earnings –and your time.
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FOUNDING PUBLISHER
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is turning ‘desperate’ problem into a business
Ashley Mooneyham, founder of Momease Solutions, discovered the sorry state of breast pump technology the hard way. As a new mother three years ago, she found she needed four 15-minute pump cycles just to fill one bottle—and babies drink a bottle every two hours or so.
She holds a doctorate in ovarian cancer research, so she got to work as a scientist does: through research. “The breast pump technology has been suction-based,” and suction-based only, for 30 years, she says, while studies show adding heat and massage speeds up milk flow.
“People are cranking it up to the highest possible setting,” she says of available pumps, or wearing the pumps practically around the clock. “At first it was my own desire to improve my experience,” she said, but her Google search found nothing.
In 2022, Momease won grand prize of $30,000 at the Hy-Vee Opportunity Summit, and a prize at Walleye Tank, a regional junior version of Shark Tank, the hit TV show where entrepreneurs vie for investors. This fall, they won the grand prize at MN Cup, a statewide startup competition at the University of Minnesota.
Last year Momease won third in that competition. What made the difference in their pitch this year? No. 1, they had a prototype. “It really made our idea tangible and approachable,” Mooneyham says.
But more important was appealing to a bigger audience, which Mooneyham calls her “huge tip” to other entrepreneurs. “It takes time — how to create a pitch that will appeal to a wide swath of people. Our danger was, we were making assumptions on what people knew about this problem,” she says. “I used to say, ‘it’s time-consuming,’” but that didn’t mean much to most people in the room who hadn’t tried pumping.
“Man, oh man, what a bummer this is,” she remembers thinking at first. “And you sit with that long enough” until she started to tell herself, “You need to take that leap. I Googled how to do a pitch deck. I had no personal capital,” she recalls.
“I put out a survey on my own Facebook. Twelve hundred women responded in 24 hours, and I knew I had to see it through,” she says. “They’re desperate for a solution.”
With her business partner, Jennie Lynch, Momease Solutions now has a prototype of a nursing bra that incorporates heat and warmth and which Mooneyham says makes her job of pumping for her 5-month-old son efficient.
Momease attracted a lead investor, Superior Medical Experts of St. Paul.
Then, she started citing a weekly average from research studies. “I said, breastfeeding takes 18 hours, and all the men in the room sat up. ‘Oh, really?’ We’re appealing to investors. We’re appealing to men.”
Lynch’s job is to get the product to market. “I position myself as being the activator,” she says, “someone who balances the creative with the boots on the ground. We feel we have only one shot” to meet the needs of so many women, who often approach the pair after presentations, frustrated and in tears.
“When we meet these women, we wish we had a product right now. It’s solving a problem that needs to be solved,” Lynch adds — a classic and worthy entrepreneurial quest.
—Beth Ewen founding editor bewen@upsizemag.com
by Alex Schoephoerster
by Craig Veurink
Multiple public companies have adopted bitcoin by adding it to their treasury reserves, including Microstrategy, Tesla, Square, Block, Semler Scientific and more. But it’s not just major public companies that are embracing bitcoin. Governments are participating. Countries like El Salvador, Norway and Bhutan hold bitcoin.
President-elect Donald Trump has announced plans for the United States to implement a bitcoin strategic stockpile and the Senate has proposed the federal government acquire 1 million bitcoin.
Thousands of private businesses across the United States also have already adopted bitcoin as a treasury asset and you can too.
The price of bitcoin is volatile, but the volatility has been skewed to the upside. Over the last decade, bitcoin has outperformed every other major asset. The answer to volatility is allocation.
Allocating 100 percent of reserves to bitcoin could be problematic if required to liquidate at an inopportune time. However, even a modest 3 percent allocation with the remainder in non-interest bearing cash has been sufficient to protect against the dramatic rise of inflation since 2020.
“When do I start to turn a profit?”
1. Where traditional banks may struggle with international transactions and are frequently closed, bitcoin is accessible at the holder’s whims.
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. Adopting bitcoin as a treasury reserve may require approval from co-owners or a board of directors. The decision-making process should be documented.
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
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.
1. Understand bitcoin and dollar reserves. Oversimplified, bitcoin is a digital ledger, similar to dollars in the bank. However, instead of a bank or government controlling the ledger, bitcoin is decentralized, immutable and is accessible and verifiable by anyone with an internet connection.
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.
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
3. Your plan should consider questions such as how you will acquire bitcoin, how much you will purchase and will you continue to buy with profits. Review existing plans as a reference for making your own.
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. There are a variety of ways to acquire and store bitcoin, ranging from brokerage accounts and apps to purchasing from an exchange. Some businesses choose selfcustody, which may be most secure, but also has risks.
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
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. Various nonprofits, such as the MN Crypto Council and the MN Blockchain Initiative, can help you learn and connect with others learning about bitcoin.
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
Every small business owner keeps at the front of their mind the question:
Importantly, there will only ever be 21 million bitcoin, no one can create more. It is the first absolutely scarce asset in our world. U.S.-based businesses hold approximately $7 trillion in cash on their balance sheet, in their treasury. However, cash loses its purchasing power. Many businesses generate nominal returns on their reserves through money market funds, CDs and treasury deposits. But these investments fail to outperform inflation. In a world where the purchasing power of our dollar is a melting ice cube (albeit, still substantially stronger than other fiat currencies), bitcoin offers a solution with asymmetric upside that is largely uncorrelated to traditional assets.
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
In addition to inflation and monetary debasement risk, having cash in the bank comes with forfeiture and counterparty risk. Over the last two decades, an average of 25 banks failed each year and countless fully legal businesses were debanked or had assets frozen or confiscated. Banks hold a small fraction of their deposits and FDIC insurance only covers up to $250,000, with total FDIC assets amounting to around 2 percent of aggregate bank deposits. Access to funds also poses a risk when using traditional banks, which may struggle with international transactions, operate only 8 hours a day, 5 days a week, and are closed on holidays — making them available less than 25 percent of any given year.
