Entrepreneurs to watch

Hot-dog stands, sunflower seed snacks, wake boarders and Scandinavian gifts. Three entrepreneurs to watch across Minnesota; from the Ground Level Blog

ONE JOB AT A TIME: The story of Nots!

Rob Fuglie's brainstorm began with the swinging of a hammer to smash sunflower seeds on his kitchen counter. His young son is allergic to nuts and so, tired of munching plain old sunflower seeds, Fuglie endeavored to create something more crunchy and tasty. "My wife and I missed peanuts in our life," he said. "I was frustrated because I wanted sunflower seeds to snack more like a peanut."

He added some sweet ingredients and a bit of olive oil to the crushed sunflower seeds, popped the mixture into the oven and presto, the first Nots! were born.

We had product demand that was six months ahead of what I'd planned

Fuglie is the kind of person who encounters a problem and then actually goes out and creates a solution, unlike most of the rest of us. When his square Costco milk jug wouldn't pour neatly, he invented a customized cap to help it along (he started shipping them to consumers last week).

In a lot of ways, the 40-year-old is typical of entrepreneurs in Minnesota. He started Nots! with $1,000 of his own money. But what's most interesting is that he's succeeded so far with a lot of help, from fellow entrepreneurs, from a test kitchen in Crookston and from the city of Fergus Falls, where the company is located.

Fostering entrepreneurism is an economic strategy that has gained momentum in Minnesota of late, especially given a sluggish economy in which established companies may be reluctant to start a new plant or open a new office. It seems that everyone these days, including President Obama, is looking to encourage small business start-ups. And there are myriad ways to do it, whether through microloans, incubators or simply helping out where needed.

Fuglie is good at networking and lucky for him, he knew Lois Josefson, executive director of TiE Minnesota, an entrepreneurs' education, networking and mentoring organization. She was the first to try his sunflower snack and said they were "not bad." But, they needed work, an assessment Fuglie agreed with.

"They tasted not bad but looked really bad," he said. "They looked like chicken feed, pale and extruded looking. They were very formed and cylindrical. They were not the most appetizing looking pellets."

Josefson suggested that Fuglie perfect his snack at the Agricultural Utilization Research Institute in Crookston, founded by the state Legislature decades ago to help develop new agricultural products. He spent three days at AURI last spring and learned how on scale up the Nots! recipe and improve their texture. He also discovered that molasses was a good way to add a warm tone to an otherwise pale snack.

Once he had the formula down, he needed an inexpensive place in which to make the Nots! Though Fuglie lives in Chanhassen, Josefson suggested Fergus Falls, where she lives, because a smaller city would be cheaper than a bigger one and because Fergus has a culture that supports entrepreneurs.

Fuglie had already met Harold Stanislawski, executive director of the Fergus Falls Economic Improvement Commission, and so the connection was easy to make. Stanislawski offered commercial kitchen space in an empty nursing home in town. Fuglie moved in and began production in mid November. So far he hasn't had to pay rent, but he hopes to give back in other ways.

"We're working with a group in Fergus Falls called Productive Alternatives," Fuglie said. "They work with adults with severe developmental disabilities. We're working on getting them in to do packaging for vocational training."

Nots! shot out of the gate and by Dec. 5, the product--every nugget of which Fuglie makes by hand--was on backorder. "We had product demand that was six months ahead of what I'd planned," he said. "That's over the top. That's awesome. But it also means the business plan is six months behind." He's since caught up with orders and again has Nots! to sell.

Fuglie has ordered customized equipment that should streamline production and he's hoping to hire two staffers by spring and also start paying his lone volunteer. "My goal is not to be the Nots! maker," he said. He's working to become "retail ready" and figure out distribution.

He acknowledged that things wouldn't be going as well or perhaps at all without the help he's received. Working in Fergus Falls has been "fabulous," he said. "You've got a lot of people who want to do things. The people you deal with on a daily basis are generally very active in the community."

Also, he said, locals in Fergus Falls are interested in local products and are some of his best customers. "You are not missing anything by not having a brand name that everybody has heard of."

MICROLOAN LETS IRON RANGE COUPLE MOVE BACK FROM TWIN CITIES

Catherine Branville always knew she wanted to own a store. But she wasn't sure what sort it would be. She'd moved with her husband, Gary, from Virginia on the Iron Range, where they both grew up, to the Twin Cities to get her business degree at the University of Minnesota.

