MN Valley Business by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley December 2019

Matt Norland of Meyer & Norland in Mankato. Photo by Pat Christman

Financial planning for business owners Tax, financial and legal help needed Also in this issue • CHERRY CREEK CABINETS • BLINDS & MORE • WILLIAMS DIAMOND CENTER

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Cyber Security By: Christopher J. Kamath

he amount of personal and financial information stored and communicated electronically on a daily basis in United States is staggering. This trend will only increase as new technologies develop and integrate into mainstream society. As a result, legislatures are making data privacy and cybersecurity laws a higher priority. Although there is no unified federal law on the subject, all fifty states have enacted data breach notification statutes. Minnesota, in particular, requires every business or person that owns or licenses personal information to notify individuals of a data breach that resulted in or is reasonably believed to have resulted in the unauthorized “acquisition” of their personal information. In general, notice to affected individuals must be provided in the most convenient way possible and without unreasonable delay; however, notification can be delayed if law enforcement determines that notification would impede the criminal investigation.

Not all personal information in covered by Minnesota’s breach notification statute. To trigger the notification requirements, a hacker must have accessed your first name or first initial and last name combined with any of the following unencrypted pieces of information: social security number, driver’s license number; or a financial account number. A growing number of states also require that organizations and individuals who own private information to implement measures for the protection of that data. Twenty-two states have enacted such laws, including Massachusetts, New York, and California. It is not clear when Minnesota will enact substantive protections for private information but given the importance of private information and the increase in cyber attacks it is likely that Minnesota will eventually enact legislation requiring businesses to implement administrative, technical, and physical safeguards for the protection of private, personal

information. Regardless of when Minnesota enacts cybersecurity legislation, it is important to be proactive in protecting your information system. Organizations that are the subject of a data beach will usually face litigation, including class action lawsuits, from individuals whose information has been affected. The best way to mitigate your legal liability is by implementing a comprehensive information security program. At a minimum, every security program should have a designated employee to maintain the information system, procedures for identifying and assessing internal and external risks to the security of the system, policies relating to the storage, access and transportation of records containing personal information, reasonable restrictions upon physical access to records containing personal information, and regular monitoring to ensure that the program is operating effectively.

MN Valley Business • DECEMBER 2019 • 1

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F E A T U R E S December 2019 • Volume 12, Issue 3

For small business owners, personal and business finances are intertwined, but they need to make a wide variety of financial decisions for the business and for their personal life.

For 30 years the family owned Williams Diamond Center has worked closely on educating customers about the high quality jewelry the Mankato store carries.

Gary Rudolf, owner of Cherry Creek in Mankato, has three decades of experience in the kitchen and bath industry, as well as in the construction industry.

Brooke Davenport and her staff at Blinds & More in North Mankato work with both residential and commercial accounts throughout southern Minnesota and northern Iowa.

MN Valley Business • DECEMBER 2019 • 3

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DECEMBER 2019 • VOLUME 12, ISSUE 3 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Harvey Mackay Grace Brandt Dan Greenwood PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Danny Creel Sales Joan Streit Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6364, or e-mail advertising@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street Mankato MN 56001.

■ Local Business memos/ Company news.....................................5 ■ Business Commentary.........................7 ■ Business and Industry trends..........22 ■ Retail trends.....................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Construction, real estate trends.....26 ■ Gas trends........................................27 ■ Stocks...............................................27 ■ Minnesota Business updates............28 ■ Job trends.........................................29 ■ Schmidt Foundation.........................30 ■ Greater Mankato Growth..................32 ■ Greater Mankato Growth Member Activities ............................33

From the editor

By Joe Spear

The future of “rural” Mankato

recent report on employment and labor force participation in rural areas carries some troubling and hopeful signs. The study compared USDA employment and labor force participation rates between rural and non-metro areas to bigger cities and regional centers. It considered rural and non-metro areas as counties without major cities and ones not adjoining metropolitan statistical areas. So that would be the second tier of counties surrounding Mankato including Steele, Freeborn, Jackson, Cottonwood, Redwood, Renville and Sibley counties. The study shows job growth in rural America and labor force participation -- a proxy for hope – have fallen far behind compared to urban areas. The Center for American Progress, a left-leaning think tank, says “economic restructuring” and “policy decisions” over several decades have “hollowed out opportunity across the United States and left many rural communities behind.” The data show rural America was hit harder by the recession than urban America and recovered much more slowly. The more rural the area, the harder it was hit and the slower it recovered. The small counties between 2,000 and 20,000 population that were not adjacent to a metro county lost nearly 6 percent of their jobs during the 2007 to 2010 recession, according to the USDA data. And in the years after the recession from 2010 to 2017, average job growth in those same small counties was flat. No growth. By contrast, urban counties with populations of 250,000 or more did much better. During the recession, those counties still actually grew jobs by 2 percent. For counties with 1 million or more residents, employment growth was 8.5 percent. After the recession, jobs in those counties grew by 6.2 percent and 11 percent. Recovery was most dismal for counties under 2,000 population and not near a metro area. There, jobs declined by 3.73 percent during

4 • DECEMBER 2019 • MN Valley Business

the recession and declined 1.18 percent even after the recession. So what about the Mankato regional rural and non-metro areas? While Blue Earth County employment rose from the beginning of the recession in 2007 to 2018 by 12 percent, employment over the same period in Jackson County declined by 11.4 percent. Cottonwood and Redwood counties lost 7 percent of jobs, Sibley County jobs fell 1 percent and Renville County was the outlier with jobs growing 5 percent. Freeborn County jobs were flat and Steele County jobs grew 2.2 percent. The disparity continues even in counties adjacent to Mankato. In Faribault County jobs were down 8 percent over the long recessionrecovery period. Same with Martin County: Jobs were down 7.25 percent. Then there’s the curious case of Watonwan County as the top job gainer with jobs up 21 percent. Brown County was flat. Nicollet County jobs grew 9.35 percent. Le Sueur County gained 15 percent. Waseca County was off 12 percent (The closing of Quad Graphics likely had something to do with that.) The American Progress report also argues that there is hope for rural areas and there are plenty of examples of how these communities may survive. The center argues that rural communities can leverage natural resources, immigration, manufacturing, agriculture and community social capital to revive themselves. Immigrants are often attracted to rural areas due to the small town nature of the communities. They often arrive in communities where they already have family. Population loss has been a big problem in rural areas. With population loss come loss of key amenities in small towns like grocery stories and coffee shops. Authors argue immigration is often the answer to rural population loss. The study notes 21 percent of growing rural areas can connect their entire growth to immigration. Immigrants have been shown to

fill shortages of farm and orchard workers in New England and filled high demand medical positions in rural areas. And as we have seen in Worthington, immigrants fill schools, open businesses and provide other cultural diversity to small towns and rural areas. Authors also point out the existence of more social capital in small towns compared to metro areas as an asset for small towns to join together and solve problems. Social capital comes from the presence of service clubs like Rotary and Kiwanis and other community building organizations. A quick internet search shows 21 Lions Clubs in the Mankato region. So while the recession was hard on rural areas and the recovery was slow, there’s plenty of local assets to build communities back to where they were.

Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow on Twitter @jfspear.

Local Business People/Company News ■

Salzwedel working from Pioneer Bank

Chad Salzwedel, of Securian Advisors MidAmerica, Inc., is now working in the St. Peter Pioneer Bank location. Salzwedel brings more than 18 years of expertise to Securian and Pioneer Bank and will work with individuals, families and businesses to help them create financial strategies. He graduated from Southwest State University in Marshall, with a double major in business administration and marketing.

Owners Pat and Tony Steffensmeier renovated and expanded the former Rasmussen College building for their business. Mankato Motorsports sells and services Polaris, Arctic Cat and Ski Doo snowmobiles, Can Am, Textron ATVs, Manitou pontoons, Sea-Doo jet skis, Shore Station and Hewitt Docks and Lifts, as well as Exmark and STIHL lawn equipment. They offer full service small engine and marine repair service for all makes and models. ■■■

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Mankato MotorSports moves

Mankato Motorsports, formerly Snell PowerSports & Equipment, has moved to its new location at 130 St. Andrews Drive.