Bitcoin offers inexpensive, frictionless, immutable, censorship resistant and 24/7/365 payments anywhere in the world without a counterparty. Nonetheless, for most bitcoin owners today, the primary use case is store of value. Businesses that want to complete transactions during bank downtimes, require a faster settlement option than the ACH system, have international payments or want to avoid the 3 percent credit card
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.
fees are all excellent candidates to use bitcoin as a payment method today.
2. Identify your approval process. To adopt bitcoin as a treasury reserve, you must understand what approvals are necessary. If you have co-owners or a board of directors, you may need to obtain their approval. This step will be unique to each business, but the plan, the approval and the decision-making process should be documented appropriately.
3. Develop a plan. Once you identify the necessary approvals, you should develop a plan for approval and implementation. The more complex your approval process, the more detailed your plan should be. Your plan should consider important questions, for example: How will you acquire bitcoin? How much will you purchase? Will you continue to buy with profits? How will you secure your bitcoin? It’s okay if you don’t have all the answers. Instead, consider who gets to make the decisions (e.g., the board or a special committee). Review existing plans from companies like Microstrategy for examples.
4. Decide how to acquire and custody bitcoin. There are a variety of ways to acquire and store bitcoin. You can buy exchange-traded fund (ETF) shares through a brokerage account or app from one of the dozen bitcoin ETFs, including major asset managers like Blackrock and Fidelity. While you don’t directly own the bitcoin in this scenario, you can still benefit from its price appreciation.
You can purchase bitcoin from an exchange (such as River, Swan
or Coinbase). You may then elect to keep your bitcoin on the exchange or move them to a more secure custodial solution. There are banks and credit unions that also offer custodial solutions. Right here in Minnesota, St. Cloud Financial Credit Union has built a unique hybrid custodial solution called the CU Digital Asset Vault.
Some businesses may choose self-custody for their bitcoin, which many consider the most secure option. However, with self-custody, you are the single point of failure. So, make sure you have a solid plan and process to account for and mitigate risks such as an untimely death, user error or loss of a passphrase. One of the most popular options for multi-owner businesses is a multisignature set up offered by companies like Unchained or Onramp which eliminates the single point of failure.
Depending on your knowledge and understanding of bitcoin, there is a security model right for you. While it may seem daunting at first, it starts with education. There are various local nonprofits like the MN Crypto Council and the MN Blockchain Initiative that can help you learn and connect with others who are on the same journey. By diversifying treasury reserves to include an allocation to bitcoin, businesses can protect against inflation and the monetary debasement of our fiat dollars, mitigate forfeiture and counterparty risk and ease liquidity constraints. Consider if a bitcoin strategy is right for you and join the thousands of other small businesses that are protecting their reserves using bitcoin.
Contact: Alex Schoephoerster is a partner with Moss & Barnett: 320.654.4580; alex.schoephoerster@lawmoss.com; www.lawmoss.com; in/alex-schoephoerster
“By diversifying treasury reserves to include an allocation to bitcoin, businesses can protect against inflation and the monetary debasement of our fiat dollars, mitigate forfeiture and counterparty risk and ease liquidity constraints.”
Alex Schoephoerster Moss & Barnett
by Craig Veurink
by Bonnie Harris
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
When I was starting my business in 2002, and for many years after, I suffered from something I call the “gut-wrenching fear.” Whenever I mention it, I get instant recognition from my fellow business owners. I’d describe it as the anxiety we all experience — those sleepless nights when a check doesn’t arrive from a vendor or customer, an important employee or client is lost, or any one of a million other things that happen when you’re running your own show. It all comes down to the fear of failure, which is very real for all of us. It’s incredibly tough to manage. And if there’s one thing that amplifies this fear, it’s marketing. The good news is there is a way to dial that stress down. It requires taking a long view and it’s easier than it sounds.
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.
our business and externally, from the economy to even the climate. Unfortunately, these factors have increased considerably since the pandemic and there doesn’t seem to be a break in the level of disruption on the horizon.
Some marketers tout “best practices” as proof they’re doing the right thing. Sometimes that’s okay. However, each business’s marketing mix has to be customized to a careful blend of strategies and tactics. The approach should be based on your ideal customer, your goals, and, of course, the nature of your business, not just best practices.
But that’s not the whole answer to alleviating stress and getting the best marketing results possible. You have to focus on the long game.
“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
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
1. Each business’s marketing mix has to be customized to a careful blend of strategies and tactics with an approach based on your customer, goals and business type.
2. Many business owners have been lured by agencies promising quick results, only to find those promises were unrealistic and don’t pan out.
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
3. Identify key past moments when sales or leads spiked and trace them back to potential causes, like influencer mentions or specific campaigns. Rebuilding the context may help you replicate the success.
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.
4. Consistency is key to building momentum and achieving sustainable success. Do something for marketing every week.
5. Focus on building sustainable marketing strategy. Play the long game.
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.
Marketing decisions often feel like navigating a strange maze. Maybe you’ve reached a dead end when an ad stops working. Your social media accounts may be eerily quiet. This is when the fear creeps in, and usually, your mind turns to marketing as you ruminate over and over on questions like:
• Do I need a marketing agency?
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.
• How do I know my marketing consultant has the right strategy?
• Am I advertising in the right places?
• How much should I spend?
No matter where you are in your business, keep these things top of mind:
• How can I get more leads/more customers/more sales…
1. Know when you will break even
This may be simple, but it isn’t easy. When numbers drop, the first thing we often do is change our marketing tactics (or even our agency) before determining what’s really going on. This is often because we believe the marketers I call “big promisers.”
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
There are too many agencies that promise to deliver unrealistic returns. They’re either too large or they’re in a short time frame. For a short period of time, I worked for one of these agencies. They projected their own revenues quarterly based on when a client terminated their contract. In meetings, they promised the world but rarely delivered. Launch a national software product on a $2,000 a month retainer? No problem! Rewrite a massive website in six weeks? No problem!
Every small business owner keeps at the front of their mind the question:
The questions can go on and on, especially if revenues are down. Sales for small businesses often feel like a roller coaster impacted by many things we can’t control, both within
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.
Now, this was a dramatic example. But many business owners have been lured by agencies promising quick results, only to return disappointed
when these promises don’t pan out. This often coincides with business owners seeking a silver bullet — a single, magical solution to their marketing woes. This mindset leads to jumping from one marketing tactic to another, resulting in short-term gains but long-term instability.