Branville's decision was made for her when Irma's Finland House, a mainstay gift shop in Virginia, came up for sale a year and a half ago. She'd shopped there as a kid and had an attachment to the place.

"We love it on the Iron Range," 27-year-old Branville said. "Both of our families are from here and we knew eventually we wanted to come back this way. We needed the right opportunity and job. The store went up for sale and it all ironically fell into place. It gave us the opportunity to come back for a reason. We both have Scandinavian heritage, so the store was an interesting fit for us."

Both of our families are from here and we knew eventually we wanted to come back this way

But putting together the $60,000 they needed to buy the store, plus extra for repairs, wasn't so easy. It can be tough to get a business loan from a bank these days. Some have tightened up lending standards. In other cases, individual assets, like homes, are worth less and so don't provide the same collateral they used to. (Branville and her husband live with her parents because they've been unable to sell their home near Lake Nokomis.)

Foundations and other organizations have stepped in to fill the gap with microloans. These loans, usually up to $50,000, can be easier to land than bank loans. And in some cases, getting the seal of approval from a foundation can lead a bank to loosen its purse strings.

That was the case with Irma's. Before making an offer on the store, Branville attended a small business financing seminar in Duluth, where she learned about the Northeast Entrepreneur Fund's microloan program. The nonprofit wound up lending her $25,000, which triggered the bank to provide most of the rest (the city and her parents chipped in also).

"It was huge," she said. "We knew the bank would never have lent us the full amount we needed. Without Northeast we could not have bought the business."

Branville and her husband have fixed the store's foundation and roof and painted its interior and exterior and replaced the carpeting and lighting. She's expanded the offerings a bit to include locally made glass jewelry and is thinking of turning the back of the building into a coffee and bake shop with cooking classes.

Irma's employs six people part time. "Things are going really well, knock on wood," said Branville. "We're beating all the projections we had for the first couple of years. There is a lot of work to do and a lot of projects on our list. Slowly but surely we're getting there."

"It's really nice to be back up here," she added. "We both ski and hunt and fish. This is where we want to be."

RED WING WAKEBOARDER HOPES INCUBATOR WILL PULL HIM TO SUCCESS

Kyle Mehrkens grew up on Lake Pepin near Red Wing, so it was only natural that he'd invent a contraption that makes it easier to be on the water. The 28-year-old is building the third generation of a specialized electric winch that can pull a waterskier or wakeboarder for 25 seconds toward shore without a boat or even another person around.

"I set out to change the way you participate in wakeboarding and waterskiing," said Mehrkens, noting that the latter was invented on Lake Pepin. His winch hasn't hit the market yet, though he's planning demonstrations at a couple of upcoming water expos and hopes to "pull" a big competition this summer. "If I pull that it will be game over because everyone will know about it."

Mehrkens, who has a physics degree from Hamline University, began development of his self-operated winch with his high school shop teacher and now has filed for a patent. He credits an entrepreneurial uncle for his drive, friends and family for the practical support that's gotten him this far and Red Wing's virtual business incubator for pushing him to the next level.

The incubator, which started last year in part with a grant from the Southern Minnesota Initiative Foundation, has lent advice and mentorship and also $4,000 in the form of a microloan. "Throughout the whole process, they've been willing to work with me and push me and support me," said Mehrkens. "It's been very inspirational."

My age group is probably the least served, but I want to give back to this community in any way I can

One of the incubator's goals is to create opportunities for younger people in Red Wing, said John Becker, a fine print shop owner who heads a nonprofit called Red Wing Downtown Mainstreet, which championed the effort. "We're not growing rapidly but we are getting older very rapidly," he said. "That means the whole property tax burden shifts to a fixed income demographic. It's hard to grow a community like that."

"Kyle is the poster child for what we want to do," Becker said. "He's young and ambitious and aggressive." If Red Wing can burnish its credentials as a sports Mecca, perhaps more young people will want to live there. "There is no point in trying to fill a pipeline that's draining when the kids aren't coming back," said Becker. "They need reasons to stay."

The way it sounds, Mehrkens intends to do just that. "This is a good spot to start a business," he said. "The bonus here is how easy it is to talk to people. You can get a lot of advice. Red Wing has so much to offer to everyone of every age. My age group is probably the least served, but I want to give back to this community in any way I can."