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RESOURCEGUIDE Managing editor: Casey Selix ■ casey.selix@finance-commerce.com ■ 612-584-1556

Would acash mobwork for yourbusiness?How to woo one, and what to do next

BY HOLLY DOLEZALEKSpecial to Finance & Commerce

If a business can attract a cash mob, it not only couldring up more than a day’s extra sales but also form last-ing relationships with new customers.

That’s the word from participantsand marketers since cash mobs startedlast year in Buffalo, N.Y. Cash Mob Min-neapolis launched in February this yearon Facebook. Minneapolis founder BretFierce runs regular polls so the group’smembers can vote on the next cash mobrecipient. By April, the group had coor-dinated seven mobs.

Cash mobs are groups of people whocoordinate via social media to visit abusiness they like on the same day and spend at least $20.Most Twin Cities cash mobs have been at locally basedretailers that focus on sustainable products, local mar-kets and community ties. Three examples: Minneapolis

retailer Moss Envy, which sells onlyeco-friendly and sustainable products; St.Paul’s Golden Fig, which sells locally pro-duced specialty food like spice blends and vine-gars; and Minneapolis art gallery Regla de Oro,which donates a percentage of sales to nonprofits.

“We were a perfect candidate for acash mob because of our businessmodel,” said gallery owner JessicaSmith. “That’s the whole premise ofcash mobs: giving back, supporting thecommunity and advocating for smallerbusinesses.”

So far, 78 percent of Cash Mob Min-neapolis’ friend base is female, andwomen ages 35 to 44 are the biggestgroup within the base, Fierce said.

A one-day cash mob obviously cannot sustain a busi-ness. But Moss Envy’s experience shows that a cashmob’s real value comes from lasting connections.

Moss Envy’s March 11 mob yielded more than $1,000

i nsales,more e-mails forthe store list,more fans onFacebook andmedia coverage of theevent. Webcasting theevent extended the socialconversation about Moss Envy.

“I could spend hundreds of dol-lars on ads and not get that kind ofROI,” co-owner Ryan North said.

Nominations start the processSo how does a business attract a cash mob?

Nominations are the first step then asking friends,customers and other supporters to vote in favor of thebusiness. But businesses also can strategically positionthemselves so the votes come more easily.

Even though social media are where cash mobs areborn, and it’s easy to promote a business in social media,it’s not the best or only strategy, said Jen Kane, principalof Minneapolis-based social marketing firm Kane Con-sulting.

Relentless self-promotion is not conversation, Kanewarns. Social media participation is a two-way conver-sation, not one-way.

So promote the business, she said, but also post ar-ticles or talk about issues that might interest others.It’s at least as useful as promotion because it puts thebrand in front of others and makes it seem more likea friend.

“You couldn’t buy enough advertising to make peoplewant to hang out with Coca-Cola, but you can make peo-ple want to hang out with your brand,” Kane said. “Andif they like you, they’re more likely to vote for you.”

Getting out the vote can also be a balancing act. Towin a March 24 cash mob, Goddess of Glass owner Con-nie Beckers asked almost daily — on her Facebook page— for fans to vote for her north Minneapolis store. Thenshe heard through a friend that some of them hadblocked her.

Then again, if business owners don’t promote, theymight not attract a mob, so they have to decide how

Moss Envy, a Minneapolis retailer, sells furniture, home décor, gifts, jewelry, clothing, innerspring and organic latexmattresses, organic baby gear and building materials. The business was recently the beneficiary of a “cash mob”— a group of people who coordinate via social media to visit a business they like on the same day and spend atleast $20. (File photo: Bill Klotz)

CASH MOB TO PAGE S-6

78PERCENT

Portion of women in Cash Mob Minneapolis friend base

Source: Cash Mob Minneapolis

S-2 Finance & Commerce finance-commerce. com May 2012

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BY NANCY CROTTISpecial to Finance & Commerce

New businesses have so many expensesthat hiring a lawyer may seem out ofreach. Enter LegalCORPS, a nonprofitthat deploys volunteer lawyers to locationsin the Twin Cities and other larger Min-nesota cities and is gearing up to offer vir-tual help to the rest of Minnesota.