In other cases, businesses often try to be everything to everyone, fearing they’ll miss out on potential customers. Trying to market to everyone usually results in ineffective, generic messaging and high costs.
Sustainable marketing takes time and patience. You can overcome gutwrenching fear by building trust in your marketing department or partner. Investing in proven practices rather than chasing quick fixes helps deliver results that last over time. Here are some guidelines to help build an effective, sustainable marketing strategy.
1. Know your audience — Start by gaining a deep understanding of your audience. Conduct small, low-cost tests to see what messaging resonates with them. Embracing this “test-and-learn” mindset will fine-tune your marketing efforts, so you know what works before committing significant resources.
2. Analyze past successes — Look at past wins. Identify key moments when sales or leads spiked and trace them back to potential causes, like influencer mentions or specific campaigns. Rebuilding the context of these successes can help you pinpoint key performance indicators (KPIs) that you can replicate.
3. Develop and measure metrics — Establish a set of meaningful metrics and track them regularly — monthly often works well.
Your initial targets might not be perfect, but starting with a baseline is essential. As you gather more data, you can refine your goals and focus on what works.
4. Find a marketing mentor — Guidance from an experienced mentor can make a world of difference. This could be a fellow entrepreneur, a consultant or even an admired author. A mentor brings objectivity and can help you overcome the fear that often accompanies marketing efforts.
5. Commit to consistency — Set aside at least an hour each week for focused marketing activities. Consistency is key to building momentum and achieving sustainable success. Even if you’re just checking your social media follower numbers, do something that contributes to your marketing strategy.
6. Test, learn and adapt — Keep experimenting with small campaigns, and don’t hesitate to pivot based on your findings. Marketing is a long-term game and adapting will help you stay ahead.
You’ll work on these steps in the short term, but they’ll inform your strategies in the future as well. That makes it feel less like a roller coaster and more like a good steady climb as you use what you’ve learned to keep doing the things that work and stop doing those that don’t.
Focus on building a sustainable marketing strategy and the confidence to overcome common fears associated with marketing. Play the long game, and you’ll get rid of that wrenching fear for good!
Contact: Bonnie Harris is an integrated marketing communications consultant and founder of Wax Marketing Inc.: 612.801.0912; harris@waxmarketing.com; www.waxmarketing.com; in/bonnieharris111
“Set aside at least an hour each week for focused marketing activities. Consistency is key to building momentum and achieving sustainable success.”
Bonnie Harris Wax Marketing
Saving for retirement is a crucial part of running a business and, fortunately, there are plenty of options tailored specifically for the self-employed.
In addition to growing the value of the business over time, self-employed individuals have four main qualified retirement savings options available, along with regular after-tax brokerage savings.
• 401(k) Plan
• SEP IRA
• SIMPLE IRA
• Defined-Benefit Plan
once the combined balances reach $250,000, or upon terminating the plan, certain filing requirements must be met. Working with your accountant or thirdparty administrator is essential to ensure these filings are handled appropriately.
by Christopher Mastley
Craig Veurink
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. One-participant 401(k) plans, for people with no employees other than a spouse, come with the advantage of allowing you to contribute as both an employee and the employer.
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. A Simplified Employee Pension (SEP), a variation of a traditional IRA, is easy to administer and allows for multiple employees to participate, making it well-suited for small businesses with multiple employees.
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. Simple IRAs can be ideal for small companies with 100 or fewer employees in that they combine IRA and 401(k) elements but with lower contribution thresholds.
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. A defined benefit plan might allow you to defer more tax on an annual basis if you have the income to sustain higher contributions over several years.
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. If other plans don’t work for you, traditional or Roth IRAs could be options, as could using a brokerage account for after-tax savings.
Each plan has specific benefits and may or may not be appropriate depending on your business. Below is a brief explanation of each:
One-participant 401(k) plans, also known as an individual 401(k) or solo 401(k), are specifically designed for selfemployed individuals that have no employees, except possibly a spouse working for the business. This plan closely mirrors a 401(k) plan offered by larger corporations, but with the advantage of allowing you to contribute as both an employee and the employer.
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.
If you have multiple employees, a 401(k) plan remains an option, but it requires more oversight. These plans must undergo annual, somewhat complicated testing to ensure benefits aren’t disproportionately weighted toward higher-paid employees. However, you can avoid discrimination testing by adopting a “safe harbor” 401(k) plan. With a safe harbor plan, you’re generally required to either match your employees’ contributions (100 percent of employee deferrals up to 3 percent of compensation and 50 percent of deferrals between 3 percent and 5 percent of compensation) or make a fixed contribution of 3 percent of compensation for all eligible employees, regardless of whether they contribute to the plan.
“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
This dual rule can sometimes enable you to defer more tax than the other options mentioned, especially at lower income levels, all else being equal. For 2024, elective deferrals (employee contributions) can be up to $23,000, or $30,500 if age 50 or older. Total contributions (employee plus employer) can be up to $69,000, or $76,500 for those 50 or older as of 2024.
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.
No matter where you are in your business, keep these things top of mind:
1. Know when you will break even
If your spouse works for you, they can also contribute to the plan and receive an employer match. If that’s not enough, your employee contributions can also be made into a Roth portion of the plan, making this a versatile vehicle for retirement savings. This type of retirement plan is quickly becoming one of the most popular for self-employed individuals due to its flexibility and high contribution limits.
Every small business owner keeps at the front of their mind the question:
However, it’s important to note that
Starting in 2024, employers with no other retirement plan (with limited exceptions) can adopt a “starter” 401(k) plan. Designed to be low-cost and easy to administer, starter 401(k) plans allow only employee contributions. Employees must be auto-enrolled at a minimum contribution rate of 3 percent (not to exceed 15 percent) and may contribute up to $6,000 in 2024 ($7,000 for employees aged 50 or older).
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
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.
A Simplified Employee Pension (SEP) is essentially a variation of a traditional IRA. This plan is easy to administer and allows for multiple employees to participate, making it well-suited for small businesses with multiple employees. With a SEP, only the employer makes contributions to the plan. Although the contribution limit is the same as other plans, up do $69,000 a year, you are generally limited to 25 percent of your net earnings, meaning you would need to earn enough to make the full contribution. While there is no annual funding require-
ment, when you do contribute, you must do so for all eligible employees.