Courtney joins Gislason

Sam Courtney has joined Gislason & Hunter at its new location in the Eide Bailly Center. Courtney will focus his practice on family law, intellectual property and trusts and estates, including estate planning. A graduate of the University of St. Thomas School of Law, Courtney served as senior editor of the University of St. Thomas Journal of Law and Public Policy and as a student attorney for the University of St. Thomas Trademark Clinic. ■■■

CLA announces advancements

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Clifton Larson Allen announced several professional advancements of staff and new hires. Among the advancements were: Mary Hoy, bizops I; Collette McConnell, senior, healthcare; Linda Minar, bizops chief financial officer; Terry Peterson, signing director, agribusiness & cooperatives; Ashley Ruch, bizops staff; Nick Simon, senior, construction; Kate Walters, bizops staff; New hires are: Debra Loeffler, bizops senior; Sierra Schultz, associate; Laurinda Sohre, bizops senior; Alyssa Wagner, associate.

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MN Valley Business • DECEMBER 2019 • 5

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■

Business Commentary

By Harvey Mackay

Customer service always matters

man entered a shoe repair shop and said to the owner, “I just found this claim ticket for a pair of shoes I dropped off … 10 years ago.” “Oh my,” the shopkeeper chuckled. “Let me take a look at that,” he said as he inspected the ticket. “I hope we still have them. I’ll go in the back and check.” The shopkeeper could be heard rummaging through boxes before he called out, “They’re still here!” “That’s great!” the man said when the shopkeeper emerged from the back room holding a pair of dusty shoes. “How much do I owe you?” “They’re not ready,” the shopkeeper replied, “but I can have them back to you by next Tuesday.” We’ve all been in that man’s shoes, metaphorically. We do business with an organization, only to find out the customer isn’t really the most important person to them. Regardless of how often I speak or write about service, the response is most often centered on personal experiences that have disappointed. On rare occasions I hear about truly amazing service, and it just reinforces how important it is to share these stories with our sales force. Let me give you an example. In the envelope manufacturing business, of which I’ve been a part for 50-plus years, we win or lose customer jobs by pennies per thousand, which at times seems incredulous for pricing to be so dominant in the decision process. However, when most of our customers are purchasing between tens of millions to in several instances over 500 million envelopes annually, the pennies do count up to thousands of dollars of cost difference. With our product and pricing so dramatically close between customer options, it truly does come down to quality of service and flexibility in adapting to the “ordering off the menu” requests by customers. But the sale only begins when the customer says yes. In addition to the sales force, every person who has a hand in the production, packaging, delivery and post-sale customer service needs to be on board with the company’s philosophy and promises. Otherwise, that customer probably won’t be a customer for long. Keeping employees motivated to consistently provide high-quality customer service is absolutely essential for any company that plans to stay in business. Here are some basic considerations:

Hire the right people

The rule is you either hire smart or manage tough. Hiring smart is much, much better, but it requires you to know what you’re looking for and to recognize the skills and attitude you want. Look at experience, and listen to your gut. If you still aren’t sure, ask yourself if you’d want that person to be working for your competitor. If the answer is no, then you know your answer.

Keep score

Mackay’s Moral: There is no such thing as too good where customer service is involved.

Measure performance or your team will be in perpetual warm-up mode. Let employees know what they’re being measured on and how it’s relevant to them, their customers, and the organization’s bottom line. Clear expectations eliminate misunderstandings.

Recognize employees

Make sure you reward the desired outcome. For instance, if you want your salespeople to create relationships and longterm accounts, reward them. We have a designated parking spot with their name near the door for the salesperson of the month. A “wall of fame” is great motivation for displaying the above-and-beyond attitude you want to encourage.

Practice what you preach

If you want a motivated customer-service rep, you need to be motivated yourself first. You need to love your customers, because if you’re not sincerely motivated yourself, you’ll never motivate other people to provide service excellence. Steve Hardison, who went on to become a successful executive coach, began his career in sales at Xerox. Product returns were against company policy at the time, but according to a story in the Chicago Tribune, one day Hardison decided to let one of his customers return a copier regardless of the rule. When his boss demanded an explanation, Hardison said, “If I lose a job because I took care of a customer, then I never had a job.” The next day his boss’s boss called him into his office. Hardison fully expected to get fired. Instead the executive said, “I wish I had more people like you.” His reputation for honesty and integrity was made. Harvey Mackay is a Minnesota businessman, author and syndicated columnist. He has authored seven New York Times bestselling books

MN Valley Business • DECEMBER 2019 • 7

Ryan McKeown of Wealth Enhancement Group.

The plan

Business owners face many financial decisions By Tim Krohn | Photos by Pat Christman

eople earning a paycheck from an employer need to decide tax deduction levels, how much to put into a 401(k), set a household spending budget and try to sock away a rainyday fund. But for those who own their own business, of any size, the situation gets more complicated. Their personal finances are inextricably tied to their business finances. They have to decide about setting up a retirement savings plan, not just for any employees, but for themselves. Tax planning and record keeping often take different approaches. And retirement doesn’t just mean a sendoff party from your employer; it means planning ahead for who will take over the business and how. “For small-business owners a lot of their business and personal finances go hand in hand,” said Matt Norland, a founder and wealth adviser at Meyer &

Norland in Mankato. While personal and business finances may be closely linked, business owners need to be careful of keeping the right record for each. “People sometimes co-mingle their personal and business assets. That’s a problem. It crosses lines on whether you’re running a separate entity. And it’s very hard to determine what your profit is,” said Ryan McKeown, senior vice president and financial adviser at Wealth Enhancement Group in Mankato. “If all your personal and business expenses are going in and out of the same account and you get audited, it can be a problem. And you could be missing opportunities for tax deductions.” Wendy Anderson, senior finance consultant with the Small Business Development Center in Mankato, said they work with dozens of people at any given time who

Cover Story

8 • DECEMBER 2019 • MN Valley Business

are hoping to start a business or expand an existing business. “There are no fees for our help. We run under the Small Business Administration and Department of Economic Development. And MSU is our strategic partner. “We also get donations from larger corporation, lenders and businesses that worked with us to get where they are,” she said. Helping businesses succeed, she said, is rewarding. “It’s great to see projects happen and jobs created. That’s the win.”

Changing rules

Tax and regulatory rules are always changing and the 2017 tax overhaul brought many. McKeown said new for this tax season is a qualified business income deduction. “It’s a ver y complicated deduction that can be beneficial for some businesses, but it only applies to some businesses and there’s a roundabout way to determine it. It’s nice to get a 20% deduction, but it’s complicated.” Another big change affecting businesses, particularly farm operations, is a change in how depreciation can be claimed when trading in equipment and buying new. “The tax law stopped having a 1031 exchange, which made trade-ins tax free in the past. Now when farmers trade in machinery, (the IRS) considers that income and taxable.” Further complicating things is different rules in Minnesota. Federal rules allow a business to deduct 100% up front. But in Minnesota it’s 20%, with the rest deducted over the next five years. “So they eventually get the deduction, but it hurts them if they’re having a cash crunch, especially now with low farm income,” McKeown said. “There’s not much they can do except stagger their trade-ins. I’m hearing from farmers that they’re not going to trade in and that will hurt implement dealers.” McKeown said the complexities of running a business invariably require professional help from financial, tax and legal advisers. But those just starting can find that tough to justify.

Matt Norland, a founder and weatlh adviser at Meyer & Norland. “It’s a chicken and egg thing. Clients want a business to be worth enough to pay a professional for advice, but if they wait to get a professional, they find there’s things they wish they would have done from the beginning. It’s a Catch-22.” He said professionals may have to go back and amend taxes for a business for several years, which can be complicated. “And if transactions aren’t listed correctly, there’s more risk of getting audited,” McKeown said. “But for a new business to pay a couple thousand to get professional advice can be difficult when they’re worried about making payroll.” Owners wanting to protect their personal assets in case something happens to their business can do it to a degree. “Owners can set up corporations or LLCs, which can separate the business assets from the personal assets, but that’s not 100%. If you’re the sole owner of a

business and you’re offering all the services and get sued, they’re going go after personal assets, too. Or if you’re in a vehicle accident your personal assets are at risk, but your business assets are, too. There’s no fool-proof way.” McKeown works with many owners who are nearing retirement and need to make plans. “If an owner is approaching retirement and trying to figure out how much they’re going to spend in retirement, they often find that difficult.” For example, an owner may have always had a cellphone paid by the business, a legitimate expense and tax deduction. “But after they retire, they still need a cellphone but they’ll have to pay for it.” The same is true for company vehicles, internet and other business expenses that will become personal expenses in retirement.

