Thursday of last week we had the pleasure of having as our guest speaker Monmouth College Board of Trustee member Larry Gerdes.

This was a rare opportunity to tap into the experience and knowledge of someone with not only nearly four decades of entrepreneurial experience but also many years of experience as a facilitator and evaluator of entrepreneurial activity (as a venture capitalist).

Below, class member Matt Juhola nicely summarizes what we learned from Mr. Gerdes.

Regards,

Prof. Gabel

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Larry Gerdes spoke with our class and shared his many stories with us from his humble beginnings as a small town kid from Illinois to becoming business partners with Monmouth College alum Walter Huff which led to his involvement as a venture capitalist.

Mr. Gerdes was born and raised in Walnut, Illinois to German immigrants and lived there until he attended the University of Illinois to pursue an agriculture degree. While he was at U of I, he was interested in business and took accounting, finance, and marketing courses. He continued his business education by enrolling in graduate school at the Kelley School of Business at Indiana University.

His amazing entrepreneurial journey began in 1974 while working at a bank in Peoria when Larry met Walter Huff who was seeking $1 million to install mini computers throughout hospitals that could hold medical information. Larry continued to work with Walter Huff by getting him the funds he needed for his company, HBO and Company, and ultimately left his bank job and jumped at the opportunity to become partners with Huff and moved their company to Atlanta despite being advised not to by his mentors.

In 1981 Gerdes and Huff went public with HBO (and made $15 million and turned several of their employees into instant millionaires). Ten years later, the company was sold to McKesson for close to $13 billion.

As if that was not enough, Mr. Gerdes then started working with one of his mentors, Don Lucas, at Sand Hill Financial Company in California and helped double the size of the company, increasing its revenue to $150 million. Larry would go on to make 59 investments through Sand Hill, with the most prominent being in Oracle, an American multinational computer technology corporation. Huff and Gerdes continued to work together and in 1991 started Gerdes Huff Investments, a private investment firm based in Atlanta, GA.

One of the companies Mr. Gerdes took over and had great success with was Transcend Services, a company in Atlanta then run by several women who outsourced medical records of hospitals. Gerdes had Transcend focus its service on medical transcriptions so the company could become successful in the market. He originally invested $700 thousand and eventually sold the company to a major competitor for a substantial profit.

Larry still ventures into other companies, primarily healthcare based, and is an active investor to this day after 40 plus years of experience. He continues to have success in his ventures by using data to make better decisions and believing in good management teams that work hard and believe in their system, much like he did with Walter Huff as a young professional.

Matt Juhola

At least once each semester the inevitable happens; we wind up being without a guest speaker. Entrepreneurs are busy people who sometimes have to cancel out on things not directly related to their businesses; and I failed in multiple last-minute attempts to get a “backup” on overly short notice.

Yet such challenge is actually welcome in the Midwest Entrepreneurs class; as long as it happens but once or twice a semester… It gives me the chance to reinforce one of the most important (general) things that business students can learn: The need to adapt to changing circumstances (and the need to be persistently ready to do so).

So that is what we did… And, as I almost invariably do, I turned to an old friend in this time of need: Spike TV’s Bar Rescue (http://www.spike.com/shows/bar-rescue).

If you are not familiar with Bar Rescue, the series stars consultant—and now entertainment entrepreneur–Jon Taffer, a no-nonsense former bar and nightclub owner who has owned, flipped, or somehow otherwise “rescued” nearly 1,000 such businesses in his career. Taffer and his crew of expert bartenders, chefs, and designers is brought in by bar owners–entrepreneurs–to save their declining and often severly neglected and dysfunctionally run businesses. After a period of surveillance and consultation and training meetings, Taffer brings in local contractors and other service providers to renovate and update the facility (based on his extensive bar/restaurant marketing and management expertise).

