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.
Focusing on a solid foundation leads to growth for diverse firms
by Andrew Tellijohn One idea came from reading several management books.
Another was inspired by an owner’s experiences with the drawbacks of the traditional model of doing business.
A third came about as an epiphany while raising money while the markets were painfully slow.As the finalists in the Best Practices in Finance & Operations category prove, a good idea can hit you almost anywhere. The important thing is to get that idea in the first place, and then work hard to implement it.
Minneapolis-based Creatis Inc. increased sales 106 percent between 2002 and 2004 while building a clientele that includes many Twin Cities Fortune 500 companies.
Along with that growth, the graphic staffing and project outsourcing firm embraced the Internet by creating two online tools, with assistance from local service provider Reside.
Salesforce.com, an online customer relationship management tool, provides sales staff with access to contact information, pipeline management, forecasting and lead tracking. Creatis Connects allows associates to manage project tasks, documents, issues, proposals and track time.
For instant access to information, quick billing and other efficiencies, “The Web is a perfect tool,” Creatis’ President Dodd Clasen says, adding that “it’s seamless for clients.”
Clasen does caution against using revenue as an all-encompassing measure of growth. “Affiliating best practices with revenue growth is kind of a red herring,” he says, adding that it isn’t something to be chased at all cost. “Profit is the oxygen that the business needs.”
Defying tradition
Minneapolis-based public relations firm Fast Horse Inc. works solely on consumer marketing projects for a clientele that includes Blue Cross Blue Shield of Minnesota, Lawson Software and the Coca-Cola Co.
The small-but-growing company is owned, staffed and run by a team of young and aggressive employees. They have plenty of experience with larger, more traditional firms, but also have grown to understand that sometimes the old way isn’t always the right way.
“One of the constraints in the traditional system is the billable hours” format, says Jorg Pierach, Fast Horse’s founder and president.
So, in 2004, the company abandoned the tried-and-true system in favor of a project-fee system that also eliminated several traditional account management layers and titles.In the old way, as senior employees moved up the chain, they would lose touch with the clients they were just getting good at serving, Pierach says.
Now, employees can spend the necessary time on a project without the client worrying about unreasonable charges. And they stay with those clients even as they move up in the organization.
“It was a product of a lot of conversations to say the old model isn’t working for the clients or for us,” Pierach says. “The client doesn’t call us up and say, ‘Can I buy about 2.5 hours?’ ”Fast Horse hasn’t abandoned every facet of the traditional system. The company still sets budgets and monitors employees’ time to every six minutes using QuickBooks Online. The company uses the data in an effort to help employees manage their time more efficiently and to improve profitability.
But by going to a flat rate, employees can spend more time focusing on the task and less on the clock while clients know that their projects will get done.
The move appears to have paid off. Fast Horse’s revenue has more than tripled in two years, topping $1.03 million in 2004, and the firm holds its own against “intergalactic agencies” when it is trying to win business.
“As long as people understand the clients’ expectations it becomes pretty easy” to manage, Pierach says.
Everyone’s an owner
Some say there’s no better way to engage employees than giving them ownership in what they do. In most cases that might mean empowering them to lead a project or to find ways to bring in new business.
But at Eagan-based Intertech Software and its sister organization, Intertech Training, it literally means that when the company does well, employees will get a piece of the action.In 2001, Intertech instituted an equity participation plan that provides employees with options on “equity participation units,” which mirror what management believes they would be worth if sold on the open market. The firm is privately held.
The company also offers a profit participation plan. Intertech contributes 25 cents of every dollar of profit exceeding 8 percent, and 50 cents of every dollar exceeding 12 percent, to a profit-sharing pool. Funds in the pool are shared equally based on salaries.
“What has been powerful is it gives everybody a long-term stake in what happens,” says Tom Salonek, Intertech’s CEO. “It’s that focus on the numbers that gets their heads in the game and gets them focused.”