This type of plan is ideal for small businesses, typically those with 100 or fewer employees, that find a traditional 401(k) too expensive to administer. It combines elements of an IRA and a 401(k) plan, with investment, rollover and distribution rules similar to a SEP IRA, but with lower contribution thresholds.
In 2024, you can contribute up to $16,000 annually, or $19,500 for those age 50 and older. Employees are allowed to make contributions, and employers have the option to contribute dollar for dollar up to 3 percent of each participating employee’s income or make a fixed 2 percent contribution to every eligible employee’s income, regardless of whether they contribute.
Starting in 2024, employers can also make additional non-elective contributions of up to 10 percent of compensation or $5,000, whichever is less, to all employees. Employers with no more than 25 employees may allow their employees to contribute 10 percent more than the standard and age-50 limits. Employers with 26 to 100 employees may offer higher limits if they provide either a 4 percent match or a 3 percent nonelective contribution.
All employees who have earned $5,000 or more in any two prior years and are expected to earn at least $5,000 in the current year must be allowed to participate in the plan.
Looking to defer even more tax on an annual basis and have the income to sustain higher contributions over several years? A defined benefit plan might be the right fit. This plan guarantees a specified level of benefits at retirement (for example, an annual benefit equal to 30 percent of final average pay).
In 2024, a defined benefit plan can provide an annual benefit of up to $275,000 (or 100 percent of pay, whichever is less). An actuary is generally required to determine the annual contributions needed to fund the promised benefit, which may vary each year based on the performance of plan investments and other factors.
While defined benefit plans are often too costly and complex for most small businesses, they can be highly attractive to businesses with a small group of highly compensated owners. These plans offer the largest potential benefit of any retirement plan, allowing for the largest deductible employer contributions, making them ideal for those looking to maximize tax-deferred savings.
The plans mentioned above may not be appropriate for every small business, so it’s important to consider your other options as well. A traditional IRA or Roth IRA is a great place to save, assuming you meet the eligibility requirements, in addition to after-tax savings in a brokerage account. IRA accounts alone allow you to save up to $7,000 per year (or $8,000 if you are over the age of 50 in 2024), which may be all you need to achieve your retirement goals.
Another excellent option to consider is a Health Savings Account (HSA). If you’re paying for your own health insurance, you’re likely on a high-deductible medical plan. Contributing to an HSA can also reduce your tax liability, and if used for qualified medical and/or dental expenses, the withdrawals are tax-free. Choosing the right retirement plan for your business can seem overwhelming, but with the guidance of your financial adviser and input from your accountant, saving for retirement should be an easy decision.
“Choosing the right retirement plan for your business can seem overwhelming, but with the guidance of your financial adviser and input from your accountant, saving for retirement should be an easy decision.”
Christopher Mastley JNBA Financial Advisors
Contact: Christopher Mastley is an adviser and tax planning manager at JNBA Financial Advisors: 952.844.0995; info@jnba.com; www.jnba.com; in/christopher-mastley-cfp®-863ba1173
by Craig Veurink
by Mike Huey
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. Don’t rely on a single vendor for all your lead generation activities. Have multiple channels, both external and internal.
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. Outbound prospecting, such as cold calling or email blasting, is the first and fastest way to get new leads, but also requires high energy and repetition each month for sustained success.
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. Networking and inbound marketing, such as landing pages utilizing paid advertising, take the most time to nurture, but eventually require less energy to actually generate leads.
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. Test two to three different options within each of four channels. Test them before deciding whether to continue with them.
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. For those that perform well, test different messaging within that channel to optimize your lead generation system.
Are you tired of being bombarded by lead generation companies on social media channels like LinkedIn? Over the past five years, we’ve experienced a perfect storm of outsourcing growth. This explosion has been driven by three key factors:
1. Advancements in AI and technology
2. The COVID-19 pandemic
3. The continual expansion of outsourcing
One of the biggest mistakes I see business leaders make is completely outsourcing their lead generation activities to other companies. This article provides some direction on creating your own lead generation strategy.
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.
Just as you wouldn’t rely on a single vendor for all your supplies, you shouldn’t depend on one source for all your lead generation activities, whether internal or external.
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.
A best practice is to have multiple lead generation channels and test their results to determine where you’re getting the best return on investment. All lead generation channels can be categorized into four quadrants. (Fig. 1.)
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.
Just because I list items as “Internal Efforts Required” doesn’t mean you have to do all the work yourself. You may choose to outsource that work. However, you are simply delegating the tasks to someone else.
No matter where you are in your business, keep these things top of mind:
1. Know when you will break even
Every small business owner keeps at the front of their mind the question:
You still need to manage it. Let’s start with the fastest methods of generating leads.
The first and fastest way to get new leads is through outbound prospecting:
1. Traditional cold calling, with or without supporting emails
“When do I start to turn a profit?”
2. Modern broadcast email blasting
3. Door knocking
4. Tradeshows
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.
5. Social media messaging, such as LinkedIn and Facebook
This is one area, out of 21, where the majority of lead generation companies that approach you want to work.
2. Put cash-flow management before profits
Although this is a fast lead generation quadrant, these channels require a high level of energy and resources. When the leads come in, there is very little to keep the channel performing. You must repeat the process each month.
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.
Another fast way to generate leads is through referrals. You can immediately start making phone calls or sending emails to get referrals from four sources:
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.
1. Customers
2. Your network
3. Referral partners
4. Joint venture partners
The following two channels take more time to nurture, but they eventually require less energy to generate leads. Think of it like driving a car: first and second gear require more gas to get the car moving quickly, while third and fourth gear, or overdrive, use less energy once the car is in motion. The same is true for your lead generation machine.
The third area is networking. Some of these lead-generating activities include:
1. Networking events
2. Creating your own networking team
3. Creating a preferred referral source network
4. Association meetings, board positions and events
Once a network connection is made, someone must nurture that relationship. Those relationships can furnish continual leads for you over time.
