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CONTENTS January • February 2018 • Vol. 17 No. 1 •


Cover story

Finding financing: Business owners, bankers, equity investors and economic development specialists share insights on what kind of financing fits different types of needs. BY ANDREW TELLIJOHN

Cover photograph by Tom Dunn




Editor Beth Ewen notes that even business owners from Wisconsin occasionally have insights that might prove worthwhile.


Make sure you’re ready if faced with sexual harassment complaints by Michelle Beck-Howard, G&A Partners

Staff list:

Small businesses are just as vulnerable to cyber criminals as large ones by Kyle Loven, Computer Forensic Services



A panel of experts shares some of the lessons they’ve learned over years in the business world

From the editor:

Who’s who at Upsize magazine, and how to reach us.

Upsize Minnesota (USPS 024-029) is published bi-monthly for $20 by Upsize Minnesota, 3033 Excelsior Blvd, Suite 10, Minneapolis, MN 55416. Periodicals postage rates at Minneapolis, MN and additional mailing offices. Postmaster: Send address changes to Upsize Minnesota, 3033 Excelsior Blvd., Suite 10, Minneapolis, MN 55416



Use process mining to build efficiencies, add to your bottom line by Christopher Perkins, Digital Symplexity





CATCHING UP: Evolve Systems

Building productivity by helping employees cope with financial stress

Marnie Ochs-Raleigh, CEO, shares an update on the fast-changing world of payment technology solutions

EMPLOYEES by Bret McKitrick, Associated Benefits and Risk Consulting

Planning now means peace of mind later.

What happens if… THE ECONOMY WEAKENS







CK&Co. can help you proactively prepare your transition with our 4-step action plan. Visit us at to learn more.

Download our free Succession Planning Guide Online

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Member of


Wes Bergstrom


Beth Ewen

MANAGING EDITOR Andrew Tellijohn




Tom Dunn

HOW TO REACH US To subscribe email Georgene Bergstrom, or visit With story ideas email Andrew Tellijohn, To advertise email Wes Bergstrom, To order reprints email Georgene Bergstrom, To order extra or back issues email Georgene Bergstrom, To suggest Web resource links,

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AT THE RISK of angering Goldy Gopher (my husband and I are both University of Minnesota alums and our son is a freshman there), I’ve got some wisdom from two restaurant founders to the east, who served on a founders’ panel I moderated recently at the Restaurant Finance & Development Conference. Their companies, Toppers and Culver’s, are headquartered just a couple dozen miles away from each other in Wisconsin, and their stories are instructive to their western neighbors, too. Scott Gittrich is the founder of Toppers Pizza, with 84 units in a chain with a sensibility aimed at 20-year-olds. “We like to talk smack about the competition. I used to be the demographic,” he said about the company he founded at age 28. “The first restaurant I managed, I was 20. Everybody stayed 20 and I got older.” Today he’s 54, and he said keeping that irreverent — some would say obscene — edge in the culture and the marketing is not easy. At one point his brand’s message became muddy. “It was easy early on,” to keep the smack-talking voice. “Then I started triangulating toward the big guys, which is easy to do.” He met a marketing pro who said, “This is not Toppers,” referring to the advertising the company had drifted to, which was basically promoting discounts and coupons like the big three pizza brands. The marketing pro had interviewed Toppers’ customers to see what they thought of the brand. “He said, ‘look at these people. They’re rabid fans. If you would just step up and be yourselves, it would cut through.’” Keeping authentic is paramount, and difficult. “Gosh, I’ve learned that lesson again and again, and that was huge,” Gittrich said. “We operationalized that inclination, that voice, that true North. Once it connects, it becomes powerful.” Craig Culver, the founder of Culver’s and home to the Butterburger, has built the burger-and-frozen custard chain to more than 640 units and in October attracted private equity investor Roark Capital to take a minority stake. But the early days were not auspicious.


He went to college for a biology degree, and then told his father that restaurants were not for him. “I grew up in the restaurant business. That’s why I didn’t want to be in it,” he said. His father told him “You go find your dream, and I didn’t have a clue what my dream was, and it ends up I never left the industry.” The first Culver’s store they opened, though, was a bust at first. “Right across the street from us was Hardee’s, the biggest burger place in 1984,” he said. On the other side was a Dairy Queen, where the Blizzard was going gangbusters. Yet “no one knew what a Butterburger was, or what custard was,” and often times their own parking lot had just a few cars in it and the neighboring lots were packed. “We thought we were so good at the business, but we came inches away from failing,” Culver said. “I don’t know how much money we lost. We kept at it, and the third year we made money.” Keeping at it, for more than 33 years, is Culver’s bottom-line advice. As for other nods to Wisconsin, as I write this the Vikings are trying to make a run at a Super Bowl being held in their own hometown, and the Packers are not, so I’ll leave it there. Wisdom from the east only goes so far. Beth Ewen Editor and co-founder Upsize Minnesota


From the east

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Preparing for a breach: Hackers target organizations of any size by Kyle Loven

TIPS 1. It’s not that smaller businesses aren’t victims of cybercrime. It’s that smaller businesses may not make the headlines. 2. Cybercriminals are interested in vulnerable organizations of any size. 3. Obtain an independent assessment of your security practices. 4. Have a trusted cyber security firm on your speed dial. 5. Your best defense is establishing a culture of security within your organization.


YOU HAVE MOST LIKELY seen the news recently of companies having sensitive internal and consumer information stolen by hackers. Target, Home Depot, Uber, and the unprecedented breach of Equifax, are among the higher profile companies that have been breached. Many small business owners read these types of headlines and say to themselves: “It couldn’t happen to me. My business is too small to be targeted.” These business owners need to reconsider the premise of their defense. It’s not that smaller businesses aren’t victims of cybercrime; it’s that smaller businesses may not necessarily make the headlines. All companies that demonstrate data security vulnerabilities are being targeted, regardless of size. One thing is certain: If there is sensitive data to be stolen, and an organization has vulnerabilities in its security posture, cybercriminals are interested. Simply put, companies are being targeted by hackers for two main reasons: • All companies retain highly sensitive data, including the personally identifying data of both employees and consumers. • Some companies fail to put adequate safeguards and protections in place to help counteract the threat of a cyber event. While some companies try to strengthen their security posture and still become victims, I would opine that the primary culprit of poor security measures can be blamed on a pervasive attitude of: “This couldn’t happen to me. Hackers don’t want my data anyway”. When an organization


possesses this mindset with respect to cybersecurity, it is likely that their response and remediation efforts will be lacking. Mitigate risks with independent assessments and diligence Small business owners especially may rationalize this complacency by pointing to budgetary constraints. In a May 27, 2015 article written for, author Rosalie L. Donlon points out that attacks on small to mid-sized businesses accounted for 62 percent of all cyberattacks in the U.S. In fact, cyber security professionals often state that it is not a matter of “if” a company will be targeted by hackers, but a matter of “when.” It is understandable that a small business would be concerned with its budget, but it’s important to make the value and necessity of cyber security a priority. Simply stated, a small business cannot afford to not make cybersecurity a part of its budget. Given the catastrophic consequences of a potential breach, both reputational and financial, what should smaller businesses be doing to shore up their data protection strategies? First, smaller companies should understand that hackers are constantly probing for weaknesses to target vulnerable databases, regardless of the size or profile of an organization. As stated earlier, cybercriminals aren’t picky. If there is sensitive data to be stolen, and it’s easy to get to, a cybercriminal will target the source. Upon recognizing that all organizations are in the crosshairs of hackers, the second step for smaller companies is to obtain an independent, unbiased

