Peter Ausenhus & Margaret Bishop, Co-owners, Worth Brewing Company
The Tiniest Brewery
Big Dreams in a Small Town
Worth Brewing Company in Northwood, Iowa is a pioneer in a now rapidly exploding nano and micro-brewing industry.
Co-owner Peter Ausenhus began his brewing career at Summit Brewing Company in Minneapolis, one of the Midwest’s early microbrewers.
Peter became inspired by the great tradition of locally owned brewers serving hand-crafted, high quality, distinctive beers. The nation’s small and mid-sized towns were once dotted with such breweries. He started looking for an opportunity to build his own tradition.
Co-owner and Peter’s spouse Margaret Bishop’s love for old buildings brought their vision to Northwood in Worth County Iowa. Margaret and Peter found a historic Main Street building in the brick 1886 Worth County State Bank Building. Margaret managed a loving restoration for the building in the Northwood Central Avenue Historic District. Among many preserved and restored details, the original teller cage was transformed into a unique bar front. It became the perfect first home for Peter’s traditional hand-brewing. Worth Brewing opened in 2007 as the first independent brewery in North Iowa in several generations. Worth Brewing brings a bit of those historic days back to the delight of the growing number of those who appreciate locally brewed beers. Worth Brewing’s brand promise blends traditional brewing with a love for historic architecture.
In the beginning, Peter brewed in the renovated turn-of-the-last-century storefront, while Margaret operated her consulting engineering practice from the upstairs offices and helped with the brewery on nights and weekends.
Active in the Iowa Brewers Guild and Brewer’s Association, Peter and Margaret accumulated accolades and an outsize reputation for excellence.
A knack for guerrilla marketing helped. Iowa Public Television’s Simple Pleasures highlighted Worth Brewing. They were featured in a national foodie magazine, Food and Wine, as Iowa’s outstanding nano brewery. These are just a couple of examples that led Iowa’s tiniest brewery to gain a national reputation from rural, small town Iowa.
While working with the North Iowa Area Community College’s Pappajohn Center and the Small Business Development Center (SBDC), Worth Brewing built a track record of business growth and profitability. Then North Iowa SBDC Director, Ted Bair brought his own experience as a successful beer distributor to the business counseling relationship. Sales and profits had seemingly reached a ceiling. For sales and profits to grow the owners knew they would have to broaden their business model to include outside distribution and in-house special events. The current brewing system and building were just too small. While cities in a 60-mile radius courted Worth Brewing to move, Peter and Margaret looked for options locally and sought the advice of the experts at the SBDC.
The NIACC Pappajohn Center and the SBDC swung into action to help formulate plans and find capital for the desired expansion. Jamie Zanios lent his experience and connections in liqueur wholesaling and restaurant and bar retailing. Tim Putnam contributed his connections and experience in retail food and drink management systems and personnel. Daniel Winegarden provided business model strategic guidance and financial modeling. North Iowa SBDC Director, Brook Boehmler advised on marketing and sales.
It was a complex challenge with many moving and interconnected parts.
Finding a suitable building was the biggest challenge. The ideal solution of an immediately adjacent building wasn’t available. New construction was considered, but ultimately rejected as inconsistent with the Worth Brewing brand. Plans progressed in fits and bits.
The Pappajohn Center and SBDC helped the Worth Brewing team apply the best lean startup techniques to test various options. The Pappajohn Center and SBDC collected key market trend research and Peter and Margaret put it into context with feedback from fellow brewers that built successful expansions in other similarly situated markets.
Margaret decided to focus exclusively on building an expanded Worth Brewing. That led to the sale of her professional engineering practice. The Pappajohn Center and SBDC contributed advice on marketing, valuation and negotiation.
The money from the engineering practice would be one of the key sources of new cash into the expansion. Banks don’t do one-hundred percent financing. Investors like owners who are investing their own money in the deal.
They attracted a key outside investor with industry experience for another slice of the financing puzzle.
The problem finding suitable space in Northwood led to consideration of other alternatives. Other communities courted Peter and Margaret seeking a destination brewery for their economic development. Northwood is a county seat but only has a population of 2,000. Sustaining vibrant main streets is a common challenge for rural communities. Worth Brewing is an attractive destination anchor tenant that brings in traffic from a much wider regional customer base. The Pappajohn Center and SBDC helped consider options with complex financial modeling to allow apples-to-apples comparison of alternative offers.
Just when it seemed a move out of Northwood might be necessary; even inevitable, local development leadership stepped up with a perfect solution. It had been staring Peter and Margaret in the face for ten years.
The Northwood Economic Development Corporation arranged the purchase and participated in the financing of a building immediately across the street from the original Worth Brewing home. It was the mostly vacant 1896 International Order of Odd Fellows (IOOF)-Erickson building.
Time for another historic renovation project to become the new and enlarged home for Worth Brewing.
“. . . This two-story brick structure in the Italianate style was designed by J.L. Rood of St. Paul, who had also designed the nearby Worth County Courthouse. When the rehabilitation project started, the building was vacant—one side having been empty for 6 years. The roof and non-historic storefront was replaced to prevent further water infiltration and damage. Many original elements were saved and restored, including the metal cornice. Those surfaces were scraped, cleaned and painted.