The final option is inbound marketing. This includes some of the following:
1. Landing pages utilizing paid advertising
2. Search engine optimization (SEO)
3. Old school advertising, such as print, billboards, radio or television advertising
4. Webinars
5. Live events
6. Publicity
7. Content, marketing, such as books, e-books, and articles. It might be working because you are reading it right now!
8. Drip campaigns
You can also combine channels. For instance, you might take an old-school tradeshow and connect it with a speaking event or webinar, along with working with an association. You can also link email blasting with landing pages to promote attendance at live events.
Pick three channels from different quadrants. The key is to test two to three different options within each of the selected channels, giving you six sources of leads to track. For example, if you want to engage a lead generation company using LinkedIn messaging, try two companies simultaneously to compare their effectiveness. If you’re considering returning to trade shows, test two or three before deciding whether to continue with that channel.
Track your spending and results over a period relevant to your industry. When the time is up, make decisive choices about which channels to cut and which new ones to try. For the channels that perform well, begin testing different messaging within that channel to optimize your lead generation system.
Lead generation doesn’t have to be the nuisance you experience in your email inbox. It can become a valuable source of cash flow for your sales or business development teams, taking your revenue to a whole new level.
“Lead generation doesn’t have to be the nuisance you experience in your email inbox. It can become a valuable source of cash flow for your sales or business development teams, taking your revenue to a whole new level.”
Mike Huey Scalable Sales Solutions
Contact: Mike Huey is president of Scalable Sales Solutions and the author of Make Your Company Scalable and Saleable: 763.299.4429; mike@ScalableSalesSolutions.com; www.ScalableSalesSolutions; in/mikehueysales
Go above and beyond for employees, they’ll do the same for you
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
He knew he needed to get educated.
“There were all these mixed feelings,” he says. “Why do we have to do this? This is going to kill us.”
At the same time, Bieganek, founder and brand advisor at Mercury Creative Group, tries to make his remote brand strategy and design firm an employee-friendly place where people want to work. Further complicating the issue for him: He has employees located in several states outside Minnesota.
“What I had to do initially was get informed,” he says. “I really needed to take a look at all of those states and that was something that was unique.”
He’d worked previously on another project with Steve Schad, president of the fractional HR firm Optima HR Solutions and he reached out again for some clarity and assistance in figuring out how to comply while also not draining the firm of resources.
“I did look at this with the lens of A, how can we be compliant, but B, how do we make this a benefit or a unique perk to my unique distributed team that goes from part-time to full-timers,” Bieganek says.
Together, Schad and Bieganek worked out a plan
under which the company won’t track vacation time, opting instead for an open policy. It includes stipulations relating to the length of time a worker can be off at any one time and time off still requires approvals, so there are boundaries.
But it’s also a plan that builds off of a culture that Bieganek saw an opportunity to illustrate through this new policy.
“We have a really strong culture of trust and transparency here,” he says. “I know all of my employees, so being able to go through that process understanding ‘What’s Julie going to need, what’s she going to want, how is she going to respond to this? How is Karen going to respond to this,’” he says. “It really just comes down to let’s all work together to make things great for all of us and respect the business and respect the people.”
The new rules will kick in on Jan. 1. Bieganek likes the new approach because it goes beyond the requirements of the state law and because it’s simpler to enact. He thinks his employees will like the flexibility.
Optima’s Schad, who advised Mercury Creative, says headwinds for entrepreneurs seem to be getting stronger with boomers retiring shrinking the workforce, participation rates lagging and government regulations becoming a patchwork effort.
In Minnesota, the controversial earned sick and safe time law requires employers to provide paid leave to employees who work in the state that can be used if they are sick, if they have to care for a sick family member or if an employee or family member has experienced domestic abuse, sexual assault or stalking, according to the Minnesota Department of Labor.
“Some states and localities are enacting more
by Andrew Tellijohn photographs by Tom Dunn
Justin Bieganek, founder of Mercury Creative, one-upped the state’s new paid leave and safe time law and created an open time off policy for employees that goes beyond the requirement.
and costly rules that favor employees,” Schad says. “This is on top of federal rules that never let up.”
As usually happens, he adds, Mercury and other small businesses have found ways to make it work. Some have started looking at employee stock ownership programs and other ways to financially give employees a stake. Others, like Mercury, have pushed the ceiling on time off.
“Many employers are finding success by treating the new rules as a minimum to go above and beyond,” says Schad, adding that creating such programs starts with a firm understanding of what the rules are and what compliance looks like.
“If I’m an employee and I say I’m sick, you have to just accept that and you have to give them time off. There’s no notice requirement.”
So, as an employer, Schad says you need to put in place rules around what is considered safe and sick time and what is considered part of an unlimited PTO allotment.
It helps, he adds, to consult with an HR professional to ensure compliance, but the end result can be great.
“It is kind of a win-win, where the employee gets this great benefit of unlimited PTO and the employer gets to advertise that at the same time,” Schad says. “That’s an example of turning the lemons to lemonade.”
TYLER ARVIG is associate chief clinical officer and vice president at R3 Continuum: 952.221.3341; tyler.arvig@r3c.com; www.r3c.com; in/tyler-arvig-psyd-lp-a1081967
JUSTIN BIEGANEK is founder and brand advisor at Mercury Creative Group: 651.488.7900; justin@mercurycreativegroup.com; www.mercurycreativegroup.com
STEVE SCHAD is president of fractional HR offering Optima HR Solutions: 651.587.0588; steve@optimahr.net; www.optimahr.co; in/steveschad
SARA SCHLIPP-RIEDEL heads HR from Minnesota for New Jersey-based Accordant Co. LLC and owns Leora Leadership Consulting LLC: 612.221.4608; sschlippriedel@accordantco.com; www.accordantco.com; in/sara-schlipp-riedel-m-a-shrm-scp-b6904948
Sara Schlipp-Riedel is director of human resources working remotely from Minnesota for New Jersey-based Accordant Co. LLC, an enterprise resource planning software vendor. She also owns Leora Leadership Consulting, which helps nonprofits establish human resources policies.
She says businesses of all sizes struggle with balancing the need to recognize the humanity that inevitably comes with having employees versus the need to have consistent policies that apply to everyone fairly and equally.
