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.
Today, Conrad Nguyen is the owner of Kortech, a facility management and contract staffing firm. He achieved that goal after spending more than 20 years in various business leadership roles with 3M and other large organizations.
But it wasn’t a smooth ride. His story and others featured here demonstrate the assistance available to BIPOC or minority-owned business owners, and their resilience, in overcoming difficult situations.
Nguyen’s family immigrated from Vietnam. He struggled early in life with addiction and was surrounded by violence and naysayers. Nguyen hit rock bottom at about 20 when a close childhood friend was killed.
But that lit a fire for his own turnaround. He arrived in Minnesota to pursue a program that allowed those under 21 to take classes and earn a high school diploma.
“That was the highest dream I had at that time,” he says. “I wanted to get out of the cycle of violence.”
He met a teacher who was impressed with the drive it took to leave on his own. She asked what he needed. “I said, ‘I don’t need any help, all I need is somoene to believe in me,’” he says.
When he earned his diploma, he moved on to college. When he finished college, he got his first job in New York with 3M. Shortly after Sept. 11, he enrolled in master’s degree program at Rutgers University, after which 3M brought him back to corporate in the Twin Cities.
He spent a few years in different roles at 3M, both here and abroad, but also had the entrepreneurial itch. When one of the divisions he was working in was sold off to a competitor, he figured it was time.
“Being at 3M was great in a lot of ways because I had opportunities to learn and grow, but it kind of held me back because I was so comfortable,” he says.
During his search, he ran into a former 3M contact who introduced him to the Metropolitan Economic Development Association (MEDA).
“For almost a year, we worked together trying to find companies that fit,” he says, adding that he was looking for a proven business-to-business operation with recurring revenues. Through those relationships he met the former owner of Kortech, who was looking to move to a different area, but wanted to make sure his employees were protected.
“I’ve always talked about wanting to start the company I wish I had worked for and be the leader I wish I had,” Nguyen says. “I knew that’s what I wanted to be involved in.”
Kortech does project and construction management, facility management and contract staffing. He has about two dozen employees full-time with additional people brought on as needed on a project basis. Sales have ranged in the mid-to-upper seven figures in recent years. He is in the middle of trying an initiative aimed at growing sales 10 times in five years through building relationships with existing clients and adding more.
MEDA helped finance a portion of his acquisition and, while he’s become pretty comfortable managing the business he still occasionally checks in.
“This is my first acquisition and I need a sounding board,” he says. “I feel pretty comfortable working with MEDA. They help vet a lot, kind of like doing my second layer of due diligence.”
For 50 years, MEDA has consulted minority business owners. The organization provides technical assistance, works to match clients with corporate and state contract opportunities, then coaches them through the proposal process, financing and navigating relationships.
It’s a Community Development Financial Institution (CDFI). MEDA entered 2020 with a $21 million loan portfolio that is expected to double to $40 million by the end of 2021. At MEDA’s annual meeting in June, President and CEO Alfredo Martel announced several new initiatives aimed at capitalizing on both the business community’s desire to help promote diversity in business ownership and the looming retirements of many baby boomer business owners to increase its ability to help create and build minority-owned businesses.
“We are stating a path to conclude our 2025 strategic plan with a goal of reaching $150 million in capacity,” he says. “We have the vision and inspiration of Martin Luther King and we have a dream. We have a vision of a better world for our BIPOC (Black, Indigenous and People of Color) clientele and the audacity of [John F. Kennedy] to say we choose to go to the moon and choose to do these things that are hard.”
Some of this will be achieved, Martel says, through the generation of a digital network of volunteers from the corporate community who he sees spending time working with small business owners on interpreting financial statements, marketing, promotion and other areas of running businesses. The electronic meetings spawned by COVID-19, he says, created the backbone necessary for such arrangements to grow, as business owners and consultants no longer must sit at the same table to meet.
“It’s going to be built on digital infrastructure, but it’s going to be built on volunteers, mostly from corporate or private industry,” he says. “Now we have corporate America, frankly corporate white America, on a direct Zoom line with BIPOC small business America.”
In an effort to increase minority business ownership, MEDA also plans to focus more on working with clients to buy existing companies owned by those who are ready to retire but don’t have a successor.
“Think of all the old businesses that are owned right now that are about to close because the mom and pop are retiring and they have nobody to hand the business over to. ‘I’ve been a baker for 45 years, I’m done, I’m checking out,’” he says. “We have a BIPOC organization like MEDA saying we’ll acquire that. We’ll help a BIPOC entrepreneur take over your bakery. There is a generational moment right now about to hit us where there is the opportunity for a dramatic transfer of wealth and business equity.”