Income-qualified individuals can have afree 30-minute consul-tation with a Legal-CORPS attorney on awalk-in basis for simplematters, or schedule anappointment for morecomplicated issues.Some of the volunteerswill even take on a proj-ect to help a small busi-

ness for free over a longer term.That’s what Gina DeConcini did for two

small businesses that needed an extraboost. DeConcini, a partner at Oppen-heimer Wolff & Donnelly in Minneapolis,is a pro bono veteran who won Legal-CORPS’ volunteer of the year award for2011, having served 23 clients in a two-yearperiod. She tends to take on the cases noone else will touch.

Such was the case when an applicationcame in from an inmate at Faribault StatePrison. Mario Hunter, 37, was serving six-and-a-half years for possession of a con-trolled substance and wanted to start ashuttle service for families to visit inmatesin Minnesota’s prisons. He had studiedbusiness while in prison and had written abusiness plan but needed help setting up

his company.DeConcini stepped in and helped

Hunter form a limited liability corporationfor his company, Silver Wings ShuttleService, based in Woodbury.

“We were able to correspond,”

DeConcini said. “He wrote back and said,‘Here’s what I need.’ He could call me. I justcouldn’t call him.”

Hunter was released from prison inJuly 2011. He employs two drivers, and hasfive vans and two cars to transport in-

mates’ family members to and from fourof Minnesota’s nine state prisons. Hehopes to expand service to all nine prisons.

“If it wasn’t for her, I wouldn’t be whereI am right now,” Hunter said of DeConcini.

DeConcini also helped a pair of TwinCities sisters whose first idea for a frozenbaby food business did not pan out whenthey couldn’t find a manufacturer. When afamily friend came down with leukemiaand asked the sisters to provide her withfrozen, easily digestible food while she un-derwent chemotherapy, the idea for theirsurviving business, the HopeFULL Co.,was born.

The sisters, Stephanie Williams of Min-netonka and Jessica Welsch of St. Paul,abandoned the idea of selling food, optingto sell food-freezing kits and recipes for avariety of people who have difficulty eat-ing, from cancer patients to children withautism. The HopeFULL Co. recentlyraised $25,000 to design packagingthrough kickstarter.com in January and isa finalist for the Edison Award, a nationalrecognition for new products.

DeConcini helped create the entities forthe sisters’ initial company and for theHopeFULL Co. Her firm is now the com-pany’s corporate attorney, and Merchant& Gould has been helping with intellectualproperty needs. The company sells itsproducts through its website and a handfulof retail stores, but the sisters hope thatthe packaging will help them expand intomore retail outlets.

“We’re trying to bring awareness to getadults and kids to get the nutrition theyneed at difficult times,” Welsch said.“Without the packaging, we’re really lim-ited.”

DeConcini and fellow volunteer MartinRosenbaum, a partner at Maslon EdelmanBorman & Brand LLP in Minneapolis,enjoy the variety of people they meetthrough LegalCORPS. Both volunteer atwalk-in legal clinics at the downtown Min-neapolis Public Library and take referralsfrom SCORE, a volunteer organization ofretired executives who help small busi-nesses with a variety of issues.

Mario Hunter, pictured at his home in Woodbury, started a shuttle service for families to visit inmates in Minnesota’s prisonswhile he was in prison himself. He received help setting up the business from LegalCORPS, a nonprofit that uses volunteerlawyers. (Staff photo: Bill Klotz)

503Clients servedby LegalCORPs

in 2011Source: LegalCORPs

Can’t afford a lawyer? Check out LegalCORPS

LegalCORPS patent programto serve as national model

BY NANCY CROTTISpecial to Finance & Commerce

The U.S. government is using aMinnesota business lawyer volunteerprogram as a model for the nation.

The LegalCORPS Inventor Assis-tance Program came into being over a2010 conversation between Minneapo-lis lawyer Jim Patterson and DavidKappos, director of the U.S. Patentand Trademark Office.

