The Upsize Business Builder Awards, presented by Winthrop & Weinstine, is an annual contest designed to recognize Minnesota entrepreneurs for driving smart, sustainable growth. From nominations, Upsize selected three finalists: Bob Hildreth of ESP Systems Professionals; Melanie Nelson of Learning ZoneXpress; and Craig Kruckeberg of Minimizer. They presented their stories in a private session in December, after which judges named Craig Kruckeberg and Minimizer the Upsize Business Builder of the Year. Upsize is proud to present all three impressive entrepreneurs in these pages, in hopes that every business owner will draw wisdom and inspiration from their tales.
Street smart
“There’s got to be something better,” Craig Kruckeberg’s truck-driver father once said, providing the genesis for the heavy-rig accessories company known today as Minimizer.
Craig Kruckeberg credits his mother for providing the inspiration for their family business, formerly called Spray Control Systems and now branded as Minimizer.
His father was a truck driver who had to outfit his rig with $2,500 stainless steel fenders to keep the equipment clean—and who then cringed when a forklift accidentally slammed into those fenders, crushing them.
“All the way home he said, There’s got to be something better,” Kruckeberg said, less expensive and more durable. A week later came inspiration. “My mother backed over the Rubbermaid garbage can in the driveway. He picked it up and said, Here it is!”
And so was born Spray Control Systems Inc., the Blooming Prairie company that manufactures poly fenders and mud flaps (to minimize or control the spray spewing from the trucks, hence the company’s names) and a number of other products for over-the-road truckers to outfit their rigs.
Fresh out of cooking school, Kruckeberg returned to the family business and bought it from his parents in 2005. Soon after, and to the consternation of his father who couldn’t fathom the expense, he paid $400 for the company’s first trade magazine ad ever. “He said, Why? I said, People don’t wake up with our phone number in their head.”
Since then he’s built a marketing and manufacturing machine set to post $18 million in revenue this year, with a $1.6 million marketing budget for 2013, a slick website with muscular video touting Minimizer products as the toughest in the business, and a network of 850 distributors with new forays into Canada, Australia and soon Mexico.
For his commitment to branding and marketing, unusual in the heavy-equipment sector; his insistence on innovation—he just spent $500,000 on a 3D printer to turn out his company’s latest big bet, molded floor mats for trucks like those popular in autos; and his street-smart, bare-knuckles style, Kruckeberg is the Upsize Business Builder of the Year.
“We’re a marketing company that manufactures by necessity,” Kruckeberg says, because he believes no one else can make products to Minimizer’s specifications.
He’s scouting now for his company’s next big thing. “Fenders are the No. 1 seller right now. In five years they’re not going to be. We’ll find something bigger and better.”
THE FINALIST:
Minimizer/Spray Control Systems
Craig Kruckeberg, CEO
Blooming Prairie
55 employees
2011 revenue: $15 million
2010 revenue: $12 million
2009 revenue: $9 million
QUOTABLE: “If I could get out of manufacturing I would, in a heartbeat, but no one manufactures to our standards.” — Craig Kruckeberg, Minimizer
ABOUT THE COMPANY: We manufacture heavy-duty truck fenders, toolboxes, custom mud flaps and truck accessories, and brand them as the toughest, most durable on the planet in an ongoing marketing campaign that costs a lot of money.
ABOUT OUR BEST PRACTICE: Minimizer emphasizes innovation, such as our recent purchase of a $500,000 3D printer, which allows us to create molded floor mats for trucks like those that have become popular in autos. I and my son visit car shows to see the latest, and then I invest in R&D to develop these things for customers, who are truckers. We’ve started a video campaign called “tested and tortured,” where we show our poly fenders being battered with a sledge hammer, run over by a truck, and put to the test—and the campaign is really popular. We’re now branching into Canada, with a new outside sales person there, and will next go into Australia and Mexico.