Worth Brewing Company converted the first floor of the Erickson Building into the brewery; the first floor of the Odd Fellows building into the brewery Tap Room, and the second level Odd Fellows hall into an event center space. On the interior, asbestos was professionally abated to expose the original wood flooring. 1980s infill partitions and drop ceilings were removed.
The original wood bead board ceiling was uncovered and carefully restored. Additionally, The IOOF meeting hall’s tin ceiling and molding was restored. Other restored elements included two of the original entry doors, all of the original doors on the second level of the Odd Fellows and the c. 1940 windows and doors on the second level of the Erickson Building. Preservation Iowa.
The result won recognition as a 2016 “Preservation at Its Best” award winner. http://www.preservationiowa.org/programs/preservation-at-its-best-awards/
It’s a big deal for North Iowa. Governor Branstad, state economic development officials, and area elected officials came to tap a keg to first announce the expansion and then returned to help christen the new home.
The rehabbed building accommodates a new seven barrel brewing system, approximately a 20 fold increase in prior production capacity. It offers a much enlarged tap room. The upper level is the historic Bee Hive Ballroom and includes a modern catering kitchen that enables a unique venue for a wide array of events. Worth Brewing now has a much enlarged original business line (the retail taproom), and two entirely new business lines with the event venue and wholesale distribution. And the story of sales growth and profit growth continues.
Financing the expansion was possible because of all the homework in developing a proven business plan based in reality and not guesses. The work with the Pappajohn Center and North Iowa SBDC paid-off. Total project investment in the newly enlarged Worth Brewing building, equipment and business model exceeds $1 million.
The existence of a plan empowered Peter and Margaret to manage through the construction unknowns and move across the street.
The Pappajohn Center and North Iowa SBDC helped develop key strategic partnerships to pursue the planned growth. A key lesson for entrepreneurs is you don’t have to do everything, you just have to see that everything gets done. Distant distribution requires partners with experience and access to retail decision-makers. Kabrick Distributing of Mason City fit the bill. Peter and Margaret work with Kabrick for Iowa distribution outside of Worth County. Expansion into Minnesota is the next step on tap as Worth’s regional customer base includes many beer enthusiasts from the Albert Lea, Austin and Rochester areas.
The SBDC also helped establish a direct distribution relationship with another key regional tourist attraction, Diamond Jo Casino. Peter mastered all the technical details required to support the casino’s sophisticated, high volume supply system. Peter and Margaret also cleared the high bar of business requirements to become an approved supplier to the casino’s corporate parent. So much of the work behind business success is not obvious but necessary.
Both Worth Brewing’s beer and new home continue to receive accolades. Peter Ausenhus and Margaret Bishop keep proving that great businesses are possible in rural Iowa. As the company likes to say, “If it’s not hand-crafted it’s not Worth Brewing.” The Pappajohn Center and North Iowa SBDC’s assistance is a key contributor to Worth’s success with over one hundred hours of counseling and work in the two years from conception to completion.
Peter Ausenhus and Margaret Bishop are the embodiment of the Iowa SBDC Neil Smith Entrepreneur of the Year’s search for outstanding business owners delivering a success story with the help of their regional SBDC. Northwood has multiple restored historic buildings thanks to the Worth Brewing team. Northwood enjoys the tourism and entertainment magnet of an outstanding microbrewery. Worth Brewing added space and employees including a new Retail Manager, Tyler Trenhaile. The NIACC Pappajohn Center and its North Iowa SBDC, led by Director, Brook Boehmler helped deliver a historic win for Northwood. Worth Brewing laid the groundwork for a dramatic expansion in volume and market reach, including interstate commerce. Worth Brewing illustrates the teamwork required for success in major projects with close work with Northwood city officials and Northwood Economic Development Corporation (EDC). Northwood City Administrator Amber Julseth and then Northwood Mayor, Jane Bloomingdale (and now newly elected State Representative), helped pull together the local support. The EDC and City were indispensable partners in financing the project and enabling Worth Brewing to continue to grow in their hometown. Peter and Margaret’s vision and energy are the direction and power behind the Worth Brewing’s success story. The dramatic results illustrate how important the allies you collect along the way are for ultimate business success. It’s not who you know. It’s who you get to know.
Northwood and North Iowa are fortunate to have gotten to know Peter Ausenhus and Margaret Bishop, co-owners of Worth Brewing and nominees for the 2016 Iowa SBDC Neal Smith Entrepreneur of the Year Award.
Performance Livestock Analytics
Big data and data analytics thrive on Iowa’s prairie
It’s a mistake to think entrepreneurial companies only grow in urban canyons, suburban parks, or academic halls. The most recent winner of the annual statewide John Pappajohn Entrepreneurial Venture Competition is a rural company serving rural customers by applying the same sophisticated information technology driving change in Silicon Valley. Performance Livestock Analytics deploys big data analytics through mobile devices like an iPhone. They created an easy to use and understand application (app) for cattle producers.Read More
Performance Livestock Analytics is changing livestock marketing by putting key data and timely action alerts in a cattle producer’s hand. And doing so when it’s time to act, with powerful real-time software. Ag producers can’t afford hit or miss marketing anymore. They have to take advantage of narrow market windows to lock in profits as they occur. Reading about yesterday’s closing market prices in the newspaper the next day is too late. Even seeing today’s market data on the desktop computer after field work is done is too late. Markets are closed. It’s not actionable information. The opportunity is history not news.