assessment of their security posture. A preliminary assessment serves as a basis for ongoing assessments. It should be noted that a security assessment is not a singular “set it and forget it” type of procedure. It is recommended that security assessments be conducted on a regular, quarterly basis by a third-party vendor who takes both a proactive and reactive approach to security. Namely, the most complete security assessments are aimed at safeguarding an organization in addition to providing remediation and incident response protocols in the event of a cybercrime or breach. Both internal and external security testing is often conducted by the assessor to obtain the most accurate assessment of an organization’s security. Third, having completed a baseline security assessment aimed at identifying vulnerabilities in an organization’s security infrastructure and protocols, smaller companies can determine whether increased security measures are necessary and to what extent. These determinations are made in conjunction with the security assessor and often include remediating existing issues, establishing or improving upon current remediation strategies and setting guidelines for ongoing security assessments. Cost of protecting likely less than cost of repairing Security assessments and the associated costs for improvement are costly to small businesses. However, it must be reiterated that the cost to an organization, both financial and reputational, in the event of a data breach or cybercrime event far exceed the costs of diligence and preparation. In this age of technology, small businesses cannot bet against the likelihood of becoming a victim. Training, education, and security assessments are crucial, especially in overcoming

the “this can’t happen to me” attitude. Fourth, although smaller companies do not typically have the resources to address the consequences of a breach directly, they can consult with cyber professionals who have the experience and the knowledge to deal with these events. It is advisable for smaller companies to familiarize themselves with a cybersecurity firm whom they trust. Having that firm on “speed dial” in the event of a data breach helps in immediately responding to and remediating an event. Immediate mitigation efforts in the wake of a data breach can often determine whether a company survives or succumbs to the event. Having an experienced and competent cybersecurity firm which has familiarity with the smaller company can help to ensure its survival in the event of a breach. Unfortunately, there are no silver bullets when it comes to cybersecurity and data protection. Typically, the best a company can achieve with respect to database security is to become a “hard target” when it comes to would be hackers. Hackers do not want to spend an inordinate amount of time attempting to breach a company’s cyber defenses. A small business’ best defense is to establish a culture of security within its organization. Investing in security assessments, in addition to proactive and reactive defense measures, is critical in today’s world. Adapting to technology also means adapting to the potential risks and mitigating those risks. Regardless of size, the inherent dangers of technology exist for everyone.

“One thing is certain: If there is sensitive data to be stolen, and an organization has vulnerabilities in its security posture, cybercriminals are interested.” Kyle Loven,

Computer Forensic Services

Kyle Loven is a national director with Minnetonka-based Computer Forensic Services: 952.924.9920;;





Process mining: Your future is in your data by Christopher Perkins

TIPS 1. Growing businesses need to use their data to compete. 2. Your contact management program, accounting software, inventory system, cloud and other applications that support your business operations provide mountains of meaningful data. 3. The key factor in profitability is making processes work better to deliver products and services faster and less expensively. 4. Through process mining, you learn not only what is going on in your business, but what could be happening. You see problems in your processes and possible ways to improve. 5. As your business grows, process mining can help ensure your processes keep up as they become more complex and as your data points quickly multiply.


“IF I ONLY KNEW THEN, what I know now!” This wail of frustration from the corner office is typical after a mission critical event refocused company resources to address issues resulting in lost revenue - or worse - lost clients. Historically, small and mediumsized businesses have managed these events faster than their larger competition. Growing businesses have less complicated processes and fewer variables affecting how they record customer orders, deal with suppliers, manage inventory or deliver an end product. They adjust more nimbly and react faster to new market dynamics. This ability to “turn on a dime” like a Formula 1 car gives smaller organizations an edge. But process mining is allowing larger organizations to be more responsive to the market place. WAIT… Process Mining? What’s this new buzz word? Are smaller companies losing their advantage? Not yet, but the massive amount of data owned by big companies using process mining is giving them more insight into their business operations. They may not be turning on a dime, but they are turning their convoy of 18-wheelers much faster. Growing businesses need to use their own data to compete. What is “Big Data” in a small company? If you’re saying “I’m a relatively small company. I don’t have a lot of data,” take


another look. Your contact management program, accounting software, inventory system, cloud and other applications that support your business operations provide mountains of meaningful data. And the amount grows daily. When you use systems to manage your business, you HAVE data. Put that data to work! What is Process Mining? It’s Google™ Maps for your business. Think about driving to the airport on a dark snowy morning with icy roads; your usual route is going to be slow and you’ll miss your flight. You access Google Maps, select the fastest route based on current conditions and update regularly to watch for new problems. Process mining helps you figure out the fastest way to implement your key business processes to arrive at a good bottom line. It identifies the detours your processes may take, the bottlenecks and the delays affecting your business. The graphic below shows the multiple routes an order process can take and how the time (and therefore the cost!) to deliver a product can double or even triple depending upon the route. The more efficient your route, the more money you save. Process mining will pinpoint those key problem areas so you can analyze and improve them, saving both time and money. How does process mining work? Process mining software allows a company of any size to move away from using a handful of Key Performance Indicators to understanding how its

business actually operates. Process mining uses the data in the log files of your systems and automatically maps:

• each activity in a process • when each activity takes place • how long it takes to go from one activity to another

• every variation the process could take

What an army of consultants would take months to report is being replaced with process mining. You get faster and more accurate results because you’re using unbiased data. You learn not only what is going on in your business, but what could be happening; you see problems in your process and possible ways to improve. Do I need process mining? In a small business, you may have an intuitive idea of what your data is telling you: what processes are working, where the bottlenecks are and what changes need to be made. But as your business grows and the marketplace changes, the processes become more complex and the amount of data grows exponentially. How do I get ready for process mining? The key factor in profitability is making processes work better to deliver products and services faster and less expensively. 1. Ask the obvious questions. What kind of processes are in place? Are they working? Consider:

• Business Activities: Which parts of

my processes take longest? Which cost the most? Are they the same? Am I paying late fees, cost overruns? • Clients: Who are my most profitable clients? How do we go from initial contact to completed sale? How do we follow up? How long does it take to get a contract?

• Suppliers: How long do they take

to get materials to me? Who is the best? The worst? • Employees: Who manages tasks the most efficiently and effectively? What affects their performance? Knowing the answers to these questions and how they inter-relate enables you to see what needs to change. Poor ordering systems result in late supplies. Late supplies result in late deliveries. Late deliveries result in unhappy clients. Unhappy clients result in decreased profitability. Solving these process problems may significantly add to your bottom line. 2. Establish a culture of continuous improvement. The best part about being in a growing company is the relative ease of personto-person communication. As a company grows, more employees are involved in successful business operations. Process mining provides the foundation for continuous process improvement and significantly increased profits. 3. Select flexible data technology tools. Your data gathering tools need to track three characteristics:

• Activity taking place • Which process is associated with the activity

• Time and date stamp With that information, and other basic information residing in your systems, you can discover the different variations to your processes, pinpoint issues and make necessary changes. Consider process mining as your business grows. Keep your competitive edge. Maintain your agility, your ability to respond quickly to new events. With process mining, you will know now what you need to do in the future.

“Consider process mining as your business grows. Keep your competitive edge. Maintain your agility, your ability to respond quickly to new events. With process mining, you will know now what you need to do in the future.” Christopher Perkins, Digital Simplexity

Christopher Perkins is a partner at the process mining and business optimization consultancy Digital Symplexity: 612.644.2900;;





Keep employees happy by reducing their financial stress by Bret McKitrick

TIPS 1. Invest in a financial wellness program. 2. Include in the program both educational information and resources for employees. 3. Available tools and resources should encourage employees to take some kind of action. 4. Financial coaching (regardless of delivery method) can be helpful as it offers additional motivational support and accountability. 5. Explaining each term and not assuming employees have a strong base for financial literacy is key to ensuring young employees start their career with a strong understanding, and helps all employees make sure they are choosing the right options.