WHY IT’S IMPORTANT: One of my biggest competitors is based in Australia, so I’m going to go to his house and make it dirty. We’ve been talking about it for the last several years, and I was at a truck show in Dallas. He came up to me and said I want to distribute your product along with mine in Australia. I listened to his pitch, and I said I’ll come to Australia and we’ll talk more. But we’re already being invited into Australia by our customers; they’re asking for us to come. So we just follow our buying groups around, and we’ll be all over the world. We’ll just do it ourselves. I don’t want to make my competitors stronger. Our manufacturing process is different than theirs, and others aren’t able to build what we do.
ABOUT EXPORTING: It’s so easy. We’re lucky enough to have resources in Minnesota, the trade office. There’s also a group at UPS, who will actually have people that will help you export. They walk you through every step. They’ll teach you the acronyms. The resources are there. Like for Australia, four years ago now, the state put a seminar on about how to sell to Australia and I just went to that. They explained why my Australian contact wouldn’t e-mail me for two weeks. The mindset there is different, the pace is different.
ABOUT DISTRIBUTION: In 2007 I switched to all distributors from retail ourselves, and since then we’ve brought on 850 distributors. I’d never go back. We have to market to the distributors but brand to the end user.
ABOUT INTERNAL CONTROLS: Internally, I’ve learned numbers don’t lie. Every night we get reports on every invoice, every payable. I get a dashboard with colors showing everything we need. So we know exactly where we’re at. Our banker loves us; sometimes I send it to them just for fun. We watch every dollar internally.
HOW THE COMPANY STARTED: My father was a truck driver, and he had to keep the equipment clean so he had to put on fenders. He put on stainless steel fenders, $2,500 each, which was a lot of money then. The next day a forklift slammed into it, and ruined the fenders. All the way home he said, there’s got to be something better. A week or two later my mother backed over the Rubbermaid garbage can in the driveway, and he picked it up and said, here it is.
ABOUT MARKETING: I placed my first ad, for $400, and my dad wondered why. I said people don’t wake up with our phone number in their head. Then John Risdall, the Twin Cities marketing guy, stopped by our office one day and they convinced us to do a press release. The magazines would call and say would we like to place an ad. Our marketing budget has grown from that $400 to $1.6 million for 2013. Out website is a big part of our marketing now, and we’ve gone to video. We do 17 or 18 trade shows a year.
ONE LESSON LEARNED: I told my team, fenders are the No. 1 seller right now. In five years they’re not going to be. We need to find something bigger and better. I have to get my team in the mindset, fenders are No. 1 today so what’s going to be No. 1 in five years? Then we have to make and sell that.
People person
“But what if I have a great idea?” asked Bob Hildreth’s young son years ago, told to be quiet when tagging along on a business meeting–and the CEO of ESP Systems Professionals started listening.
“Our mission is to always place people first,” says Bob Hildreth, CEO of ESP Systems Professionals, an IT staffing company in Minneapolis that has nearly doubled its revenue in each of the past three years, to $5.35 million last year, and wants to do it again by 2015.
Key to the effort will be a new niche practice, ESP Health IT, launched with a couple of consultants in Colorado in October and planned to go nationwide. Hildreth aims to get his share of the information technology business as health care providers race to convert to electronic medical records.
The foundation of the company will remain its people, he vows, and he crisply details four principles that he believes make for business success.
No. 1, Hire the best. And he’ll interview candidates four or five times, sometimes stretching the process for months and involving all staff members, to really get to know someone. “I always ask, Can you picture being here for years?” Hildreth says, and if the answer is no he keeps the discussion going to find out why.
No. 2, Set mutual expectations. “Most set expectations of the employee. I think we’re good at finding out their expectations for us,” Hildreth says. The process continues after the hire, too, during quarterly reviews in which he briefly shares the numbers and then asks the same set of questions each time. “I ask more intimate things: How can I improve? What’s the best part of your job?” he says. “It’s amazing what you can find out.”
