READY TO GROW

By Andrew Tellijohn

Photographs by Jonathan Hankin

“She had little cuts on her opposite leg,” Roeser says. “The ID band was super sharp. It just didn’t make any sense to me. This is a direct opening for infection.”

Roeser and her colleague, Vicki Sheaffer, who together own North Star Newborns, an in-home infant care provider, started NSN-BabySoft LLC, to exclusively distribute in the U.S. a softer, kinder band aimed at providing more comfort and reducing the risk of infection.

The bands are comprised of two parts. The first, a latex- and allergen-free soft foam that forms the base of the band, is the part that comes into contact with the patient’s skin. It connects with a durable, antimicrobial vinyl label that they say is compatible with thermal printers in use by most health care providers.

They believe the product will make infants more comfortable and reduce incidents of infection where those babies are delivered.

“It’s designed and created specifically for their delicate skin,” Sheaffer says. “We asked the question ‘why even allow the potential for an entry way of pathogens to occur by allowing nicks, cuts and scrapes to happen from an inferior ID band when they could be avoided completely.”

The product is patented in the U.S. It’s designed to last four to six weeks, if necessary, and it can be washed with soap and warm water. Sheaffer and Roeser say they believe strongly in the product, in part due to positive feedback received from patient-facing personnel. But after many visits with officials at many health care facilities, they’re still looking for a taker.

They sought advice because they feel the company’s next step, which would include significant investments, both in a professionally built website and, possibly, in adding to their team with sales and marketing assistance.

“We believe in the product because we’ve seen what’s out there,” Roeser says. Adds Sheaffer: “Ellen and I are at a point where we have done all we can do … Is this worth pursuing? Is it something worth pushing out there? Because it’s now going to take an investment.”

Expert thoughts

Experts said the BabySoft bands could have potential, especially if they can get a first customer.

It might be a good idea to start with a smaller practice where it’s easier to get a foot in the door, says Andy Schornack, CEO of Flagship Bank.

“You should find a small regional instead of trying to go to the larger ones, even though those would be a bigger hit,” he says. “You’ve got to find that first one to try it.”

Dean Willer, chair of the corporate practice group at Winthrop & Weinstine, agrees that while the cost savings at a large health care organization would be more substantial, the likelihood of finding a partner quickly is at the local or regional level.

“It’s never easy dealing with a huge faceless organization,” he says.

“You’d be better off with a smaller group where you actually talk to the decision makers and convince them to take a chance on you.”

He also suggests pitching doctors who ultimately might end up becoming some of the product’s biggest supporters.

“Find a way to make it mutually beneficial for you and the doctor,” he says. ”You can find champions if you frame it right. They get credibility out of doing white papers or speaking at conferences. If they get in front of an audience to talk about how the product could improve medical practice, that could really develop a buzz.”

Jon Austin, senior partner with J Austin Associates, expressed concerns that by limiting the bands to babies, NSN-BabySoft might lose the ability to market cost savings because hospitals would then have two systems to upkeep.

“You’re offering them a lot of extra work,” he says. “If you are a hospital administrator you are thinking ‘ok, where are we going to put it, how are we going to get it, who is going to train it, who is going to maintain it.’”

“Then you’ve got a better argument to be made on costs because you are replacing a system instead of adding a second one,” he says.

Diane Paterson, associate director of the Small Business Development Center in the Opus College of Business at the University of St. Thomas, says the company is going to need a stronger, stand-alone web presence with pictures and a description of its value proposition if it is going to succeed. Currently the product is being marketed on the duo’s infant care company website.

“I think it would help you from a credibility standpoint when you are out selling to care providers and OBGYNs,” Paterson says. “There was a disconnect to me. … The section of site dedicated to this didn’t sell me on the value proposition. If I am a health care provider and I have met with you, the first thing I’m going to do is go see your web presence and review what it is you were selling me on at our face-to-face meeting.”

Ice fishing on the move

If you watch Kent Hrbek Outdoors or other recreational sports programming in the Twin Cities, you may have seen the Wilcraft, a water, ice and land-based vehicle that extends the winter ice fishing season.

It’s mobile, so those on the ice can move around to find the fish, unlike with a fixed fish house. It’s insulated and it floats. And if it does break through the ice, it can crawl back out of the water.

There are four aspects of the sport Wilcraft focused on, addressed and improved upon, says Tom Roering, president. They include the accessibility, the mobility, the safety and the extension of the ice fishing season.”

The Wilcraft fits on a trailer or, in the case of one early model, the back of a pickup. It doesn’t have to be physically moved by hand like a fish house.

“Our option is jump in the Wilcraft, back it off trailer, and head out on to the lake,” he says. “Once in Wilcraft you never have to get out.”

Roering came up with the concept in 1998, spent several years coming up with the prototype, and began producing them 2006. To date the company has been self-funded. It’s been profitable since 2016 and has seen double-digit growth the last three years.