OVER THE LAST DECADE, there has been a steady increase in business leaders investing in wellness programs that are designed to improve workplace well-being. Yet, many of these programs are not targeting one of the biggest sources of employee stress: personal finance. Beyond the impact on mental wellbeing, an AOL Health Poll indicated that financial stress has a significant impact on the physical health of employees and on workplace productivity. It also has been linked to anxiety, insomnia, stomach ulcers and muscle tension. Accordingly, employers are beginning to see the manifestations of personal stress on an employee’s attendance and productivity in the workplace. For the large number of employees who are saddled with student loans, personal finance is a huge concern. A Pew Research Center study shows that 37 percent of U.S. households headed by adults younger than 40 have student loan debt and 70 percent of recent Minnesota and Wisconsin college graduates have student loan debt, according to ValuePenguin. That’s a huge population of employees who are feeling the crunch — and taking that stress to work every day. Fortunately, there are a number of actions employers can take to relieve some of financial stress hitting their employees – especially those with student debt. Invest in a financial wellness program As with health-related wellness, there is no “one size fits all” approach to financial well-being. Employees


are at different places on the financial wellness spectrum and have varying preferences for accessing services they may need. A successful financial wellness program will include both educational information as well as resources. The educational component should cover the various aspects of an employee’s financial life, such as debt management, college education funding, mortgages, credit management, retirement planning and budgeting — just to name a few. Available tools and resources should encourage people to take some sort of action. They may include a financial wellness assessment (similar to a health risk assessment) which outlines the bigger picture of an individual’s financial situation, and access to financial consultants or financial planners to identify and guide employees through the first steps in the process. The following are a few best practices that I would recommend to those considering implementing a financial wellness program for their employees: • Education and awareness alone will not lead to behavior change, but are a necessary component of the program. • Offer a variety of resources, from debt management, budgeting, educational resource planning, to retirement planning services. • Service modalities should vary — in-person, online, telephonic, or self-service. Financial coaching (regardless of delivery method) can be helpful as it offers additional motivational support and accountability.

• Employers need to be committed to the program. Simply announcing it and indicating where to go for information will not produce positive results. The program needs to be continually promoted and barriers to accessing it need to be removed or limited. Communicate benefits in their language Helping employees to understand financial benefits offered through the company and empowering their financial literacy can reduce some of this dollar-sign stress, and should be among the top priorities of business leaders. Help employees learn about their benefits through tactics other than forms, slides and word documents. Opt for visuals — videos, infographics or even games — to help employees truly understand their options. Explaining each term and not assuming employees have a strong base for financial literacy is key to ensuring young employees start their career with a strong understanding, and helps all employees make sure they are choosing the right options. Explore student loan repayment assistance There are a couple options for employers when it comes to repayment assistance. Employers can help pay the employee’s loan directly, setting caps for total loan assistance at amounts such as $5,000 or $10,000, or making repayment contingent upon continued employment. Employers can also connect employees with organizations that can help refinance student loans at more favorable interest rates. Employers should note that there is currently no wage or employment tax exclusion for employer-provided student loan repayment assistance.

Consulting with a financial adviser regarding the best offerings — for both the employee and employers — will save time and money. Additional strategies In addition to student loan repayment assistance, employers are looking at other ways to help shore up their employees’ financial wellness. For example, many employers are utilizing 401(k) automatic enrollment as a way to nudge employees into saving for retirement, and automatic increases as a way to continue nudging them along. Employers are also offering benefits that can ease the financial burden faced by younger employees (who are more likely to have student loan debt), such as paid parental leave, wellness programs that reward healthy behaviors, and contributions to health savings accounts, health reimbursement accounts and/or flexible spending accounts. The benefits of financially literate employees directly correlate to productivity and the company’s overall bottom line. Less-distracted employees drive productivity, so helping them to understand their finances and manage large payments like student loans is a critical investment in the company’s ability to operate and compete down the line. Empowering employees to make their own lives better is not only a differentiator for recruiting and retaining top talent, it helps ensure that current employees are brand advocates, creating a mutual stake in the future of the company.

“Helping employees to understand financial benefits offered through the company and empowering their financial literacy can reduce some of this dollar-sign stress, and should be among the top priorities of business leaders.” Bret McKitrick, Associated Benefits and Risk Consulting

Bret McKitrick is a senior vice president and senior human resources consultant in the Milwaukee office of Minnetonka-based Associated Benefits and Risk Consulting: 262.542.8822;;



human resources


Properly addressing sexual harassment allegations by Michelle Beck-Howard

TIPS 1. Sexual harassment occurs when unwelcome conduct of a sexual nature affects an individual’s employment or interferes with his or her job performance. 2. One of the biggest mistakes an employer can make is to dismiss a report without conducting a proper investigation to determine the claim’s validity. 3. A neutral third-party with specific training should conduct investigations into allegations of sexual harassment to ensure that no bias or pre-conceived notions about either the harasser or the victim affect findings. 4. Employers should strive to keep the employee who reported the behavior as updated as possible about the progress of the investigation throughout the process. 5. Particularly in the wake of the #MeToo movement, employers must be equipped to deal with claims of sexual harassment, either with internal resources, through employment counsel or by using a professional employer organization.


WITH NEW STORIES coming out on almost a daily basis about celebrities, politicians and other prominent public figures, sexual harassment has gone from a topic normally not addressed in public to dinner table conversation. What started as a reaction to allegations against Hollywood heavyweight Harvey Weinstein in October has become more than a viral hashtag, and has left many employers anxious about how the #MeToo movement might manifest in their organizations. In the wake of these highprofile allegations, employers are concerned that employees may start coming forward now about past experiences or behavior. Some employees are now coming forward now either because they didn’t realize at the time that such conduct constituted sexual harassment or because the employee didn’t feel comfortable disclosing the incident immediately after it took place. It’s essential now more than ever for employers to open a dialogue with employees on how to address sexual harassment in the workplace. Defining sexual harassment With something as complex as “sexual harassment,” it’s important to start any discussions by defining what exactly the term means. From an employment liability perspective, sexual harassment is a form of discrimination that


violates an employee’s rights under Title VII of the Civil Rights Act of 1964. It occurs when unwelcome conduct of a sexual nature affects an individual’s employment or interferes with his or her job performance. Intent is the most common misunderstanding amongst employees when it comes to sexual harassment. Many people are under the impression that conduct isn’t sexual harassment if the harasser didn’t intend to harass the victim. It is essential for employers to understand, however, that the harasser’s intent is not important when it comes to determining whether the behavior constitutes sexual harassment. Instead, it is the impact on the victim that matters. Addressing sexual harassment allegations Employers should always take all reports of sexual harassment seriously. In fact, one of the biggest mistakes an employer can make is dismissing a report without conducting a proper investigation to determine the validity of the claim. Ideally, a neutral third-party should conduct an investigation into allegations of sexual harassment. The third party (such as a human resources consultant or the organization’s employment counsel) is trained on how to conduct these investigations to ensure that no bias or pre-conceived notions about either the harasser or

the victim color the findings. Not only will this person have a better understanding of the legal definition of harassment and know what questions to ask, but also any employee being interviewed as witness is more likely to feel comfortable speaking to someone with whom they don’t have a personal relationship. If the employee who made the allegation presents compelling, documented evidence of severe or pervasive harassing behavior, the person conducting the investigation may recommend that the organization terminate the accused employee immediately. Even if the evidence presented doesn’t rise to this threshold, it may still be appropriate for the employer to suspend the accused employee while the investigation is being conducted. Otherwise, employers should wait until the investigation concludes before taking any further action. There are three likely outcomes to most sexual harassment investigations. If the compelling evidence is severe and proves pervasive harassing behavior, then the employer takes adverse action against the employee (up to and including termination). If there is little or no evidence of harassing behavior, then, no action is taken against the accused employee. Finally, there could be evidence of behavior that is unprofessional but does not meet the standard of sexual harassment. It’s important to note that just because the behavior in question isn’t found to meet the definition of sexual harassment, that doesn’t mean the organization should not be taking steps to curb it. If evidence of inappropriate

or unprofessional behavior is found, employers can and should still address the behavior of the employee with coaching, counseling, discipline, or even termination. Such behavior may also constitute creating a hostile work environment, which also is illegal. Throughout the entire process, employers should strive to keep the employee who reported the behavior as updated as possible about the progress of the investigation to ensure they know the company is taking their concerns seriously. This includes an update at the conclusion of the investigation to inform the employee of any findings and to assure them that appropriate action (if any) will be taken to address the situation. Although sexual harassment is rarely something supervisors or business owners feel comfortable addressing, it’s something employers have to be equipped to deal with (either with internal resources, through employment counsel or by using a professional employer organization), particularly in the wake of the #MeToo movement.