No. 3, Give employees the tools to succeed. “I spend more than others” in the IT consulting business, he says, outfitting his consultants with laptops years ago before everyone did that, going “to the cloud” for data hosting long before it became the rage, always spending money on apps.” Each week one person in the company trains the rest on their topic of choice. His topic each year is trust, which he’s researched intently. “The one thing that can undermine trust is duplicity, otherwise known as gossip,” he says. “So we talk about it.”
No. 4 “is my favorite,” Hildreth says: Get out of the way. A simple example, he says, is they don’t track PTO or paid time off. “We trust people will take the time off they have coming to them.”
Hildreth has honed his philosophies over several decades—he’s already bought and sold a couple of IT consulting businesses—and swears by the insights he’s gained through his long-time participation in Vistage, a CEO group with a professional facilitator that guides each member through business problems.
That included the dark days of 2001, when his company had just leased the top floor of a downtown Minneapolis office tower and the IT market crashed. “There must have been a memo that went out to every hiring director in the country that said no more hiring and cancel every project,” Hildreth says with a rueful laugh. “It was a tough time for us.”
Burned out by 2007, he took a sabbatical for a year and a half and came back to the business with renewed energy, starting the growth spurt that gained him recognition as one of three Upsize Business Builder finalists this year.
Now he’ll navigate the tricky challenge of building a new niche practice in health care IT around the country, while maintaining the culture that’s remarkable at a fast-growing company for its detail and its CEO’s commitment.
He relates the tale of his young son years ago, told to be quiet when tagging along with Dad on a business meeting. “What happens if I have a good idea?” his son said. “Everybody in the company, no matter what department, just like my son—if anyone has a good idea, I want to hear it,” Hildreth says.
THE FINALIST:
ESP Systems Professionals
Bob Hildreth, CEO
Minneapolis
bob@esp.com
51 employees
2011 revenue: $5.35 million
2010 revenue: $3.45 million
2009 revenue: $1.8 million
QUOTABLE: “CEOs have to keep focused on their purpose and their mission, and not let other things distract them.” — Bob Hildreth, ESP Systems Professionals
ABOUT THE COMPANY: We’re an IT staffing company that specializes primarily in the technical side or application development side of the IT departments, supplying programmer analysts, project leaders, business analysts, web development people, quality assurance. We’re 44 years old; we were founded in 1968. I came in as an owner and president in 1986. I took a sabbatical in 2007; I was burnt out. I came back with a clear vision of what we wanted to do, and we’ve had an amazing run of growth, from $1.8 million in 2009 to $5.35 million last year. It’s amazing what a sabbatical will do for you.
ABOUT OUR BEST PRACTICE: ESP Professionals has four fundamental principles for creating a successful team. 1. Hire the best. A thorough interview process creates a team with diverse personalities and complimentary skills sets. 2. Set mutual expectations. We spend considerable time understanding the expectations our employees have of us as a company. 3. Give employees the tools to succeed by providing consistent training, the latest in technology and a fun and ergonomic workplace. 4. Get out of the way. Employees are given support without being micromanaged. We operate on a foundation of trust and believe everyone’s a leader.
WHY IT’S IMPORTANT: I used to have this saying that we all do many things well and many things poorly. As I’ve gotten older and wiser I realize we all do a couple things well and we do a lot of things terribly. So often I see in companies that they hire people like themselves or similar people. I’ve always tried to bring complementary skill sets together, so if I see a strength in somebody that nobody else possesses in the company, that’s good for the team. Hiring people that are different from each other makes challenges in management but I think it builds much stronger teams.
THE GLORY YEARS: We had a lot of growth in the 90s. When I started it was less than a million dollar company. In years past on the direct hire side we grew to $5 million. I started another company that did the consulting side of the business, and that grew to $15 million at the time of our sale, and we did that in seven years.
THE NOT-SO-GLORIOUS: And then we got caught up in 2001. There must have been a memo that went out to every hiring director in the country that said no more hiring and cancel project. It was a tough time for us. We downsized considerably. I took a sabbatical in 2007. I just had to learn to be, so I’d get up in the morning and had no idea what I was going to do. It was hard in the beginning. It was very therapeutic. Then I felt I was ready to go again, in the spring of 2008. It’s been a fun ride.