MN Valley Business • DECEMBER 2019 • 9

Solid projections

When someone comes to the SBDC for help, a varity of steps exist to create a plan for a start-up or an expansion. “Ever yone comes in at a different place. Some have a plan, some don’t have an idea where to start,” Anderson said. “First we learn what their project is, whether it’s a service business, building a building, or leasing, all those types of things. We really go through that list to make sure nothing is missed.”

The next step is to look at their projected income. “How they came to those assumptions. And then you look at the monthly expenses. You look at the first year and the second year, when they should be stabilized. The big thing is can you pay the loan back and can you pay yourself? The lender wants 24-month projections.” She said people often don’t have a good handle on what their payroll expenses will be and have trouble estimating the cost of goods. “Especially with startup

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restaurants and coffee shops and things.” One of the final steps is a balance sheet showing reasonable projected assets to liabilities. For people who have been in business for a while and are looking at expansion, the process is a bit different. “Often they are looking at building a building or buying a building versus renting,” Anderson said. “Buying big equipment to expand is another big thing.” She said expansion leads to increased sales, but there also are costs to that growth that have to be considered. “You have to keep in touch with your lender all the time. Your lender is your friend,” Anderson said. She said they tell all their clients to use QuickBooks for their financial record keeping. “That’s the best way to go. That’s what the CPAs use.”

“It depends”

Norland, a Mankato native, MSU grad and certified financial planner, said his conversations with clients focus on their goals. “Our business is really built upon trust and relationships. Our clients trust us with some major financial decisions.” He said most business clients have and need a team of specialists to advise them, including financial planners, CPAs and attorneys. “If they are business owners, there are certainly many issues for them to consider.” Norland works with many clients doing retirement planning. “The top questions are ‘Matt, can I retire yet? Matt, can you help me make more money? Matt, is there a way to manage my portfolio to help reduce the impact of taxes?’ ” Norland said. “It’s those common goals, to determine whether retirement goals are realistic.” He said when to start drawing Social Security is always a top question. “Almost any question in the world of finance can be answered by: ‘It depends.’ The Social Security draw depends on everyone’s unique situation.” Those with health issues or

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alluring... Wendy Anderson works with a client at the Small Business Development Center. those who have little other retirement funds may want to start drawing Social Security as soon as possible. For others, delaying may be best. Norland said year-end tax planning also requires a close look at the business and the laws. “And they have to look at tax laws that have changed or will change,” he said. “Most people spend more time planning their next vacation than on their financial plan. If you have the discipline to put down on paper your goals and put down a reasonable assumptions, it helps. It has to be an active plan, not just something you put together and put on the shelf.” MV

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Bill Johnson and his son Jerimiah offer a wide variety of diamonds and gems at Williams Diamond Center.

A gem Williams Diamond Center has long history By Dan Greenwood Photos by Pat Christman

hile other jewelry stores have out a diamond ring or other gem from the come and gone, Williams Diamond display case. Nowadays they can design Center continues to adapt to their own. changes in the industry “It used to be a lengthy as more customers are process because they asking for rings, didn’t have the necklaces and other technology to design jewelry that are custom these models,” Johnson WILLIAMS designed. said. “People were DIAMOND CENTER Owner Bill Johnson, starting to look towards 1823 Adams St,, Mankato who has been in the designing new styles, 507-387-5000 business since 1979, but there wasn’t a lot of said technology and suppor t from the Williamsdiamondcenter.com growing flexibility manufacturing side. among designers has Now virtually everybody changed the way people select jewelry. does.” Before the internet, it was common for About 80 percent of Johnson’s customers customers to walk into his store and pick already have an idea of what they’re looking

Cover Spotlight

12 • DECEMBER 2019 • MN Valley Business

for, usually subtle variations on what is already available. Nearly 30 percent of those want significant changes. “I’ve taken three or four different styles of rings and put them altogether into one ring,” Johnson said. “These companies can do it.” In the late-1970s, Johnson worked for the Waseca County Sheriff’s Department courtesy of a federally funded program. When those funds dried up, he began working with his brother in 1979, who ran several jewelry stores in the Twin Cities. A few years later, the two and another partner founded their own company, Williams Diamond Center in Eau Claire, Wisconsin. Six months later, in 1985, Johnson, who is originally from Janesville, started a new branch in Mankato before buying the store from his partners. Originally located at high visibility areas downtown and later at the River Hills Mall, Johnson moved his business to 1823 Adams Street, where he’s been since 2000. He said that longevity helped establish solid relationships with vendors, manufacturers and designers. “Being in the business as long as we have, we’ve got really good established vendors,” he said. “I’m working with companies I still worked with in 1979 when I got in the business.”

Lab diamonds

While diamonds are still the bestseller, Johnson carries a variety of gemstones, from rubies and emeralds to sapphires. Another relatively new trend that’s growing in popularity are diamonds produced in a lab. Johnson’s son, Jerimiah Johnson, who has worked at the store since 2002, said synthetic diamonds can cost half the price of diamonds that are mined. Determining the differences between the two involves a great deal of expertise and a microscope. “Sometimes you’ve got to really hunt for those little clues that will tell you what is a synthetic,” Jerimiah Johnson said. “Those lab grown diamonds have ID numbers on them. If you didn’t have that inscription it would be

Bill Johnson inspects a piece of jewelry at Williams Diamond Center. very hard to tell if it was a natural stone or lab grown.” Natural diamonds, made of carbon, are formed deep underground through a combination of extreme pressure and temperature. Their finicky nature is part of what makes the stone so valuable. Synthetic diamonds are formed using diamond seeds, or extremely tiny diamonds that take about 12 weeks to produce in a lab, using a vacuum chamber that essentially rains carbon molecules onto the small stone, causing it to grow. “Nowadays, that opportunity has presented itself to consumers and so more suppliers are starting to carry lab-grown diamonds; because it is a diamond, it’s just a different concept,” Jim Johnson said. Unlike gold, which is rated on the number of karats (the percentage of gold compared to alloy), which determines the cost and purity, carats are the system used to measure weight among diamonds and other gemstones. Diamonds are rated based on three factors: color, cut and clarity. “They still grade diamonds by eye,” Bill Johnson said. “They use a 10-power magnifier to grade the diamond for clarity. The cut is what separates the sparkle and brilliance compared to any other material out there. Only a diamond can refract light the way it does.”

One of the first things Jeremiah Johnson did after coming back home after college to work at his father’s store was to earn a degree from the Gemological Institute of America. That involved not just learning about diamonds and all of the other gemstones, but also being able to identify and sort them. He said customers routinely come in after inheriting a piece of jewelry, or even finding one at a garage sale, to determine whether the diamond or gemstone is what it is supposed to be. “I just had somebody a month ago,” Jeremiah Johnson said. “She found an anniversary ring and wanted to see if it was a real diamond. It sure was. I told her it would be $1,000 or $1,500 brand new.” Both say working with customers is their favorite part of the job. “Every time a customer walks in the door we just love that challenge and that opportunity to help them,” Bill Johnson said. “Sometimes they’re looking for a special gift, or something happened to their jewelry and they need some repair on it, or they have a new idea where they want to consolidate and put pieces together and design their own. It’s a fun challenge.” MV

MN Valley Business • DECEMBER 2019 • 13

It's better with a Broker! 14 • DECEMBER 2019 • MN Valley Business

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MN Valley Business • DECEMBER 2019 • 15

Gary Rudolf and his son Garrick in the showroom at Cherry Creek Inc. in Mankato.