“The harasser’s intent is not important when it comes to determining whether the behavior constitutes sexual harassment. Instead, it is the impact on the victim that matters.” Michelle Beck-Howard, G&A Partners

Michelle Beck-Howard is human resources advisor and client advocate at G&A Partners: 713.784.1181;;



Finding financing Businesses balance the pros and cons of debt, equity and alternative sources of capital


hile many college students were out partying, Connor Wray and Erik Brust, were starting a business. Wray and Brust, respectively the CFO and CEO of JonnyPops, balanced class with figuring out how to grow their fresh, all-natural frozen treats company. “We were committed to the idea,” Wray says, adding that Brust had previously intended to start the business with a cousin who passed away. “The idea had gotten set aside. … We took back up the torch.” The now six-year-old company, incorporated in November 2011 and opened five months later, started in the basement of Brust’s dorm room, where he and a handful of college friends began testing recipes. JonnyPops has since penetrated all the major local grocery stores with its treats and has achieved approximately 5 percent penetration nationally. That solid progress has opened several doors for financing even further expansion going forward. But it took some time getting here. First, as the winners of the student division of the Minnesota Cup competition and the Ole Cup student competition at St. Olaf, they used the grants they won to support the company’s initial efforts. Some family and friends also helped out. To improve cash flow, Wray says, JonnyPops did a lot of farmers’ markets. It didn’t take long before the company needed a bit more money to move forward. When the company made its first sale to a customer in Northfield, the product, which at the time consisted of three flavors, sold out in 48 hours, Wray says, that provided justification for their belief they had a business with good growth potential. “That was what we considered to be an astounding success,” he says. “We had very strong feelings we had a good product from the beginning. In food, if you have a good product, there is an opportunity for it to be a successful business.”

BY ANDREW TELLIJOHN photograph by Tom Dunn



Connor Wray (left) and Erik Brust at JonnyPops have used equity and debt financing to build their healthy frozen treat business

“We want to be the Victoria’s Secret of the fitness world. Victoria’s Secret owns the space of women’s intimate apparel — bras and underwear, that’s all they do. People walk away from the Macy’s and Nordstrom and JC Penney and Sears and all the department stores and go to Victoria’s Secret. So, we want the same thing.” Luke Carlson, Discover Strength

COVER STORY Working with angels and banks

The Minnesota Cup win was also a springboard into an angel investing seed round of financing. Wray won’t disclose details related to who invested, but does say the company used the roughly $500,000 it raised to expand manufacturing facilities, which was necessary because JonnyPops makes all of its products. JonnyPops was then able to start working with grocers and retailers like Target, Costco, Cub Foods and SuperValu. “Those were immediate results of being able to set up the structure that was needed,” he says. “We were able to make significant investments in 2014 and 2015 that built a solid platform on which we could continue our growth.” The company was okay giving up some equity. It had few options, he notes, given that the owners were, at the time, college students and had no collateral for a bank. And Wray acknowledges that JonnyPops has benefited from the immediate feedback it received from many of the potential investors its officers met with and from insight gleaned from those who ultimately did buy in to that round. The upgrades resulted in revenue growth and improvements in margin and cash flow that allowed JonnyPops in 2016 to begin seeking non-equity sources of capital. The company got just over $500,000 to invest further in equipment and production expansion from KLC Financial. And in 2017, the company was growing fast enough that it went in search of a banking partner through which it could establish a credit line and start leveraging some debt.

JonnyPops partnered with Venture Bank

After talking with many potential partners and receiving several recommendations, Jonny Pops settled in with Venture Bank. “Doing the hard work to find the right partner, that’s always been part of our value proposition,” Wray says. “That’s why you talk with all the people, to find the right people. … It seems like it doesn’t matter which type of capital you’re looking for, you are looking for similar things.” While the company hasn’t ruled out further equity financing going forward, Wray says he and Brust also want to maintain ownership. It would be a case-by-case decision. “You have to make the right decision for the right circumstance,” he says. Kevin Doyle, vice president and commercial banker at Venture Bank, says when a company indicates they’d like to do some banking, he wants to start with a face-to-face meeting. “We like to get to know the management team,” he says. “We tell them we want to hear their story. If you are looking for financing and you want to do business with Venture Bank, we want to get to know you.” The company is interested in its partners’ successes and, sometimes more importantly, how they have handled struggles. 16


“Failures are sometimes more important or a better prognosticator of future success than past success,” he says. “People who have failed and gotten back up on their feet are typically better and stronger.” If everyone starts to feel comfortable and the cultures mesh, the company and the bank will start talking about numbers, business plans and projections. Either way, Doyle will try to give companies an honest, objective assessment. He’s told some who come to see him that they might be better off trying to find an equity buyer. But he’s a believer in debt when it’s an option. “We try to be objective, but we always say borrowed capital is less expensive than giving up equity,” he says.

Angel investor Russick has used both debt and equity financing

Entrepreneur-turned-angel-investor David Russick is currently managing director at Gopher Angels, a group of accredited investors who want to help create and grow Minnesota businesses. Previously, he was founder and president of Tubs Inc., a familyowned waste and recycling business in the Twin Cities and cofounder of Bagster LLC, a nationwide waste company that sells tarp-like bags through home improvement retailers. During the growth of those two extremely different companies, Russick says, he’s used both debt and equity financing. One factor at play when deciding what model will work best for your company, he says, is the speed at which growth must happen. At Tubs, the growth was totally organic. That company grew through the investment of Russick and his wife, Sara, and with assistance from vendor debt, bank debt and U.S. Small Business Administration loans. “By the time we started Bagster, Tubs had operations in Denver, Cleveland and Minnesota,” he says. “We funded it with our own dollars and through debt.” Bagster was a different animal. The Russicks felt there was a need to get to market quickly, so they brought in equity partners. And within three years the company was in 15 markets throughout the U.S. The speed was necessary, Russick says, because despite having a patent on the bag, it would not have been difficult for someone else to create a similar product and beat the Russicks into stores. “At the time the concern was – and it was valid – whoever was going to steal that shelf space for a dumpster bag was going to have the market. We knew we couldn’t sit there waiting for organic growth. We had to be aggressive,” he says. “We developed a go-to-market strategy that was outstanding and worked. But nonetheless, it would have been easy for someone else to come into the market with a bag.”

Several factors determine the path

Speed to market was one factor in Russick’s decision to seek an


“I don’t care if it’s rich Uncle Bob’s money, if it’s conventional bank money, if it’s SBA money, if it’s angel, venture, equity, whatever. To me the number one thing is fundamentals. What is happening? What does somebody want financing for? And what does the financial context look like? It’s always fundamentals first, the funding tool second.” —

John Thwing, Anchor Bank, a division of Old National Bank

equity partner for Bagster. Another was collateral. Banks aren’t risk takers, he says. When they lend, they want collateral. When he borrowed from banks to start Tubs, his family home was on the line “which is a hell of an incentive to make sure you don’t fail,” he adds. “I happened to have, when we started Tubs, the collateral I needed.” Vendor financing also came into play with Tubs. His vendors had financing arms to help companies buy their equipment. “We were able to get fully set up vehicles with cranes, dumping mechanisms and everything we needed, financed through the vendor,” he says. “If you are an IT company, there is no collateral, unless it’s personal. The bank can’t attach much to lend against.” A third factor in deciding between debt and equity financing is a company’s business plan. If the goal is creating a regional or local business that you stay with for the long-term, Russick says, it probably doesn’t make sense to bring in equity investors. If the plans are for a bigger splash in a shorter time period, finding someone willing to invest equity might be a solid plan. “If you are looking to quickly grow and your mindset is you want to grow it, exit and then do another one, then equity financing makes sense, because it will speed the whole process up” he says. “It really depends on your strategy and what your personal goals are with your business.” The Russicks started Gopher Angels after selling Bagster in 2013. They have since sold Tubs, as well. The group of investors are industry agnostic. They look for a good management team, a business concept that has scalability and an exit strategy. The portfolio to date is about 40 percent health care companies and 30 percent to 40 percent technology companies with the remainder in food, agriculture and other companies.

use and not enough on the basics that will interest someone in providing the necessary financing.