More than seventy percent of a beef producer’s profit is determined by three prices: what the farmer pays for young feeder calves; the cost of feed to grow calves for six months or so; and the sales price for fed calves. The problem? The three prices are constantly changing, day to day, minute by minute.. To further complicate matters, there is both today’s market (current cash price) and a futures market price (price for delivery on a future date, with opportunities to put or call future production).
In similar circumstances, Wall Street pays a fortune for marketing-leading, high-speed trading technology to capture arbitrage (profit-taking) opportunities lasting only seconds or minutes. Performance Livestock helps farmers lock in profits (or manage risk) when the commodities markets offer similar narrow market windows in local livestock and grain markets. Current competitive alternatives are too slow and too late because livestock producers are not desk bound but multitaskers. Performance Livestock’s CEO Dane Kuper says, Traditional marketing does not keep up with today’s market volatility, The Cattle Krush app changes the game for cattle producers. No longer are they subject to volatility, they now have the power of our app in the palm of their hand..”
Dane explains, “Our Cattle Krush App puts the key data already custom analyzed to the farmer’s unique situation into an easy to understand format on a 4G high-speed smartphone or tablet. It’s in the farmer’s hand whether he or she’s in the pickup,at the sale barn, or in the field. A desktop computer sitting in the farm office just isn’t convenient or timely enough. To succeed today, it has to be my farm’s data and current prices in my local markets. Our pop-up alerts help farmers pull the trigger before the target disappears.”
COO Dustin Balsley expands, “Timely market action is even more critical now with low grain and livestock commodity prices. Bankers want their client farm borrowers to have a handle on costs and a proactive marketing plan to maximize profits. Our Performance Beef App maximizes production efficiencies. Together our products Performance Beef and Cattle Krush are the answer.”
Performance Livestock Analytics is the brainchild of two Osage, Iowa area farm kids all grown-up to become high-tech entrepreneurs. Dane Kuper and Dustin Balsley were high school wrestling teammates. They built muscle and the Iowa work ethic throwing hay bales and doing the daily work of raising cattle and hogs. They went off to college for degrees in Agriculture. Their sales success and hustle won them careers in California with an early innovator in analyzing data to maximize row crop production and profitability. They decided the same information technology trends and tools could be applied in livestock production and marketing. While still working that row crop day job they built their livestock platform by side hustling at night and on the weekends.
That’s where the NIACC John Pappajohn Entrepreneurial Center helps. The Pappajohn Center includes the regional Small Business Development Center (SBDC) and the NIACC Pappajohn Accelerator working together to serve North Iowa Businesses. A lot of great programming is available in Iowa for entrepreneurs cultivating early-stage high-growth companies. Most of those options don’t work for mid-career executives with a day job and family responsibilities. But the NIACC Pappajohn team is located in rural Iowa. It focuses on the industries that drive Iowa’s rural economy including agriculture, logistics, and advanced manufacturing.
Accelerator Director Daniel Pitts Winegarden says, “Many people don’t understand just how scientifically driven agriculture is. Ag is up there with medicine in applied science and demand for data. Performance Livestock Analytics is a perfect example. The tools of IT cross the vertical industry silos. We can take lessons from a similar problem in row crops or stock trading and apply it to livestock production and marketing.”
Winegarden is an SBDC business coach focused on Accelerator opportunities, high-growth, high-tech companies seeking business out-of-state and importing dollars and jobs to Iowa.
Winegarden coached Dustin and Dane to polish their business pitch in preparation for the Venture Competition. “As a client of the SBDC, they came in with a brilliant business model already on the verge of launch. It was easy for ag customers to understand their unique value proposition. I helped them tell their best entrepreneurial story so the non-ag community could understand the market opportunity. And I did so after hours with one-on-one coaching because that’s when they had time to be entrepreneurs.”
Dustin explains, “With Dan and the NIACC Pappajohn Center we found deep expertise that immediately grasped the business and helped us tell the story more effectively. We didn’t have to educate him. He showed us new connections. His examples or illustrations made it easier to explain our ideas and made the benefits feel real and realizable. Even if our listener never set foot on a farm.”
Dan says, “Dane and Dustin are something of an entrepreneurial dream team. They know leading edge information technology. They’ve deployed for others all the trendy ‘buzzwords’ of change. Cloud storage, software-as-a-service (SaaS), big data, data analytics, Internet of Things (IoT), and real time management dashboards aren’t theory but practice to Dane and Dustin. They’ve done them for others. They also know the livestock producer customer, because they are livestock producers. They both operate cattle feeding operations of more than a 1,000 head a year. And they’re marketers and salesmen. Almost never do startup founders begin with all three areas of expertise in a single leadership team. Here the founders know the business problem, the IT solution, and sales.”
The proof is in their results. Performance Livestock Analytics won out over a talented field of more than fifty Iowa startups to claim the $25,000 first place prize from the 2016 John Pappajohn Entrepreneurial Venture Competition.
“I see a lot of business models, plans, and entrepreneurs. This win is well-earned by Dane and Dustin. Performance Livestock Analytics stands out for its exceptional leadership team and a fabulously polished business model. They’re already racking up key partners and customers like Producers Livestock Marketing Association. They have both market insight and market access to the target customer. They know IT. And they can sell. I couldn’t be more impressed and proud of their progress.”
