Upsize Minnesota September/October 2022

Your future in franchising?

Starting your own franchise or buying into another can bring success and build wealth.

HERE’S HOW

Catch up with the duo that expanded Dunn Brothers Coffee

Learn from experts on shoring up your supply chain efforts

PAGE 12

Cover story

Franchising tends to thrive during times of uncertainty, but how do you do it right?. Franchisors who have expanded their businesses through franchising and franchisee consultants who have started their own businesses share their secrets to success

BY ANDREW TELLIJOHN

Cover photograph by Tom Dunn

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Founder’s Forum: Nice Healthcare CEO Thompson Aderinkomi wants to exact revenge against traditional healthcare by introducing a simpler, lower-cost system that works for everyone

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

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

Postmaster: Send address changes to Upsize Minnesota, PO Box 23238, Richfield, MN 55423-0238 Vol. 21 No. 5

BUSINESS BUILDERS

PAGE 6

ACCOUNTING

Learn how to evaluate salesperson performance and adjust their compensation accordingly by Jayme Shuda, Mahoney | CPAs and Advisors

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CONTRACTING

Paadio Consulting and the city of Brooklyn Park have collaborated on a certification program prepping small businesses to bid on projects by Christy Morrell-Stinson, Paadio Consulting

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LAW

Better understand the Minnesota Business Corporations Act and how it treats shareholders in dispute by Aram Desteian, Bassford Remele PA

COLUMNS

PAGE 18 FEATURE

Small companies may be even more vulnerable than larger counterparts to supply chain challenges. Experts share thoughts on how to mitigate these challenges by being more strategic about your logistics needs

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CATCHING UP

Skip Fay and Chris Eilers acquired Dunn Brothers Coffee 20 years ago, just as Upsize Minnesota was being established. Where are they now and how did they grow the chain to more than 60 locations

PAGE 28

BACK PAGE

John Arms co-founded Voyageur U to help those looking for work transition to fractional executive jobs. Now he’s written a book about it

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Fighting for cheaper healthcare—and revenge

The CEO of Nice Healthcare zooms up on his one-wheel elec tric scooter, removes his helmet and plumps up his dreadlocks for a photo. Then Thompson Aderinkomi describes his mission, to simplify healthcare and cut its cost in half.

“The ongoing purpose of the business is to get the most possible people the best possible healthcare,” he says. Then he describes his formative experience with the U.S. system. His young son had a fe ver. He went back and forth to the doctor, only to finally get a correct diagnosis of pneumonia and a quick cure of antibiot ics the fourth time. Then he got the bill: $664.28.

“I said, ‘I’ve had enough. I’m going to see what they have here,’” and he barged into the clinic’s rooms. An X-ray machine had a list price over $100,000. “I Googled and saw X-ray machines for $10,000 and it fit in my car. And it’s a Prius, too.” Many rooms and their cupboards were empty.

“I walked back to my wife and said, ‘I can do this. I can create a clinic that’s better than this, that costs half as much.’ But how do you do it? You have to take things away.”

First to go: The building. “Only 30 percent of primary care needs to be done in person,” he says, adding that Nice’s providers go to people’s homes for that. The rest is done via phone call, video visit or a chat. “That’s how the unit econom ics work.” Nice Healthcare doesn’t take government reimbursement, so the “armies of people filling out those forms” are gone as well.

And Nice Healthcare takes what he calls an “ethical margin” on lab tests and prescription drugs. The industry stan dard markup “is 200 percent to 1,000 percent,” on drugs. “We’re passing these savings to patients and we deliver it to them for free.”

Fresh from a $30 million Series A fund-raising round, the 5-year-old Nice Healthcare now serves 500 clients in 12 states and employs 200 people. Insurance

brokers sell the plans to small- and midsized businesses as a benefit on top of a traditional health plan. But his previous company with the same business model is defunct.

“I worked on it for three years, raised $8 million and then the investors kicked me out of the company and proceeded to destroy the company,” he said. What did he learn from that? “Don’t work with people that want to do bad things to you.” How would you know in advance? “You can’t know,” so the only route is to be yourself.

“The only thing that makes love pos sible is to open up your heart. Same with changing the world,” he said. Another founder told him, “You should be your authentic self so people can find you.”

Aderinkomi’s parents immigrated to Minnesota from Nigeria. He was born here. He has a master’s degree in biosta tistics and an M.B.A. from the University of Minnesota. But he talks plainly, not like a policy wonk.

“I believe healthcare is simple, but everyone wants it to be complicated,” he says, citing insurance groups whose executives are paid millions. Why does he keep fighting?

“The healthcare system has been abusing the people of this country for decades. I want to exact revenge.”

—Beth Ewen founding editor bewen@upsizemag.com

A client-first and conflict-free philosophy: that’s how JNBA Financial Advisors has operated since our founding days over 40 years ago. Since we began tracking in 2001, we have been fortunate to maintain a client-retention rate of 97 percent. And, Barron’s has ranked JNBA and CEO Richard S. Brown #1 in Minnesota on its Top 1,200 list for two consecutive years.

To learn more about how advice driven by advocacy®could help you and your family, begin a conversation with our team by calling us or visiting JNBA.com.

We develop and rely on best practices to help create a tailored experience for all our clients. Whether you’re working with me or any advisor on the team, you receive the same commitment to and a that JNBA is to nor the achievement of any professional designation, certification, any professional organization, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if JNBA is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (see link as to participation criteria/methodology, to the extent applicable). Unless expressly indicated to the contrary, JNBA did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of JNBA by any of its clients. ANY QUESTIONS: JNBA’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by JNBA Financial Advisors, LLC (“JNBA”)) or any non-investment related services, will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation or prove successful. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement. Please see important disclosure information at www.jnba.com/disclosure.

 BUILDERS accounting

Using income statements to negotiate sales team compensation

by Jayme Shuda

Experienced sales profession als are tough negotiators. They will use those skills when negotiating a sales position or contract. However, the skills that make them star performers may also disadvantage a company in protecting its profitability.

A summary-level income statement doesn’t break down the bottom-line costs of acquiring new business. If in creased revenue, or top-line, is the only trigger for paying out sales commis sions or bonuses, this can sometimes result in eroding profitability through bottom-line sales costs.

TIPS

1. All employees, including salespeople, come with costs. Clarify what each salesperson is truly bringing to your bottom line by going beyond numbers in a summary income statement.

2. Paying commissions based on gross profit instead of total sales helps hedge against heavy discounting, which helps close deals but can quickly erode the company profit margin.

3. Flying first class, constantly traveling and regularly wining-anddining clients can win business, but also add to variable costs that can erode profit margins.

4. Any small business accounting software will allow you to generate an “Income Statement by Salesperson” report that can help you balance individual’s expectations and the company’s goals.

5. Having income statement trend data can assist in conversations about curbing spending per salesperson or in adjusting specific compensation agreements.

What is your break-even?