Kappos said he wanted to establisha national pro bono program to helpinventors get the legalhelp they needed toapply for patents.

“And I said, ‘Well,you’ve come to theright place, sir, be-cause Minnesota hasa strong history inpro bono, and I’vebeen involved in probono at both theprovider and theboard level for thelast 30 years,’” recalled Patterson, apartner with Patterson ThuenteChristensen Pedersen P.A., an intel-lectual property law firm.

Then Patterson and Candee Good-man, recently retired pro bono direc-tor at Minneapolis law firm Lindquist& Vennum, got to work. They knewthat similar efforts in California andWashington, D.C., had foundered andbegan to wonder why.

“We figured out that you needed anentity that actually coordinates it all,”Goodman said.

So they asked LegalCORPS to ad-minister it, asked the Minnesota Intel-lectual Property Law Association toprovide volunteers for it (there arenow 45) and started raising money topay a manager to run it. Local corpo-rations and law firms have pledgedmore than $200,000 to run the pilotprogram for four years. The programbegan operating in June 2011.

“The help that we’re providing is inobtaining a patent,”Patterson said. “Thedirector’s vision hereis that there is a hugeresource in Americaof inventors and goodideas, and they’re pre-cluded from the sys-tem because of thecost of getting apatent.”

If they cannot get apatent, inventors can-

not protect their ideas from competi-tors and safely bring them to market,creating jobs for others as well, saidJohn Calvert, senior adviser in innova-tion development in the U.S. Patentand Trademark office.

“This country was built on thebacks of these individual inventorsthat created a product, that created acompany, that created an industry andcreated economic growth, and we’ve

got to look at it in that respect,” saidCalvert, who traveled twice to Min-nesota to promote the program and isin regular contact with Goodman andPatterson.

Because not every state has enoughpatent attorneys to serve its needs, thefederal program will be regional, usingteleconferencing and other methods tobring inventors and volunteer lawyerstogether. The patent office is sched-uled to debut a nationwide clearing-house for inventors and pro bonolawyers and advisers in about amonth.

Programs similar to Minnesota’sshould be up and running in California,Colorado, Texas and the Washington,D.C., area this year, Calvert said.

“We’ve learned a tremendousamount from the Minnesota pilot,” hesaid. “They took it upon themselves tofigure out how to make this thingwork, and they did.”

The program hasn’t had a patent is-sued yet, but “having about a dozen ac-tive cases right now is very good in thepro bono world,” Patterson said.

“The big thing in the first year isthat you actually have boots on theground and you actually have cases inprocess,” he said. “It’s a huge accom-plishment.

“One of the surprises of the casesthat we received is how good theywere,” Patterson added. “The sophis-tication of the technology was surpris-ingly good.”

$200,000+Amount pledged so far

by law firms and corporationsfor pilot inventors program

Source: LegalCORPS

LEGALCORPS TO PAGE S-8

May 2012 finance-commerce. com Finance & Commerce S-3

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How to prepare to sell your small business Editor’s note: In this guest column, Heidi

A. Carpenter, a commercial transactionalattorney for Fafinski Mark & Johnson inEden Prairie, offers a step-by-step methodfor getting a small business ready for sale.

BY HEIDI A. CARPENTER

The complexity of preparing a businessfor sale can be overwhelming. But advancepreparation by the owner likely will lead tomore interested buyers, an increased saleprice and fewer transaction costs.

After all, buyers are attracted to prof-itable businesses that are easy to evaluateand operate. For this reason, spendingtime and resources on completing the fol-lowing seven steps is worthwhile for mostowners:

■ Get financials in order. Up-to-date, ac-curate financial statements including bal-ance sheets, income statements, cash flowstatements and tax returns should bereadily available for buyers to review. His-torical financial statements and tax re-turns also should be ready for disclosure,and a seller should have explanations forany past or present issues. Buyers tend torequest this type of information first andwill likely evaluate it fully before spendingany time looking at other components ofthe business. Many buyers walk away fromdeals at this stage because of poor record-keeping, questionable tax practices or lackof information.