A TURNING POINT: We saw a new trend coming in the IT departments, and we’re trying to partner more with them. Back in the 90s there was a real differentiation between the permanent side of the house and the consulting side of the house. Today it’s more of a blend.
GROWTH EQUALS CASH DRAIN: As our growth really started spiking, one of the challenges was cash. We’re hiring all of these consultants and we’re paying them good salaries. Just keeping up with that was tough. These consultants are highly paid. The first year we brought on 20 consultants. The next year we added another 15 plus. And then we added a lot of internal staff also. So our payroll went from modest to much, much larger.
HOW TO FIX IT: I was able to fund some of it myself. But it got to be a point where I had to fund it like a business. We worked with our bank and the growth was rapid. At one point we had some very rapid growth, and to handle some short-term cash needs we even did some factoring. I had never done it before. It’s exorbitant rates when you look at it. Banks were a little more cautious back then. It was one of those things where you do what you have to do. We do not factor any more, and we had to rebuild those relationships.
ONE LESSON LEARNED: There are hundreds of things that can go wrong in the business and it’s important to keep your eye on all of them, but CEOs have to keep focused on their purpose and their mission, and not let other things distract them. It gets to my four principles described above. There are a lot of things to keep an eye on, and if I focus on those four things we’ll do well.
‘Energizer’ CEO
With First Lady Michelle Obama leading a nation toward healthier eating –™I’ve never met her, but she’s my best friend,” says founder Melanie Nelson–Learning ZoneXpress is right on trend.
It was 10 a.m. on June 2, 2011, and Melanie Nelson’s 15 staff members were gathered to watch First Lady Michelle Obama’s announcement. For the U.S. Department of Agriculture, Obama was unveiling the new visual to help people make healthy food choices.
“We knew Michelle Obama would say we were going from a pyramid to—something,” Nelson recalls, describing that formerly familiar visual with a big slab of carbs on the bottom and tiny triangle of fats on top. Then when Obama unveiled “My Plate,” which shows that half your plate should be fruits and veggies, a quarter carbs and a quarter protein, Learning Zone’s staff went wild. “We cheered. We had mimosas.”
That’s because Nelson’s Owatonna-based company, which makes posters, DVDs and other products that convey simple nutritional messages to encourage better health, had already designed products with a similar image. The company was right on trend to sell much more product, and 20 percent revenue growth in each of the past three years is the evidence.
The company’s position is no accident, because Nelson spends loads of time reaching out to anyone who can tell her what’s the buzz. She and her staff members attend “80 or 90” trade shows every year, and listen to what customers want.
Nelson calls herself an “Energizer Bunny,” traveling the world, taking meetings, and this year enrolling in a three-year owner/operator program at Harvard so she can meet business owners from all over the world. “Because of my insatiable love of learning. I’m like, Wow, who can I meet? I’ve gone to Shanghai, Hong Kong, Turkey, to see if there’s a niche for nutrition education in emerging countries.”
Her latest coup is a partnership with Dan Buettner’s Blue Zones project, the Minnepolis-based effort to identify the healthiest ways to live long lives, and a darling of TED conferences and the Oprah Winfrey Show. Nelson’s company will provide educational products around Blue Zone’s “Power of 9” concept.
Nelson admits she has “10,000 ideas, and which of those is going to make money is the question,” something that she credits her COO for helping her sort out. A recent effort to reach health care providers with an informational poster about sugar in food cost $18,000 but didn’t generate a single order. But Nelson is undaunted. “We do very little market research. Let’s just get it out there and see if it works, and if not we’ll abandon it.”
Then she’ll go out to seek the next idea, at a pace that sets her apart from most entrepreneurs, with an enthusiasm that’s infectious. “I had five meetings today with fabulous graphic designers,” she tells the judges gathered to hear her presentation as an Upsize Business Builder finalist. “I get energy and excitement from meeting with all these people.”