All employees bring a cost to doing business. Salespeople may have special fixed costs as part of their role to at tract and convert new customers. To clarify what each salesperson is truly bringing to the bottom line, break down the numbers by viewing fixed and vari able costs per salesperson. Your fixed costs could include:

• Base salary (paid regardless of sales volume)

• Benefits

• Depreciation on a company vehicle

• Other negotiated perks

Say, for example, your total fixed costs for a particular salesperson are $250,000. Let’s also assume that the typical gross profit margin on sales is 20 percent. This means that the sales person will have to generate $1,250,000 in sales before the company will break even on its investment. This is the real ity before even considering commission or other variable costs. This calculation alone can assist you in setting commis sion structures. You will understand

the level of sales required to achieve “break-even,” and therefore set the commissions to pay out only after the salesperson achieves break even. In some cases, commission is paid

FIGURE 1

Salesperson 1

Sales $ 1,250,000

Cost of Goods Sold $ (1,000,000)

Gross Profit $ 250,000 20%

Fixed Costs — Salary, Benefits, Depreciation $ (250,000)

Net Income $ (0)

from the first dollar of sales. If this is the case, the break-even sales dollars calculation changes a bit, as you can see in Figure two. That same salesper son from Figure one now has to reach $1,388,888 in order for the business to achieve break even because the busi ness is paying 2 percent on every dollar of sales.

FIGURE 2

Salesperson 1

Sales $ 1,388,888

Cost of Goods Sold $ (1,111,110)

Gross Profit $ 277,778 20%

Fixed Costs — Salary, Benefits, Depreciation $ (250,000) Commissions $ (27,778)

Net Income $ (0)

Other commission structures pay based on gross profit instead of total sales. This structure helps to hedge against heavy discounting, which helps close deals but can quickly erode the company profit margin. It also helps

FIGURE 3

Salesperson 1 Salesperson 2

Sales $ 2,100,000 $ 1,900,000

Cost of Goods Sold $ (1,680,000) $ (1,520,000)

Gross Profit $ 420,000 20% $ 380,000 20%

Fixed Costs — Salary, Benefits, Depreciation $ (250,000) $ (250,000)

Commissions $ (42,000) $ (38,000)

Other Variable Costs $ (150,000) $ (50,000)

Net Income (Loss) $ (22,000) -1% $ 42,000 2%

align the salesperson’s goals with the company goals — to maximize profit to the bottom line. In order to pay com missions on the gross margin model, you just need to have an accurate accounting of the gross margin on the jobs that each salesperson sold.

Variable costs can erode profits

As you explore your data, you may find that your star performers are cost ing you in higher-than-average over head (flying first class on every flight, travel expenses, wining-and-dining prospects) while other great players are creating big opportunities with less month-to-month expense.

This is most apparent when review ing variable costs such as travel, trade show expenses, fuel and entertainment per customer — all of which eat away at your profit margin. As you can see, this begins to create a full picture of the profitability of a particular salesperson by accounting for the variable expenses associated with that person’s approach to closing deals.

Of course, some companies make a conscious decision to incur some losses on the front end. This is common when a company is breaking into a new market or building a new book of busi ness. If this continues to trend in the red after the agreed upon sales ramp-

up, however, you may have a problem. Breaking down the income and expens es by salesperson on a regular basis will allow you to see not only the monthly results, but the lifetime trend or total of your investment gain or loss.

Having income statement trend data at your fingertips can ultimately assist in conversations to curb variable spending per salesperson. You may also choose to adjust your budget or renegotiate a specific compensation agreement. These decisions are critical when your sales team is pivotal to ac celerating sales or helping to transi tion an owner out of the company. You need to balance each individual’s expectations and behaviors against the company’s goals.

Any small business accounting software will allow you to generate an “Income Statement by Salesperson” report. To identify trends and translate the data for those tough negotiations with your salespeople, you may need to seek a CPA level business adviser.

Be ready with the facts to back up your decision to adjust base pay or commissions while still providing enough incentive for your competitive salespeople to perform at their best. Use trending income statement sales data for mutual benefit of the sales team and the business for growth and higher business value.

Contact: Jayme Shuda is a partner on the Business Solutions Team at Mahoney | CPA and Advisors: 651.281.1878; jshuda@mahoneycpa.com; www.mahoneycpa.com, in/jayme-shuda-cpa-4651baa/

“Be ready with the facts to back up your decision to adjust base pay or commissions while still providing enough incentive for your competitive salespeople to perform at their best.” Jayme Shuda Mahoney CPA

Preparing small businesses for local contracts

by Christy Morrell-Stinson

TIPS

1. The Procurement-Ready Enterprise Certification program was developed as a tool for economic inclusion with the intention of providing transparent and inclusive contracting opportunities for local small businesses

2. It’s a steppingstone for more robust certifications required by larger corporations and government agencies at the state and federal level

3. Program participants go through a discovery phase that identifies areas where they need development and can participate in trainings aimed at targeting those needs

4. Purchasing decision makers consulted during the creation of this program emphasized the importance of building relationships and trust with them as they seek new partners

5. Readying your company to consistently compete for contracts and complete them successfully includes mastery of several specific business systems in areas addressed by the program

Paadio Consulting and the city of Brooklyn Park’s Economic De velopment Authority have created a grassroots-level certification program aimed at preparing small businesses to become a vendor for larger entities.

The Procurement-Ready Enterprise Certification (PRE) program provides a pathway to contracting for small and micro businesses, freelancers and inde pendent contractors.

The program was developed as a tool for economic inclusion with the intention of providing transparent and inclusive contracting opportuni ties for local small businesses. It is a steppingstone to prepare for more robust certifications required by larger corporations and government agencies at the state and federal level, while it provides a more visible and accessible pathway for local entrepreneurs that have been historically underserved, under-reached, invisible, marginalized and underestimated.

Program participants go through a discovery phase that identifies areas where they need development and pro vides modular training workshops that zoom in on those areas. What makes this program different is the hands-on follow up in the form of navigation sessions where participants can bring their questions and challenges and de termine their next steps. They also get matched with resources and experience a guided journey for developing each critical area of readiness to prepare them for success in selling to larger entities.

Each business owner is equipped with a “Pre Kit” that contains a selfevaluation tool to build upon their dis covery work and guide them to develop a step-by-step, week-by-week dynamic roadmap to readiness for connecting and achieving contracts, and/or for becoming an easily found vendor when employees need to purchase something. Once the business owner has achieved the minimum standard in each of eight layers of readiness, they can be matched with local contracts.

What does it mean to be “procure ment-ready” or “contracting-ready”? Readiness requires specific business systems to be developed and strength ened to be able to effectively participate in the local supply chain or contracting marketplace and successfully perform contract work.

The eight layers of readiness

1. Basics ready. A stable business foundation must be in place to support sustainable growth.

2. Search ready. Purchasers and procurement staff must be able to find you easily.

3. Networking ready. Build key relationships with the most likely targets in a credible manner. Learn about what products or services they need, when and why, what they expect from bid to delivery to reporting and how they make vendor selections and purchasing decisions.

4. Bid ready. Be prepared to put a professional bid, quote, or proposal together quickly that matches the expectation of the decision maker.

