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.
UPSIZE GROWTH CHALLENGE :: PRESS GOLD GROUP
Press Gold aims to fuel
newer, fast-growth biz
with profits from old
by Andrew Tellijohn
Change is good, but it?s also hard for the founders of Press Gold Group, Jeffrey Goldenberg and Carl Pressman.
Bloomington-based Press Gold Group has provided time and attendance systems that calculate pre-payroll processes, saving businesses countless hours, for about a decade. The company had gotten several leads from payroll companies and had been consistently profitable ? even very profitable ? for most of its time in business. Annual revenue was ?well over? $1 million with ?modest growth.?
Then those leads began drying up as payroll firms began providing their own time and attendance products. Business was still strong, but the change pushed Press Gold?s owners toward a decision they had been debating for awhile.
They spent six months identifying staff, software and other needs and then entered the payroll business to compete with Paychex Inc., Automatic Data Processing Inc. and other companies providing the same service.
The move made sense to the founders because it is a closely related field, because it has a value-added product it can offer to its time and attendance customers, and because ?this market for whatever reason, does not have a lot of local competition,? Goldenberg says. The company is one of three winners of this year?s Upsize Growth Challenge.
So Press Gold Payroll became reality two years ago and the results have been largely positive. Recruiting clients has been a bit different ? 60 percent of Press Gold Time & Labor clients were going from a manual process to an automated one while almost 90 percent of Press Gold Payroll customers were either unsatisfied clients of larger firms or switch-overs from smaller outfits and professional employer organizations.
Press Gold has also been going after companies that still do their payroll in-house, though Goldenberg says that?s been a longer sell requiring a lot of education.
The company brought in 130 clients in 20 months, more than 100 clients in 2007 alone. Officials expect 2008 revenue to triple 2007. ?We see there?s a real appetite in this market,? he says. In fact, within two years the company expects the new division to eclipse its time and attendance business.
Growth has been fast and steady but has left Press Gold Group with some challenges. Doing payroll creates data security issues. While Press Gold contracts with a certified third-party company to perform tax filings and other activities, Pressman and Goldenberg still want to make sure they are doing enough to protect the company against a breach.
Goldenberg and Pressman say they?re also concerned about integrating staff, especially on the operations side, and about creating meaningful goals outside of simply growing quickly. The founders also have greater concerns with client security than before and with unifying a marketing message while competing with larger, better known competitors.
?Our challenge,? Goldenberg says, ?is how to build a fast-growing business within the context of a slower, profitable business environment.?
From an insurance standpoint, Mark Gleeman, attorney with Winthrop & Weinstine and the Upsize Growth Challenge legal expert, suggests looking into employment practices liability insurance (EPLI) and comprehensive general liability (CGL) policies with an insurance broker. Those types of policies can guard against unfortunate fraud instances.
He also suggests that an employee handbook with well-defined confidentiality rules and remedies can help guard against problems.
The business can take some structural steps to protect itself against liability issues. Bryan Ross, a certified public accountant with EideBailly in Bloomington, suggests that the company might consider creating a holding company out of which the employees of its two separate businesses are paid. The move could reduce liability in the instance of fraud, he says.
Both Ross and Rick Wall, CEO of Highland Bank, say the higher-risk payroll business should be kept a separate entity from the time and attendance company. Press Gold has maintained separate banking relationships, tax identification numbers and one is far riskier than the other.