THE FINALIST:
Learning ZoneXpress
Melanie Nelson, CEO
Owatonna
melanie@learningzonexpress.com
15 employees
2011 revenue: $5.20 million
2010 revenue: $4.30 million
2009 revenue: $3.61 million
QUOTABLE: “I’m an Energizer Bunny. I get energy and excitement from meeting with all these fantastic people.” — Melanie Nelson, Learning ZoneXpress
ABOUT THE COMPANY: Learning ZoneXpress is a health and nutrition education company that designs, creates and delivers educational resources to teach life skills to children and adults. These include posters, DVDs, videos and other materials on such topics as healthy eating. I founded it in 1997; I was a teacher and then went on to start a couple of businesses.
ABOUT OUR BEST PRACTICE: I am bold, I am a risk taker, and I am always learning new things, forming new partnerships, and meeting other people. When First Lady Michelle Obama introduced the new healthy plate model in 2011, to replace the old food pyramid, we were elated, because we had developed an image showing a plate the year before and immediately created new posters and other products to teach this concept. I have just created a partnership with Dan Buettner and his Blue Zones project, geared toward learning how the longest-lived people in the world age in good health. And, we just received word from a group of nurses in New Jersey, who want to use our products to teach 500 educators. That’s a big deal for us, and these opportunities come from reaching out and going after them.
WHY IT’S IMPORTANT: When you take risks, along with that comes a network where I’m not afraid. I’m always meeting new people that can really help add value to our business. I am now going to Harvard three weeks a year, as a participant in their owner/manager program, and the goal is continued learning. With that network, and being able to leverage the best of it, I believe is how we’ve built this business. It’s reaching out and finding out what the buzz is. I love it at Harvard because it’s learning from other people and it’s learning from other key studies of what went wrong and what went well. Because of my insatiable love of learning, I’m like, Wow, who can I meet? I’ve gone to Shanghai, Hong Kong, Turkey, to see if there’s a niche for nutrition education in emerging countries.
WHY SHE TAKES RISKS: I’ve always been a renegade. Middle child, I’ve never followed the rules. I always learned the hard way. I really like to push the envelope. An example, we just did a medical mailing, and sent out this fabulous new product we have, which is a new brochure about how much sugar is in your foods. And we thought this would be a big success. It cost $18,000 and it did not get one response. We’re not finding the right audience for that one. But we never give up and we will continue. I’ve hired a research gal at the University of Minnesota’s Carlson School of Business to pursue that market and see where people are buying.
A CHALLENGING AREA: I just love my business, and I realize that not everybody has to love the business the way I do. The whole thing of engagement is always, always a challenge. That’s why I have a COO who’s a team builder; this wouldn’t have grown without her. I have 10,000 ideas, and which of those is going to make money is the question. That’s what my COO will ask me. But the ideas bubble up from everywhere, from our staff of 15 people, from customers, from people we meet.
WHERE SHE GETS IDEAS: I love to travel, and I always make sure to visit the U.S. Commercial Service personnel wherever I go. We really listen to our customers. We do 80 to 100 trade shows every year.
NOT ONE FOR RULES: I had my professor from Harvard visit my business, and she said, where’s your governance? You run it like a family business? But that’s not me, to have those governance rules in place.
ABOUT EXPANDING MARKETS: Our focus has been 18 and younger, but because of our simplicity in our messaging our focus has been WIC, Women, Infants & Children, the government program to assist them. We would love to move into health care, but we need research and help to get there. Our materials are too fun for corporate America. We did come out with an older Americans healthy plate, and we’re going to try to market to those groups.
ONE LESSON LEARNED: One thing I wish ‘they’ would have told me about being an entrepreneur? How much fun it is. I would have started way earlier. I would have started in my 20s, and started business after business. As it was I was into security in my younger days, and didn’t get going until after age 35.