5. Contract ready. Have contract templates ready that protect you and the client or customer. Negoti ate in advance the clear and spe cific terms and conditions of what you will get paid, when you will get paid and how you will get paid.

6. Invoice ready. Utilize an indus try-standard accounting system that is right-sized for your small or micro business and that allows you to quickly build and send a professional invoice to the right contact. Be ready to receive pay ments and realize what kinds of banking delays may affect you.

7. Delivery ready. Keep your prom ises and deliver with excellence. You need a good track record in order to get additional contracts. Ask for recommendations for a job well done. You’ll want to plan BUILDERS contracting

ahead for what capacity is going to be required to stay on track and on time with your contract deliver ables such as what your statement of work calls for.

8. Money management ready

Be ready in advance to handle increased revenues and business owner income. Consult with a CPA who is familiar with tax strategies, not just tax preparation. Engage in strategic financial planning with an adviser who is not held captive to a specific set of products but rather can provide objective guid ance.

The contracting landscape is as varied as the small business landscape. For example, some larger entities have centralized purchasing systems. Some will require “Preferred Vendor” status in order to purchase goods or services from you, but it also may be that only certain types or amounts of purchases require it. This depends on the entity’s policy and may vary from one department to another, so be sure to do your research. That’s where good networking helps.

For another example, some city or county procurement policies may require a state-level certification, while others do not. Get to know your city and county and find out what they require. Do not hesitate to engage the economic developers in conversation around policy and make suggestions (advocate strongly) for opening more flexibility to allow for more equitable economic inclusion. Writing letters and booking time to talk is an investment that can result in transparent dialogues and policy changes. Again, be sure to do your research and build your team of allies.

Brandee McHale, head of community

investing and development at Citi, said in 2017 that “The buying power of cit ies is integral to empowering the local ecosystem … and to recirculate wealth versus allowing it to be siphoned off.”

Consider membership in commu nity-based organizations, associations and alliances, such as the Independent Business Alliance and the National Federation of Independent Business. These organizations may or may not have formal advocacy programs in place but are a great starting point to build coalitions around the call to do business with local independents and especially with those who have been invisible, underestimated or marginal ized in regional economic development

work.

The number one theme that came up during discussions with purchas ing decision makers as this program was being created was the critical importance of relationships and trust. Ideally, meet-and-greet types of events can be a great way to get introduc tions to purchasing decision makers and procurement professionals in your community.

If you build these layers of readiness into your business, your enterprise will be strengthened in many ways. Achiev ing contracts with big clients or selling to larger customers will become easier and more natural to you and your team. You can overcome barriers faced by small local businesses and become a supplier of choice in your community.

Contact: Christy Morrell-Stinson is a business strategist and intermediary and a consultant for Paadio Consulting: 612.321.8390; cmorrell@kw.com; www.paadioconsulting.com; in/cmorrellstinson

“The number one theme that came up during discussions with purchasing decision makers as this program was being created was the critical importance of relationship and trust.”

Christy Morrell-Stinson

Paadio Consulting

BUSINESS BUILDERS law

Four things closely held shareholders should know

by Aram Desteian

TIPS

1. In the event of disputes, the Minnesota Business Corporations Act gives courts broad authority, permitting them to grant aggrieved shareholders any equitable relief it deems just and reasonable in the circumstances.

2. The relationship between partners is one of mutual trust and confidence. Subsequently, shareholders that do not act in good faith violate the fiduciary duty imposed by law.

3. The concept of “reasonable expectations” has been applied broadly to protect minority shareholders’ rights, including the right to employment. The absence of an express or implied agreement, Minnesota law presumes that employment for an indefinite term is at will.

4. The initial guiding post for resolving shareholder disputes is a shareholder agreement. The document provides a procedure for dealing with disagreements that occur.

5. One of the most significant remedies available to minority shareholders is a motion for mandatory buy¬out of shares. The MBCA provides six circumstances in which the court may order such a sale.

Small businesses are the foundation of our economy. Commonly formed by friends and relatives, closely held corpo rations are often the result of combined capital and personal interest. But what starts off as an exciting entrepreneurship journey often ends up in emotionally charged disputes between sharehold ers who no longer have the same vison for their business. When these disputes occur, it is important for shareholders to understand their rights and relief available under the Minnesota Business Corporations Act (MBCA), Minn. Stat. 302A.1

The MBCA, defines a “closely held corporation” as a corporation which does not have more than 35 sharehold ers.1 The MBCA gives courts broad authority, permitting them to grant the aggrieved shareholder any equitable relief it deems just and reasonable in the circumstances.2

So, what exactly does the MBCA provide and how have courts interpreted equitable relief for shareholders? Here are four points critical to understanding what shareholders can legally expect.

1. Fiduciary duty

All shareholders in a closely held cor poration owe one another the duty to act in an honest, fair and reasonable manner in the operation of the corporation.3 Courts acknowledge that Minnesota law imposes the highest standard of integrity and good faith in mutual dealings.4

The Minnesota Court of Appeals addressed the high standard of integ rity in Evans v. Blesi where two college classmates and close friends formed Blesi-Evans Co. as co-owners and equal shareholders. Unfortunately, this duo faced a challenge when Evans trans ferred a single share of stock to Blesi thereby giving him the majority interest. Following the transfer, Blesi berated

1 Minn. Stat. § 302A.011 subd. 6a (2021

2 Id. § 302A.751, subd. 1

3 Id. § 302A.751, subd. 3a

4 Fewell v. Tappan, 27 N.W.2d 648 (Minn. 1947)

Evans, demanding and ultimately receiv ing Evans’ written resignation from employment and consent to change the corporate structure. Alleging breach of fiduciary duty, Evans sought relief under the MBCA. The Court held that the high standard of integrity imposed on shareholders rendered one owner’s acts of secretive planning to oust his partner, verbal abuse and coercion of their resig nation a violation of the fiduciary duties owed within a close corporation.5

The relationship between partners is one of mutual trust and confidence. Subsequently, shareholders that do not act in good faith violate the fiduciary duty imposed by law.

2. Right to employment

In ascertaining equitable relief, the MBCA provides that courts take into consideration the reasonable expecta tions of shareholders as they exist at the inception of and throughout the share holders’ relationship with the corpora tion and with each other.6

The concept of “reasonable expec tations” has been applied broadly to protect minority shareholders’ rights, including the right to employment. In Pedro v. Pedro, the Court defined “reasonable expectations” in that case to include lifetime employment.7

Pedro involved a family-owned busi ness equally owned by three brothers. After finding discrepancies in the corpo ration’s financial records and continuing with an investigation, one of the share holder brothers was fired, leading him to seek dissolution of the corporation. The Court held there was a violation of an implied agreement to provide lifetime employment because the reasonable expectations of a shareholder include a job, salary, a significant place in manage ment and economic security.