“To some degree,” he says, “I don’t care if it’s rich Uncle Bob’s money, if it’s conventional bank money, if it’s SBA money, if it’s angel, venture, equity, whatever. To me the number one thing is fundamentals. What is happening? What does somebody want financing for? And what does the financial context look like? It’s always fundamentals first, the funding tool second.” So, what are the fundamentals? There are several. Cash flow is one. If the business owner has enough to support debt, bank financing might make sense. If there is no cash flow, that person probably needs to go the equity route. “If you don’t have cash flow, a bank or an SBA lender are not going to lend to you,” Thwing says. How about liquidity? Can the business put some of its own resources into the deal? With few exceptions, “an SBA or a bank loan are almost always going to look for an equity contribution,” Thwing says. Even after considering such factors, Thwing adds, there still is room for significant overlap in funding mechanisms. “Most bankers think there is conventional financing and then there is a hard stop and then SBA starts,” he says. “My point of view, as an SBA lender, is that there is bank financing. Then about halfway through that range, SBA starts and then that extends beyond where conventional wouldn’t go. There is significant overlap where it’s really a matter of preference for which one is a better tool.” Thwing also says there risks inherent with each type of financing and borrowers should go in with eyes open. Equity partners want an exit in a set timeframe with a significant return on investment. Traditional bank loans might come with shorter repayment terms or with greater reporting requirements than Fundamentals first, then the model John Thwing, senior SBA lendar at Anchor Bank, a division SBA loans. And sometimes a deal might benefit from a pieceof Old National Bank, is also known as the SBA Guy. He thinks meal approach. “All forms of capital have strings attached,” he business owners focus too much on what tool they are going to says. “The key is understanding the fundamentals of the



COVER STORY tion. If the deal has good fundamentals, there will be sources of capital available.”

Non-traditional sources exist

While most financing discussions focus on debt or equity, there are some additional lesser known and, perhaps, underutilized sources of funding available to business owners if they take the time to look. Justin Erickson, a principal with Essex Capital LLC, says most communities have some economic development assistance available for businesses, especially if they are willing to relocate or look in communities that might be a bit off the beaten path. Erickson says economic development advisers in those areas may be able to help them with financing and other business needs. From large cities like Minneapolis to small towns, economic development officials want to keep existing businesses happy and build their tax base by helping those expand or by bringing new ones to the market. “They want to bring new companies into town,” he says. “It doesn’t have to be a corporate headquarters, but something that will add to that job and tax base.” And to do so, they’ll typically find ways to incent a newcomer to the area. “They want to get their money back, but they are willing to employ different types of capital,” Erickson says. “Their primary source of motivation is getting activity going in their community.” They have access to capital, in the form of loans, grants, performance-based or forgivable debt, cost mitigation and more, that companies can use to grow, says Erickson, whose Essex Capital owns the Community Venture Network, a platform he uses to expose business to these opportunities. Additionally, he notes, in larger projects, it’s rare that funding comes solely in the form of bank financing, equity investments or economic development incentives. “Most of my projects will have some combination,” he says. “Economic development may fill a gap.”

While much of what the organization does isn’t related to financing, it can help in that area. In recent times, it provided a $442,000 loan at 1 percent interest to PurNet, a women-owned business that tries to find solutions to challenges faced by ambulatory surgery centers and surgical hospitals. That loan added 18 new jobs and counting in Worthington. Another low interest loan of $115,000 to Sailor Plastics helped keep the doors open for that company, maintaining 10 manufacturing jobs in nearby Adrian. The organization’s overall loan portfolio is just under $1.2 million and those funds have helped around 25 businesses in the last half-dozen years. It’s primarily gap financing on anything from helping a construction company buy a trailer to helping construct a new building. “The resources we bring on board,” Algadi says, “are really a function of our ability to work with foundations, with cities, with state government and other resources to bring about funding.”

CONTACTS: ABRAHAM ALGADI, Worthington Regional Economic Development Corp.: 507.259.9676;; KEVIN DOYLE, Venture Bank: 763.398.5813;; JUSTIN ERICKSON, Essex Capital LLC: 612.281.4648;; DAVID RUSSICK, Gopher Angels: 612.810.9166;; JOHN THWING, Anchor Bank: 612.505.9751;; CONNOR WRAY, Jonny Pops: 651.243.0705;;

An example from Worthington

One such community organization is the Worthington Regional Economic Development Corp., which is a public-private partnership in southwestern Minnesota with a budget of around $250,000 annually. It provides technical assistance to businesses, entrepreneurs, people with ideas and others. Abraham Algadi, the organization’s executive director, says the potential benefactors of such services often don’t know they exist. “They call it non-traditional because they are not necessarily the obvious solutions,” he says. “The burden is on people like myself to reach out to entrepreneurs, something we are trying really hard to do, to let them know what is out there.” 18


UPSIZE MINNESOTA and CLUB ENTREPRENEUR Present a luncheon workshop series at the Minneapolis Club

Thursday, March 22nd

Thursday, May 24th

Tuesday, August 28th




Who are the buyers and sellers of smaller companies? How are companies valued? What are the keys to a successful exit? Get the answers to these questions and more at our annual M&A workshop.

Growth is essential to a company’s success, not easy to achieve and even more difficult to sustain. The likelihood of continued growth is a key consideration when deciding to build or sell a business. This workshop will help entrepreneurs prepare for the grow of go decision, and introduce experts who can help.

Lenders, venture capitalists and business owners are sometimes at odds when it’s time to raise money. But they agree on one key point: seeking the right type of capital for each company’s stage and strategy is critical. Attend this workshop to find out what fits where.

11 a.m. to 1 p.m.

11 a.m. to 1 p.m.

11 a.m. to 1 p.m.

For the fifth straight year, the UPSIZE and CLUB E workshop series is dedicated to helping attendees with all facets of the growth challenge, and introducing local experts who can serve as trusted resources. Who should attend: The workshops will be geared towards entrepreneurs, CEOs, presidents, smallbusiness owners and executive managers. Questions from the audience will be encouraged.

Cost: $34.00 per workshop, which includes the program, lunch and parking during the event.

Location: All workshop will be held at the Minneapolis Club: 729 Second Ave. So. — in downtown Minneapolis — at the corner of 8th Street (one way headed east) and 2nd Ave. Enter the parking ramp from the 8th Street side, on the south side of the building.

SPACE IS LIMITED! REGISTER NOW, go to For questions, please contact the Front Desk team of The Minneapolis Club 612.332.2292 or

SCHEDULE: 11:00 – 11:30 — Registration & Networking | 11:30 – 1:00 — Introductions, Lunch & Workshop | After 1:00 — Networking


WORKSHOP: Best practices

Best practices

Business experts share lessons they’ve learned By Andrew Tellijohn Photographs by Tom Dunn


hether it’s keeping up with your accountant or tax lawyer throughout the year or making sure your employees are on the same page, communication is key. It helps strengthen relationships with professional partners, it helps build the business when everyone who works there is on the same page and it can help owners find like-minded people whom they can talk with about problems or ideas as they arise. Communication was one of the main messages at a workshop, co-sponsored by Rick Brimacomb’s Club E and Upsize magazine at the Minneapolis Club in late November, where five business professionals shared lessons they’ve picked up over their years in the business world.