■ Audit contracts and agreements. Allwritten contracts should be reviewed todetermine when they expire, whether theyare affected by a sale of the business or ifthey remain to accurately reflect currentbusiness dealings and economics.

Verbal agreements and other non-writ-ten special arrangements should be me-morialized in writing. Many buyers willrequire such documentation. Further,savvy buyers will quantify the negative im-pact of the contract provisions (or lack ofwritten contracts with key vendors or cus-tomers) and reduce the purchase price asa result.

■ Identify assets. Inventory must becounted and accurate. Obsolete itemsshould be sold. Premises should be clean,and equipment must be in good workingorder and in compliance with regulatoryrequirements.

I once witnessed a potential buyer beingescorted by the seller to a basement wherethe inventory and equipment for a usedsporting goods store was located, andnone of the items had been counted,cleaned or organized. The seller admittedthat “he had no idea what was there.” Thepotential buyer completely discounted theinventory when making an offer and fur-ther subtracted from the offer the cost hewould incur for counting, organizing andremoving obsolete inventory.

In addition to tangible inventory, allcopyrights, trademarks, patents, domain

names and software should be audited toensure the business properly owns orholds a license to use such property. Up-grades should also be considered if equip-ment or software does not meet industrystandards.

■ Scrutinize interrelated transactions.Many small businesses, in some manner,have entered into transactions with itsowners, directors, managers or their re-lated family members. Potential buyers,however, will likely be suspicious of suchtransactions and relationships.

Therefore, a seller should be preparedto disclose and explain the business valueof such arrangements to the buyer; or, inthe alternative, terminate arrangementsthat are not economically or otherwiseprudent for the business. For instance, ifan owner’s non-employee spouse has beenprovided a company car, it may be advis-able to restructure that benefit beforemarketing the business.

■ Start the transition. An owner shouldstart preparing the business for his or hereventual departure. Training key employ-ees and managers to operate the businessin the owner’s absence is critical. Theowner also should begin the transition ofcustomer and vendor relationships to oth-ers within the organization so that the im-pact of the owner’s departure on thebusiness is minimized.

Key employees should also be requiredto sign agreements protecting the trade

secrets, patents, customers and intellec-tual property of the business to preventbuyers from fearing that the property ofthe business is susceptible to misappropri-ation or disclosure.

■ Confirm ownership. Although seem-ingly obvious, the ownership records of thebusiness should clearly identify ownersand ownership interests. Any verbal trans-fer of ownership interests or owner depar-tures that have not been documented maybe called into question by potential buyers.In addition, it will likely be easier to get de-parted owners to sign off on their owner-ship status before an offer from a thirdparty has been received.

■ Resolve problems. Any pending orthreatened litigation, customer complaintsor similar issues that may decrease thevalue of the business must be resolved. Anadvisory team can assist in formulating astrategy to disclose and address any issuesthat cannot be resolved prior to the sale.

Completing these seven steps and as-sembling an experienced team of adviserswill maximize the sale price of a small busi-ness and help to avoid hassles. With de-tailed planning, the sale of a business canbe a satisfying conclusion to years of hardwork.

Heidi A. Carpenter can be reached at 952-995-9500 and heidi.carpenter@fmjlaw.com.

Are you a networker,conversationalistor brand builder?

BY ELIZABETH MILLARDSpecial to Finance & Commerce

For many small business owners, keep-ing up with social media can seem like apart-time job in itself, not just a compo-nent of the company’s marketing andpublic relations plan. But here’s the goodnews: It’s possible, and even advisable, tolimit social media efforts to get the mostreach for your message.

Trying to take on every tool — Face-book, Twitter, LinkedIn, Pinterest, GooglePlus, blogging and others — is dauntingunless you’re an enthusiastic technophileor your job is in social media. So which topick? Generally, it will come down towhichever tools you tend to like the most,

but there are some personality types thatgravitate toward specific sites. Here’s aquick guide to see where you might fit:

The networker: LinkedInBuilt for professionals rather than con-

sumers, LinkedIn has become a power-house when it comes to finding businessassociates, employees and executive tal-ent. The site also boasts more than a mil-lion groups, which people can join basedon their interests and expertise.