However, in the absence of an express

5 Evans v. Blesi, 345 N.W.2d 775 (Minn. App. 1984)

6 Minn. Stat. § 302A.011 subd. 3a (2021)

7 Pedro v. Pedro, 489 N.W.2d 798 (Minn. App. 1992)

or implied agreement, Minnesota law presumes that employment for an in definite term is at will. In a more recent case, the Minnesota Court of Appeals focused on whether shareholders acted in a manner “unfairly prejudicial” to another shareholder.

In Gunderson v. Alliance of Computer Professionals, the plaintiff-shareholder signed corporate agreements permitting the involuntary withdrawal of sharehold ers by 3/4 vote of shareholders.8 The Court held that the corporation did not engage in unfair prejudice toward the plaintiff-shareholder by voting him out as an officer and offering to repurchase his stock consistent with the buy-sell agreement.

These two cases demonstrate that a shareholder in a closely held corporation may have a right to permanent employ ment, but that the analysis is highly fact specific.

3. Mandatory buy-out

One of the most significant remedies available for minority shareholders is a motion for mandatory buy¬out of shares. The MBCA provides six circum stances in which the court may order the sale of shares held by a shareholder. The circumstances involve director deadlocks, fraudulent, illegal or unfairly prejudicial behavior, extreme division of shareholders impacting voting power, wasted corporate assets and expired duration period.9

In a court ordered buy-out, the purchase price for the shares is the fair value of the shares as of the date of commencement of the action or as of another date found to be equitable by the court. However, if the parties have

8 Gunderson v. Alliance of Computer Profession als, Inc., 628 N.W.2d 173 (Minn. App. 2001)

9 Minn. Stat. §302A.751, subd. 1 (2021)

established a price for the shares in the corporation’s bylaws or shareholder agreement and the price is reasonable, the court may order the sale on those terms.

4. Shareholder disputes

While there are many reasons for which a shareholder dispute may arise, the initial guiding post for resolution is the shareholder agreement. Reviewing the company’s governing documents provides shareholders with a procedure to follow when disputes among share holders occur. Absent an agreement, the MBCA permits judicial interven tion allowing courts to grant equitable relief deemed just and reasonable in the circumstances. Because the court’s con sideration is broad, it’s important for corporations to take preventative steps to avoid exposure to minority share holder claims. Seeking independent legal counsel to advise the company early on can provide corporations with guidance as to business practices that are aligned with the fiduciary duties imposed on shareholders.

The relationships among sharehold ers are complex. The law requires a high level of loyalty, honesty and transpar ency. Outside counsel with experience litigating these issues can be immensely helpful in navigating these requirements and minimizing the company’s risk.

Bassford Remele Business Litigation Attorney Casey Marshall, Shareholder Aram Desteian, and Law Clerk Olivia Liz-Fonts all contributed to writing this article.

Contact: Aram Desteian is a shareholder at Bassford Remele: 612.746.1088, adesteian@bassford.com, in/aram-desteian-4461612; Olivia Liz-Fonts is a law clerk at Bassford Remele: 612.376.2657, olizfonts@bassford.com; in/olivia-liz-fonts-3a911884; and Casey Marshall is a business litigation attorney at Bassford Remele: 612.746.1090, cmarshall@bassford.com, in/casey-marshall-38009962

“While there are many reasons for which a shareholder dispute may arise, the initial guiding post for resolution is the shareholder agreement. Reviewing the company’s governing documents provides shareholders with a procedure to follow when disputes among shareholders occur.”

Aram Desteian

Bassford Remele

FINDING IT

IN FRANCHISING

Displaced workers discover freedom in buying, building business

Todd Peterson has owned or run a number of businesses throughout his career. He was the CEO of Chippewa Springs Water for five years and owned Underwater Adventures at the Mall of America, to name a couple.

During the height of the COVID pandemic, he was considering his next career move. He started looking into franchising after learning that quick service restaurants were thriving while much of the food and beverage industry was struggling.

Ultimately, in November 2021, he instead chose to ac quire Happy & Healthy Products Inc., a 30-year-old whole sale healthy snack company. He, the franchisor, focuses on creating a strong line of products. His franchisee partners sign up to build a U.S. market, helping get the company’s products into institutions, including hospitals, golf courses, grocery stores or others, depending on what fits that geo graphic area.

“The wholesale distribution business just really rang true to me,” says Peterson, who runs the Florida-based business

from his office in the Twin Cities. “A lot of my prior acquisi tions have involved wholesale distributors, mainly through the beverage industry.”

With Chippewa Springs Water, for example, he built a business that involved bringing five-gallon jugs of water to homes and businesses around the Twin Cities. He grew that from eight trucks to 20 and learned logistics along the way.

“It’s something I can share with these franchisees as they set out to create their own distribution businesses,” he says of his new role leading Happy & Healthy Products.

Find the right fit

Peterson and others say there is good business to be done in franchising, either as a franchisor or franchisee. But it’s im portant that people take the time to find the business model fit for them. He initially looked at restaurants, but quickly realized it was expensive upfront just to start a buildout. Then, upon opening, it’s a seven-day-a-week job that would have required hiring a bunch of employees. He wanted more flexibility and the ability to take some vacations.

Todd Peterson acquired Happy & Healthy Products Inc., a wholesale snack franchisor, hoping to expand his franchisee network and widen the product reach reach

by Andrew Tellijohn photographs by Tom Dunn

COVER STORY

“It happened to be one of the worst markets ever for try ing to hire people,” he says.

Most of his franchisee partners keep their business as sole proprietorships or work with family members. They aren’t looking to add a ton of trucks or employees. They can set up reasonably flexible delivery schedules and the products, which range from healthy cookies to meat sticks to frozen fruit bars, are supplied for them “so they are in business without having to do all that work for them selves,” he says.

Explore your options, find your passion

When Peterson was exploring Happy & Healthy Products he spoke with John Francis, a franchising adviser with 30 years of experience. Francis, also known as Johnny Fran chise for his years of experience in the industry, owns Next Level Franchise. He says franchising has mostly stayed strong through the pandemic, often drawing in people who were in between jobs and wanted more control over their lives.

But getting into franchising also is different from just opening a business on the street. For potential franchi sors, it can help significantly speed up a company’s growth. However, not every model is a good fit for it and doing it too soon, Francis says, can be disastrous. He suggests “build another one.” It takes three units, he says, to have all the manuals, schedules, checklists and other information franchisees will need to successfully replicate your model. “Once you’ve got three successful units as an operator/

CONTACT:

LUCY DIVINE is a FranChoice consultant: 952.470.9284; ldivine@franchoice.com; www.franchoice.com/ldivine; in/lucy-divine

JOHN FRANCIS is a franchising consultant at Next Level Franchise: john@johnnyfranchise.com; www.johnnyfranchise.com; in/johnnyfranchise

TODD PETERSON is executive chairman at Happy & Healthy Products Inc.: www.happyandhealthy.com; in/springhouse

JIM RUNYON is a FranChoice consultant: 651.246.7974; jrunyon@franchoice.com; www.franchoice.com; in/jim-runyon-f2i

STEELE SMILEY is CEO and founder of international wellness brands operated under Steele Brands: franchise@crispandgreen.com; www.crispandgreen.com/franchise

owner, now you’re ready to franchise because you’ve got the experience of opening, of training, the marketing, the startup, the whole experience of opening new units,” he says. “A lot of people franchise too early. I say the first unit is an ac cident. The second one is a coincidence. You got lucky again. The third one, now you’ve got a pattern.”