Finding — and keeping in touch with — your partners

When business owners are hoping to establish a relationship with a banker, John Lindquist says owners should treat the occasions much like a first date. Lindquist, senior vice president of commercial lending with Crown Bank, says they should be prepared with something to

talk about when they first meet. They should be organized, with financial statements and other important information. And they should prepare to regularly communicate through good times and bad. “The more prepared you are for the meeting, the more success you are going to have with the banker,” he says. “The most successful customers I have are organized ones that are prepared and they are willing to give you information or put you in contact with their accountant to give you the information you need.” As the relationship develops, it’s important to keep in touch with the bank — not only when the business is running well, but perhaps even more importantly, when it has come across some hurdles. “I’ve had customers who have kept me in the dark on everything,” Lindquist says. “You don’t find out something is going wrong until one, the obvious, they are slow to make payments or, two, you receive their financial information and you start seeing some issues. I always tell my customers it’s great we’re talking when everything is good, but it’s just as important — if not more important — to talk about things when they are bad. As a bank, we are there for you to help you come up with a solution.” The same is true with an accountant, says Brad Theisen, partner in charge at Eide Bailly LLP. He’s had clients approach

“Don’t do your HR on paper. There are low cost easy entries into bringing technology to the people side of your business.” — Kristen Baas, Insperity



WORKSHOP: Best practices “I say ‘I wish you would have called me before you did this. We could have structured it differently.’ Talk to people before you do stuff, don’t just jump ahead and do things.” — Brad Theisen, Eide Bailly LLP

him at the end of the year telling them they bought, built, sold or did something of magnitude, as an aside. “I say ‘I wish you would have called me before you did this’” he says. “‘We could have structured it differently.’Talk to people before you do stuff, don’t just jump ahead and do things.” In general, he adds, tax planning is something that should take place throughout the year. Whether it’s a good year or a bad one, Theisen says it’s vital to keep in touch with your team of professionals. “After the year, when we are doing tax returns, it’s too late,” he says.

Communication is internal too

While communicating with professional partners is key, so is communicating with employees. For Tanya Korpi Macleod, founder and CEO of MacLeod & Co., having a cohesive marketing strategy is the most important thing a business can do. That strategy then needs to be communicated, not just to the public-at-large, but internally, so all employees, from C-suite executives to receptionists, are working on the same page. “That’s going to allow everybody to make decisions and buy in,” she says.

Tech Guru, a technology service provider with a partner in London and a marketing person in Los Angeles, has streamlined its internal communications. Everyone uses an office chat app called Slack (an acronym for Searchable Log of All Conversations and Knowledge), which allows for archived discussions on all work matters from the serious to the mundane. It has eliminated thousands of internal emails and it’s easier for people to catch up on conversationally than following long chains of previously sent messages, says Dan Moshe, founder and CEO at Tech Guru. “All that history is logged forever,” he says. “If you are not using a collaboration tool, 2018 is the year to start.” And then business owners themselves frequently need someone with whom they can discuss problems and ideas, Theisen says. It can be an individual, a professional you already work with or, in some cases, clients he works with have created formal or informal boards of directors. “Owners feel like they are out on an island,” he says. “I would recommend you always have a mentor or somebody to go to in order to help them run the business.” Moshe says Tech Guru established a board of advisers in 2017 that has been an invaluable help to the business as it began focusing on a new niche working with CPA firms.

“I always tell my customers it’s great we’re talking when everything is good, but it’s just as important — if not more important — to talk about things when they are bad. As a bank, we are there for you to help you come up with a solution.” — John Lindquist, Crown Bank



WORKSHOP: Best practices “Culture will kill you or it will make you. Your culture will help low performers rise, it will help star performers work better on a team. Culture is just imperative. Everybody in the organization has to be aligned in supporting your business goals.” — Tanya Korpi MacCleod, Macleod & Co.

“It turns out people will help you just because they want to – all you have to do is buy them lunch,” he quipped. “They have provided us with critical information. They helped us better understand the market. We learned so much. It was definitely a worthwhile endeavor.”

The outcome of not handling that situation effectively could be catastrophic to that business. We’re trying to keep the business safe, keep the business running forward and be respectful to all of their employees.

Prepping for harassment issues, spending on HR

Baas adds that she frequently comes across small business owners who decide they don’t want to spend significant money on human resource functions, such as preparing sexual harassment policies, only to contact her again months later when problems arise. “It’s good for my business,” she says. “It’s not good for their business.” She recommends that executives look at hiring professional human resources assistance as not just an expense, but as an investment in the business. There are too many issues of concern today to have someone in the office doing HR work as a secondary responsibility. “It helps you get a better ROI out of your employees,” she says. “It reduces your risks so that you can keep more dollars in your pocket. At the end of the day, HR is not there to be your friend, it’s there to keep your company safe.” And having policies in place that ensure a safe, comfortable environment for employees can be marketed as part of a culture that makes your business a place people want to work and used as a guide during the hiring process. She cited a quote from the book “School Culture Rewired,” written by Steve Gruenert and Todd Whitaker: “The culture of any organization is shaped by the worst behavior the leader is willing to tolerate.”

Having someone to go to, especially these days with a lot of thorny issues making headlines, may be even more important than ever before. Kristen Baas, a certified business performance advisor at Insperity, says recent headlines involving sexual harassment with celebrities and large companies has driven up interest among business owners in having good training programs and well-defined policies. While many of the companies being taken down by sexual harassment allegations are large and public, she says, small and growing firms also must be just as prepared in the event they face an allegation. Baas cited a local company that had just signed on as a client when allegations against film producer Harvey Weinstein were hitting the airwaves. That company, almost immediately after, faced a similar situation: an executive sent an employee a suggestive email that was forwarded to another executive. Insperity was called in to conduct an investigation. The company’s policies, spelled out in its manuals, were unclear, vague and had not been updated in four or five years. Following the investigation, the executive was given a written reprimand and training and, Baas says, the issue was closed. However, she adds, situations like this can be just as catastrophic for small businesses as their larger, more visible counterparts — if not more. It’s illustrative of a company’s need to be prepared to respond. “There is a risk out there and small businesses are just as open to it as big businesses,” she says. “This is happening in our community. In those types of situations, we want to be really respectful to the person who received the email. 22


Establishing a culture

Technology rules

In addition to internal marketing, Korpi Macleod says companies need to take a holistic look at how they are presenting their business and they need to be demanding with their marketing budgets. Korpi Macleod worked with several large advertising agencies before heading to Europe for 10 years. Upon returning, she and her husband bought several Valvoline Instant Oil Change

WORKSHOP: Best practices

“It turns out people will help you just because they want to — all you have to do is buy them lunch.” — Dan Moshe, Tech Guru

locations. Over the years, she says, she and many companies she has observed make the mistake of not defining their culture or their marketing plans. That’s important, she adds, not just externally but internally, as well. If people don’t embrace the culture, if they don’t understand what is expected of them, they cannot work as effectively or sell the company to their maximum capacity. “Culture will kill you or it will make you,” she says. “Your culture will help low performers rise and it will help star performers work better on a team. Culture is just imperative. Everybody in the organization has to be aligned in supporting your business goals.” It will also help companies get employees aligned around business goals and working on the same page … One additional point on marketing, Macleod says: Social media can be a revenue generator “and should be treated as a serious tool in your toolbox.” “People of a certain age are quick to say ‘that’s a young people’s game,’” she says. “It needs to be part of a holistic

CONTACT THE EXPERTS KRISTEN BAAS is a certified business performance advisor at Insperity: 952.960.5360;; JOHN LINDQUIST is senior vice president of commercial lending with Crown Bank: 952.285.2716;; TANYA KORPI MACLEOD is founder and CEO of Macleod & Co: 612.315.5200;; DAN MOSHE is founder and CEO at Tech Guru: 612.235.4895;; BRAD THEISEN, is partner in charge at Eide Bailly LLP: 612.253.6500;;

marketing strategy. It needs to reflect your culture. Your social media is just as important as your website and as when people walk in.” One additional marketing point: Korpi Macleod says people need to avoid marketing myopia, otherwise known as “talking to yourself.” “That’s what happens when you are too close to your marketing and you think Average Joe cares about what you are selling,” she says. “They don’t. You have to make them care. You need to get an outside perspective on your marketing. That’s the biggest thing to avoid.”