And that is exactly what happened in the episode that we used to remedy our no-speaker woes last week… The dysfunction- and remarkable-turnaround-laden episode of the series that rescued Midwest Entrepreneurs last week was entitled “Hard Heads and Softballs.”

http://www.spike.com/full-episodes/cxzdea/bar-rescue-hard-heads-and-softballs-season-4-ep-438

Below, class blogger Austin Johnson summarizes what takes place in the episode as well as what we can learn from it. As you will see, an extra challenge for this particular entrepreneurial business is the very unique layout of the facility and the property it sits on; coupled with dual and potentially clashing target market segments.

And thank you Jon Taffer and Spike TV for rescuing us yet again!!

Regards,

Prof. Gabel

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Todd Chester and Scott Mack invested in a bar together in 2012 called the SRO (Standing Room Only). This bar has been in Anoka, Minnesota since 1976, so it had been a successful bar for a long time.

The owners added their own names—“Mac and Chester”—but still have the original SRO sign because it is well known within the community. They both thought this would be a good business decision.

What makes this bar unique and challenging is that it consists of not only a bar but twenty-three acres of land, two bars, and four softball fields. The softball fields are a great thing to have because it will be appealing to a lot of people. Families can come to the games and order food or drinks from either bar.

Unfortunately for Scott he didn’t think he would have to worry about the behavior of Todd. But, as we saw in the video, while Scott is working out on the softball fields trying to help the bar, Todd is in the bar drinking and acting like an idiot with his friends. There are some very poor business decisions being made by both of the owners; like giving away drinks, letting bar patrons do burnouts with their motorcycles on top of benches, and then setting the benches on fire (and standing around and watching them burn).

Not too surprisingly, when Jon Taffer shows up, the bar is losing money; about $6,000 a month. This means they aren’t making a profit in order to pay their bills. If you can’t pay your bills how are you supposed to run a business?

Also adding to the problem is that the management situation is very poor and the workers have no organization, which gets in the way of efficiency. If the bar is crowded the workers need to be getting the drinks out as fast as possible and with the right ingredients. It also becomes obvious that the employee’s weren’t trained properly.

Todd is afraid to tell his friends to stop destroying stuff and being rowdy because he says that they are the ones keeping the business going during the “off season” (in the colder months when softball cannot be played on the fields outside). Todd feels that these customers are the business’s truly loyal customers. However, it seems that they might only be going their so often because Todd gives them free drinks. This still shouldn’t trump the fact that he is destroying his bar and putting his family at risk to loose everything.

After Todd leaves the establishment and lets his wife manage the bar, they start to make a lot of improvements. Taffer remodels the bar and brings in professional helpers to make the menu more appealing. They also train the employees at SRO so that they are better prepared to serve their customers. The proper training and remodeling of the bar is a great opportunity for SRO, but they must keep up the work. They can’t let the bar get out of hand again and I think with the right management it will be a successful bar. The Standing Room Only sits on a lot of land to attract customers and now that Todd and his friends aren’t destroying everything I think they can become a better business.

Austin Johnson

Our guest speaker last Thursday was Dr. Nic Mink, President & Chief Salmon Steward at Sitka Salmon Shares (http://sitkasalmonshares.com/ and https://www.facebook.com/SitkaSalmonShares/).

Coming in, we knew that Nic and his firm were connected in some fashion to two previous class speakers. First, although Sitka Salmon Shares is legally based in Sitka, Alaska, it has warehousing and distribution operations in the Sustainable Business Center in nearby Galesburg, IL. Recent class speaker Ann Mueller is the center’s recruiting and communications director (see:  www.sustainablebusinesscenter.com).

Second, given that the firm operates somewhat like a community supported agricultural (CSA) enterprise, we knew that the business model would have some similarities to Spurgeon Veggies run by class speaker Dustie Spurgeon (see: http://spurgeonveggies.com/ and https://www.facebook.com/SpurgeonVeggies).

We also knew of the interesting and unusual genesis of the firm; a fundraising trip to Alaska by a Knox College professor and two students. Quoting from the Sitka Salmon webpage:

Our story begins in 2011, when a Midwestern college professor, Nic, and his two students traveled to Sitka, Alaska, for the summer. There, they engaged in conversations and deepened their understanding of the importance of protecting Southeast Alaska’s wild salmon populations and the pristine environment that supports one of the world’s last great salmon reserves.