To potential franchisees, Francis says don’t try to be an entrepreneur.

“You buy a franchise to go implement that model,” he says. “If you are a real entrepreneur that wants to create something completely new and make it yours, do not buy a franchise.”

Work with people you trust, do your homework, find a business you like. But don’t try to change up the system.

Then be ready to work hard and be responsible for your results.

“Like any other business owner, you’re responsible for what happens, good or bad, right or wrong, easy or hard – it’s never easy — you’re the owner. It’s not their fault if you fail,” he says. “You have to be responsible, resourceful, committed. You’ve got to work your tail off.”

Capital and communication

One of the state’s most successful franchisors, Steele Smi ley, grew a fitness business from 900 to 2,800 stores span ning 25 countries. He sold that and now owns Steele Brands, which is growing three restaurant brands – Crisp & Green, Stalk & Spade and Paco & Lime – through franchising.

And it’s working. Crisp & Green, for example, is opening a new restaurant every six days.

“Franchising is a great way to grow,” Smiley says. “It’s a very specialized way to grow. There have only a few people in U.S. history that have built brands that have spanned the globe in 20-plus countries, especially in the food business.”

So, what does it take? Relationships are how you build in franchising, Smiley says.

“What most people don’t realize is when you are a young business trying to start as a franchisor, people are largely buying the executive and they are buying who is on that team,” he says. “People are nervous to select a young franchi sor who has never done it. It’s one thing to sell someone a license, it’s a whole other thing to support that person and open that store and make that store profitable. Your journey only starts when you sell that license.”

Having the right team in place to help and communicating with franchisees regularly also is important, he says, adding that he communicates weekly with his partners. “It’s not a sign them up and then be done.”

On the franchisee side, Smiley sees undercapitalization as the biggest risk. A lot of franchisees have great passion for a brand. Smiley says running a growing business requires

COVER STORY

Happy & Healthy Products Inc. products range from healthy frozen fruit bars to cookies and other novelties. Franchisees sign up to get them into various markets

money and not everyone who wants to be a franchisee has the resources necessary to do so.

“A lot of new franchisors tend to pick anyone who will write them that initial check,” he says. “Unfortunately, most go into that category of ‘sold, not opened,’ which is not where you want to be.”

Doing the homework

There are many franchise organizations and consultants potential franchisees can use to seek assistance in finding the right business for them. One is FranChoice, an Eden Prairiebased consultancy. Two of the organization’s consultants, Jim Runyon and Lucy Divine, agree that upfront research is key in

finding the right business.

Divine grew up around franchising. Her father was a franchisee and she and her husband became franchisees in the Great Clips system, at one point owning 26 salons with more than 200 employees.

“Business ownership is really important to me,” she says. “So many people think about it, but they just don’t know how to begin the process. They don’t know how to begin the process of evaluating a franchisee or a franchisor or figuring out who they should be talking to.”

Divine says when she bought into Great Clips it wasn’t because she had any particular interest in hair. She was never a stylist, but she thought the company had a good business system in place. Potential franchisees, she says, need to explore the back-of-house systems of businesses they are considering buying into and make sure they are steady and a fit with their own personal goals.

That involves looking at the initial investment, the real estate, marketing and recruitment efforts that are in place to assist in their growth and the alignment between their

Steele Smiley, CEO and founder of Steele Brands, previously built and sold a franchised fitness chain. He now has three healthy restaurant concepts growing through franchising

COVER STORY

personal goals and those of the franchisor.

“I can’t tell them what to do,” Divine says. “I don’t try to lead anyone to any particular franchise. I want to help them figure out how to use the infor mation they are getting to make a good decision for themselves.”

There are a lot of op tions available, she says. Explore them. Find the business that best fits your needs. “It’s a complicated process. I don’t think it’s something you should jump into in a couple weeks. I don’t think you can.”

While complicated at times, Runyon says franchising has never been more popular. “If COVID taught us any thing, it’s that life is too short,” he says. “A lot of people don’t want to work 40 to 60 hours a week … and want to find more fulfillment out of life and out of their work. They’re looking at franchising.”

He puts his clients through a process aimed at helping winnow down a large number of options to just a few. He’ll start with a couple hundred possible brands across nearly three dozen industries and funnel it down based on their feedback.

Whether it’s FranChoice or another consultant or expert, Runyon suggests not trying to navigate the vast ex

panse of opportunities alone. “Take the free advice,” he says.

Potential franchise entrants need to also keep in mind that success doesn’t come just from finding the right concept upfront. That’s just when the real work starts. Even though you’re not going to reinvent the wheel in franchising, there still are areas in which you can set your own course. But you should still reach out to other franchisees within the system for feedback before proceeding to see what has worked and what hasn’t for them.

Many franchised companies have advisory councils where people can share ideas. “One of the benefits of buying into a franchise is you’re not in it by yourself,” he says. “There are other people who are going through it with you.”

SUPPLY CHAIN STRAIN

Multiple partners, strategic focus upfront can reduce logistics-related stress

For years, many companies have given their supply chain little thought. They had their suppliers, they had the product they needed and if they needed it more quickly, they might just have to pay a little bit more to get it fast.

The COVID-19 pandemic blew up the reliability of those shipments, however, making it harder for every one to get what they needed. Global strife in China and Ukraine followed by heavy inflation and a potential recession has furthered the strife to a point where many companies have closed and others have struggled.

Nearly two-thirds of respondents to a study conduct

by Andrew Tellijohn

ed jointly by the Association for Supply Chain Manage ment (ASCM) Twin Cities Chapter and Grow Minne sota, the economic development arm of the Minnesota Chamber of Commerce, indicated that bottlenecks or delays and cost increases were among their three big gest challenges — one manufacturing company waited nearly a full year for a shipping container that got delayed in China — and 59 percent said lack of inven tory or product availability was among their three top worries.

But even though these challenges appear to be stick ing around a while, not all is lost. There are no silver

FEATURE

— Rob Kress Waypost Advisors LLC

bullets, says Rob Kress, founder of Waypost Advisors LLC, which advises companies on these issues. But for those who have made it this far, there are steps they can take to at least alleviate some of the supply chain strain.

“The companies where it is too late I don’t think are around anymore, we’ve been dealing with this for a while,” he says. “But there are still a number of compa nies struggling with this and limping along, putting up with the pain.”

Make a plan, get some expertise

To solve those problems, he says, businesses need to be more proactive about planning further in advance for their inventory needs than they have in the past. Talk to your customers and suppliers. Get a clearer under standing of what you will need and when.

“We’re seeing a lot of instances where companies haven’t taken the time to understand these things,” he says. “If you’re dependent on trucking freight, it be hooves you to understand the freight market so you can plan. The companies that are weathering the storm are thinking ahead.”