Additional lessons learned

Communication wasn’t the only thread. The panelists discussed several other topics, including best and worst practices they’ve observed in small business owners over the years. Theisen and Lindquist both say control of the checkbook can be a risk at times for entrepreneurs, who sometimes go a bit overboard on spending when the company can’t afford it. “Being a business owner does not give you a right to have an ATM card to the bank account,” Theisen says. Adds Lindquist: “That’s probably the biggest mistake we see.” Moshe called on business owners to improve efficiencies and productivity by staying as ahead of the technology curve as they possibly can, as long as they do so in a financially intelligent manner. “Plan it out, invest in it and be pragmatic,” he says. Baas echoed Moshe’s emphasis on technology, indicating that companies doing human resources on paper are prone to dangerous mistakes. She cited a company whose general manager was performing HR duties who let four employees go in the spring, then realized several months in the winter that the firm was still paying their benefits because he missed some paperwork. “Don’t do your HR on paper,” she says. “There are low cost easy entries into bringing technology to the people side of your business.”



catching up by Andrew Tellijohn

Payment technology evolution bringing further growth at Evolve Systems

TIPS 1. Pay it forward. Mentor the younger generation. You learn something every time. 2. Find a mentor who is older, wiser and a little more experienced, just to use as a confidante. 3. Sometimes it makes sense to say no to a client. If, in early meetings, the relationship doesn’t feel right, it’s okay to walk away. 4. Make sure you hire slow and fire fast. Make sure you have the right people on your team. 5. Have a rainy-day fund to pull from when things go wrong. 24


t was February 2007 when Upsize first spoke with Marnie OchsRaleigh, CEO of Evolve Systems, about the point-of-sales terminals the company had started providing for merchants that were relying more heavily on credit card payments. Evolve Systems, then and now, also develops, manages and optimizes websites. Ochs-Raleigh, and her husband, company President Don Raleigh, were convinced that both of those vertical markets would continue to grow. They were right, though Ochs-Raleigh admits being amazed at how fast some of the payment technology is … ahem … evolving. Evolve Systems still does play in both verticals, but that’s about all that has stayed the same. “If you were to ask me 10 years ago, I would not have imagined the difference in how my client engagement looks, in how my staff looks, in how we do business — it’s been a really interesting journey,” she says. With respect to payment solutions, instead of solely focusing on e-commerce, Ochs-Raleigh says the company has also gotten into doing custom software development for businessto-business payment solutions. So, the company has expanded beyond focusing on credit card terminals for the retail environment. Businesses, she says, are accepting more plastic, as well. And governments are more active with purchas-


ing cards that provide a method for paying for small dollar and highvolume purchases. Evolve Systems has done custom development work for clients coast-to-coast setting up the platforms they use for Level 3 business-to-business or business-togovernment card processing. “It’s really allowed us to do some fun things,” she says. “It really is a key differentiator for us now.” And Evolve Systems has had a chance to take part in some significant payment program advancements over the last decade. It helped Mastercard kick off what is now its Masterpass fast-payment digital wallet program that works on desktop, tablet and mobile devices. And Evolve Systems was on the team that helped bring the Europay, Mastercard and Visa (EMV) securityenhanced credit cards equipped with chips to the U.S. “We see that happening in a retail environment as a huge success,” she says. “We expect the rate of fraud is going to decrease quite a bit here in the United States.” The company also had the chance to introduce one of the first pay-atthe-table concepts in the U.S. The technology is widely used in Europe, but in the U.S. restaurateurs were not initially willing to pay for it. “That’s another wireless technology we rolled out,” Ochs-Raleigh says. “The different manufacturers have come to us multiple times with ‘here’s a new technology, please find

Evolve Systems Description: Web development and management company that also provides merchant payment services CEO: Marnie Ochs-Raleigh President: Don Raleigh Founded: 1993 Headquarters: St. Paul Web:

an application where we can do some beta-testing. We’ve had a lot of fun with that.” While there have been many successes, growth has not come without challenges — some of them significant. Evolve Systems barely survived a June 2009 debacle where the Federal Trade Commission, in an effort to eliminate Internet spam and other nefarious online activities, shut down a hosting facility outside San Jose, Calif. that was operated by an Internet service provider accused of hosting and distributing spam, spyware, pornography and other content. There were, however, at least some legitimate customers whose servers were in the facility. Evolve Systems had one there that was hosting about 300 websites and when the facility was shut down, the company lost access to all of them. It took three weeks for the legal process to play out. Eventually the FTC hired a retriever to physically remove Evolve Systems’ server and, Ochs-Raleigh says “For three months, Homeland Security hosted 300 of our websites.” The damage, however, was significant. The company lost a handful of clients in the aftermath. Others who stuck around were paying in advance for work to be done in the future, she says, so the company had the cash

flow it needed to survive. “I don’t wish that on anybody,” Ochs-Raleigh says. But the company did survive and it has enjoyed significant growth in the last decade to the point where it made sense a few years ago to move from a leased office space in Roseville to a purchased office condo in St. Paul. Ochs-Raleigh does not disclose specific financial data, but says revenues are now in the low seven figures. That’s up from between $600,000 and $700,000 in 2006. And Marnie and Don will soon be focusing even more attention on building their business. Their fourth and final child graduates from high school this spring, so there will be fewer activities and sporting events to attend. “We’ve been very active in all of the kids’ sports and their events and they’re very active in the Civil Air Patrol. Being entrepreneurs has allowed us to participate with all of their activities and we haven’t missed a thing,” she says, adding that as soon-to-be empty nesters “We’re looking forward to refocusing a lot of our attention back to the business.” And now, it seems, one of the new ongoing business challenges will be mentoring one of their sons, who two years ago announced his interest in getting involved with the family business, while ensuring that staff doesn’t feel as though there is favoritism taking place. Retirement is some ways off, but Ochs-Raleigh says she and her husband have talked about what an exit strategy might look like if their son remains interested in a few years. “We never anticipated one of our kids wanting to work for us,” she says. “It’s been an honor to be able to have the conversations about business with one of our kids.”

“If you were to ask me 10 years ago, I would not have imagined the difference in how my client engagement looks, in how my staff looks, in how we do business — it’s been a really interesting journey.” — Marnie Ochs-Raleigh CEO of Evolve Systems

Marnie Ochs-Raleigh, CEO of Evolve Systems: 651.628.4000;;



UPSIZE RESOURCE DIRECTORY accounting Cummings, Keegan & Co., p.l.l.p St. Louis Park, MN • Apple Valley, MN 952-345-2500 • Kathy J. Klang, CPA/ABV Business owners in all phases – new and emerging, established, and those planning a succession or exit strategy – rely on Cummings, Keegan & Co., P.L.L.P. for a complete range of tax, accounting and auditing, and business management needs. Clients receive a tailored client experience – driven by client preferences, needs, and goals.

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Bank North American Banking Company

Roseville, 651-483-4521, Michael Bromelkamp Eden Prairie, 952-941-9242, Thomas Pesch

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

We strive to provide an exquisite client experience that is dedicated to building strong relationships while providing a hands-on approach to business consulting. In addition to the traditional CPA services, we provide valuations, employee benefits, HR, and back-office accounting. We also have extensive experience working with start-up companies, mergers, recapitalizations and financing.

Our goal at North American Banking Company is to give business owners all of the banking services they need and make it a great experience. Our bankers are seasoned professionals in all areas of business banking. You will find it’s easy to do business with bankers who are focused on you. We’re not your average bank.

Depend on Our People. Count on Our Advice. SM Member FDIC

advertising • marketing Risdall tel: 651.631.1098; fax: 651.631.2561 John Risdall, Ted Risdall, Tom Wilson, Josh Dahmes Founded in 1972, Risdall Marketing Group is the sixth largest and seventh oldest ad agency in Minnesota. With more Web Marketing Awards than any other agency on the planet in the last four years (not to mention the two Clios we just won), we are the world’s leading interactive agency, as well as the Minnesota leader in industrial, high technology, medical technology and business-tobusiness advertising.



bank Venture Bank 4470 W. 79th St. Circle, Suite 100 Bloomington, MN 55435 763-398-3333 Christine Young, VP & SBA Program Officer Venture Bank is a Business Bank that specializes in finding creative solutions for the loan and deposit needs of business customers. Venture Bank is a Preferred Lender with the Small Business Administration and is one of the most active SBA lenders in Minnesota.


business machines Loffler Companies, Inc.

