The Upsize Growth Challenge, presented by Winthrop & Weinstine, is a contest created by Upsize magazine to match two winning business owners with the expert advice they need to reach their goals.
From nominations, judges select two winners based on the ambition of the growth goal and the quality of the work already completed to meet it. They participated in a workshop this spring with expert advisers supplied by the sponsoring companies, which is covered in this article.
Next up is a public event where they will share their stories and the experts will give advice applicable to all growing firms, on Thursday, Sept. 24, 11 a.m. — 1 p.m. at the Minneapolis Club. Nominations for next year’s contest open in spring 2016.
This year’s Upsize Growth Challenge winners both want to grow but in opposite ways.
HealthSource Solutions is pursuing organic growth through expansion to new cities.
Fourcubed is hunting for acquisitions, and has already landed a few. Our advisers are helping them along their journeys.
HealthSource CEO could think bigger about expansion plans
HealthSource Solutions began in 2009, after Park Nicollet health center spun off the department to one of its employees, Mary Kruse (pronounced CROO-zee).
She and a business partner, whom she bought out last year and so now owns 100 percent, built the provider of worksite health programs into a $2.3 million company with 34 full-time employees and 40 on-call staff and faculty.
The company, one of two winners of this year’s Upsize Growth Challenge, is well-known in the Twin Cities, providing consulting services to clients interested in healthier workers, and providing staff for onsite fitness centers and health promotion.
“The key to making this work is putting a program together that meets a company’s unique culture,” Kruse says. Rather than providing a portal, say, and telling employees to access it on their own, like many companies do now, “we become a hub for their health journey.”
But now Kruse wants to start a journey of her own, and has set her sights on Memphis, Tennessee, where she already has a few staff members and contracts with a couple of companies—Medtronic being one, a client in the Twin Cities which then wanted her to expand in its Tennessee location.
She’s taken several actions so far, such as having staff attend professional networking events there, participating as an exhibitor and speaker in the Memphis Business Group on Health, sponsoring events in Memphis and meeting with local healthcare providers.
“My biggest challenge is how do we break into a new market?” Kruse says to the panel of experts gathered to advise her in workshop one, at Winthrop & Weinstine offices in Minneapolis in July.
She finds the South to be about 10 years behind Minnesota in their wellness initiatives, but also eagerly interested in making strides in the area. She also knows a local presence is key to expansion.
“They want homegrown help. They don’t want some outsider coming in and telling them what to do,” Kruse says.
That may be true, but Kruse should also capitalize on her position of expertise, advises Dan Moshe, founder of Tech Guru and one of the Upsize Growth Challenge experts.
“You are from the health capital of the United States, Minneapolis. So leverage that. That’s a strength,” he says. He urges her to focus on the high-touch, emotional side of her business, just as he did when Tech Guru developed their tagline, the caring technology company.
Rick Brimacomb, founder of Brimacomb + Associates, suggests returning to HealthSource’s roots.
“What were the drivers when the market started here, the one or two things that resonated” most with clients, he asks. Those same factors will likely be her best bets in a new market, particularly those a decade behind where the Twin Cities are now.
Instead of hosting a conference in a new market, as Kruse does locally, Brimacomb suggests forming a group with non-competitive businesses in wellness, and then holding regular Meet-up or LinkedIn gatherings. “You’re all rowing in the same direction,” he says.
Andrew Downey, a business consultant with PwC, suggests aligning with other businesses in the area to reach clients. For example, accounting firms and law firms often have a healthcare practice focus, and if she joined with them to present a half-day conference, they would provide an existing network and she could speak on a hot topic.
Ryan Schildkraut, Winthrop & Weinstine, seconds the idea. His law firm, for example, has an employment law seminar each year and invites clients. He suggests she partner with law firms, insurance brokers or the like. “Your pitch is we’ll pay for it—you get the people here.”
But both men caution against trying to do everything at once. “You offer a lot of services across a wide range of companies,” says Downey. “As you go into a new market, think of focusing because there’s a capital investment.”
The same goes for Kruse’s talking points and written materials, which Downey points out list a long roster of services but fail to succinctly communicate what the firm does best. “Hone the message,” he advises.
On the other hand, Moshe urges her to think much, much bigger than she is. “Zoom out. Think, what am I really trying to do here?
Is it really Memphis, or do I have a national play” in mind, he advises, strongly suggesting she go toward the latter. “I want this to be 100X” what it is now. “I want to be a national player,” should be her guiding motto.
Thinking big, he suggests, will get her out of the deep weeds of expansion tactics, and into the motivating world of vision. That’s her job as CEO, after all—and then she can build her team to execute the plan.
[contact]
Mary Kruse is CEO of HealthSource
Solutions: 763.287.0749;
marykruse@healthsource-solutions.com; www.healthsource-solutions.com
WHAT THE EXPERTS SAY
ABOUT EXPERIMENTING
Companies have limited resources, so choose two or three things to try, “then either conclude if it works or scratch it off the list,” says Rick Brimacomb, Brimacomb + Associates: rick@brimacomb.com.