Custom designs Cherry Creek does design, remodeling construction By Dan Greenwood | Photos by Pat Christman

herry Creek Inc., a home construction and “I saw an opportunity to get to a community that is remodeling business established in Mankato in progressive and growing,” he said. 2007, broke ground in November to begin He sold his Marshall business to a partner and an construction on a new, larger employee, and used the seed location on Tullamore Street, a money from that to open Cherry block off of the Madison Avenue Creek Inc. on St. Andrews Drive. thoroughfare. Owner Gary Rudolf, Since they opened, their business his son Garrick and their staff of model has evolved to include every CHERRY CREEK seven expect to move into the new step of the design, remodeling and 150 St. Andrews Court location by mid-2020. Part of the construction process – providing 507-386-1699 new building will be leased to the plumbing, cabinetry, and flooring Cherrycreek.build Mankato Ballet Company. along with installation and labor. “The new space is going to be “Our business model is still – I about 4,000 square feet, so a little would consider – relatively unique bit larger,” Garrick Rudolf said. “It’s going to have to the area in that we are a general contractor, we are some warehouse storage and will all be on one floor.” a retail showroom, and we’re a design firm,” Garrick Gary Rudolf, who ran a similar business in Marshall Rudolf said. “We have designers on staff and our own for 16 years before opening Cherry Creek Inc., said he carpentry. It’s all under one roof.” had been working on a couple projects for customers When they opened in 2007, the recession hit, in Mankato, who told him there was nobody in town compounding the existing challenge of being a new with a similar business model. name in town. For those first years, they advertised in

Profile

16 • DECEMBER 2019 • MN Valley Business

From left, Alicia Kranz, Christina Sample and Nicole Wolters look at samples in the Cherry Creek Inc.showroom. print and broadcast media. Since then, they say the internet, and especially social media, has allowed them to reach far more people at a fraction of the cost. For the past seven years, they’ve been slowly gaining traction. “We’ve been here long enough now that we’re starting to get more referral business,” Gary Rudolf said. “That’s really important to us. We’ve had quite a number of repeat clients where we do one project and then a few years later we’ll do another one. I think that’s a testament to our doing a good job.”

Changing styles

Design styles have changed since Gary Rudolf first got into the business about nearly 30 years ago. While customers used to be more interested in brown color tones, those gave way to shades of gray, and more recently designs are trending towards warmer tones. Complex and intricate designs have also given way to more minimalist styles. A big part of their business model is adapting to those changing needs of customers. “We want to focus on homes

that are smaller square footages with higher-end finishes,” Garrick Rudolf said. “That’s a direction we want to go further towards catering to the people that are maybe 50-plus that want to downsize from their current home but don’t want to sacrifice quality.” The first step of the process begins by sitting down with a prospective customers in the showroom, with model kitchens, bathrooms and living spaces on display. They’ll look over photos and discuss the goals of the project they have in mind. Garrick Rudolf stresses the importance of regular communication with clients to ensure the project is going in the ideal direction they are envisioning. “We’re going to take the time to make sure we don’t compromise the end design when unexpected things arise,” Garrick Rudolf said. “We pride ourselves on that.” Probably the biggest change, they said, is the ability to put LED lights virtually everywhere, from color changing shower lights and remote controlled lighting to cabinet interiors. Gary Rudolf said every project

is unique and involves a learning curve, and they pride themselves in troubleshooting both expected and unexpected challenges. They had one project where the customers wanted to have a saltwater aquarium embedded in the cabinetry, requiring them to consider marine grader stainless steel along with addressing the required piping and moisture conditions. They say turning a space that is uninviting to a one that customers enjoy being in requires just the right amount of thought and creativity. Rudolf said he can’t say enough about his staff’s devotion to customers, and that expands to their collaborative approach to each project, from the carpentry to design and construction. But what’s most rewarding, said Gary Rudolf, is building relationships with customers and helping them fulfill their dreams. “I had one client – not too long ago I saw her in the mall – and she had to run up and give me a hug,” he said. “That’s always a good testament to a job well done. To me that’s the most rewarding.” MV

MN Valley Business • DECEMBER 2019 • 17

Brook Davenport is the owner of Blinds & More in North Mankato.

Blinds and More The ups and downs of a blinds business By Grace Brandt Photos by Jackson Forderer

ll businesses have ups and downs, but In 2005, Davenport started working for a blinds business might have more her neighbor, Amy Falink, who owned Blinds than most. For Brook Davenport, and More. Falink had sold Davenport and owner and Blinds and her husband blinds for some of their newly More in North Mankato, constructed homes, and the last 14 years have had she had mentioned that some wild highs and she needed some help. So lows: a recession, a BLINDS AND MORE Davenport came on as a divorce, and a ransom 424 Belgrade Avenue sales representative. attack by online hackers. North Mankato “It made sense, since Any one of these could 507-380-5019 my husband was in homes have toppled a small blindsandmore.org that needed blinds,” business. Davenport said, adding that her husband would help install the Starting something new blinds. “I was used to going to people’s Davenport was born in Mankato and liked homes and used to direct selling; I was used it enough to stay ever since. to presenting an option to a client and saying, She attended Mankato West High School ‘Do you like A or B?’ The difference now was and got married to her first husband, Josh (it wasn’t) colors of lipstick anymore but Kleinschmidt, at only 19, planning to be a colors of blinds.” stay-at-home mom. Her husband had a Davenport worked with Falink for two construction business, and she eventually years, until she and her husband took over began working as a Mary Kay sales director the business — a perfect fit for her extroverted personality.

Feature

18 • DECEMBER 2019 • MN Valley Business

“I fell into the business,” she said. “A lot of this business stuff, I’ve learned from friends and family, along with a few business training classes and coaches.”

Making a change

For the next year, business continued to be good for Davenport and her husband, with customers continually calling. But things became more difficult in 2008. First, Davenport and her husband divorced, and she was left with the blinds business since he had no interest in continuing it. Within the next year or so, the recession that had begun rippling through the countr y finally caught up to her, with a noticeable drop off of customers. Because of this, Davenport set Blinds and More “on the back burner,” opening a full-time daycare to make ends meet. She still ran her blinds business, but she only had three or four sales calls a month, going out at night and on weekends. She also didn’t advertise, relying solely on customer referrals. By 2013, she had married her second husband, Dan Davenport, and the two of them had a serious discussion about whether to continue with Blinds or More or let it go. After much deliberation, Davenport decided to try going back into her business full-time. She put an ad in the Free Press on Jan. 3, 2014 — and she got a call that very day. “I’ll never forget it,” she said. “That same day, I got a call to go to Le Sueur for somebody’s appointment. Advertising really just kicked off our business.” Up to this point, Davenport had been operating out of her garage. But as shipments increased to 4-5 times a week, it was difficult to store so many blinds. She started renting office space in North Mankato, moving to her current location in 2016 Her staff has also grown in the past few years, with three sales representatives, an of fice manager and a lead installer (as well as husband Dan, who is a part-time installer).

Tia Reddy measures windows for a blind installation project.

A thousand options

According to Davenport, her business offers blinds, shades, shutters, draper y and motorization — and there are thousands of options. “What’s fun about the windows coverings is, every single person’s home is different,” she said. “Every single person’s style and taste is different. I’ve got thousands of different ideas of what I can give them as an option, but usually when I walk into someone’s home, I can pretty much hone in within 10-15 minutes of what they’re probably going to want, just from the style of their home and their décor.” Davenport said it typically takes about one-to-two hours to install blinds in a standard home (it could take a little longer if they need to remove old blinds), and it takes about double the time if motorization is involved. She doesn’t offer repair on old blinds. Blinds and More works with residential and commercial structures within a 60-mile radius of Mankato

