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.
As their father was aging, the children of a design engineer for NASA approached Foreverence with the idea of creating a custom urn in the shape of a space shuttle.
Once their father was on board, the kids presented him with the urn. They sent CEO Pete Saari a video showing the man laughing and expressing excitement about sharing it with his friends in the senior home.
“When was the last time someone said that about an urn?
Probably never,” Saari said during the Growth Challenge public event, held at the Minneapolis Club in October “Death and dying is inherently sad. Every website associated with this product or service wants to take a sad event and make it even a little sadder. We feel like our role is to give people a little bit of a break from that.
As weird as it is people seem to have fun with it and find some joy in it.”
Saari got the idea for Foreverence a few years ago while reading an article in Time magazine that indicated half the country’s dying are now opting for cremation over burial, with further increases projected in the years ahead. Foreverence uses 3D printing to create the custom urns, which are designed in consultation with family members to represent the deceased person’s interests.
“Every family has a story to tell,” he says.
Maple Grove-based Foreverence has had some significant successes since opening, among them being chosen to build the Paisley Park urn used to house the remains of Prince. Several other celebrities, including Scott Weiland, Bob Casale and Lemmy Kilmister, have been memorialized via the company’s urns, which has been a public relations coup, Saari says.
There also have been some challenges. Incorporated in 2014, Foreverence started out trying to sell to funeral homes — an industry that claimed to really like the product but that moved slowly enough in adopting it that the company grew frustrated.
“I half-jokingly say they did us a great disservice by liking the product as much as they did,” Saari says.
While growth through that channel languished, the 3D printing industry got excited about having a consumer product to market. Growth in the business-to-consumer segment started increasing almost by accident, he adds. So, in 2017, Foreverence officials stopped attending funeral home trade shows and started focusing on marketing to affinity group events with passionate attendees such as the Barrett-Jackson Auto Auction, the Miami Yacht Show and the Westminster Kennel Club Dog Show.
“We finally decided we’re going to make a full pivot here and leave the industry and become a straight up direct-to-consumer brand,” Saari says.
As the Growth Challenge was taking place, Foreverence was preparing to create a sister website aimed at the pet market. The company already sells some product to those buyers, but intends to up its efforts soon. People spend a ton of money on pets and it tends to be an easier sales process, Saari says, because the loss of a human loved one typically means a consensus decision-making process. For pets, “it’s that one person making that call right then and there.”
Saari says there also are internal discussions taking place on the best strategies for upping a conversion rate that right now hovers around 10 percent.
That likely involves some “downstream options,” such as an e-commerce platform that provides some options at lower price points than the completely unique ones presented in person, Saari says.
Upstream options under consideration, he says, include commissioning an artist that could design something special solely for a customer or commissioning a series of 100 or 200 items at a higher price point.
“You’re always looking at up and down and how to churn margin,” Saari says.
The challenges Foreverence faces in taking its next steps are similar to other small businesses. What to focus on doing next? How to expand its offerings while maintaining the high-end niche? How to raise the necessary capital for doing so?
The company also would like to diversify away from operating as just a “time of need” company. About 20 percent of its current business come from the pre-planning segment of its business for those who want to take control themselves over how they are remembered. That’s a side Saari would like to see grow. Post-planners, who feel whatever product was purchased years ago for their loved ones was inadequate and want something new also present an opportunity, he says.
“There is never a shortage of good ideas, but there always is a shortage of capital and a shortage of human resources to execute on those ideas,” Saari says.
The company has conducted some smaller offerings. While Saari doesn’t consider that a mistake, he told Upsize in a separate interview that balancing between the amount of financing to seek versus maintaining control of the company matters.
“You end up becoming a professional fundraiser instead of running and operating your business,” Saari says, of raising smaller amounts. “It elongates the process. You always find yourself holding off on some of the things you think you should be executing.”
The company’s urns usually cost consumers on average around $2,500 — well above the cost of a traditional urn, but below the cost of a casket from a funeral home. “We definitely play on the high-end,” Saari acknowledges, comparing a Foreverence urn to a Rolex. “Nobody has ever bought a Rolex watch because it tells time. You’re not buying it for its primary utility, you’re buying it because it’s an expression of style, an expression of elegance. If you’re looking for an ash container you’re not going to buy one of our products.”
The panel of experts commended Foreverence for targeting pets and wondered if the company may be able to increase sales and margin by incorporating some prototype urns into its mix.
Dan Moshe, co-founder and CEO of Tech Guru, says he’d like to see the company supplement its core, customized urns with a collection of pre-made products
“If it can be done without hurting the brand,” he says.
Those might still include a nameplate that identifies the person, but otherwise would be a standard product. “I’m thinking, in the transactional world we live, in I’d love to see 1,000 concepts — it doesn’t matter if they’ve ever been made — where I can pick something out and include that in my estate planning.”
Those mass-produced products could step into the company’s current price points, allowing Foreverence to charge a higher rate for its fully-customized urns, adds Dean Willer, a shareholder with Winthrop & Weinstine. “If you go complete customization you could move up-market quite a bit,” he says. “If someone is going to want a pure custom urn those people are probably a lot less price sensitive.”
Saari replied that on the pet side, Foreverence intends to have available the six most common breeds of American dogs as sculptures. That product could then be customized with some ancillary attribute special to the dog, such as a blanket, chew toy or their house. On the human side, Foreverence may dabble a bit in less customized products, but not to the point of losing the company’s identity, he says.
Jon Cassens, a director with DS+B | CPAs + Business Advisors, says the custom urn market is a significantly unique niche.
“Kudos to you guys for really having a unique product,” he says. “I’d never have thought I’d go to a wedding and sit next to my grandma and say ‘look at this cool urn you could be in, in a couple years.’ It is a unique and cool idea.”
He suggested tailoring at least some promotions toward assisted living facilities or other end-of-life centers with the idea of reaching caregivers. “They will be your direct contact at some point,” he says.
Rick Brimacomb, CEO of Brimacomb Capital, told Foreverence officials that he heard a news report around Halloween indicating that people spend around $350 million on costumes and other items for their pets.
“Every pet person I see, they are just off the charts about their pets,” he says. “If $350 million a year are spent on pet Halloween products, you should be able to sell a healthy amount of the pet product.”
Regarding financing, Brimacomb says the company should focus on creating a one-to-two-year plan aimed at an amount that would move past the “raise a little, spend a little” pattern.
“If you are break even, give or take, you have the luxury of time,” he says. “If you take a step back and say we did a lot of work to get here, we’re breaking even, we’re trying some things, we’re learning, this works, this doesn’t, then you can go raise, say, $2 million. You have time to do that.”
CONTACT
RICK BRIMACOMB, Brimacomb Capital: 612.803.3169;
ri**@*******mb.com; www.brimacombcapital.com.
JON CASSENS,DS+B |CPA + Business Advisors: 612.630.5071; jc******@*****pa.com; www.dsb-cpa.com.
DAN MOSHE, Tech Guru: 612.235.4895;
da*@********it.com; www.techguruit.com.
PETE SAARI, Foreverence: 888.730.6111;
pe********@*********ce.com; www.foreverence.com.
DEAN WILLER,Winthrop & Weinstine: 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.’”