While planning ahead is important, it’s also vital to not panic and overcorrect, he adds, as having too much inventory on hand during a recession — which many experts are predicting will happen in the months ahead — can tie up your cash flow, as big a problem or bigger than not having product on time.

“It’s a puzzle,” Kress says. “This is not going away. We’re seeing a fundamental shift in many industries. The [companies] who adapt and make these changes are going to be the ones out front in a year or two.”

One thing that would help businesses lacking exper

tise in supply chain management is hiring someone to help them plan, whether that’s bringing on an internal hire or a consultant. That’s especially important for companies reliant on specialized products, Kress and others say.

“If your supplier makes some super special unique art, that’s going to be a lot harder than if you are buying lumber,” Kress says. “What it comes down to is compa nies need to put more of an effort, more of a focus into their supply chain.”

Sarah Sengupta, associate professor of operations and supply chain management in the Herberger Business School at St. Cloud State University, referenced the alumni program at her school or the robust educational programs available through the Twin Cities Chapter of the ASCM as places companies could go for training and assistance on the basics of logistics.

“Education is a great place to start,” she says.

Sean O’Neil, director of economic development and research at the Minnesota Chamber of Commerce agrees companies need to go from simply purchasing and procuring product to building more of a supply chain strategy.

“That’s one simple suggestion is think about what expertise is out there that can help walk through the business at that deeper level,” he says.

The ASCM/Grow Minnesota study sought information from 40 supply chain leaders statewide. It indicated that businesses have started planning, but altering such activities takes time. In the meantime they are increas ing inventories and restructuring supply chains, with more than one-third looking to do more business with Minnesota suppliers.

“This is not going away. We’re seeing a fundamental shift in many industries. The [companies] who adapt and make these changes are going to be the ones out front in a year or two.”

FEATURE

They’re not just looking to work with local compa nies, but trying to make sure they add one or more backup suppliers in case things go haywire.

“A lot of companies were single source,” O’Neil says. “The pandemic hit and they realized that was a risk factor.”

One resource the Chamber makes available to all businesses trying to diversify there is Minnesota Sup plier Match, a database created by the Grow Minnesota program aimed at helping businesses make connections and grow. It lists 1,200 companies in different indus tries across the state.

“It’s a tool for companies to learn about other sup pliers close to home that they may not know about,” O’Neil says. “Businesses are looking at ‘who are my backup suppliers. Can I have some additional vendors in place to mitigate some of those risks.’ To the extent that it’s possible we encourage them to look locally.”

Building relationships, being creative

Working with local companies, he adds, can shorten lead times. And the Chamber staff can help run custom

ized searches of the match database and other resources to provide businesses with a list of potential partners as a starting point “and try to get them a little closer to finding out who can help them here locally.”

“A lot of companies are viewing their suppliers as key partners rather than just vendors,” O’Neil says.

Building stronger relationships with potential sup ply chain partners could go a long way, particularly for small business owners who, studies have shown, feel at a disadvantage to larger competitors in their ability to keep up with supply chains, Sengupta says. She cited a study by Software Advice earlier this year indicating 91 percent of small- and medium-sized business owners feel at a disadvantage to larger companies during the supply chain crisis. Nearly half of those say they’ve had at least one vendor drop them for reasons relating to them being a small business — including lack of vendor status and inability to meet minimum order sizes or pay premium prices.

The study indicates — and Sengupta agrees — that small business owners need to work harder to establish and strengthen relationships with their suppliers, some thing SMBs typically have not focused on doing well.

CONTACT:

ROB KRESS is founder of Waypost Advisors LLC: 952.222.8178; info@waypostadvisors.com; www.way postadvisors.com; in/robertckress

JOHN MELBYE is owner of Become Demand Driven consultancy and president of the Twin Cities Chap ter of the Association for Supply Chain Management: 612.202.0799; john@becomedemanddriven.com; www.becomedemanddriven.com; in/john-melbye-stop-managing-chaos

SEAN O’NEIL is director of economic development and research at the Minnesota Chamber of Commerce: 651.292.4650; growminnesota@mnchamber.com; www.mnchamber.com; in/sean-o-neil-64279722

SARAH SENGUPTA, associate professor of operations and supply chain management in the Herberger Business School at St. Cloud State University: sarah.sengupta@ stcloudstate.edu; www.stcloudstate.edu; in/sarah-sen gupta-ph-d-97365724

“That negotiating power that small businesses maybe lack from larger enterprises is what they need to be careful of,” she says. “Being honest and being transpar ent with their own customers is going to be key to their success in getting through. There is a lot to be said for relationship building in the supply chain.”

While it might not be possible in every case, Sengupta indicated small business owners might also want to con sider getting creative and seeing if they can rework some designs to reduce the number of components necessary to complete a build.

“There is not a lot of certainty on what’s coming in and how fast you’re going to get it,” she says. “Depending on the time frame of how long the uncertainty is going to last, some small businesses might want to think about some redesign.”

Luckily, she adds, there may be at least a few signs of some relief coming. Ocean shipping container costs have come down significantly in recent months. Over purchas ing by big box retailers might be helping stabilize prices, as well, as they try to off-load some of their inventory, which could help small businesses.

“There has to be some equilibrium coming back,” Sen gupta says.

FEATURE

— Sean O’Neil Minnesota Chamber of Commerce

Longer-term problem

Even if that is the case, businesses should take this crisis as a sign they need to fix their supply chain strategies for the long-term. While building a strategy around supply chain management and finding more suppliers are good short-term steps companies can take to improve their supply chain performance, John Mel bye says there also are longer-term issues at play.

“The way we’ve been doing things is part of the prob lem,” says Melbye, president of the Twin Cities ASCM chapter and owner of Become Demand Driven consul tancy.

Traditionally, he says, supply chain relies upon preci sion estimates on exactly when companies are going to need each part. Just-in-time management is the ultimate level, he says, of attempting to know pre cisely when to have product shipped so it arrives when needed. The problem is these strategies haven’t been working for a while and, he adds, the pandemic shed an extreme light on the shortcomings.

“Everything we do is based on thinking we can use precision to calculate exactly when we need some thing,” he says. “Maybe at some point that worked. But over time, our lead times have gotten longer and longer. And our forecasts have gotten less and less accurate.”

He recommends transitioning to a demand driven material requirements planning. “We need to strategi cally place inventory such that the parts we leave to

precision can actually work,” he says, comparing it to someone who uses three eggs in baking or cooking ev ery day. If you don’t have eggs on hand, running to the store to get more adds time to whatever you’re making. So, you keep a few extra on hand in case one breaks or a neighbor needs to borrow one.

“It’s no different in manufacturing,” he says. “If you have the product in your facility, then you can say it’s going to take me three days to get it from here to here and it’s in my control and I can manage that,” he says. “If you don’t have it, some items will take you six months, some will take you two months, some will take you three days and that’s where you’ve got chaos intro duced into the whole path.”

Melbye’s consulting company works to educate busi nesses on Demand Driven Material Requirement Plan ning, which he says is designed to focus on systemic flow rather than cost, figuring that if incoming widgets and outgoing products improve flow, cost will follow.