They returned to the Midwest with boxes of line-caught, wild Alaskan salmon, harvested by their fisher friends in Sitka. To say the fish was well-received would be an understatement. People raved about the salmon’s taste and were impressed by its traceability. They quickly made the connection between their consumption and the impact this small act could have on conservation efforts and the health of Alaska’s sustainable fisheries. Perhaps, the group thought, they were on to something.

 Well… They were “on to something” indeed!!

Shortly thereafter, the sustainable fish business based on a “boat-to-table” supply chain began. An initial investment of about $10,000 yielded around $7,000 in first-year sales. Today, however, the firm has sales of almost $4 million (with 80% of this amount being direct-to-customer retail sales and the remaining 20% wholesale sales to restaurants and chefs).

Below, Midwest Entrepreneurs student Connor Gillen provides details on how the company went from so little to such much so fast.

Enjoy!!

Prof. Gabel

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Nic Mink, who was a first time speaker in our class, is the co-founder and CEO of Sitka Salmon Shares.  Sitka Salmon Shares sells “shares” of sustainably caught fish all across the Midwest United States year-round.  The fish are caught in Sitka, Alaska by family fishermen who have to follow certain procedures to maintain the high quality of fish the business offers.

The business idea began five years ago while Nic was teaching at Knox College in the Environmental Studies Department.  He had traveled to Alaska with two of his students as part of a fundraising project where they would sell salmon from Alaska to Knox College faculty and staff. After visiting Alaska, Professor Mink decided to make a business out of what was a fundraiser.

The main idea for the business is providing its’ members the knowledge of where there food came from, how it was caught, where it was caught, how it was delivered and things like that.  His main idea on why he started the business is because he is passionate about finding a way to build a better food system.  He said that more and more people at this day and age are eating healthier and wanting to know where the food they eat comes from.  They provide each of their members with all the details about the fish while delivering a high-quality product.

As stated above, family fisherman catch the fish in Sitka, Alaska.  The fish is then processed there in a facility Sitka Salmon recently acquired. The fishermen are required to follow procedures to makes sure each fish has a high quality taste when it’s finally delivered.  There are 13 fishermen that are apart of the business and most of them are young.  Nic thinks having younger generation fishermen helps carry out the value of the business because they understand why they have some certain procedures that other fishermen don’t have.  For example, Nic places a restriction on how long the fishing trips last so that the fish isn’t on the boat for extended periods of time before being processed.

After it is processed in Alaska, it then gets loaded onto barges that travel to Seattle, Washington.  The fish are then put on trucks and transported to one of their distribution centers, which are located in Galesburg, Chicago and Madison, WI.  The fish are delivered to “members” of the business in 5-pound boxes once a month.  “It’s kind of like a wine of the month club,” said Nic.

Wholesale is also the second way Sitka Salmon sells its fish besides delivering it to households.  Wholesale accounts for about 20% of the sales in the business and is usually delivered to chefs who use it in restaurants.  Direct consumer distribution though has better margins and also has better cash flow for the business since each member has to pre-pay.

The first year the business was up and running, Sitka Salmon totaled $7,000 in sales.  In 2016, they had an incredible $3.6 million in sales.  The first two years of the business, Nic did not pay himself a salary.  But once the business began to grow rapidly, Nic paid himself a salary and also hired an accountant and lawyer.  He attributes some of the firm’s recent success directly to having a great lawyer and accountant.  He also says that these two employees “pay for themselves” because they are so great at the critically important things they do.  The business has grown rapidly over the last couple years and has been recognized as one of the top companies focused on sustainable fish and community-supported fishing in the entire country.

Lastly, one of the biggest things Nic attributes his success to is the fact that he is both a social entrepreneur and liberal arts entrepreneur.  Although, he did not receive his degrees from a liberal arts college, he has taught at Knox for a number of years and has a very diverse educational and experiential background.  He has a Ph.D. in natural resources management and history from the University of Wisconsin.  He has excellent writing skills and not just knowing one area has really helped him succeed.  Knowing a lot about a lot of different things helps him effectively speak to a wide variety of people and he can fit in with just about any group of people.  His ability to also tell a good story gets people emotionally involved and helps him sell his product and his message.  It is all these skills that he can fit it to any situation and speak the language of capital that has helped his business have so much success.