With the win comes the attention of high profile customers and potential investors to fuel additional sales and growth. Dan explains, “Dane and Dustin are brilliantly exploiting their knowledge of the network of supporting players and consultants like animal nutritionists that work with livestock producers.” This network is part of the marketing and distribution channel to capture new users.
They’ve started with the cattle market because their longer production life cycle makes market swings a bigger pain point for farmers. Markets can swing from profits to deep loses before a six month old feeder calf is a finished, fed calf at eighteen months. The same basic tools of real-time local price discovery, data analytics tailored to a producer’s unique herd and cost structure, and timely convenience will come to additional markets as Performance Livestock grows.
Dustin concludes, “Individually tailored action alerts in your hand, where you are, when it matters, beats unconnected data on a desktop, after the market window closed.”
Beef producers want to be more profitable. Beef producers’ bankers want less risk and a proactive profit maximization plan. Performance Livestock Analytics’ Performance Beef and Cattle Krush apps answers both problems. And does so from the real world of rural North Iowa with all the high-tech tools of Silicon Valley. Iowa ag entrepreneurs are succeeding with expert entrepreneurial assistance from the NIACC Pappajohn Business Accelerator.
Simon Rodrigues grows business with focused marketing
Simon Rodrigues is a recent graduate of the NIACC Pappajohn Center’s Launch & Grow Your Business program. Launch & Grow prepares prospective business owners to successfully launch new ventures and assists existing business owners grow or otherwise deal with change. Simon came in with deep experience in welding but learned that running a business is more than technical expertise in the service offered. The discipline of working through the operational details and operational budget was essential to go live.Read More
“As a welder, I immediately understood the production time and consumables required for a particular welding job. Those were variable costs in my operating budget. It required more planning and helped me to think through all the fixed costs like rent, insurance and basic equipment necessary before I could do job one. These fixed costs are there regardless of how many customers or projects I have. When you’re an employee, these are the employer’s problem. When you’re the business owner you can’t ignore the fixed costs or the time to ramp-up sales with marketing,” Simon explains.
“With the help of friends, I’ve kept my start-up and fixed costs low. And I’ve focused on a different market than my day job. This allowed me to start my business part-time.”
One of the key things Launch & Grow focuses on is solving a problem for a clearly defined customer. Selling to everyone almost never works. Offering a solution for a customer’s problem does work for most small businesses. Keeping a customer is less expensive than constantly getting new customers. Knowing this, Simon looked for customers in a position to deliver repeat projects. “If I keep them happy, they’ll be back,” Simon concludes.
“In brainstorming with my NIACC businesses coaches, I identified the architectural and construction industry as a repeat buyer of custom architectural, decorative or ornamental iron and steel work. I’ve landed some good projects building custom railings and stairs. These show off my craftsmanship and attention to detail and satisfy my artistic side. They also work on the business side. The construction industry needs parts built to specifications, but on time and on budget is also important because my work eventually gets incorporated into final building.”
Simon concludes, “I do a variety of on-demand work including repairs and fabrication. I need some of the repeat, volume jobs to make the numbers work. Fabricating for the architectural market is great. I love that people see and touch my craftsmanship every day. The Pappajohn Center and Small Business Development Center helped me understand how I solve problems for customers. Architects and building contractors need a welder to build custom details that can deliver the fabricated steel to realize their vision. I can see the growth in my business as a result.”
Glory Welding, in Mason City, Iowa, offers customer welding and steel fabrication. www.glorywelding.com/ Owner, Simon Rodrigues works in a variety of metals and welding techniques and offers more than ten years’ of welding experience.
Sarah Novacek, President & Owner, Legacy Logistics Freight, Inc.
Nominee for the Iowa SBDC Deb Dalziel Woman Entrepreneur of the Year Award
Sarah Novacek is building a multi-million dollar logistics business from humble beginnings as the newly-wed wife of a kid from a truck-driving family, just trying to help her husband find loads and get paid. Her ah-hah moment was wondering, “How do truckers do it who don’t have a wife or girlfriend?” That led to offering her service to other independent truckers. Flash forward ten years.Read More
She’s grown from an adjunct of the in-law’s trucking business, to a solo broker operating out of an in-home basement office, to now a corporation with more than $2.5 million in annual revenues serving national brand name food companies like Jennie-O, Hormel, Michael Foods and more.
2015 saw major advancements including:
- 100%+ revenue growth;
- transition from a “doing business as” (DBA) structure to a new corporate entity to accommodate future growth; and
- moving into professional office space within the North Iowa John Pappajohn Business Incubator.
The changes and growth of the last eighteen months are a direct result of Sarah’s coaching from the North Iowa SBDC counselors, Brook Boehmler and Daniel Winegarden.
Sarah explains, “Working with the SBDC has changed our lives. Literally. They’ve helped us grow a good idea into a great company with a focused message and vision. I’m a hard worker but didn’t always think like an entrepreneur. The SBDC helped me understand that for my corporate customers and the truckers with whom we place customer loads my rural work ethic is an advantage. I didn’t grow up rich or connected. I know the life of a trucker. I’m married to one. As a load broker, understanding the process and problems that can arise for everyone involved is critical. You don’t need a fancy degree to be successful. I am a business owner and now I think like one. My job isn’t to do everything; it is to see that everything gets done. And, it’s not who you know, but who you get to know. I work with corporate executive clients and self-employed truckers by treating each of them well but also being direct when necessary. My coaches have my back. Brook Boehmler knows marketing and support systems. Dan Winegarden makes complex strategy and corporate finance seem simple and obvious. We’ve gotten so much better at telling our story and our unique advantages and it shows in sales. The SBDC is a big part of our success. Maybe the biggest thing is they believe we can do it. They’re advisors, sounding boards, and cheerleaders. We’ve been exposed to other entrepreneurs and you know what? If they can do it, so can I. The financial success provides jobs for four people and allowed us to buy a new, bigger home to hold a growing family.”