Intertech has 30 employees. The software and training firm saw its revenue increase 28 percent between 2002 and 2004. The programs are in addition to the traditional 401(k) plan. The company augments the equity program by holding monthly meetings during which the metrics being used to measure performance are discussed. While Salonek acknowledges a certain amount of risk inherent in sharing such numbers with employees, it’s a tradeoff he is willing to bear.
“If employees don’t have any information they are going to make it up,” he says. “And what they are going to make up is going to be a lot worse than what is actual.”
Having a number of minority shareholders, who could potentially cause headaches at times, could also be risky, Salonek tells the audience.
But the company is protected to some extent because the options don’t fully vest for six years and employees lose them altogether if they leave the company during their first three years. In the long run, Salonek says the payoff exceeds the cost in time and money.
Accounting is a minor issue. The reserve shows up as a long-term liability on the balance sheet. The incentive program, which won in the Best Practices in Finance and Operations category, was inspired, Salonek says, by his reading of Aubrey Daniels’ book, “Bringing out the Best in People,” which discusses maximizing employee potential through positive reinforcement.
“The upside is for the long-term employee,” he says. “This is not about get rich quick. We’re here, we show up — it’s about building long-term equity.”
Attracting investors
With fuel prices up and the ongoing search for alternative energy sources spreading, WindLogics Inc. appears to be onto something big.
The efficiency of wind power continues to increase, but in order to make wind a better alternative to traditional forms of energy, utilities need to know when, where and how consistently it’s going to blow.
Enter WindLogics, founded in 1989 as Software Solutions and Environmental Services Co. The company identified a new growth opportunity in 2004 and created a strategic plan aimed at capturing the commercial wind energy market.
WindLogics’ new focus was collecting terabytes of meteorological data — 25 gigabytes every day — to provide better historical analysis of wind patterns at any given location for utilities hoping to build towers intelligently.
Lee Alnes, vice president of marketing and general manager with St. Paul-based WindLogics, jokes with attendees: “Weather forecasters exist to make the financial prognosticators look good.”
A moment later he turns serious. When WindLogics began studying the idea, company officials realized “this is an area where people are going to make hundreds of millions of dollars worth of decisions.”
So WindLogics capitalized on its background as a software solutions company, though it has always had a meteorological bent. The company hired several top scientists and developed sophisticated scientific modeling techniques that have helped develop advanced wind energy data.
Actually, Alnes says, when the firm started trying to raise capital the plan was to distribute information to aviation and transportation agencies over the Internet.
“We had one of those classic ‘who moved my cheese’ moments,” he says. “We really put together a concise and compelling story about the technology we had.”
Now, WindLogics’ clients include Boeing’s autometric division, NASA, and the United States Air Force, and it just started work on a big forecasting project for Xcel Energy Inc.WindLogics will perform four times as many wind studies in 2005 as in 2004.
[contact] Lee Alnes, WindLogics: 651.556.4262; www.windlogics.com. Dodd Clasen, Creatis Inc.: 612.333.3233; do*********@*****is.com; www.creatis.com. Jorg Pierach, Fast Horse Inc.: 612.746.4611; jo***@**********nc.com; www.fasthorseinc.com. Tom Salonek, Intertech Software/Intertech Training: 651.454.0013; ts******@***************re.com; www.intertechtraining.com or www.intertechsoftware.com.
Cannabis-based products have been increasingly available in Minnesota over the last six years. The opportunities in that space became even more prominent last year when the state legislature voted to become the 23rd state to legalize adult recreational use of marijuana for Minnesotans over 21.
When Super Bowl LII was played at U.S. Bank Stadium in February 2018, Alex Tittle didn’t play a down on the field, but he had more than three-years of impact on the experience.
Unemployment in Minnesota sits below 3 percent. Labor market participation is high. Airport traffic counts across the country are approaching and even surpassing pre-pandemic levels, so consumers are still spending money. Consumer confidence, reportedly spurred by the strong labor market, also seems at least cautiously on the rise.