In the future, Nic wants to grow as fast as they can, but keep the values of the company first.  The values of the company will always come first with Nic.  As he put it:  “If a business puts its values first, then the money will soon follow.”

It was a pleasure to listen to Nic talk about his unique business and I am glad he has had so much success with it.

Connor Gillen

One of the most satisfying guest speaker visits of last year’s Midwest Entrepreneurs class for me was that of former Monmouth College Chaplain Rev. Dr. Kathleen Fannin (who has taken a passion for painting realized only after retirement and turned it into an entrepreneurial venture). The reason for this high level of satisfaction was seeing someone talk passionately about something that they truly loved and how they had transformed it first in to a hobby and then realized it could become a means of starting an entrepreneurial business (which at the very least pays for adventurous pursuit of the loved hobby).

Kathleen made her second guest speaker visit to the class last Thursday; it was every bit an interesting and insightful as the first. Below, class member Blake Bichsel provides further detail on her captivating story.

Lastly, see—and buy–her paintings at her artists webpage : http://cattail.pixels.com/. My personal favorite of her many works—the original of which hangs on a wall at home—can be found at:  http://cattail.pixels.com/featured/puerto-vallarta-b-kathleen-fannin.html.

Prof. Gabel

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So far in our classes we have had a lot of very interesting guest speakers.  Rev. Dr. Kathleen Fannin kept that trend going.  She was the chaplain here at Monmouth College for thirteen years before she became an artist.  The interesting thing about her entrepreneurial adventure was that it began after she had retired from being a chaplain.  She said that when she started she had no idea she could draw, and even told our class that she wasn’t even sure she could draw a stick figure.  You might find that very hard to believe if you saw one of her paintings though.

Dr. Fannin has written several books over the course of her career as well.  She said one day she had “writer’s block”, so she went to Dick Blick and got some supplies to do watercolor paintings.  The first painting she did was of an owl.  She was in love from the start; she loved her new found hobby and was very surprised how good she was.  She shared her new hobby with her friends and family by sending them notecards featuring her paintings.  One of her friends liked her notecards so much he asked to buy the actual painting from her.  She continued to improve her artistic ability and decided to enter an art show in May 2012.  She had a painting win “best in class” at the art show; and by December she had sold eight paintings.

In November 2013, she attended her first craft show where she had a lot of success.  She had only paid $30 for her table and ended up making $400 that weekend.  She continued to do lots of paintings for her friends as well.  The first couple paintings she didn’t charge very much, but she was doing something that she loved and that’s all that mattered.  People then began asking her to do paintings of their own homes and things and that’s when she realized she could charge a little more because people were willing to pay more for something that was special to them.  She would take a picture of the house, then draw the outlines with pencil, and begin to paint.

At the craft show the next year she decided to get a double table that only cost her $50 and it really paid off.  That weekend at the craft show she made $960.  She sold things such as notecards and prints and even some original paintings.  She painted a beautiful picture of historic The Holt House here in Monmouth and it sold for $450 (see: http://cattail.pixels.com/featured/holt-house-b-kathleen-fannin.html ).  She also sells prints of her paintings on her artistwebsites.com page and for $30 a year they take care of everything from the customers ordering the products to shipping the products to them.  The website also has other products like phone cases, and shower curtains that have her paintings on them as well.  She doesn’t really do a whole lot as far as marketing goes.  But she does post all of her paintings on her Facebook page for all of her friends to see.

Recently, Kathleen has been experimenting with painting on Yupo paper, a plastic material which the paint does not absorb into. She shared with us several of her Yupo paintings done as part of her recently concluded “Lenten Painting Series.”

After becoming an artist she realized that just because she painted something and absolutely loved it, doesn’t mean other people would want to buy it.  That also goes the other way around; she said that she has had a couple paintings that she didn’t think were very good that sold relatively quickly.