Legacy has never lost a corporate client and continues to add clients and new volume from existing clients. Combine this with the overall revenue growth and profitability and it’s a significant measure of customer satisfaction.
Dan Winegarden relates, “Sarah sees the value they add to the community and region. Her brokerage plays a critical role in moving our high value industrial output to market, contributing to the economic success of not only her own company, but all those involved in the food chain. She’s positioned Legacy to scale with systems that allow employees to deliver consistent quality service with all the appropriate and necessary documentation for compliance and payment. It’s a smart business that plays to Sarah’s strengths in dealing with people, but it’s also a business that requires attention to detail. Legacy Logistics handles personalities and documentation equally well.”
Sarah explains, “I wanted to own my own business since college in 2001 introduced me to a bigger vision of opportunity. I married into a family of over-the-road independent truckers. My new husband and father-in-law were both small business owners, but I immediately saw the limits of their business. There was no good way to grow the business. It was capital intensive because of the expense of the trucks. It was labor limited because there are only so many hours in a day that drivers are allowed to operate a truck. And it required active management of cash flow with high fuel expenses and the time delay between when a load is delivered and when shipping clients pay. Somebody had to first acquire a load and then do the follow-up paperwork to prove timely delivery and get paid by the shipper. If that somebody was driving a truck full-time the office work tended to suffer.”
Sarah continues, “My new husband, Brian, had grown up in the front lines of the transportation logistics industry. He had hard experience in driving, accounting, payroll, dispatching, collections and more. He’d dealt with problematic shippers, receivers and drivers and knew the excuses. While Brian knew the drivers, I learned the logistics business facing the shippers as my key customer. Drivers are necessary but not sufficient. No loads from the shippers? Then, nothing for drivers to do. Shippers were the indispensable relationship. I learned how to cultivate, acquire and sustain relationships with profitable shippers.”
Ambition counts for a lot. “Brian and I agreed when first married that we wanted our own businesses that let each of us do what we do well. Controlling our own time was a motivator in our ‘5 Year Plan.’ I suggested that we didn’t have to own the trucks. So long as we controlled the shipper relationship, we could place the loads and fulfill the contracts by brokering loads to other drivers. It was what I was already doing for ABC Trucking but now I could see the path to a larger scale. I became a broker.”
Sarah turned the key on her new business in 2006. “A Fortune 100 food company shipper was my first client. I began brokering loads for Jennie-O turkeys to multiple trucking companies and not just ABC Trucking.”
Legacy Logistics rapidly grew into a multimillion dollar business in just a few short years. Gross income in 2006 (year 1) was $198,657. In 2014 Legacy Logistics grossed over $2,747,377. The company is almost 14X larger in seven years. Sarah now has multiple national food company clients. She grew the company right through the Great Recession by focusing on food company clients. “People have to eat,” Sarah explains the logic of her strategic focus.
This year Legacy incorporated as the scale of the business grew and Sarah had more need of a liability firewall between the business and personal assets. Sarah is responsible for leadership and management, especially getting, growing and keeping shippers, the lifeblood of the company. Mary Novacek is the controller. She can help with dispatching and customer service and is Sarah’s back-up. The company is 100% female-owned and managed.
Another area of SBDC assistance for Legacy Logistics is guidance on registering as a Targeted Small Business (TSB) as a female-owned and managed company. Many government procurement contracts require a set-aside for some share of the contract spending to go through targeted small businesses. TSB status is a point of service differentiation and competitive advantage in a male-ownership dominated industry. This is one of Sarah’s growth strategies going forward as many of her current customers do business with federal and state governments.
Legacy Logistics outgrew the humble home-office setting. It now operates from the John Pappajohn Business Incubator, a co-working space operated by Sarah’s alma mater, North Iowa Community College (NIACC) and its John Pappajohn Entrepreneurial Center. The incubator provides both a professional working environment and the business coaching assistance of the SBDC. Sarah concludes, “John Pappajohn is a billion dollar venture capitalist from Iowa who helps fund support services for younger entrepreneurs, like myself, in five centers throughout Iowa. He started in a family grocery store while going to school at NIACC. It’s not where you started that counts. It’s what you build on that foundation.”
Tony Halsted, Hoover’s Hatchery, Rudd IA
Nominee for the Iowa SBDC Neil Smith Entrepreneur of the Year Award
Tony Halsted never intended to come back to the family business. He’d grown up working the incubators and packing chicks. Thanks to the family business, Tony had a college education and a perfectly great career in business development and information technology for a national financial services company. But plans change. Tony’s father was killed in an automobile accident, leaving his aging mother to run the hatchery. A couple of potential succession plans outside the family never quite materialized. Tony realized if Mom was ever going to retire, he’d have to step-up.Read More
In 2011, Tony came back to a 70-year old family company with a very traditional hatchery business model. Hoover’s sold day-old chicks to elevators and feed stores and their customers primarily through a paper mail order catalog, phone orders and some regional delivery trucks where the drivers were also the sales representatives to the local dealer. There was a lot right about the company, especially a reputation for great service and strong personal connections with dealers and reliable employees from Rudd, Iowa and the surrounding rural communities. The company had talent, real revenues and a base of productive assets. But there were also challenges.
