Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
This year’s two Upsize Growth Challenge winners, TimeSolv and Way Cool Cooking School, came to the experts searching for answers to specific questions. What they got was a new way to look at their businesses, which is a point of view useful to every entrepreneur.
From nominations, judges select two winners based on the ambition of the growth goal and the quality of the work already completed to meet it. They participated in a workshop this spring with expert advisers supplied by the sponsoring companies, which is covered in this article.
Next up is a public event where they will share their stories and the experts will give advice applicable to all growing firms, on Thursday, Sept. 29, 11 a.m.— 1 p.m. at the Minneapolis Club. Nominations for next year’s contest open in spring 2017.
“Thomsen wasn’t sure what to do with it. I was lucky to buy it and have the client base,” says Hasan, explaining his company’s growth challenge to an assembled group of experts in a private workshop at presenting sponsor Winthrop & Weinstine this spring. “This was a neglected child at Thomsen.”
Starting in 2014, Hasan, his business partner and their team of eight employees began pouring resources into the software to make it hum. “Our goal is to help them leverage their billing to the max,” says Hasan about the one- to 10-person law firms that are TimeSolv’s target clients.
Hasan, who used to work at Northwest Airlines on the tech side, is very comfortable talking about technology and all its bells and whistles. He described six to seven years of work on the software to perfect it—how it generates code automatically, how clients are not constrained anymore by slow bandwidth and other obstacles.
“Since October of last year we have not had a single minute of downtime,” Hasan tells the group, and they are duly impressed. “We did not want to go to market with a crappy product.”
But he soon also reveals his challenge: converting customers accustomed to using legacy products to handle their billing with TimeSolv’s solution; making a mark in a fragmented market where there is “a ton of billing software,” as Hasan puts it; deciding whether to acquire some of those other providers as a quicker way to bring on new customers, and if so which ones to target.
But Steve Grohn, a senior adviser with L. Harris Partners and one of the Upsize Growth Challenge experts, succinctly puts TimeSolv’s challenge into a bite-sized piece that many technology-focused companies can chew on.
“You have to learn about your customers. You’re obsessed with the technology piece,” Grohn says. “But get obsessed with your customer. Reach out to your best customers” and ask them why they use the product, in great detail.
Grohn himself does that in his role as a retail consultant for one of his clients. He tells Upsize he literally will stand in a store, and when a customer picks up a product but then puts it down and walks away, he will go up to her and ask: why didn’t she buy?
He will then recommend adjustments in price or placement or something else to meet those objections. He advises Hasan to dig into the basic sales stats, to track closing rates by the person giving the demo, for example.
Dan Moshe, founder of Tech Guru, an information technology consulting firm who knows well the hazards of getting too techie, agrees. “The more we have become market-focused, the faster we’ve grown,” he says, recommending that Hasan consider hosting an annual conference, for example, inviting software users and non-competitive providers that serve law firms. Such conferences “can break even and pay for themselves.”
Dean Willer, an attorney himself at Winthrop & Weinstine and the Upsize Growth Challenge legal expert, advised Hasan to get in early with law students, the way WestLaw, a Thomson Reuter’s mainstay product, does.
“One of the things WestLaw does really well is they’re like a street dealer. They give you free samples. It happens when you’re at the baby stage, and you get hooked on it,” Willer says.
“Explore literally giving it away for free” when attorneys begin to hang out their own shingles. The trick is to make sure the attorneys have a free trial long enough so they have a history of billing with the TimeSolv system—they’ll never want to switch, because switching is a hassle.
Sean Boland, managing principal with DS+B, CPAs and business advisers, suggests Hasan explore other vertical markets, for example, the construction trades, as a smart way to augment revenue.
Rick Brimacomb, with Brimacomb + Associates and also a private adviser to Hasan, seconds that idea and also talks up Hasan’s recent implementation of an advisory board. When a growing firm starts an advisory board with people from all different skill sets, Brimacomb points out, the company’s fortunes improve.
Finally, Mary Stoick, a banker with Highland Bank and an Upsize Growth Challenge expert, encourages Hasan to pursue an acquisition strategy by buying competing firms, saying mergers and acquisitions are a bankable proposition these days, especially for firms that have recurring revenue (in other words, cash flow.)
“Do you have a good relationship with you banker? Do you have a line of credit? I recommend that,” she says. “Banks are hungry for customers, and M&A is the most active” these days, but not every bank understands software as a service or SAS, as is TimeSolv’s business model. Seek out a banker who understands the nuances of the niche.
[contact] Raza Hasan is CEO of TimeSolv:
ra********@******lv.com; www.timesolv.com.