Like most of the speakers so far she is doing something that she absolutely loves to do.  She asked us, “If you aren’t enjoying what you’re doing, then why are you doing it?”  She also told us that she strictly does this for fun and never wants to see this as work, she just wants to be able to enjoy it.

Blake Bichsel

Our guest speaker this past Tuesday was Ann Mueller, Recruiting and Communications Director for the Sustainable Business Center located at 2900 West Main Street in nearby Galesburg, IL. See the Center’s webpage at: www.sustainablebusinesscenter.com.

I introduced Ann to the class as the first of 2-3 “facilitators of entrepreneurial activity” we will have as guest speakers this semester. By “facilitators of entrepreneurial activity” I mean that the guest is not an entrepreneur themselves but rather that they—and their organizations—help entrepreneurs expand or otherwise succeed in any of a variety of ways.

As stated on its webpage, the Sustainable Business Center performs this important, often hidden function by offering environmentally sustainable entrepreneurial firms that already have some level of success—i.e., “second-stage” firms—the opportunity to move their operations to the next level and beyond via provision of “office space and accompanying office amenities, warehouse storage, manufacturing space, land for organic agriculture production, and a Food and Drug Administration-certified commercial kitchen.”

I now turn things over to Midwest Entrepreneurs class member Matt Bertelsen to provide you with further details on what we learned from Ann Mueller about the Sustainable Business Center. Further details on the Center can be found at the weblink provided above or by contacting Ann via phone (309-343-1191) or e-mail (ann@sustainablebusinesscenter.com).

Prof. Gabel

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There is a facility west of Galesburg, Illinois that some would call a “little known treasure” of the area.  This facility is called the Sustainable Business Center (SBC).  Our class had the opportunity to learn all about the Center and its goals for the community when SBC Director of Recruiting and Communications Ann Mueller came to speak to our class.

The SBC got its start in 2010 when the Carhartt clothing manufacturing company donated the building—a former Carhartt manufacturing facility—to the Human Links Foundation (see: http://www.humanlinksfoundation.org/).  The future of Galesburg’s economy looked bleak but Human Links had a vision and believed that it could be turned around.  From that vision the Sustainable Business Center was born with some ideas in mind: create gainful employment, produce well-made, high quality products, and create an environmentally sustainable economy.  From these ideas came a mission: “Bring jobs to the Galesburg area by nurturing and growing businesses that represent green technology in its purest form”.  The second hidden treasure created by the Sustainable Business Center is the restaurant in the facility called “en season”.  A second mission was established for the restaurant: “To bring local food that is wholesome and pesticide-free back into the community”.

The Sustainable Business Center has created a business plan that not only helps boost the economy in the Galesburg area but also helps create a sustainable environment and economy for future generations.  The Business Center provides a range of support services and a space to work to help start-up or established businesses build and succeed.  With this in mind they began searching for tenants that would use green technology, clean energy, and sustainable agriculture practices in their business plans.

In the Center’s 88,000 square-foot facility, it houses three tenants, along with the restaurant.  The first tenant, Intellihot Green Technology, is a company that creates smart tankless water heaters which save energy (see: http://www.intellihot.com/).  These water heaters recently won a first place award in the Illinois Clean Energy Fund Awards.  The second tenant, Sitka Salmon Shares, allows members to sign up for a “share” of the harvest of an independent, small boat, family fisherman (see: http://sitkasalmonshares.com/).  The third tenant, Jerry’s Mojo, is a mobile coffee shop that uses a 100% electric, zero emission vehicle (see: https://www.facebook.com/JerrysMojo).  Jerry’s mobile coffee shop’s location can be tracked on social media.  The restaurant in the facility, en season, is an entirely farm to table restaurant.  All food used is locally grown by both local farmers and in the SBC’s garden and pesticide and antibiotic free (see: http://www.enseasongalesburg.com/).

The Sustainable Business Center still has some open space for tenants looking to follow a sustainable and green business plan.  For more information on the facility visit its website www.sustainablebusinesscenter.com.

Thanks to Ann Mueller for being our very informative guest speaker!!

Matt Bertelsen