A challenging year

Davenport and her staff had to face one of their biggest challenges last year, when Blinds and More was hacked. Near the beginning of 2018, hackers got into all Davenport’s personal and business accounts, eventually locking her out of them entirely. They forced her out of her old website, scrubbed her presence

from Google search results, blocked clients from being able to call and even stole photos from her cellphone. “For a month last year, we were basically out of business because nobody could call us or get ahold of us,” Davenport saidThe hackers initially demanded a $10,000 ransom, which eventually jumped to $200,000 before they would give her passwords back. Davenport went to the police, but there wasn’t much that could be done. Still, she refused to give in to the hackers’ demands. “They just assume you’ll give them the money and they’ll give you your passwords back and they’ll go on to the next small business,” she said. “But I’m thought, ‘I’m not giving them that money.’ All in all, we spent way more than $10,000. We should have just given them the $10,000 and walked away. But it was the principle of the matter.” Eventually, Davenport and her team members were able to push the hackers out of all their accounts. She also worked on raising public awareness and bringing the issue into the open, sharing her story across Mankato. Looking forward, Davenport said she hopes to bring on another salesperson soon, to focus on areas outside of Mankato. She also wants to grow the commercial side of the business. MV

MN Valley Business • DECEMBER 2019 • 19

20 • DECEMBER 2019 • MN Valley Business

MN Valley Business • DECEMBER 2019 • 21

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22 • DECEMBER 2019 • MN Valley Business

Business and Industry Trends ■

Energy Natural gas pipeline capacity jumps

The United States is expected to add 16-17 billion cubic feet per day and of natural gas pipeline capacity in 2019, most of which was built to provide additional takeaway capacity out of supply basins. Of the 134 active natural gas pipeline projects, 46 have entered or are expected to enter service in 2019. These projects will increase deliveries by pipeline to Mexico or to liquefied natural gas export facilities in the Gulf Coast region. More than 40% of this new pipeline capacity delivers natural

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2018 - 2019 929 1,065

1500 1200

gas to locations within the South Central region. Many of these pipeline projects will provide additional takeaway capacity out of the Permian Basin in western Texas or enable additional Permian natural gas production to reach the interstate pipeline system.

900 600 300 0

Source: Sales tax figures, City of Mankato

Winter fuel outlook

The U.S. Energy Information Administration forecasts that average household expenditures for all major home heating fuels will decrease this winter compared with last. This forecast largely reflects warmer expected winter temperatures compared with last winter. Average U.S. propane expenditures should to fall by 15%, home heating oil expenditures by 4%, natural gas expenditures by 1%, and electricity expenditures by 1%.

Crude lower than last year

Brent crude oil spot prices averaged $63 per barrel in September, up $4/b from August and down $16 from the September 2018 average. Brent spot prices began September at $61/b and increased to $68/b after attacks on major Saudi Arabian oil infrastructure disrupted the country’s crude oil production. However, Brent spot prices have subsequently fallen, reaching $58/b in early October, as Saudi Arabia restored the shut-in production and concerns about oil demand based on the condition of the global economy rose. Brent spot prices should average $59/b in the fourth quarter of 2019 and then fall to $57/b by the second quarter of 2020.

Natural gas takes a jump

The Henry Hub natural gas spot price averaged $2.56 per million British thermal units in September, up 34 cents from August, which was the first monthly price increase since March. EIA forecasts Henry Hub prices to average $2.43 in the fourth quarter of 2019, a decrease of more than $1from the fourth quarter of 2018, subsequently increasing to an average of $2.52 in 2020. U.S. natural gas prices have fallen in 2019 because of strong supply growth that has enabled natural gas inventories to build more than average during the April through October injection season.

Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato (In thousands)

- 2018 - 2019

600

$505,100

500

$475,675

400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato $67,134

70000

- 2018 - 2019

$42,911

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2018 - 2019 175000 140000

$65,100 $68,804

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • DECEMBER 2019 • 23

■

Agricultural Outlook

By Kent Thiesse

Changing farm financial strategies in a challenging time

rofit margins for crop production in 2019 continued to be at or below “breakeven levels” for many producers, especially in areas of Minnesota that had weather issues during the growing season. It appears that low commodity prices and tight profit margins in crop and livestock production will likely continue for 2020. Credit availability for agriculture has remained good for farm businesses that are on a solid financial base; however, credit has begun to get much tighter for farm businesses that are in a “higher-risk” financial position.

consider a “flexible rental lease”, or possibly give up some high rent land. n Review all other direct and overhead expenses in the farm operation and look for any ways to make reductions.

n Pay attention to grain and livestock marketing.

n “Fine-tune” the farm’s grain and livestock marketing plan, based on the “cost of production” and update the plan regularly to set price targets and deadline dates. n Don’t get caught up in the “market hype or chatter” …… pay attention to how changes in the grain and livestock market prices affect the profitability of the farm business. n Look for “profit margin” opportunities in crop and livestock production, and “lock-in” both cash expenses and market prices when those margins exist. n Utilize the expertise of ag lenders, farm business management instructors, and trusted marketing advisors to develop sound marketing strategies that fit the farm operation.

Following are some financial strategies for farm businesses to consider:

n Keep the “current position” (cash available) segment of the farm business strong.

n Pay attention to the level of “working capital” on the farm financial statement. If there is a big decline, it could signal some financial concerns for the farm business. n It is usually advisable to use excess revenues from the farm operation to pay down short-term farm operating debt, rather than to make extra payment on longer term machinery and real estate loans. n If there are any excess revenues from 2019 grain and livestock sales beyond repayment of the 2019 farm operating loan, it is probably best to prepay some 2020 crop expenses or keep a small cash reserve. n Remember to account for CCC grain loans, financing with crop input suppliers, short-term loans from family members, etc. when analyzing the Working Capital.

Carefully analyze decisions to purchase farm land.

n There is likely to be a lot of farm land for sale in the coming year, so don’t get caught up in the hype of: “Buy now, because they don’t make any more farm land”. Make sure that any land purchases are financially sound for the longterm future of the farm business. n Shop around before settling on a high dollar purchase of farm land, as there may be opportunities to find comparable farm land for less money. n Compare the cost of owning the farm land to the likely annual land rental rates to secure increased crop acreage. n Be sure to include the required annual real estate loan principal and interest payments, along with real estate taxes, into annual cash flow planning for the farm business

Look at ways to reduce production costs and other expenses. n

n Try to be a “optimum-cost” producer …… thoroughly analyze seed, fertilizer, chemical, etc. crop expense decisions for 2020 crop production and look for ways to manage those input costs. n Be cautious when making reductions in production costs, so not to reduce yield potential …… optimizing crop yields is still very important to the “bottom-line”. n Carefully analyze more expensive cash rental rates on rented farm land, and if the rates are not profitable, try to negotiate lower rental rates,

24 • DECEMBER 2019 • MN Valley Business

Review other ways to manage financial risk. n

n Take time to analyze the best crop insurance strategies for a farm operation …… there are many insurance options available and cutting crop insurance coverage may not be the best risk management strategy.

n Utilize government farm programs, when available, to enhance gross farm income. n Carefully analyze any decisions for major capital improvements beyond land purchases, making sure that they are financially sound for the of the farm business. n Review spending for family living and non-farm expenditures, as this can be a “hidden expense” in the farm business.

n Pay attention to the repayment ability on Term Debt Loans.

n In addition to declining Working Capital, a low “Term Debt Coverage Ratio” is a common sign of financial stress in a farm business. This ratio is the cash available for debt repayment divided by the total annual principal and interest due on all intermediate and long-term loans. n Term loans usually are set up to finance machinery purchases and capital improvements and require payments for several years, which need to be included in cash flow budgets. n Make wise decisions on the use of available cash for farm machinery and capital improvement 8investments, making sure that the investments are needed. n 6Look for opportunities to sell any farm assets that are no longer needed in the farm business 4and use funds for added working capital, or to repay some term debt. 2

n Communicate with family members, farm0 partners, and ag lenders. J F M A M J J A S O N D

n When financial matters and farm profitability become more challenging in a farm operation, it is very important to discuss these challenges and possible solutions with family members and other partners in the farm operation. 8 n Meet with your ag lender to discuss your farm 100 operating credit needs for 2020 and to consider 6 possible solutions to address any financial 85 challenges that may exist. There are usually 4 70 more viable options available when financial problems are addressed early. 2 n 55 Utilize farm business management advisors, crop insurance agents, crop consultants, and 40 0 J professionals F M A Mto Jassist J with A Smanagement O N D other decisions. 25 J

n Resources available for farm families facing financial difficulty. n Minnesota Farm and Rural Helpline -- 100 (833) 600-2670 n Ted Matthews, Rural Mental Health Counselor 85 --(320) 266-2390 n University of Minnesota Extension --70 1-800-232-9077 55 n Farmer-Lender Mediation Program -- (218) 935-5785