“Cost is an outcome,” he says. “If my flow is good, if I buy what I need, costs will be minimized.”

“Businesses are looking at ‘who are my backup suppliers. Can I have some additional vendors in place to mitigate some of those risks.’ To the extent that it’s possible, we encourage them to look locally.”

catching up

by Andrew Tellijohn

Still brewing: Eilers, Fay reminisce about 20 years of Dunn Brothers Coffee

Twenty years ago, Skip Fay and Chris Eilers had just transitioned from Dunn Brothers Coffee fran chisees to franchisors. They were enamored with the opportunity to build the coffee shop brand as a place where folks could sip away the day in a smoke-free coffee shop with free Internet access.

“Today it sounds silly, but back in the day that was pretty cutting edge,” says Eilers.

When they bought into the com pany initially as store owners, they ended up the most successful fran chisees founder Ed Dunn worked with. They loved the business.

“The scary part wasn’t should we do it,” then Chairman Fay told Upsize in the magazine’s inaugural cover story in 2002. “It was ‘How are we going to afford it so we don’t lose this opportunity.’”

Eilers and Fay entered just as coffee shops were taking off. Dunn Brothers isn’t the largest such chain, but has generally shown steady growth through economic ups-and-downs and retrenchment in franchising in general. Today, there are just over 60.

Building a business

Fay and Eilers initially met at a social gathering involving their wives, who at the time were work ing at the YMCA. “We were the outsiders,” Eilers says. “We got to get to know each other a little bit and we built a friendship and

shared what we were interested in and there was alignment that we both wanted to do something differently than we were.”

They no longer work together, but during a nearly hour-long call, they completed a few of each other’s sentences and laughed easily while reminiscing about when they did.

One major takeaway for Eilers was finding a business partner he trusted. “If you are going to choose someone to partner with, you need to do your homework and, to me, that is choos ing someone that you would want to be friends with, that has the same values as you,” he says. “There’s a lot more partnerships that don’t work be cause people don’t make those, what may appear to be simple decisions.”

They brought in good people to help and had complementary skillsets and a willingness to experiment, which sometimes worked and sometimes of fered opportunities to learn.

“We weren’t afraid to try new things,” Fay says. “Sometimes it works and sometimes it doesn’t, but we were fortunate enough it has worked more than it hasn’t. I learned really early to not be so stuck in my ways that I can’t change because the market changes.”

Eilers recalled an early foray into tea with Dunn Brothers that was not successful. “I was under the assump tion that if we can do what we did with coffee in a tea shop format, then how hard can that be?” he says. “The lesson I learned from that experience is that the American coffee culture

In 2002, Skip Fay and Chris Eilers had just acquired Dunn Brothers Coffee. The chain now has more than 60 locations.BY JOHN NOLTNER

is not the same as the American tea culture.”

One that did work was bringing food to Dunn Brothers about 10 years ago. The whole industry was exploring it. “They were trying commissaries, they were trying frozen,” he says.

Dunn Brothers hired Executive Chef Andy Revella, who helped put together a menu the company could execute in the stores. Converting was relatively simple. Convection ovens allowed for cooking eggs and making sandwiches.

“We can make delicious food in an acceptable amount of time,” Fay says. “We trusted the process and it worked and I think it really changed the math for our franchisees.”

2017 brought change

Fay remains with the business as its chief coffee officer. Eilers felt com pelled in 2017 to try something else. He now runs Jinx Tea, a brand he

started with son Sam and wife Jennifer Wills.

“It just felt like the right time for me, after spending 23 years with Skip,” he says. “I love Skip, but I was just

Chris Eilers moved five years ago from Dunn Brothers Coffee to Jinx Tea, which he started with his wife and son.

PHOTO COURTESY OF JINX TEA

Dunn Brothers

Description: : Franchised chain of more than 60 coffeehouse locations

Headquarters: Roseville

Founded: 1987 by Ed and Dan Dunn

CEO and president: Kim Plahn

Employees: 54

Website: www.dunnbrothers.com

ready to try something different. ... I was 57 back then when I made that decision and figured if I was going to try something else, I’d better step into the fray.”

The intent was creating a more ap proachable tea brand focused on cold teas. They tested the market with a food truck in 2018 and opened a retail location in 2019. When COVID hit, they shifted to wholesaling, opening a production facility in 2021.

“That’s been really a lot of fun,” he says. “It’s no different in terms of the challenges that a new brand faces as they try to create market awareness, but we’ve had some good success.”

He’s recently found an investor and is working on developing a shelfstable product that doesn’t require

refrigeration for restaurants, cafes, cof fee shops and tap rooms. He’s drawn on his time with Fay while growing his new company.

“It certainly gave me and the com pany a little more street cred,” he says. “Dunn Brothers is a brand that a lot of people, certainly in this neck of the woods, know about and respect. So, it allowed me to open doors.”

The future?

For Fay, the variety of daily tasks keeps the work interesting. He’s had opportunities to do other things, but ultimately stuck with it. That’s true through the company’s latest tran sition, as well. Dunn Brothers was recently acquired by Gala Capital Part ners in a deal the private investment firm indicated would bring the chain to a wider audience.

“We believe Dunn Brothers is the best-kept secret in the coffee seg ment,” said Gala’s managing partner Anand Gala, in a statement announcing the acquisition: “We look forward to working with the management team and franchise partners to bring this great product and brand to the rest of the world.”

Contact: : Chris Eilers is co-founder of Jinx Tea: ceilers@jinxteamn.com; www.jinxteamn.com; in/chris-eilers-5b11416.Skip Fay is chief coffee officer at Dunn Brothers Coffee: sfay@dunnbrothers.com; www.dunnbrothers.com; in/skip-fay-9890076.

Skip Fay Dunn Brothers Coffee

“We weren’t afraid to try new things. Sometimes it works and sometimes it doesn’t, but we were fortunate enough it has worked more than it hasn’t.”

BANK

Crown Bank

6600 France Avenue South, Suite 125

Edina, Minnesota 55435

Ph: (952) 285-5800

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

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

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BANK

Highland Bank

Rick Wall, CEO | 952.858.4753

Troy Rosenbrook, President | 952.858.4810

952.858.4888 | www.highland.bank

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

BUSINESS BROKER

Sunbelt Business Advisors

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

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

www.sunbeltmidwest.com

Thinking about buying or selling a business? Sunbelt is the world’s largest seller of private companies. We work with business owners to help them under stand the current value of their business and how to maximize their net proceeds at the time of sale. Sunbelt will provide business own ers with a completely confidential, no-obligation value range.

CFO SERVICES

Integrated Consulting

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

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

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

COMMERCIAL PHOTOGRAPHER

Tom Dunn Photography

308 Prince Street Studio 242

651-368-2047 www.tomdunnphoto.com

Tom Dunn tom@tomdunnphoto.com

Tom is a commercial photographer who has been help ing 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.

COMPUTER CONSULTING

Intertech

1575 Thomas Center Drive • Eagan, MN 55122 www.intertech.com • Ryan McCabe at rmccabe@intertech.com or 651.288.7000

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.