The business was Mom’s, Mary Halsted’s, retirement annuity. Could it also be Tony’s future income? To do both meant growing the business without alienating current customers.
One of Tony’s first visits was to the North Iowa Small Business Development Center and then Director, Ted Bair. Ted worked with Mary and Tony to explain debt and equity options in developing a succession plan and started the planning process. One of Ted’s SBDC dictums is plan to plan. That’s what Tony did with Ted’s coaching. It’s worth mentioning that Mary had consulted with the North Iowa SBDC as far back as Rich Petersen, advice that was reflected in the good things Tony was counting on as his foundation for growth.
Tony worked the plan and applied his business school education and recognized that nationally customers were changing with a growing urban backyard chicken market, but that the suppliers, the hatcheries, were all pretty much like Hoover’s, with aging owners and aging business models. Tony sensed opportunity.
He wanted to get away from just selling a commodity so he entered into an exclusive genetic licensing agreement for a red-feathered meat chicken that looks like a traditional Rhode Island Red layer (egg laying hen) and a black foot, black feather chicken for the Asian immigrant market. Armed with the proprietary Red Rangers and Black Asians, Tony needed to reach the new customers.
He built a website with a simple online shopping cart for less than $1,000. Hoover’s was now an “online business.” That didn’t mean anyone else knew, especially those target customers, so he marketed extensively on social media, including Facebook and Pinterest. Hoover’s became the expert on backyard chickens and used visuals to sell the lifestyle, not just chicks. It worked. Hoover’s moved up Google page rankings from buried twelve pages deep to third on the first page. (And the first two served big commercial layers, not Tony’s market.) Within eighteen months, sales were up thirty percent (30%). And the growth came from new customers, not cannibalizing the traditional dealer base and revenue stream.
In 2013 Hoover’s efforts in social media were recognized by the Iowa Dream Big, Grow Here contest as state runner-up. As part of the regional contest, Tony met North Iowa SBDC business coach, Dan Winegarden, NIACC’s Director of Business Acceleration. Dan helped prepare Tony for the state contest, but together they saw the potential to change the audience of the growth story, to address investors.
Now the problem was production capacity. Working with the North Iowa SBDC, Tony presented their capital needs and growth strategy to key community banks. With debt financing secured, Hoover’s added-on, bought additional used incubators, and even contracted out production to other hatcheries that were less effective marketers but had excess production capacity.
Tony reorganized shipping to capture new economies of scale. Every week hundreds of thousands of chicks fly out of Minneapolis via the U.S. Postal service.
The work to plan and finance a workable succession plan continued behind the scenes with the North Iowa SBDC. Not all the opportunities panned out with the usual buyer vs. seller issues of structuring (asset vs. stock) and valuation. For both the client and the SBDC consultant a lot of work was below the surface creating the conditions of success. Hoover’s story just kept getting better so the Halsted’s negotiating leverage kept increasing. With the help of SBDC and Pappajohn Staff in Mason City, Tony developed a business plan and used forecasting models to project the growth and tell the vision for the company. They helped Tony realize the succession plan to buy his mother out with partners.
Dan arranged a meeting with and helped prep Tony for a key angel investor for growth equity. The angel’s initial reaction was, “My wife will shoot me if I take on a new project,” but Tony’s story was just too good to resist. It wasn’t just a growth company, but a growth industry niche. Tony arranged new debt and equity investors to buy-out his Mom and provide for her retirement. It meant sharing ownership with outside investors, but the investors brought synergistic knowledge, connections and resources to the table. It was the classic entrepreneurial lesson. It’s better to own a smaller share of a much bigger, growing enterprise, than all of a smaller, stagnant business.
From 2011 to 2015, four short years, Tony led the reincarnation of a fine but stagnant regional family business into a growth company, serving a national market and partnered with national players.
- Employee growth, from 32 employees to 72
- Revenue grew by 3X in four years, more than 70% year-over-year revenue growth with eight figure results, and is on track to be 4X in 2016
- Physical facilities 200% larger than in 2011 and with 400% greater production capacity
- New national contracts with Ace Hardware and Tractor Supply Store
- Simultaneously, new dealers were attracted to the traditional business lines by Hoover’s success in new lines and the exclusive offerings like Red Rangers.
- An investor group led by Steve Weiss assures access to capital for growth and animal nutrition and marketing depth.
Tony is now lead owner, post purchase from his Mom, Mary, and CEO (up from COO). Mary continues to consult to assure a smooth transfer of her traditional relationships. Hoover’s is a standout example of rural business growth, serving new distant customers both through an online B2C (business-to-consumer) model and through new strategic B2B (business-to-business) relationships. All this was accomplished without destroying the foundation of traditional dealers.
Tony Halsted and Hoover’s continue to work with the North Iowa SBDC including both Director Brook Boehmler and Dan Winegarden. The story isn’t over. Tony says, “I am beyond privileged to work with the North Iowa SBDC team and I let everyone know.”