Agriculture/ Agribusiness Corn prices — southern Minnesota

$3.13

Soybean prices — southern Minnesota

Iowa-Minnesota hog prices 20 100 25 16 85 22 12 70 19 8 55 16 4 40 13 0 J F 25 10 J F J F Source: USDA

$8.59

$7.79 N D N D N D

$63.41

22 19 16

M M M

A M J A M J A M J

Milk prices

J J J

A S O $46.47 N D A S O N D A S O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2018 — 2019 25

$16.68

$15.13 J

20 25 16 22 12 19 8 16 4 13 0 J 10

185 pound carcass, negotiated price, weighted average

— 2018 — 2019

Kent Thiesse is farm management analyst and senior vice president, MinnStar Bank, Lake Crystal. 507-381-7960); kent.thiesse@minnstarbank.com

(dollars per bushel)

— 2018 — 2019 8 20 100 16 6 85 12 470 8 255 4 40 0 0 J F M A M J J A S O 25 J F M A M J J A S O J F M A M J J A S O Source: USDA

Source: USDA

12 8

$3.68

(dollars per bushel)

— 2018 — 2019

Source: USDA. Based on federal milk orders. Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

C. Sankey

MN Valley Business • DECEMBER 2019 • 25

13 10

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

- 2018 - 2019 (in thousands)

$8,645

5000000

$2,576,264

4000000

12000000

3000000

9000000

2000000

6000000

1000000

3000000

Information based on Multiple Listing Service and may not reflect all sales

- 2018 - 2019 (in thousands)

198

186

300

Median home sale price: Mankato region - 2018 - 2019 (in thousands)

250

$179,500 $183,044

200

240

150

180

100

120

0 J

Source: Realtors Association of Southern Minnesota

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

Includes single family homes attached and detached, and town homes and condos

Housing starts: Mankato/North Mankato

— 2018 — 2019

- 2018 - 2019

5.5

4.8%

5.0

4.5

4.0

3.5 3.0

$14,934,971

Source: City of Mankato

Existing home sales: Mankato region

Source: City of Mankato

$2,354

15000000

3.8% J

Source: Freddie Mac

Read us online!

10 D

Source: Cities of Mankato/North Mankato

Trust our team to be there for your team when you need us most. www.schwickerts.com | 507-387-3101 | 330 Poplar St. Mankato, MN

26 • DECEMBER 2019 • MN Valley Business

Gas Prices 5

Gas prices-Mankato

— 2018 — 2019

54 43 $2.69

32 21 10 0

Gas prices-Minnesota

$2.39

$43.51

+8.2%

Ameriprise

$138.82

$158.15

+14.0%

Best Buy

$68.72

$75.47

+9.8%

Brookfield Property

$19.13

$18.99

-0.7%

Crown Cork & Seal

$64.02

$75.97

+18.7%

$4.10

+23.1%

Fastenal

$35.42

$37.44

+5.7%

General Mills

$54.01

$51.43

-4.8%

Itron

$74.16

$78.39

+5.7%

Johnson Outdoors

$59.70

$61.83

+3.6%

$160.51

$174.37

+8.6%

Target

$111.15

$109.95

-1.1%

U.S. Bancorp

$53.26

$58.64

+10.1%

Winland

$1.15

$1.16

+0.9%

Xcel

$63.28

$61.07

-3.5%

21 M

$40.20

$3.33

$2.48

Archer Daniels

Consolidated Comm.

$2.72

Percent change

Nov. 5

Oct. 14

— 2018 — 2019

Stocks of local interest

0Source: GasBuddy.com J F M A

C. Sankey

MN Valley Business • DECEMBER 2019 • 27

Minnesota Business Updates

■

the possibilities and pitfalls of in-store robotic technology. CNN reports that Walmart is investing heavily in instore AI. The company will add self-driving robots to scrub the floors of more than 1,860 individual stores by February. Additionally, it will deploy robots to scan shelves at 350 stores and use AI to scan deliveries and sort them by department onto conveyor belts at 1,700 stores. On the other hand, Minnesota-based Target has a markedly different vision for the role of AI. The company has added self-checkout and automatic cash-counting machines to hundreds of stores in recent years, but CEO Brian Cornell says the company won’t be adding AI to its 1,850 sales floors. “You won’t see robots in Target stores anytime soon,” Cornell says. “We really think, even in today’s environment, where people are talking about AI and robotics and different elements of technology, the human touch still really matters.”

■ State companies on Forbes’ best list Five Minnesota companies have been included in the top 250 of Forbes’ list of “World’s Best Employers.” The highest Minnesota entry on the list is Richfield’s Best Buy, which has been named for the first time on the list and ranks as high as 66th. Best Buy was the 7th-highest ranked retailer, and also the 7th-highest ranked overall in the “Best Employers for Women” list. Two spots back in 68th is the Minnetonka-based UnitedHealth Group, followed in 72nd place by Austin’s Hormel Foods. Another food giant, General Mills of Golden Valley, ranks 131st on the list, with Maplewood’s 3M ranking 218th. Further back is Minneapolis-based U.S. Bancorp at 426th. Forbes compiles the rankings based upon the feedback of some 1.4 million employees it surveyed, as well as public feedback across the globe.

■ Best Buy offers next day free delivery Best Buy announced it will offer free next-day delivery on thousands of items. The new delivery service covers items such as tablets, headphones and even

■ Different views on AI Walmart and Target are both using artificial intelligence to streamline their operations, but how each company is making use of retail robots underscores

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major September Industry 2018 2019 Construction Manufacturing Retail Services Total*

147 52 36 96 331

Local non-farm jobs Percent change ‘18-’19

73 132 20 80 305

Construction 126000 126000 Manufacturing Retail 113000 Services 113000 Total*

2,712 987 832 2,578 7,109

2,583 1,702 782 2,806 7,873

126000

2100 1400

113000

700 100000

Minnesota Local non-farm jobs

3,018 3,046

8000 3500 3500 6000 2800 2800 4000 2100 2100

-4.8% +72.4% -6.0% +8.8% +10.7%

28 • DECEMBER 2019 • MN Valley Business

200000

100000 50000

700 0 0

150000

2000 1400 1400

700

- 2018 - 2019

(in thousands)

Percent change ‘18-’19

Services consist of administration, educational, health care and social 100000 assistance, food andJ otherF miscellaneous services. M A M J J A S O 100000 J don’t F equal M total A because M Jsome Jcategories A not S listed. O N *Categories

3500 2800

-50.3% +153.8% +44.4% -16.6% -7.9%

Minnesota initial unemployment claims September 2018 2019

133,604 132,602

139000

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Major Industry 139000 139000

- 2018 - 2019

Nine-county Mankato region

F M

M A A M

M J

J J

J A

A S

S O

O N

N D

espresso machines but excludes larger items such as bigscreen TVs and refrigerators. Best Buy said 99% of customers will be able to receive free next-day delivery. Individuals who live in areas where this service is not available will still have free standard shipping on all items. Shoppers also have the option of picking up their orders within an hour at their local Best Buy store. This move follows other retailers in making similar announcements this year. Amazon is spending $800 million to provide one-day shipping for all Prime members. Walmart said it would also start offering next-day delivery for more than 200,000 items on its website.

made to site the building right on Second Street because Fastenal leaders felt that the building’s contributions to the fabric of the downtown streetscape were more important than maximizing river views from inside the office.