Now, the company hopes to significantly ramp up sales and profits over the next few years with a goal of selling to a private equity or larger all-terrain vehicle/powersports brand in about four years. Wilcraft is seeking financing to ramp up production and staffing.

“We are right at that threshold of some good growth and we need to be able to strategically manage it and move forward,” Roering says. “Funding is probably our next step.”

Roering is considering several different options. He met in April with economic development officials around the Midwest. There were some individuals interested in investing, but taking advantage of community superfunds that include low-interest rates, some of which are forgivable, would involve a move that could cost the company some vendors.

Other options include traditional private equity to help ramp up marketing and staffing. A final, though less appealing, option, he says, is staying the course.

“We have to be able to ramp up our marketing in a more professional manner, hire some key people and ramp up production,” Roering says.

Expert thoughts

Experts called the Wilcraft a cool product but expressed concerns that the company’s patents expire in five years, something a potential buyer will find important. They also see production limitations of the vehicle as an issue as sales growth speeds up, though Roering says the manufacturers that currently assist with assembly can ramp up as needed and “will do more of the assembly for us to the point where it could be turnkey for them.”

Austin says Roering’s growth goals eliminate staying the course as an option.

“You’re going to have to change the way you do business pretty radically to get to those goals,” he says, adding that creating a professionally produced video for the company’s website and for the tradeshow circuit  would be helpful.

Roering has been active on the trade show and State Fair circuit. The experts think it would be a good idea to ramp that presence up by bringing in a commission-based sales staff of at least a couple people who are dedicated to hitting every outdoor tradeshow possible.

“This is a product people need to see and touch and sit in and see it in use,” Austin says.

“So, you marry that experience with the target customer. How do we get to those people? A lot of people go to those shows looking for something to buy even if they don’t know it.”

Willer quizzed Roering about the size of investment he’s seeking and what it would be used for. When Roering listed a number of ideas, Willer suggested nailing down a specific plan for how he would use the roughly $500,000 he says he’s seeking.

“Investors want to know where their money is going and how it will accelerate your growth,” he says. “If you can show a detailed plan of how you intend to spend that investment, that goes a long way.”

Schornack and Paterson aren’t sure Wilcraft will need that much in order to ramp up production.

The company typically gets 20 percent of the cost upfront. It’s a luxury product with a healthy profit margin. Such a down payment could allow the company to continue self-financing much of its growth, especially if a sales team went to several shows and made a few sales.

“I would be looking at it as how quickly can I build and maintain a backlog,” Schornack says. “You could finance yourself at pretty limited cost. It comes back to balance sheet structuring and how you handle that in terms of what your capacity is to extend more debt from existing cash flow.”

Paterson also suggested that he contact local resort owners to see if they’d have interest in a fleet of Wilcraft vehicles instead of monitoring and maintaining ice houses. If they buy a bunch, he might be able to get more than a 20 percent down payment in lieu of discounting an overall bulk purchase.

She did express concern about Roering’s current staffing, which leaves him in a key role. He should consider making sure that some of the incoming hires he makes can stay around if he wants to leave the company after a sale.

“As the business stands now, you’re it,” she says. “When you step away and you are selling the business, other than the patent and the product — because you’re even making part of the product — the whole brand is about what you’ve created. There is no opportunity for somebody to buy your business with staff in place as it stands right now.”

About this project: The Upsize Growth Challenge, presented by Winthrop & Weinstine, was designed by Upsize magazine to match two winning business owners with the expert advice they need to reach their goals.

Winners, selected based on the ambition of their growth and the quality of work they’ve completed, meet twice with a panel of experts. During the first they share plans and receive advice. Then, two months later, they meet again, sharing their progress and getting a final round of thoughts from
the expert panel.

CONTACT THE EXPERTS

JON AUSTIN, senior partner at J Austin & Associates: 612.839.5172; jo*@**********up.com;
www.jaustingroup.com.

DIANE PATERSON, associate director of the Small Business Development Center in the Opus College of Business at the University of St. Thomas: 651.962.4503;
di************@******as.edu; www.stthomas.edu.

TOM ROERING, president, Wilcraft: 651.653.0534;
tr******@*********ft.com; www.thewilcraft.com.

ELLEN ROESER, co-owner of NSN-BabySoft: 612.819.0716; er*****@***************ns.com; www.northstarnewborns.com; www.northstarnewborns.com.

ANDY SCHORNACK, CEO of Flagship Bank: 952.358.2522; as********@***********ks.com; www.flagshipbanks.com.

VICKI SHEAFFER, co-owner and president of NSN-BabySoft: 651.402.7697; vs*******@***************ns.com;
www.northstarnewborns.com

DEAN WILLER, chair of the corporate practice group at Winthrop & Weinstine: 612.604.6633; dw*****@******op.com; www.winthrop.com.