The advantage for smaller businesses, she says, is agility — the ability to provide some flexibility “or even customization in terms of recognizing the human component of what it is to be a professional today, no matter what stage of life you’re in.”
Schlipp-Riedel regularly has discussions with her mother, who worked while raising a family, about how different it is today in that parents can often chaperone field trips or attend programs at school without upsetting employers.
“She will ask me questions like, ‘Your employer was okay with that? And your colleagues don’t get upset with you?’”
Schlipp-Riedel says. “I think smaller organizations have an opportunity to recognize that, to really embrace that, to support that. And that goes a long way for employees.”
There are challenges there. Some employees with kids may be treated differently than others who don’t have children. But those employers can address that by providing time off for those without children to do something else that might help them feel fulfilled.
“So, if Jane wants to step out and volunteer in the classroom, maybe you can also turn to Melissa and say, ‘Hey, you know, we really want to give you the space. If it’s important to you a ... to go and do something that’s important to you a couple hours a week, do something that fills your cup.’”
The opportunity for small businesses to set themselves apart as worker friendly can be put to the test when it comes to something longer-term, such as caring for an aging parent, dealing with death or an illness, or other reasons that might take an employee away for an extended time.
But Bieganek, Schlipp-Riedel, Schad and others indicate these are the times when a company can put actions behind the words of their culture.
“Those are moments of impact for an organization,” says Schlipp-Riedel. “How an organization, how an organizational leader responds in those moments really sets the tone and probably says a lot to whoever is a part of the organization about their perspective on what’s life really about, what’s most important.”
Tyler Arvig, associate chief clinical officer and vice president at R3 Continuum, says larger companies may have access to more resources, such as Employee Assistance
Programs, that smaller businesses don’t have access to. And in those larger settings, one person’s absence might not have the same kind of impact that it might in a smaller office.
There are ways for small businesses to help their people. What it looks like depends.
“It depends on what the role is,” he says. “Do you have the people that can cover, people that can flex in their job duties to cover for that person?”
Then it’s important, he adds, that when the person does return to work after an extended leave that work has gotten done on their behalf.
“There’s nothing worse than coming back to work and then finding out that, ‘Oh, geez, nothing got done while I was ‘gone,’” Arvig says. “You don’t want people to come back into a work environment and feel like they have clean-up to do.”
Bieganek says he’d focus on communication, pulling the person aside to better understand and assess the situation to figure out how to rebalance resources to provide the space necessary while trying to maintain workflow, as well.
“Life happens sometimes,” he says. “Horrible things happen. We’re emotional beings so being alongside that person on whatever unfortunate journey may be happening, and staying as close as you can to help and even sometimes just being there, is the most important thing.”
Mercury Creative Group has worked hard to build a trusting relationship with employees and thinks the new leave policy will illustrate that culture.
Arvig adds that often times lost in these situations is that upper ranking executives, whether at small businesses or large corporations, sometimes need services too — but often don’t feel they can take the time away.
R3Continuum is seeing a lot of traction with mental wellness counseling that allows top executives to get support from well-trained mental health professionals with backgrounds in how business works through virtual appointments over a lunch hour or other convenient times.
“Maybe I don’t even need to leave the office necessarily to do it,” he says. “We’ve seen just great feedback from folks who were really struggling with stuff and the employer offers that. There’s some cost to the employer, but what’s the cost versus the cost if I take two months off of work and I’m not there? That’s a pretty big cost too. So, am I going to invest in supporting my people in a really more intensive way that they can feel supported and continue to help my company?”
Jay Sachetti got into the residential cleaning industry about three years ago. His company, Bundl Home Cleaning & Maintenance, has done several acquisitions and is exploring more.
While 2024 has been a good year, it’s not as hot as it had been during an extended era of historically low interest rates coming out of the pandemic. The correction on that has, he says, created some challenges in getting deals done.
“I think as we transitioned out of that environment there was some misalignment between seller expectations and buyer expectations and what those returns were going to look like with a different financial picture,” he says.
Sachetti joined Jeff O’Brien, partner at
Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
While O’Brien described the current market as “busy” and Ross-Hanson used “robust,” Sachetti called it “uneven.” Bundl has chosen to expand through acquisition because his business is focused on recurring work and he figured it would be easier to grow by acquiring companies in new Twin Cities markets that had established portfolios rather than chasing
by Andrew Tellijohn
new contracts one at a time. He’s seen the market as a buyer in recent years.
Through-the-roof multiples paid for businesses during the low interest period reset expectations and it has taken some time to re-regulate prices after the pandemic messed with financials for three years, he says.
“I’m looking at your 2020, your 2021, even your 2022 books and in a lot of cases it can be hard to figure out up from down because there were so many weird things going on,” he says.
Other common challenges stepping in the way of getting business transitions completed, he says, are when owners get bad advice from the wrong adviser before lawyers and other team members are brought together, especially in cases where they decide spontaneously to sell without doing proper planning in advance, O’Brien says.
“There was a lot of puffing going on about the value of the business prior to the contract getting signed and then, after the contract was signed, ‘oh, actually, no, it’s a lot less,’” he says. “That’s probably one of the more common things I see is you get somebody in there that really doesn’t know the business and is not the appropriate person to be on the team.”
O’Brien emphasized that those problems can be solved with long-term planning and bringing in a team of advisers well in advance of a sale.
Ross-Hanson agreed and added that a lot of business owners assume when they are ready to move on, there will be a bidding war, an all-cash offer and an opportunity
to “sail off into the sunset.”
From left to right, Jay Sachetti, Bundl Home Cleaning & Maintenance; Upsize publisher Andrew Tellijohn; Dyanne RossHanson, Exit Planning Strategies and Jeff O’Brien, partner at Husch Blackwell
“The reality is that’s a dream, it’s not real, it’s not a plan,” she says. “Not starting early enough is the biggest war story or problem, not having an experienced advisory team helping evaluate what those options may be.”