■ Xcel seeks rate hike

Xcel Energy has proposed a rate hike for Minnesota 3500 139000 customers between the years 2020-22. The proposal would increase the average residential 2800 bill by 15.2 percent over the three years. 126000 2100 It would add $108.60 to the average annual electricity ■ Fastenal unveils building plans bill by 2022. 1400 More details Xcel Energy, Minnesota’s largest electricity utility, is 113000 came out about a seeking to increase revenues by $466 million through 700 major development the rate rise, but will have to wait a while before a final 100000 is made by the Minnesota Public Utilities 0 by Fastenal for its decision J J F M A M J J A S O N D d o w n t o w n Commission. Winona offices. In the meantime, it’s asked for a 4.1 percent interim Construction is slated to begin in April on a big, new increase in the rate, which would go into effect on Jan. 1. building at Second and Washington streets that will be The utility says it would use the additional revenue to home to 400 employees, with room to expand the build 3500new and upgrade its transmission and distribution 139000 8000building an “advanced electric grid” that provides 200000 3500 lines, 139000 occupancy to 600. 2800options for customers. The Winona Daily News said a rendering shows a more 6000 150000 126000 building clad in brick and stone abutting 2800 large, four-story 2100 126000 Second Street with roughly a half-block of surface 2100 4000 100000 parking in the rear. Earlier designs considered placing a 1400 113000 nearer to the river, but the decision was 1400 taller building 113000 700 2000

700

100000

100000 J F

J M

Employment/Unemployment

F M A A M J

M J

J A

J S

Local number of unemployed

4000 2100 1400 2000

A O

S N

O D

8000 6000

2,796

J F M A M M A M J J M A M J J

J A A

J S S

A S O N O N D O N D

150000

66,585 77,052

100000 50000 0

M MJ

J JA

J JS

A AO

S N S

O D O

N N

D D

(includes all of Blue Earth and Nicollet Counties) 200000 150000

October

100000

0 F

J M

F M A A M J

M J

J A

2018

2019

1.9% 61,160 1,214

2.2% 61,474 1,388

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2018 - 2019

200000

F M A M AJ FA M

Unemployment rate Number of non-farm jobs 50000 50000 Number of unemployed

100000

2000 0 F F

0 0 J F JM

Mankato/North Mankato Metropolitan statistical area

150000

3,221

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2018 - 2019

Nine-county Mankato region 8000 3500 6000 2800

50000

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

October 2018

October 2019

1.9% 2.3% 2.3% 2.2% 2.6% 1.8% 2.1% 2.6% 2.4% 2.2% 2.3% 3.6%

2.3% 2.4% 2.8% 2.4% 2.7% 2.1% 2.5% 2.7% 2.5% 2.4% 2.5% 3.3%

Source: Minnesota Department of Employment and Economic Development C. Sankey

MN Valley Business • DECEMBER 2019 • 29

Sponsored by the Carl & Verna Schmidt Foundation

Don’t let anxiety rule your financial decisions By Amrita Jayakumar | NerdWallet

inancial decisions are rarely easy, whether it’s buying your first car or home or deciding whether to refinance student loans. The anxiety can be heightened for millennials who witnessed economic turmoil during the Great Recession as they weigh milestone financial choices as adults. “Many (millennials) grew up and saw their parents lose a house or have to delay retirement,” says Brad Klontz, a financial psychologist and associate professor at Creighton University. “Of course, they are going to be anxious.” In fact, a survey this year by insurance company Northwestern Mutual found that this generation not only has a stronger inclination to make financial plans compared with older generations, but also has a higher level of anxiety about whether they are following the right strategy. The survey found that 66% of millennials (those born from 1981 to 1996) said they were “highly disciplined” or “disciplined” financial planners, compared with 60% of Generation X (born 1965-1980) and 52% of baby boomers (born 1946-1964). At the same time, 70% of millennials said their financial planning needs improvement. That’s compared with 68% of Gen Xers and 52% of baby boomers. There are ways to reduce the stress of financial decisions. Start by identifying your attitude toward money. Then, take action in a way that’s tailored for you and turn to others who’ve been there.

Know your money attitude

Most of us grow up with a specific approach toward money, often learned from our parents, imbibed from those around us or informed by our own experiences. Being aware of your relationship with money can help you avoid pitfalls like worrying too much. Klontz, the author of several books on finances and psychology, says he’s found four common approaches to money: worship, avoidance, vigilance and status. For example, those who are vigilant about money always worry about having enough and experience trouble making spending decisions. On the other hand, avoiders don’t look at bills or statements until they absolutely have to, Klontz says. Another source of insight about your financial mindset is Gretchen Rubi ‘s book “The Four Tendencies,” which explores what drives people’s decisions. She categorizes people as obligers, questioners, rebels and upholders. (You can take Rubin’s online quiz to see which one you are.)

30 • DECEMBER 2019 • MN Valley Business

“Your ‘tendency’ shapes your perspective on the world and influences what kinds of (financial) strategies will work for you,” Rubin says. For example, a “questioner” likes doing their own research and will only seek outside counsel they trust, Rubin says.

Take action tailored to you

Once you’ve identified your attitude toward money, use that knowledge to ease the anxiety of financial decisions. MAKE A TO-DO LIST: People who don’t know where to begin can start by making a financial to-do list, says Eric Tyson, author of “Personal Finance for Dummies” and a former financial advisor. You could calculate how much money you earn and spend every month or add tasks like saving money for a goal or getting your credit in shape for a loan. “Prioritize it, get some early victories,” he says. “Don’t beat yourself up thinking you’ve got to do it quickly.” STAY ACCOUNTABLE: If you’re an “obliger” and want to save up for a goal, use accountability to get started and stay motivated, Rubin says. That may be in the form of friends, a financial advisor or thinking about what you want in the future, she says. VISUALIZE THE END GOAL: If you are a “rebel” who doesn’t like being told what to do and wants to pay off debt, think of the freedom you’ll have when you’re debt-free. Set up automatic payments so you don’t have to think about them, Rubin says. The automatic payments option is effective for anyone, she notes. TURN TO OTHERS FOR GUIDANCE Tyson says the biggest mistake he’s seen people make is that they don’t get advice — or rely on one source — before making a financial decision. “If your Uncle Joe seems financially savvy, you can run your thinking by him, but you should be selective about taking one person’s advice as gospel,” Tyson says. Do your own research in addition to talking with family or friends. Consider visiting a personal finance website or downloading an app to help manage your money. If you want an expert’s perspective, turn to a fiduciary fee-only financial advisor. Advisors who are paid by fees only, not commissions, have fewer conflicts of interest; those who follow the fiduciary standard put clients’ interests ahead of their own. Or you can set up a free consultation with a nonprofit credit counselor. MV

Sponsored by the Carl & Verna Schmidt Foundation

Signs an Online Loan Is a Debt Trap

Annie Millerbernd | Nerd Wallet

s you scan the crowded pages of Google search results for a low-cost loan, it can be difficult to decipher reputable lenders from predatory ones. These lenders, who use abusive or unfair practices, offer loans with high rates and excessively long or short repayment terms that make the lender money but leave the borrower with a loan they may not be able to repay. Payday loans are a common type of predatory loan: About 12 million Americans take them out every year, says Alex Horowitz, a senior research officer with the nonprofit public interest group Pew Charitable Trusts. These short-term, high-interest loans can trap borrowers in a cycle of debt. “Consumers fare best when they have affordable payments — when they have a clear pathway out of debt,” he says. Knowing what makes a loan dangerous can keep borrowers from falling into a debt trap. Here are five signs of a predatory loan.

No-credit-check ads

Some lenders advertise loans that don’t require a credit check, meaning the lender doesn’t obtain information about the borrower’s financial history and can’t gauge their ability to repay the loan. Predatory lenders will often charge a much higher annual percentage rate to make up for the borrowers who inevitably default on their loan, says Brad Kingsley, a South Carolina-based financial planner with Cast Financial. “If they’re making it super easy, then it’s a red flag,” he says. “Some pushback is positive.”

Focus on monthly payments

Lenders that advertise low monthly payments on a loan without mentioning the APR or loan term should set off an alarm, Kingsley says. Lenders may do this to distract from the loan’s term and rates, he says. Because predatory lenders offer loans with high fees and interest rates, borrowers should focus as much on the full cost of the loan — which an APR represents — as the monthly payments.

Sky-high rates

The APR on a loan shouldn’t come out to more than 36%, says Charla Rios, a researcher with the Center For Responsible Lending, a consumer advocacy group. That maximum rate has been affirmed by multiple states and federal agencies because it gives borrowers a fair chance at repayment and incentivizes lenders to offer affordable loans, according to a 2013 report from the National Consumer Law Center, a policy-focused nonprofit that serves low-income people.