She went to college for a degree in marketing, then worked for Monsanto, which became U.S. Foods and she eventually landed a job as VP of marketing there.
But the stress took its toll. “I was getting migraines three to four times a week. When they called an ambulance” for her one day at work, she decided to make a change. “I quit a six-figure job like that,” she says, snapping her fingers, in 2004. “I was trying to figure out what to do next,” and her young daughter became obsessed with the Food Network and wanted to attend a cooking class.
Elliott took her daughter to Cooks of Crocus Hill, a local cooking school for adults, “and she was totally intimidated.” Then a light bulb went off. “I spent four months, eight hours a day on my business plan,” and mapped out the idea for Way Cool Cooking School in Eden Prairie, which offers team building for corporations, summer cooking classes for kids, birthday parties for all ages, and Scout troops and school groups events.
She even lucked out with her school space because there was a Viking range showroom in Eden Prairie that didn’t have much business, so she met with the owner and proposed a cross-marketing arrangement. “He had a huge smile” on his face, Elliott recalls. “He said, have you seen that movie Pay it Forward? Well, a long time ago someone gave me an opportunity and I think I’m supposed to do this for you.”
He let Elliott use the space rent-free for a time, and now her cooking school has been doing so much business for the last 12 years that she has to turn people away, as many as 10 to 12 birthday parties a month. “The one thing I hate is turning people down,” she tells the Upsize Growth Challenge experts.
But then she got another idea: to create cooking crates that she could send to clients, who could then have their own experience at home. She wanted advice on scaling the crate business for the best possible outcome. “I know how to market my business,” Elliott says. “I don’t know how to take a product like this and bring it to life.”
“You started a business from scratch that became so successful that you couldn’t keep up with demand, and now you want to start another business?” recaps Dean Willer, an attorney with Winthrop & Weinstine.
He suggests looking at other locations for organic growth, and Rick Brimacomb, with Brimacomb + Associates, urges her to explore franchising the original concept as an asset-light growth model.
Sean Boland, with DS+B, asks her for her revenue goal with the new business, and she cites what she calls a “small goal,” 12 crates a week, or 52 units per month, generating annual revenue of $125,000 a year.
She plans to assemble the crates in her house, but Boland discourages that, and questions whether her revenue goal is big enough to justify all her effort.
When Elliott says she wants this business to be her “retirement business,” Boland again urges that she think it through, mapping out her goal for retirement income, how long until she wants to retire (she’s 55 now), and work backward from there.
Dan Moshe, founder of Tech Guru, said he understands Elliott’s reluctance to let go of the hands-on aspect of running her business, but he encourages her to do so. “That was difficult for me,” he admits.
“Once I was OK with 80 percent, then I really learned to let go.” He suggests an exercise: “What would my ideal work week look like three years from now?” Then figure out how to get there.
Steve Grohn with L. Harris Partners urges Elliott and entrepreneurs like her—with many competing ideas to choose from—to think about what turns them on. “Do you like your life right now? Do you get more value out of the creativity piece or operations?”
When Elliott says “creativity” without hesitation, he advises she beef up her management team. “You have to get people who can execute. You’re doing it all,” Grohn says.
Mary Stoick, vice president with Highland Bank, is all for the idea of the two separate businesses, but she urges Elliott to build two separate teams. ‘You may want to consider having a different implementor for this business and the school,” she says, but she is enthusiastic about the cooking crate idea.
“I love this idea,” she says, and urges Elliott to think bigger. “You may want to grow it nationally. Are you prepared if that happens?”
Earlier in the workshop, Elliott had said she’s always coming up with ideas. “My head just spins all the time,” she says.
[contact]
Lynn Elliott is owner, CEO and chief
dishwasher of Way Cool Cooking School in Eden Prairie: 952.949.6799; www.waycoolcookingschool.com
CONTACT THE EXPERTS
Sean Boland is managing principal at DS+B CPAs + business advisers in Minneapolis:
sb*****@*****pa.com; 612.359.9630; www.dsb-cpa.com.
Rick Brimacomb is the founder of Brimacomb
+ Associates in Minneapolis: 612.803.3169;
ri**@*******mb.com; www.brimacomb.com.
Steve Grohn is senior adviser at L. Harris Partners in Eden Prairie: 952.944.3303; st*********@*************rs.com.
Dan Moshe is founder of Tech Guru in Minneapolis: 612.235.4895; da*@********it.com; www.techguruit.com.
Mary Stoick is vice president at Highland Bank in St. Paul: 952.858.4541; ma*********@***********ks.com; www.highlandbanks.com.
Dean Willer is an attorney at Winthrop & Weinstine in Minneapolis: 612.604.6633; dw*****@******op.com; www.winthrop.com
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