MEDA might be the largest, but many other organizations also are working to level the playing field for BIPOC entrepreneurs.
The Metropolitan Consortium of Community Developers is an association of nonprofit community development organizations committed to expanding the wealth and resources of neighborhoods through housing and economic development initiatives.
Its “Open to Business” program contributes technical assistance free-of-charge and also, when appropriate, loans to emerging entrepreneurs, says Tyler Hilsabeck, director of small business development.
The technical assistance comes in a range of business phases but is focused on BIPOC communities, low-wealth individuals and women-owned businesses. The organization has Somali and Hmong language speakers available.
“Business advisers assist prospective and current entrepreneurs in business plan development, cash flow projections, marketing plans and the implementation of sound financial management systems,” Hilsabeck says.
When capital is a need, MCCD can provide for those locked out of traditional lending institutions. Financing can be tailored to terms that make sense for startup and working capital, equipment and asset financing or for short-term contract or “transaction” financing, Hilsabeck says.
“Our goal is to help an entrepreneur identify and plan for their true long-term capital needs,” he says. “Pairing the upfront planning, ongoing technical assistance and sufficient operating capital gives the entrepreneur the best chance of success.”
There also is the six-member Catalyst Coalition, a consortium CDFIs working to support minority entrepreneurs. MEDA is one, as is African Economic Development Solutions (AEDS), where Gene Gelgelu is president and CEO.
The organization worked with 1,400 people in 2020 due to the pandemic-related economic crash, helping them try to stay in business.
“Our organization has been very busy,” Gelgelu says “We ended up working with a lot of businesses we had never worked with. We never imagined we could hit those numbers.”
Those businesses were looking for anything from advice to loans to stay afloat during the pandemic. While typically not a grant organization, AEDS did raise money for Twin Cities-based businesses affected by civil unrest last summer following the murder of George Floyd.
“When you are hit by something you never anticipate, going back to normal is not easy,” he says. “Those businesses, small businesses, even before COVID and civil unrest, they were struggling financially. They’re not corporate. They are small businesses. They are migrant-owned businesses. They were already capital starved. When hit with this kind of challenge, getting back to normal is very challenging.”
As a CDFI lender, AEDS offers up to $25,000 in financing for new businesses and up to $100,000 for expanding businesses.
AEDS conducts 12-week development training programs, offers training on first-time homebuying and workforce development and works to build sustainable wealth within African immigrant communities through the Little Africa Business and Cultural district and its efforts to ensure a voice in the community. More than 12,000 people attended its Little Africa Festival in 2019.
The 13-year-old organization has also established the national African Immigrant Leadership Conference. It has primarily been a Twin Cities-focused organization, but some of its services are expanding into greater Minnesota.
“There were people who came for our training from Rochester for our business development training program,” he says. “If people are willing to drive one-and-a-half hours to come for the training, why don’t we take the training there? The demand was there. We are at a time where it’s the right time to expand.”
Among AEDS’ pupils a few years back were Abraham and Aster Dalu, married business partners who who were born in Ethiopia. They decided to start their own business in 2012 after he was laid off for economic reasons from his job leading medical studies for a pharmaceutical company.
Abraham wanted to take more control over his family’s financial situation.
“I vowed from that point on not to go back to big companies and, even better, to start my own company and take my financial destiny into my own hands,” he says.
Thus was born A&A Reliable Home Health Care, which now is an insured, bonded, AAA-certified provider of services ranging from personal care assistance to home care nursing and homemaker services to supported living services for patients from the comfort of their homes, Dalu says. They have more than 60 employees, many of whom speak different languages, which helps the company serve a diverse mix of patients.
With their backgrounds — his in toxicology and hers as a nurse — they had much of the health care knowledge necessary to establish the business. But they lacked a business background. So, they enrolled in a 12-week small business course at Neighborhood Development Center and sought some technical assistance from AEDS. They learned about advertising, marketing and the use of QuickBooks for creating accurate financial records.
“With a new company, you wear so many hats and you have to get involved on a personal level at every step of the business’s activity,” Abraham says. “That requires you to know the details that you take for granted when you are with big companies where you get support personnel.”
It took a couple years of planning and going through the certification process to get started, but since 2014, outside of last year when the pandemic caused some struggles, the company has been growing, Abraham Dalu says.
He’s thrilled to be in control of his own destiny, to be employing people and contributing to the state’s economic growth while helping his community.
“Creating jobs and providing services to those who need them is something to be noted,” he says. “Together we wanted to … not just start a business, but something that we thought would benefit the community.”
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.’”