Many payday lenders charge APRs well above 100% and may not make that explicit on their homepage, Rios says. If you can’t see an APR range anywhere on the lender’s website, you should be cautious about doing business with them, says Lauren Saunders, associate director of the National Consumer Law Center. “If you have to hunt for [the APR], that’s a red flag,” she says.

Excessively long or short repayment periods

Payday lenders typically require a borrower to pay the loan back within a week or two. But some lenders offer small loans with high APRs and excessively long repayment periods, Horowitz says. These loans can leave a borrower paying more in fees and interest than the amount they originally took out. For example, a $1,200 loan with an 18-month repayment period and a 300% APR would result in monthly payments of about $305 and total interest of $4,299.

All-in-one payment requirements

A predatory lender may have repayment terms that require a single payment or a handful of small payments, then a lump sum, also called balloon payments. The average payday loan takes 36% of a borrower’s paycheck, Horowitz says. If a borrower can’t go without that income, they might take another payday loan to make up for the cost. A reasonable loan repayment plan should center on a consistent share each paycheck, rather than a balloon payment, he says.

Getting out of a predator y loan

Borrowers who have a predatory loan can try a few avenues to get in better financial shape. If borrowers have somewhat solid credit, Kingsley says, they may be able to pay off a predatory loan with another loan from a reputable lender. Many credit unionms offer low rates to borrowers with undesirable credit. You may be able to fina a nonprofit legal aid office in your area that offers free or inexpensive legal consultation, Rios says. Another option may be to search for a credit counselor to help you determine the best way forward. Writing to your attorney general won’t get you out of the loan, but it will create a record that you’ve encountered predatory lending practices, says Rios with the Center for Responsible Lending. If you’re one of many complainants, it’s possible the office will investigate further. MV

MN Valley Business • DECEMBER 2019 • 31

NEW BUSINESS

NEW LOCATION

Sota Sisters 1754 Commerce Drive Suite #104, North Mankato

The Refinery 520 South Front Street #300, Mankato

RENOVATION

MERGER

NAME CHANGE & ANNIVERSARY

Charley’s Restaurant & Lounge 920 Madison Avenue, Mankato

Mankato Clinic Pediatric Therapy Services 150 St Andrews Court #310, Mankato

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Pivotal Chiropractic & Wellness 1600 Madison Avenue, Suite 112, Mankato

Skrien Chiropractic Clinic, P.A. 315 Webster Avenue, North Mankato

Prairie Care 120 East Main Street, Mankato

WELCOME, NEW MEMBERS

North Risk Partners northriskpartners.com

Habitat For Humanity South Central MN habitatscmn.org

32 • DECEMBER 2019 • MN Valley Business

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Mayo Clinic Health System Courtyard by Marriott Hotel & Event Center NOV 5 101 Martin Luther King Jr Drive, Mankato 901 Raintree Road, Mankato Build your Brand; Dotson Iron Castings grow your business. Exclusively Diamonds DEC 3 200 West Rock Street, Mankato Adams Stand out and get It’s not just st1601 WHO WHO you ouStreet, Mankato noticed! know, it’s who knows k 2019 October Business After Hours hosted by Hilton YOU. Networking IS Garden Inn: Powerful.

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NOTE: Calendar magnets are available at the check in table at each Business After HoursWe event theymember are available at our office onlyand refer at 3 Civic Center Plaza, Suite 100. Also, a downloadable version is available at greatermankato.com/business-after-hours. businesses. Word of mouth

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MN Valley Business • December 2019 • 33 greatermankato.com/join

“Snow” Much Fun for Winter Tourists Greater Mankato is a Hot Spot for Winter Travelers

‘T

is the season for travelers! There is plenty to do in the winter months and Visit Mankato promotes activities and events to continue to attract travelers throughout the winter season.

As visitors travel to our region, keep your patrons and customers in the know by staying informed on Mankato’s biggest winter attractions including Kiwanis Holiday Lights and the inaugural SnowKato Days featuring the NEW Jack Frost Frolic, candlelight snowshoeing, snow sculpting contest, pond hockey, medallion hunt and more! Kiwanis Holiday Lights in Mankato’s Sibley Park is undoubtly one of the largest events that takes place in Greater Mankato. The opening ceremony and parade will kick off the event on November 29, 2019 at 6 pm and will continue the display Sunday - Thursdays from 5 pm - 9 pm and Friday - Saturdays from 5 pm - 10 pm. Also to be featured at this year’s Kiwanis Holiday Lights is the Explore Minnesota traveling #onlyinmn monument which will be displayed throughout the entire duration of the event. Other fun activities featured in Visit Mankato winter promotions include; fat tire biking, skiing, snowboarding, ice skating, and sledding. Weekend itineraries featuring outdoor adventure, nightlife & entertainment, girlfriend getaways or a trip for two can be found at visitmankatomn.com.

Greater Mankato’s 10-Day festival celebrating Minnesota’s spirit in the heart of winter! January 17 - 26, 2020 SnowKato Days is structured to be open and inclusive to community organizations and businesses with three ways our community partners can become involved: 1. Become a sponsor (available for a variety of budgets) 2. Promote your business in the Button Program and provide a special offering (prize, coupon or discount) to SnowKato Days enthusiasts. 3. Submit an event that your businesses is already hosting or create one that’s new with a twist for winter! (i.e... winter themed karaoke, snow structure building contest, cooking contest, craft workshop, battle of the bands) A comprehensive list of all the community events featured for SnowKato Days can be found online at SnowKatoDays.com

34 • DECEMBER 2019 • MN Valley Business

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The clear business school choice for real-world learning ACADEMIC PROGRAMS

REAL-WORLD EXPERIENCES

When you enroll in Minnesota State Mankato’s College of Business, you open the door to an abundance of possible career paths—including some you may not even know about. You will gain experience in all of our focus areas through the shared business curriculum, which integrates pieces of each major.

The College of Business at Minnesota State Mankato is committed to creating opportunities for its students to develop their own big ideas and to use real-world thinking to make those ideas possible. Our curriculum is designed to include hands-on application of the most forward thinking content whenever possible. We’ve also created student clubs, activities and events to enhance your educational experience.

Accounting

• Master of Accounting (MAcc) • Graduate Certificate in Taxation • Bachelor of Science in Accounting • Minor in Accounting

Analytics

• Certificate in Business Analytics

Bachelor of Business Administration – MavBiz Online

• Fully Online Degree Completion Program

Business Administration

• Master of Business Administration (MBA) • Minor in Business Administration

Business Law

• Minor in Business Law

Entrepreneurship & Innovation

• Minor in Entrepreneurship & Innovation • Minor in Agribusiness & Food Innovation

Finance

• Bachelor of Science in Finance • Certificate in Business Analytics • Certificate in Financial Planning • Minor in Financial Planning • Minor in Actuarial Science (housed in Math Dept.)

International Business

• Bachelor of Science in International Business • Minor in International Business

Management

• Bachelor of Science in Management • Minor in Human Resources • Emphasis in Human Resources • Emphasis in Business Management

Student Organizations

• More than 15 to choose from

United Prairie Bank Integrated Business Experience Big Ideas Challenge VITA (Volunteer Income Tax Assistance) Study Abroad and Away Opportunities • New York Study Tour • Belize Fair Trade Study Abroad • The European Experience

Maverick Student Investment Fund Diversity Case Competition Richard and Mary Schmitz Food Entrepreneur Lecture Series Daryl and Karyl Henze Student Ag Innovators Program Stangler Internship Initiative Wall Street Journal Program Meet the Firms Event Executive Lecture Series Global Entrepreneurship Week Women Entrepreneurship Week Student Pop-up Stores Student Engagement Fair

Marketing

• Bachelor of Science in Marketing • Minor in Marketing

LEARN MORE AT COB.MNSU.EDU

An Affirmative Action/Equal Opportunity University. This document is available in alternative format to individuals with disabilities by calling the College of Business at 507-389-5020 (V), 800-627-3529 or 711 (MRS/TTY).

MN Valley Business • DECEMBER 2019 • 37

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MN Valley Business • DECEMBER 2019 • 38