Innovate. Deliver. 1101 East 78th Street, Suite 200 • Bloomington, MN 55420 952-925-6800 phone 952-925-6801 fax • Jim Loffler — President Loffler is your one call for office technology and services. Our integrated solutions from digital printers & copiers (Canon, Konica Minolta, HP, Lexmark, OCE & Toshiba) to telephones, IT services, dictation, document management software and on-site managed services improve your productivity and bottom line. Our fast, reliable and professional customer service makes Loffler your first choice.

COMMERCIAL PHOTOGRAPHER Tom Dunn Photography 308 Prince Street Studio 242 Saint Paul, MN 55101 651-368-2047 Tom Dunn Tom is a commercial photographer who has been helping businesses tell their unique story with photographs for websites and marketing materials since 2006. Tom works closely with his clients to understand their business and branding strategy and creates images that support their mission and success.

UPSIZE RESOURCE DIRECTORY commercial real estate The Ackerberg Group

EXPORT MANAGEMENT Hollingsworth International

internet marketing Risdall

Lake Calhoun Center, Suite 10 3033 Excelsior Boulevard • Mpls, MN 55416 612/824-2100 • Stuart Ackerberg •

6190 Olson Memorial Hwy, Golden Valley, MN 763-231-1444 • Dick Bottorff, Principal • Jim Thomas, Sales

tel: 651.631.1098 fax: 651.631.2561 John Risdall, Ted Risdall, Tom Wilson, Josh Dahmes

Hollingsworth is an Export Management and Distribution company. We specialize in increasing export sales by developing international markets for US based manufacturers. We offer export management, logistics and overseas distribution. We have bilingual staff on site. Contact

As the world’s leading interactive agency, we offer our clients the most extensive assortment of web tools including Search Engine and Social Media optimization. And when it comes to winning awards, nobody does it better. Since 2007, we’ve won more Web Marketing Awards than any other agency on the planet. And last year, we also won two Clios.

computer consulting Intertech

insurance O’Rourke Agency, Inc.

it managed services Tech Guru — The Caring Technology Company

1575 Thomas Center Drive • Eagan, MN 55122 • Ryan McCabe at or 651.288.7001

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

612.235.4895 -

The Ackerberg Group creates vibrant neighborhoods in Minneapolis’ urban core by combining astute development, renovation, investment, management and brokerage services with passion for social and ecological sustainability and the arts. Since 1964, Ackerberg has created office, industrial, retail, residential and mixed-use projects that have transformed neighborhoods through the development of long-standing relationships with neighbors and tenants alike.

Intertech consultants are leading software developers who focus on more than simply “heads down” programming. We provide comprehensive software services – consulting, project delivery and mentoring – for all leading technologies, most notably Java, .NET and mobile. Intertech consultants are highly experienced and among the IT industry’s top contributors at conferences, technology journals and user groups.

Our agency has provided personal and business insurance services for the past 30 years. We proudly represent a number of outstanding insurance carriers, including Chubb, Metropolitan, Progressive, Travelers and Kemper. Call us for all your insurance needs!

Tech Guru’s Caring Technology Services offering is built for businesses and non-profits with 25-250 employees that want consistent uptime. By being responsive, collaborative, and security-minded, Tech Guru helps organizations maximize returns on IT investments, minimize technology risk, and achieve their strategic visions.

GROW OR DIE Move your business forward with investment capital generation, deep-level network connections and strategic refinement consultation from Brimacomb and Associates. We partner with emerging companies and professional services firms to offer unparalleled access to professional resources, executive suites and financing sources. 612.803.3169 •





mergers & acquisitions Franklin Partners

SECURITY Floyd Total Security

1000 International Centre, 920 Second Avenue South Minneapolis, MN 55402 612-339-8131 | 800-752-4297 | Contact: Jesse Beier

222 South Ninth Street, Suite 3050 Minneapolis, Minnesota 55402 612-436-0891 Chip Myers

9036 Grand Ave S. Bloomington, MN 55420 952-881-5625

Looking for a business lawyer who speaks plain English and not legalese? Contact Lommen Abdo where we focus on small, medium-sized, family and closely held businesses. Our attorneys operate like your outside general counsel – providing you effective legal advice and sound business strategies. We are upfront about our costs and will work with you to budget legal expenses.

Founded in 1994, Franklin Partners achieves exceptional results for established and growth-oriented private companies in mergers and acquisitions.



law firm Winthrop & Weinstine, P.A.

networking resources The Network Connect


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

13643 Duluth Circle Apple Valley, MN 55124 612-865-9933 • Contact: Dick Sommerstad

6900 Shady Oak Road, Suite 210 Eden Prairie, MN 55344 952-944-3303

The Network Connect is a business referral and resource network that serves as a catalytic gateway to new opportunities for businesses, investors, talent, and service providers. We bring technology, talent, and capital together. Contact us today to get connected.

We help business owners develop and implement strategies that improve financial results. Our holistic approach to consulting involves strengthening value drivers; this leads to enhanced enterprise value, minimized taxes, and maximized net proceeds upon transition out of the business.

LENDER Connect2Capital

SBA LENDER Highland Bank


801 Nicollet Mall, Suite 1700W Minneapolis 55402 Contact: Maddie Larson,

Rick Wall, CEO | 952.858.4753 Jay Hammond, President | 952.858.4810 952-858-4888 |

1000 International Centre, 920 Second Avenue South Minneapolis, MN 55402 612-339-8131 | 800-752-4297 | Contact: Cameron Kelly

Winthrop & Weinstine has a long tradition of representing entrepreneurs and rapidly growing private and public companies across the Upper Midwest and the United States. Our mission is to help fuel the growth of great companies. We are committed to providing outstanding service, sound advice and strong execution. We offer flexible fee arrangements including fixed fees, “success” fees, hourly fees, blended fee arrangements and performance-based agreements.

Connect2Capital is a non-profit lender with people right here in your community who will work with you to find the best loan for your small business. We offer small business loans from $50,000-$4 million for permanent working capital, owner-occupied commercial real estate and leasehold improvements, business equipment, and refinancing existing debt.

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

You owe it to yourself, your family, your co–owners and your employees to have a business succession plan in place in the event of incapacity or death. Every business and every family is unique and your succession plan needs to fit your goals for your business and your family. Contact us to design a plan that meets your goals.

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mailing services Braemar Mailing Service Inc.

SBA lender Venture Bank

venture capital Brimacomb + Associates

7379 Washington Ave S • Edina, MN 55439-2417 tel: 952-767-0300 fax: 952-767-0345

4470 W. 79th St. Circle, Suite 100 Bloomington, MN 55435 763-398-3333 Christine Young, VP & SBA Program Officer

TCF Tower, Suite #1600, 121 South Eighth St., Minneapolis, MN 55402 612-803-3169 * Rick Brimacomb, Chief Strategy and Relationship Officer

Venture Bank is a Business Bank that specializes in finding creative solutions for the loan and deposit needs of business customers. Venture Bank is a Preferred Lender with the Small Business Administration and is one of the most active SBA lenders in Minnesota.

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.

Since 1985 business mailers who value personal service and meticulous attention to detail have found one company rich in both. We are postal experts and list brokers who offer a full service lettershop and data management services. Your mailing, unique or ordinary, in large quantities or small, receives Braemar-style attention to detail. We are proud of the work we do and the customer service we provide.





your IT team from printer problems.

Does your IT team spend more time on printer maintenance and support than they do on mission critical tasks and strategy? FREE your team from printer headaches with a Managed Print Services program. Service. Supplies. Controlled Costs. One Vendor.


Learn more at • 952.925.6800

Upsize Minnesota January/February 2018  
Upsize Minnesota January/February 2018  

Upsize is a magazine and online resource center with a single mission: to help Minnesota’s small-business owners build bigger and more profi...