Options include acquisitions. But there are others, including ESOPs — employee stock ownership plans — or other forms of internal transitions to family members, individual employees or a management team, she says. Ultimately, pre-planning for what is realistic will maximize your opportunity to actually make a good deal in the end. “Having the right expertise on the advising team, building that early, starting the planning early, would be
Dyanne Ross-Hanson is president of Exit Planning Strategies LLC: 651.426.0848; drh@exitplanstrategies.com; www.exitplanstrategies.com; in/dyannerosshanson
Jeff O’Brien is a partner at Husch Blackwell: 612.852.2723; Jeffrey.obrien@huschblackwell.com; www.huschblackwell.com; in/jeffreycobrien
Jay Sachetti is owner and founder of Bundl Home Cleaning & Maintenance: 763.531.9100; contact@bundlhome.com; www.bundlhome.com; in/jaysachetti
my recommendation,” she says.
Sachetti adds that while business brokers add value in many ways, some also can complicate deals by creating valuation expectations that vary significantly from what the market will pay.
He adds that business owners also hurt their efforts to maximize proceeds from a sale with purchases aimed at reducing a tax bill for any given year.
“You’ve had a good year, there’s some cash in the bank and boy, that tax bill is going to look huge,” he says. “So, hey, let’s go buy an RV or a boat or a camper, something you can run through the business as an expense. The downside is that when it comes to sell, you’ve taken your earnings down on a one-for-one ratio with whatever it is that you buy and that is now directly subtracted by the multiple you want for your business. You traded out four times, three times, eight times, whatever the multiple is you want.”
Ross-Hanson emphasized market statistics indicating that only 30 percent of businesses that go up for sale end in a successful transaction. So, how do owners make sure they give themselves the best chance to sell? She advised them to consider all alternatives — and to be aware that all deals look different.
The likelihood is that a transfer within a family or to a management team will take some time and won’t result in the largest possible deal because those parties might lack cash or bankability.
“A lot of times that financing is also going to have to come from what they call seller financing, where the
cash flow of the business is going to be utilized to gradually allow those internal buyers to buy ownership,” she says.
The size of the business and the asset-denseness of a company will also impact salability, adds Sachetti.
“The smaller you get, the harder it is to sell, the more assets there are, it’s harder to sell,” he says. “The value of those assets you can liquidate are worth more than the cash flow and whatever the multiple might be.”
Finally, O’Brien adds that internal family sales are becoming less common, especially as successful transfer rates decrease significantly as the business moves from second to third and fourth generations. Many of those latter generation members, he says, have lived a certain lifestyle because of the business, but don’t necessarily want to put in the work to continue its success.’
“They aren’t coming from a certain bootstrapping of the building of the business,” he says. “I think also, there is a desire to maybe step out from under the shadow of the parents and be known for something other than just taking over that particular business.”
One positive right now is that business owners seem to be heeding the advice of people like O’Brien, RossHanson and Sachetti, who say they need to begin readying their business for sale well in advance of putting it on the market.
Ross-Hanson sits on the board of the Twin Cities chapter of the Exit Planning Institute, which recently conducted a State of Owner Readiness study. Twice as many businesses are planning for their exit compared
with the last time such a study was conducted in 2017.
“The subject of exit planning for privately held businesses has probably never been more pronounced than now,” Ross-Hanson says. “The increase in awareness, planning, team building has over doubled in that time, just even from the last six years.”
O’Brien agrees. An exit strategy should ideally be part of the company’s initial business plan. Among things to look at, he adds, are buy-sell provisions, growth strategies and provisions for buying out minority partners if an opportunity arises.
“You should be talking about what the exit strategy is as part of your planning from day one and then be looking at it through the life of the business, measuring against some benchmarks to see if you’re on target,” he says. “I have a lot of clients who are doing that now, where they are years away from actually selling.”
Robust 2025 market and closing advice
As the discussion closed, each panelist offered their strongest advice to owners looking to find their way to the best deal possible. Ross-Hanson reemphasized that every business owner will eventually leave their company, voluntarily or involuntarily, and it will likely be the most important transaction of their lives. “The quality of that exit,” she says, “is in direct proportion to the quality of preparation made. The better prepared, the better the outcome.”
O’Brien reiterated the need to have good advice. “Make sure you have a good team of advisers and make sure they know each other and work with each other and talk with each other, so when the day the sale comes, everybody is on the same page,” he says. “You may go
for networking, a discussion of M&A and exit strategies and a couple samples of the brewery’s beers.
through this one time. … We go through it many times in a week, so rely on our advice if you hit a bump in the transaction.”
Sachetti emphasized the need for an experienced, stable management team that will stay on board after a deal.
“You can show a track record and a story and a history,” he says. “When I’m looking for businesses to buy, I’m looking for tenure. I’m looking for depth in the team.”
Despite some of the challenges in getting deals done, speakers universally say they expect 2025 to be another solid year for business transition activity.
A robust market in 2024 where deals have cut across markets from manufacturing to HVAC companies to breweries that have tired of trying to compete in a deeply competitive market, O’Brien says, will continue featuring a number of aging business owners who want to wind down and retire.
And business owners like Sachetti, who have decided acquisition will help them grow faster than they could organically, will continue pushing the market. “We’re out on the hunt ourselves,” he says. “I hear and see a lot of that going on, as well, so I am optimistic for 2025.”
by Andrew Tellijohn
It was early 2016 and A Couple of Gurus was a couple years into using the entrepreneurial operating system, commonly known as EOS, to get a better handle on its business when Upsize last visited with the company.
Founder and CEO Keith Schoolcraft, at the time, acknowledged he always knew what he wanted the company to look like but had previously struggled sharing that vision with others. “The vision was crystal clear to me, but my employees — including my president — just didn’t get it,” he said.
Anne Schoolcraft, Keith’s wife and, in 2016, the company’s presi -
A Couple of Gurus is Keith Schoolcraft’s second business. Perseverence, having mentors and learning from mistakes have keyed his success.
dent and integrator, said: “I was intensely focused on managing the day-to-day operations and making payroll, and when Keith’s vision wasn’t clear to me, it just wasn’t worth the time or energy to try to understand it.”
A Couple of Gurus, hit hard by the economic downturn of 2008, had significant debts. After embracing the Vision, Traction and Healthy components of EOS, the operational alignment and financial improvement was immense and fast. “Now that we run on EOS and have the [Vision/Traction Organizer], I am
By the time the COVID pandemic hit, the company was debt free. Keith Schoolcraft has been pleased that while his company was growing, EOS has matured and evolved, as well, introducing new guidance, tools and strategies that continue keeping the learning fresh.