The impact on the community cannot be overstated. Forty new jobs in a small rural community like Rudd (population 370), is a huge economic win. Successful entrepreneurs create opportunity and benefits far beyond their own family. Twenty Iowa farms support Hoovers Hatchery with eggs for hatching and those families also benefit. Feed mills and other agricultural businesses enjoy the new production demand. Tony’s strategic vision and tactical execution are stellar. His prior corporate experience in business development using the power of information technology, transferred exceptionally well to his own company. He’s grown revenue, managed the human resources needs of an expanding company, improved margins and profitability, raised both debt and equity, and established relationships with strategic partners. Tony has been the exemplar of a great SBDC client. He is coachable and action oriented. No matter how great the advice and assistance, execution and business judgment fall on the client. Tony delivers. He is most deserving of recognition as the Neil Smith Iowa SBDC Entrepreneur of the Year.
Dumont Insurance Agent Wins Statewide Woman Entrepreneur Award
Shelly Zimmerman, now owner and principal agent at Harrison-Thornburgh Insurance of Dumont in Butler County is the 2015 Iowa Small Business Development Centers’ Deb Dalziel Woman Entrepreneur Achievement Award winner. This statewide award recognizes women who have significantly improved or changed their own personal situation, thus having an impact on others around them. Zimmerman will be honored at a State Capitol breakfast reception with state legislators and leaders on March 5.Read More
Zimmerman completed the purchase of the independent insurance agency from her long-time employer in 2014. This business succession keeps a main street professional office in Dumont, sustaining client access and continuing a local tradition of professional service. She successfully expanded her clientele and hired additional staff.
Zimmerman, a long-time resident, is active in Dumont civic life. She had a great opportunity to buy the agency from her retiring employer.
Zimmerman’s bank, First Security of Dumont, referred her to the NIACC John Pappajohn Entrepreneurial Center and its North Iowa Small Business Development Center (SBDC) to work through the buyout business plan and make sure the numbers would cash flow or work.
Zimmerman relates, “The North Iowa SBDC provided me with important business projections and solid financial data to reinforce my purchase decision. The assistance I received from Daniel Winegarden was invaluable in drafting the focused business plan needed to obtain the financing to purchase Harrison-Thornburgh Insurance. I’m grateful to have had a resource with such a high level of knowledge and expertise to use as a sounding board when making tough business decisions.”
Right up front in planning Zimmerman identified her desire to help the community, “It’s important to Dumont to keep professional services local and main street offices thriving.” Shelly was committed to sustaining her business in her community and not just letting the business fade away or move away. She understands the importance to the local economy of sustaining key professional services.
Daniel Winegarden, NIACC Pappajohn Center’s Director of Business Acceleration and an SBDC business coach shares, “Shelly is a joy to work with. Her experience as an insurance agent perfectly prepared her for the buyout plan. She crafted a win-win for the prior owner’s retirement, her own advancement and the success of her community. She already knew the agency’s clients and their needs. We worked to assemble a detailed month-by-month financial forecast based on the history of the agency. From that Shelly knew exactly what new business was necessary every year to make the purchase price and purchase loan work. It’s rewarding to see a client’s success and it means Dumont keeps a community leader as a new business owner.”
State elected officials representing Dumont and Shelly Zimmerman note Zimmerman’s award.
State Senator Amanda Ragan said, “I am very proud of Shelly Zimmerman for being selected to receive the Deb Dalziel Woman Entrepreneur Achievement Award. Her achievement as a businesswoman in rural Iowa is very significant and a tribute to her efforts to improve her community and the lives of its citizens.”
Rep. Linda Upmeyer remarked, “Shelly is a perfect example of successful entrepreneurs in small, rural Iowa communities. She demonstrates why we need to ensure these business leaders have access to many opportunities. I look forward to following her continued success.”
The NIACC John Pappajohn Entrepreneurial Center and its North Iowa Small Business Development Center offer business counseling services to current and prospective business owners. Services help area residents create new business start-ups, grow or reinvigorate existing business, and transfer or acquire businesses with planned successions. Shelly Zimmerman is a perfect example of a successful business succession.
Latham Hi-Tech Hybrids LLC
Description of the Business:
Corn is big business in Iowa, but high technology corn is becoming an even bigger business. Third generation seedman John, along with wife Shannon and brother Chris Latham seized an opportunity to begin supplying corn seed with multiple traits to farmers across the upper Midwest and formed Latham Hi-Tech Hybrids in 2004. With a motto of “brings world-class technology home,” they have become one of Iowa’s fastest growing family-owned seed companies. In April 2006, the Lathams turned to the SBDC of North Iowa for help accelerating and preparing financially for rapid growth.Read More
In Mason City, the SBDC is housed inside the John Pappajohn Entrepreneurial Center on the North Iowa Community College Campus. This setting offers huge opportunities for collaboration with other JPEC members, including the North Iowa Business Accelerator, Iowa Workforce Development, North Iowa Venture Capital Fund and Wellmark Community Venture Fund. By utilizing all the assets at its disposal, Ted Bair, the SBDC Director was able to help John, Shannon and Chris Latham refine all aspects of their business plan- marketing, financial and operations. He also critiqued and helped them prepare their presentation for the Venture Network of Iowa and submission of their business plan to the statewide Pappajohn Business Plan Competition contest.