EXIT STRATEGIES

Exit Planning Institute

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

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• Best Practices to Grow Enterprise Value

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

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Winthrop & Weinstine, P.A.

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

Sponsorship Opportunities!

Download episodes and order the book! https://www.poisedforexit.com/

Winthrop & Weinstine is a business with a deliberate culture of enterprise and fresh thinking. Our clients have big ideas, and our lawyers help turn those ideas into successful businesses. We represent clients in the early stages of their business in matters such as entity formation, capital raising, employment matters, vendor and customer agreements, and others. We provide counseling as your business grows, and work closely with clients to smooth the path to success.

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Optima HR Solutions

Steve Schad, sschad@OptimaAdvisoryllc.com

Ph: 651.587.0588

www.OptimaAdvisoryllc.com

Attracting and retaining the right people will fuel your growth. Take the guesswork and headache out of the people side of your business with help from Optima HR Solutions. Smart HR will get you to the next level - assessment, strategy, fractional HR leadership, and tactical HR support and recruiting.

MERGERS & ACQUISITIONS

Lingate Financial Group

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

Greg Loeschke — Managing Principal

Founded in 1945, Lingate Financial Group is a leading provider of lower middle market merger & acquisition advisory services, representing privately held businesses of all types with revenues of $5 – 50 million. Lingate helps business owners with market-based valuations, business sales, mergers, acquisitions, recapitalizations, and internal transitions among family members, partners and management. We get deals done.

LEADERSHIP DEVELOPMENT

Prouty Project

6385 Old Shady Oak Road, Suite 260

Eden Prairie, MN 55344

952.942.2922 | www.proutyproject.com

Kari Baltzer | stretch@proutyproject.com

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

PUBLIC RELATIONS

Bellmont Partners

3300 Edinborough Way, Suite 700 Edina, MN 55435

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

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

SBA LENDER

Highland Bank

Troy Rosenbrook, President | 952.858.4810

Kim Storey, SBA Lending Manager | 952.858.4590 952.858.4888 | www.highland.bank

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.

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21st Century Bank

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

At 21st Century Bank, we know what it takes for businesses to survive, grow, and prosper in today’s market. For over 100 years, we have been your community partner. A family-owned bank, with expertise in all SBA and conventional lending programs covering all stages of your business. We tailor solutions that respond to your unique business and banking needs.

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Sunrise Banks

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

STRATEGIC PLANNING OR DIE

David Reiling, CEO Phone: 651.265.5600 www.sunrisebanks.com

Sunrise is headquartered in St. Paul, MN, and has four retail banking branches located in the urban core of Minneapolis and St. Paul. Its primary business lines include: Commercial Lending and Leasing, Relation ship Banking, Treasury Management, Prepaid Cards, Fintech Partnerships, New Markets Tax Credits, and Small Business Administration Lending.

Prouty Project

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

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

TRANSITION PLANNING

KeyeStrategies

Minneapolis, MN

Keyestrategies.com 763-350-5563

Julie Keyes, Founder/CEPA

“KeyeStrategies LLC advises business owners in Transition and Exit Planning. Julie Keyes is both a Certified Exit Planning Adviser (CEPA) and Value Growth Adviser. She is also a faculty member for the Exit Planning Institute’s Global organization and President of its local Chapter.”

venture capital

Brimacomb + Associates

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

Rick Brimacomb, rick@brimacomb.com

Chief Strategy and Relationship Officer

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.

WEALTH MANAGEMENT

JNBA Financial Advisors

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

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

WORKPLACE WELLBEING

R3 Continuum

7825 Washington Ave. S., Suite 500 Bloomington, MN 55439 R3c.com 866-927-0184 toll free

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

Outside

Nonrequested

by Andrew Tellijohn

The use of fractional executives — those hired by companies on contract to work a fraction of the hours at less cost than full-time hires — has been on the rise for years. That accelerated during the COV ID-19 pandemic. John Arms, co-found er of Voyageur U, helped establish the organization to help educate free agents on what it takes to make it as a fractional executive.

He’s now put that knowledge into print, recently releasing the book “Consult Your Way to a Full-Time Job.” Arms joined Upsize Min nesota Editor Andrew Tellijohn to talk about how the book can help potential fractional ex ecutives carve their new paths.

Tellijohn: What will readers get from the book?

Arms: Readers are going to get three things from the book. First, confidence. The book takes readers on a journey of their own success. Your next role, whether consulting or full-time, can only be a good role if it is grounded in what makes you great. It’s not about the current opportunity. It’s not about new connections or your LinkedIn Page. It’s about you. The book regrounds readers in what makes them awesome for any business.

Second, they will get a whole lot smarter on how to secure contract work. The connective tissue between a business’s need and a person’s skill is new territory since the pandemic. The traditional talent infrastructure col lapsed completely when the economy shut off. As it puts itself back together

the dynamics of remote, hybrid, pay, benefits and leadership aren’t falling back in line. The needs are still there but the means to connect them are brand new. The book puts you in the new, emerging model.

Third is relief. The current search for work is a dumpster fire, with no fire truck in sight. If nothing else, the book is a relief from having to go through a pain ful, increasingly unproductive process.

Tellijohn: Why did you write the book?

Arms: I decided to write this book because I believe that if you find success you should leave the gate open behind you for others to walk through. I mapped my journey along the way to consulting work and de cided others could benefit from knowing my journey. My experience consulting led to full-time job offers, equity shares in clients’ businesses, board roles and more money than I had ever made, even as a CEO. I am nothing special, so I figured if I could do this, so can the mil lions of other professionals with similar career experiences as mine. All they need is a little new direction.

Tellijohn: What's the trajectory of the fractional/consultant model now?

Arms: If you can imagine a growth chart on this model, things are mov ing rapidly up and to the right. More businesses are seeking fractional talent. More professionals are pursuing it. It’s finding its spot in the talent economy.

It is taking some time to shed the traditional belief that talent must be in-house, full-time and completely dedi cated. Those norms are falling away, as they are just that, norms.

Horses were the norm until we had

cars. Trains were the norm until we had airplanes. Dial-up internet was the norm until we had wi-fi. Productivity and out put in relation to cost is far superior with fractional talent. And it’s not just produc tivity. The work experience is smoother, more enjoyable and healthier. That’s what so many leaders fail to understand as they try to figure out a back to work strategy. Workers have had time with their families, time for their health and time off of the gerbil wheel. All with very little penalty to paychecks and earning potential, other than the initial 12 months of the shut down. Pandora’s box on work has been opened.

Tellijohn: Where can people get the book?

Amazon: https://amzn.to/3TNxNwl

Contact: John Arms is co-founder of Voyageur U: 612.590.1995; john.arms@voyageuru.com; www.voyageuru.com; in/johnarms

www.upsizemag.com

Arms offers advice to those pondering going fractional

Voyageur U Founder John Arms wrote “Consult Your Way to a Full-Time Job” to clear the path for new fractional executives to enter such work.

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