Still making a difference
Eight years later, EOS has helped fuel steady growth for the company, which has gone from 10 employees to 15 and grown in revenue from just over $1 million to around $3 million.
EOS helped A Couple of Gurus
Description: IT company serving world-changing organizations, largely medical device manufacturers and nonprofits
Headquarters: Minneapolis
Founded: 2002
CEO: Keith Schoolcraft
Employees: 15
Website: www.acoupleofgurus.com
company still maintains the regular weekly meetings. It completes 90 percent of its rocks — quarterly goals — and is in a good place operationally, he says,
Meanwhile, Anne Schoolcraft was impressed enough that she left her husband’s company to become an EOS implementor, helping other companies start using the management strategies — which Keith admits was hard on the company, but perhaps good for their family life.
“That did admittedly leave a gap for me when she did that,” he says. “On one hand, I was very happy for her. On the other hand, things at Guru were a little challenging for a while.”
He just found a new integrator to replace her — important because he had mixed results taking on that role while also being the visionary.
“I didn’t understand how important that integrator role was, and I didn’t fully understand what she was doing for us until she was no longer doing it.”
Every business owner, he says, has a little integrator in them — otherwise “we’d just be all theoretical and we wouldn’t actually get anything done,” he says. “What I realized is
that kind of work is a little more detail oriented and, while I can jump into it when needed, it doesn’t energize me. It actually drains me — I was starting to get burned out by doing both roles.”
While EOS has helped Schoolcraft grow A Couple of Gurus, he says it’s not the only factor in his success. This company is actually Schoolcraft’s second bite at the entrepreneurial apple. He grew up with parents who were entrepreneurs in real estate. They tried to ease him in that direction, as well, but he shifted, instead, to computers,
Entrepreneur Operating System, or EOS, helped A Couple of Gurus get employees on the same page with founder Keith Schoolcraft on vision and strategies for getting there.
for which he had a passion even then.
He started Microgate Systems, a computer building company, when he was 17 — a move he acknowledges now he was not ready for.
“When you’re 17, you don’t really know anything about running a business,” he says. “And the bigger
Contact: Keith Schoolcraft is founder, CEO, president and visionary for A Couple of Gurus: 612.454.4878; keith@acoupleofgurus.com; www.acoupleofgurus.com; in/keith-schoolcraft-589440
side of it is, how do you generate sales, how do you do the sales part. I had a mentor I thought was going to take over that part, but it didn’t pan out.”
That business closed, but he learned from the opportunity, got a degree in networking business management then worked for a service provider for a while where he found a couple more mentors who helped hone some business skills.
After Sept. 11, when the economy took a hit, he decided to start A Couple of Gurus.
“When you have someone in your life that gives you that confidence, it allows you to maybe start pursuing your dreams,” he says. “I never lost the bug to want to try and start a company again.”
He recommends getting into some kind of networking peer group where you can bounce ideas and
problems off people who have dealt with the same or similar issues during their own entrepreneurial journeys. Talk to other CEOs, as well, he says.
“There’s huge value in CEOs getting together. They say it’s lonely at the top,” he says. “It’s only lonely at the top if you stay isolated. My advice to people is to not stay isolated and find a group of like-minded entrepreneurs you can bounce stuff off of.”
He also suggests business owners find ways to continue growing and don’t be afraid to try things.
“I love talking to young entrepreneurs,” he says. “I’ve made my share of mistakes over the years and I’m sure I’m going to make a whole pile more. You know, part of the journey is figuring those things out, picking yourself back up and keeping on moving. It’s hard.”
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6600 France Avenue South, Suite 125
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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.
Peggy DeMuse, pdemuse@sunbeltmidwest.com
651-288-1627
Lisa Meyer, lmeyer@sunbeltmidwest.com
612-361-4918
www.sunbeltmidwest.com
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Allison Hinton
Email: allison.hinton@usbank.com
Phone: 619.341.4332
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.
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.
Carlson Partners, founded in 2011, is a private commercial real estate firm specializing in strategic planning for industrial, office, and retail clients. We offer expert guidance in lease negotiations, acquisitions, site selection, build-to-suit planning, and portfolio management across North America, aligning business goals with real estate solutions.
Craig Siiro
612-669-7703 (c)
craig.siiro@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.
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6385 Old Shady Oak Road, Suite 260
Eden Prairie, MN 55344
952.942.2922 | www.proutyproject.com
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7575 Golden Valley Road, Suite 100 Minneapolis, MN 55427
763-546-8201 www.Lingate.com
Greg Loeschke — Managing Principal
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.
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.
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
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.
Rich Larson, General Manager rich@kymnradio.net
507-645-5695
For nearly 60 years, KYMN Radio has been a friend to Northfield, Rice County and Southern Minnesota. Our listeners count on us for news, weather, community based programming on local arts, local politics, the Twins, basic frivolity, and an eclectic music playlist that goes on for days. Listen FM 95.1, AM 1080 and at kymnradio.net.
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.
Lisa Meyer, lmeyer@sunbeltmidwest.com; 612-361-4918 Peggy DeMuse, pdemuse@tnma.com; 651-288-1627; www.tnma.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.
www.capitalclubmn.com
The Capital Club (CAPS) is a sports-centered, business-networking group designed for established and emerging leaders in the Twin Cities. Members gather monthly over breakfast to hear from notable sports figures and accomplished individuals who share their journeys, stories and strategies for success. For more information, contact Patrick Klinger at patrick@ agilemarketing.com.
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™
6385 Old Shady Oak Road, Suite 260
Eden Prairie, MN 55344
952.942.2922 | www.proutyproject.com
Bethany Krueger | stretch@proutyproject.com
Brimacomb + Associates
TCF Tower, Suite #1600, 121 South Eighth St., Minneapolis, MN 55402
612-803-3169 * www.brimacomb.com
Rick Brimacomb, rick@brimacomb.com
Chief Strategy and Relationship Officer
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.
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.”
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.
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.
Business Broker
Cell: 612-801-2299
Direct number: 612-361-4918
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Cell: 612-730 - 8921
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