Results from SBDC Assistance:
- Successfully penetrating a five state region
- Met sales plan for 2006; exceeding plan in 2007 (years run Sept to Sept) with continuing triple digit percentage increases.
- Presented to the Venture Network of Iowa, drawing the interest of Venture Capitalists and Angel Investors
- Placed 3rd out of 87 entrants statewide in the Pappajohn Business Plan Competition, winning a $10,000 prize
- Awarded $100,000 in funding from the Wellmark Community Venture Fund
- Accelerated hiring plan. On track to add at least 1 new sales pro-rep employee every other month in 2007 with ultimate goal of 45 employees by 2010 earning in excess of $75,000 annually.
Quote from Client:
“We faced the same problems every new company faces. Although, we had the background, the connections and the education to be successful, we needed to supplement it with the skill and experience of the North Iowa SBDC in the Pappajohn Center at NIACC. We were given access to capital sources and to a network of specialists that shaved years off the execution of our business plan. No one did the work for us, but because of the NIACC-JPEC SBDC, the work we did was much more effective.” John Latham, President, Latham Hi-Tech Hybrids LLC, Sheffield, Franklin County, Iowa
Owens Family Concessions LLC.
Owen’s Family Concessions LLC is a certified and licensed business founded in February of 2012 by its owner Mike Owens of Leland, Iowa. OFC LLC provides concession services/products for special events (Civic and Private) as well as Fairs and Fundraisers in North Central Iowa Region.
Mike and his family are located in Winnebago County at 40862 160th Avenue, Leland, Iowa and can be reached at 641-590-0207 or by email at firstname.lastname@example.org.
In December of 2011 Mike Owens contacted the SBDC of North Central Iowa at NIACC requesting help in forming a business entity to provide concession services. Mr. Owens had some limited previous experience providing concessions to special events in his role as Scoutmaster for his local Boy Scout Troop. Having been recently laid-off from his job, Mr. Owens saw a potential opportunity to develop a business around providing concessions, but lacked business experience and sought help from our Center to help with starting this venture.
Several sessions took place with the client as he refined his concept, began forming operational guidelines and identified start-up-costs. In February of 2012 Mr. Owens formed his Limited Liability Company (Owens Family Concessions LLC) and we began the search for funding his company in preparation for launch. Preparing financial forecasts based upon research data, food cost analysis, overhead projections, we were able to outline goals and objectives financially and presented to his bank for funding his start-up-costs. Bank agreed to the request for trailer funding and along with funds provided by NIACC Nano-loan fund for additional equipment and working capital, Mr. Owens was ready for business.
Mike also started our 10 week boot camp for new businesses ( FastTrac ) in April of 2012 and graduated with a completed business plan and much more confidence and validation his project would be successful. While Mike attended these sessions he was securing events for Spring/Summer/Fall events.
Mike and his family completed their first calendar year in business providing concession services for events with sales exceeding . Mike has been an excellent example of a entrepreneur with passion and knowledge of what he wants his business to look like. Mr. Owens represents opportunity through adversity ( job loss ) by creating a service business benefiting others while creating value and wealth for his family.
North Central Mechanical Services Company, Mason City
Nathan Bartels began his career as an apprentice heating and air conditioning specialist the summer before completing college at North Iowa Area Community College. During the next 12 years he completed his heating and air conditioning certification while working first for Comfort Inc. and then for Mechanical Air Systems.Read More
While he was gaining experience working for others, Nathan’s level of confidence in managing and operating his own company increased and he decided he’d like to start his own business. Good customer relations and providing excellent outcomes for clients validated his feeling that he would be successful implementing his personal vision and work ethic within his own company.
Barriers for Nathan to move forward with forming his own company included amassing adequate capital necessary to provide the type of service that customers in North Iowa demand. Nathan began to formulate his business plan and accumulate the necessary tools and cash to launch his own company.
Knowing that he needed additional help, Nathan contacted Ted Bair, Regional Director of the North Iowa Area Small Business Development Center (SBDC), to evaluate his business plan, help determine cash flow needs, and discover options for financing of additional capital needs such as a larger service vehicle and starting inventory. While meeting with Ted, Nathan secured the services of an attorney and formed an “S” Corporation, to provide the legal structure of his business. He also initiated discussions with U.S. Bank for financing.
North Central Mechanical Services Company opened for business on August 18, 2010 with the help of an SBA-guaranteed loan and a guaranteed credit card, both through U.S. Bank in Mason City. Nathan also obtained a truck loan from a dealer offering internal financing, plus he personally invested tools and cash into the business. The company provides commercial and residential heating, air conditioning, and refrigeration parts and services within 50 miles of Mason City.
Praising the business advice and assistance he received from the SBDC, Nathan says, “Ted Bair and the SBDC have been very helpful in validating my concept and pulling all of this together, and I look forward to our continued relationship on a monthly basis to assess progress and also fulfill the SBA Community Express Action Plan.”
Nathan’s great reputation and good customer relations skills helped his company to grow quickly and in 2011, with additional advice from the SBDC, he was able to move his business from his home to a building the company purchased with additional financing from U.S. Bank. He has also purchased additional equipment, more service trucks, and added five full-time positions, all to better serve his customers.
In 2011 the company had a 250 percent increase in sales over its 2010 figures and it is projected to do even better in 2012. And as Nathan grows his business further, he knows he can go back to the SBDC for more great advice.