ABOUT VISION
“Answer the question, what are you going to be the best at in the world, that no one can touch? Figuring that out has been clarifying for us, and helps us to simplify our messaging,” says Dan Moshe, founder of Tech Guru: dan@techguruit.com.
ABOUT FOCUS
Companies do better if they focus on a certain type of client, perhaps in a certain industry. “People like knowing you get their industry,” says Ryan Schildkraut, Winthrop & Weinstine: rschildkraut@winthrop.com.
ABOUT PARTNERSHIPS
Gain an understanding of non-competing service providers who have a presence in a new market, and align with them, advises Andrew Downey, PwC: andrew.downey@us.pwc.com.
ABOUT CRITERIA
For Fourcubed, “I think the challenge is about the focus question, because you have a modest team and a lot of balls in the air,” says Ryan Schildkraut, Winthrop & Weinstine. He advises gaining clarity about where the company wants to end up. “And then it’s a debate over, does that fit into what we want to do?
ABOUT STRUCTURE
“In addition to the strategic fit of targets, another aspect is the ownership structure of the company,” says Andrew Downey, PwC, “because those things will add to the time frame and integration time. As you’re building a road map that might be another filter.”
ABOUT STRATEGIC BUYERS
“I get called every six months” by a potential strategic buyer in the information technology space. “I always take the call,” says Dan Moshe, Tech Guru. “I say we’re too small, but what are you looking for?” Such conversations help him shape his strategy.
ABOUT ADVISORY BOARDS
At Fourcubed, “we have an advisory board of which I’m one of three outsiders,” says Rick Brimacomb, Brimacomb + Associates, something he highly recommends. “We’re accountable to them.”
Fourcubed needs to find ways to sip from firehose
Since joining Fourcubed as president in March, Jim Olson has been on a mission to buy companies to complement the Minneapolis firm’s offerings.
It’s a company that markets offers from advertisers and sponsors to online gamers—and the number of potential targets could be described as a flood, with thousands and thousands of firms worldwide and only a few dominant players.
Fourcubed, one of two winners of this year’s Upsize Growth Challenge, entered the contest for advice on “everything having to do with acquisitions, advice on doing it well,” Olson tells the panel of experts gathered at workshop one.
Armed with a $2-million investment from the Mille Lacs Band last December, he’s already executed three small acquisitions as a matter of “loosening up our muscles,” he says.
They’re also building their management team, which is thin for a 10-year-old company that zoomed to $13 million in revenue before the Justice Department shut down the online gaming business one bad day in 2011. (See this month’s interview with Jim Olson for more.)
He’s on the hunt for more acquisition capital and is filling the pipeline with deals, which takes him to New York one day, Las Vegas another and Serbia the next.
Olson believes in meeting people face-to-face, even in an industry addicted to Skype like online gaming, because he believes personal contact is the only way to evaluate culture and an eventual good fit.
“The pipeline for acquisitions is enormous. There are hundreds of companies on that list, so being clear on one opportunity or another” is his biggest challenge, Olson says. “It’s very easy for the strategy to morph. There’s drift that does happen.”
Ryan Schildkraut, an attorney with Winthrop & Weinstine, leads with a question: “What does your target acquisition look like?” he asks, and Olson says there are two buckets.
A target has to have real revenue, real profits and a decent margin; and a target has to complement what Fourcubed is already doing.
Schildkraut suggests Olson will need an investment banker to sort through the possible acquisitions in the future, because he won’t be able to keep up with the possibilities for long.
Andrew Downey, a transactions expert with PwC, wonders if the key to the acquisition strategy is technology capability, or people, or assets such as the domain name.
When Olson replies it’s all three, Downey indicates he’s thinking the same way as Schildkraut, that Fourcubed needs to draw brighter lines around the possibilities.
He believes Olson should add, for example, another set of criteria when seeking targets: the ownership structure of the firms, and the likelihood that such a structure will lead to a quick closing and a smooth integration.
Dan Moshe, founder of Tech Guru, asks a bigger-picture question. “What is the end game?” Olson replies its stated objective is an exit in three to five years, in other words a sale of Fourcubed to a strategic buyer. “Do you know who?” Moshe asks, and Olson replies no.
“So you’re guessing about what the strategic buyer would want,” Moshe says, and advises instead that Olson identify possible buyers and go talk to them now. That way he can take the acquisition path most likely to reach the desired outcome.
Rick Brimacomb, Brimacomb+Associates, is both an Upsize Growth Challenge expert and an advisory board member and consultant to Fourcubed. He advises all fast-growing companies to form such a board with people of diverse backgrounds.
Olson knows he’ll continue to need all hands on deck to get to the golden exit. “Rick is a dealmaker. I’m an operator,” Olson says, then refers to Chris Carlson, the founder of Fourcubed. “Chris is a poker player.” That may be an ideal combination to grow an online gaming company.
