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.
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, then presented stories of their progress at a public event in September. Nominations for next year’s contest open in spring 2015.
Chris Erickson points to a book in her office, “Strategic Planning for Dummies,” which she bought after her first meeting with the Upsize Growth Challenge experts this spring.
“We have our first strategic planning meeting scheduled for October 15,” she says proudly, in which her full staff will meet over lunch to kick off the new initiative. Creating a plan is a first for the firm, and Erickson says she and her staff are motivated.
Erickson, founder of Benefit Extras in Lakeville, had hit a plateau at the 15-year-old third-party administrator, which handles health care and other benefits for clients.
As one of two winners of this year’s Upsize Growth Challenge, she had told the assembled advisers in June it was time to get growing again, but she didn’t have an answer when they asked where she wanted to go.
Her fellow winner, XL Feet founder Adrian Coulter, was facing hard choices, too, but his three-year-old retailer of large-size men’s shoes is at the beginning of its growth curve, not at a mid-point.
He was taking advice to evaluate whether his bricks-and-mortar store in St. Paul is too costly to operate and takes too much of his time.
He was convinced to abandon his idea of opening more stores in Canada. “Texas has more people than Canada,” one of the experts noted dryly at the first workshop.
Mostly, Coulter embraced the idea that he should focus all his energy on establishing himself as the go-to expert to fit men with extra-large feet, and outsource everything else.
Coulter, too, appreciates the direction, and in August reported his best sales month ever—coincidentally, perhaps, and the Upsize Growth Challenge experts advised him to carefully watch his cash as he strives toward his goal: doubling in sales, to $1 million annually, within the next couple of years. (For more on Coulter’s firm, see the August/September issue of Upsize at dev.divistack.com.)
Both CEOs say they’ve been energized by participating in the Upsize Growth Challenge, our 10-year-old annual contest designed to pair two business owners, each with an ambitious growth goal, with the expert advice they need to meet it.
Erickson of Benefit Extras is making major investments in the fourth quarter, even though it’s her firm’s busiest time.
“We’re going into our year-end craziness,” she says, pointing out, for example, that they serve 420 tax-advantaged plans and 285 of them renew by January 1.
They service 650-plus COBRA accounts, for another example. They’re rolling out a new mobile app so customers can check their accounts and submit claims on-the-go.
Now, 80 to 85 percent of claims come in via fax, so going paperless should increase efficiency and reduce the number of phone calls from enrollees on the road who ask her staff to look up their accounts.
Plus, her firm will be able to compete for the increasing number of clients that require mobile access.
They’re augmenting their non-discrimination testing service, which employers are required to perform when offering certain plans, to ensure they don’t benefit certain groups such as key executives or highly paid employees.
Erickson figures that service will allow a new revenue stream because they’ll target more employers as customers. “We are fairly sure a lot of employers aren’t” performing the required tests, she says.
They updated their website, using their headquarters address in Lakeville, for example, replacing the P.O. box. One Upsize Growth Challenge expert had remarked the latter makes it seem like they’re operating out of a basement.
In all, she’s investing several thousand dollars in new offerings, all while keeping rates steady. And she’s marketing each move aggressively, recently sending e-mails to 700 brokers to tout the changes.
“I’m more conservative. I may be apt to roll out one or two things, but my staff has convinced me we can do all this, roll out all the bells and whistles at once,” she says, adding when they received her e-mail to schedule strategic planning, she received many thumbs up—and not just because she offered to buy lunch for the first meeting, she joked.
“We’re a small company,” she says about her 12-person staff. “They have worked really hard. They want to see Benefit Extras move forward, and they were very excited” to hear about the new initiatives.
“There’s no way we could have gotten to where we’ve gotten without these people. The employees have been the reason for our success,” she says.
And while just a few months ago she couldn’t articulate a clear direction, now her message is both rock-solid and characteristically humble.
“I’m optimistic about year end. I have no reason to believe it won’t be good,” Erickson says, then adds a coda that for her could count as hyperbole. “Exceptionally good.”
Kirk Hoaglund of Clientek related to the business owner who doesn’t like to lose control, yet he urged both the winning CEOs to figure out what they do best and outsource or delegate everything else.
Adrian Coulter of XL Feet, for example, should spend all his time establishing himself as an expert to help men who have extra-large feet.
So he should, for example, build the very best website catering to those customers. Everything else–get rid of it. Hoaglund said he even took the advice himself, and recently outsourced lead generation at his company to an outside firm.
Rick Brimacomb, Brimacomb + Associates, says business owners have to decide if they’re going to be faster, cheaper or better than everybody else.
If “better” is the answer, then emphasize intense, high-touch customer service and expertise that can only be found with you. In the case of both this year’s Upsize Growth Challenge winners, “better” is the way to go, he suggests.
Al Kaufmann, BDO Worldwide, remarked on the transformation of Chris Erickson of Benefit Extras. At the first workshop, he said, “I wasn’t sure if she was last man standing or dead man walking.
She had lost her passion and needed to rekindle it.” Many business owners reach such a plateau, he said, and they could learn from Erickson’s decision to re-engage and light the fire.
Dean Willer, Winthrop & Weinstine, remarked it’s hard for entrepreneurs to focus. “You are putting out a lot of fires,” as a business owner, but it’s important to set aside inviolable time each week or every other week to set goals.
“Make sure you’re going in that direction,” he said. One way to focus is to analyze which activities bring in revenue and profits. Focus there and cut the noise. Outside advisers can help the effort.
Mark Lucke, Sunrise Banks, applauded Benefit Extras’ progress. “You’ve built up a successful company and that’s a great thing,”∫ he said, adding business owners should concentrate on doing more of what they do best.
“We come across owners who have branched out. Focus on what you do best, and get help for the other things.” He also touted Adrian Coulter, XL Feet, for turning in his best month ever in sales this past August.
Now Coulter will need to carefully plan for growth so he doesn’t outstrip his cash needs. Stretching vendor terms could be a smart step.
Rick Brimacomb is the founder of Brimacomb + Associates in Minneapolis: 612.803.3169;
ri**@*******mb.com; www.brimacomb.com.
Kirk Hoaglund is managing partner and CEO of Clientek: 612.260.6473;
ki**@******ek.com; www.clientek.com.
Al Kaufmann is a partner at BDO in Edina: 952.842.9692;
ak*******@*do.com; www.bdo.com.
Mark Lucke (LOO-kee) is an executive vice president with Sunrise Banks in St. Paul: 651.523.7815;
ma********@**********ks.com; www.sunrisebanks.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.’”