Many small business owners findLinkedIn an easy place to start with socialmedia, notes Holly Matson, director of ex-perience planning at Minneapolis-basedBolin Marketing, an agency that providesbusiness consulting, social media andWeb design. She says the site allows busi-nesspeople to expand their networkswithout the frantic pace seen at sites likeTwitter. Also, it’s a good place to be if com-petitors are dominating the site.

S-4 Finance & Commerce finance-commerce. com May 2012

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Hope for the best,plan for the worstThe importance of a disaster recovery planfor your business data

BY DAN HEILMANSpecial to Finance & Commerce

Your small business’ insurance will replace your phys-ical assets in case of a disaster. But what about your com-pany’s digital assets — files, applications, networks,databases and the like? For some companies, losing thoseis a lot worse than replacing a roof.

Just as many of us are not truly prepared for a tornadoor earthquake, many businesses don’t have the properpieces in place to make up a sufficient plan for disasterrecovery or business continuity.

While those terms are often used interchangeably, theyare not the same. Business continuity planning is theprocess of identifying and prioritizing a business’ assetsand developing a strategy to prevent or mitigate damageor loss to them. Disaster recovery (or DR) strategy is fo-cused more on technological assets and contains a planfor keeping those assets up and running no matter what.

Business managers who haven’t done so should createa DR plan or regularly conduct a thorough review of theirexisting one. A good early step is to determine your re-covery time objectives and recovery point objectives,said Brian Dimatteo, director of information technologyat Indecomm Global Services in St. Paul.

“It really comes down to how much data can you af-ford to lose and how much time can you afford to lose,”Dimatteo said. “Some businesses can afford to lose aweek’s worth of data, while for others even losing a fewhours’ worth can be bad. You have to figure out what’smission-critical and put your time, effort and budget intoprotecting that.”

Part of a sound DR plan is choosing a provider — acompany that can get your files and applications back online with minimal disruption to your business. Cloud-based backup is easily and cheaply available for compa-nies that are only seeking “redundancy” for their filesand applications. But a full-service, always-on DR pack-age can be a four-figure monthly expense — one thatmany companies find worthwhile.

“Your cost will depend on your maximum allowabledown time, how quickly you need to have your data re-trieved, how much data you have, how fast it’s growingand how often it changes,” said Matthew Price, an ac-

count executive with Netrix Information Technologies inEagan. “If it’s mission-critical, you might need to spenda little more.”

Although disaster recovery is most commonly associ-ated with newsworthy catastrophes,a data disaster can result fromsomething as mundane as a powerfailure. Price said the digital assetsof a number of Netrix clients innorth Minneapolis were affectedless by the tornado there last Maythan by the disruption in electricalservice that came after it.

For that reason, DR specialistsadvise having your data protectedin a geographic location somewhatfar away from your business.

“If you’re in Minneapolis, it’s notnecessary or even advisable to haveyour provider in Dallas,” said SusanJudge, chief operating officer of As-surity River Group in Minneapolis.“But it’s not a bad idea to have yourDR site on a different grid, at least.”

Once you have prioritized your data and established aDR plan, don’t let it grow stale. With the help of yourprovider, run real-time tests. Some experts even recom-mend unannounced tests to see how your employees re-spond — not in a theoretical situation but a real,“uncontrolled” one.

Keep copies of the plan in various locations outside theoffice for easy access. It’s a good idea to make the com-ponents of any DR plan accessible to everyone in thebusiness. If employees don’t know how to access systems

during an emergency, valuable timeand resources can be lost. If disastershould strike, procedures should bein place to allow your enterprise tokeep running to the greatest extentpossible while recovery is underway.

You can save time and money bydoing your own scheduled backups,too. Most Windows operating sys-tems can be configured to do thisautomatically, and your DR providercan teach you how to plan backups.

“It makes it easier on the busi-ness if everyone is backing up alldata, including applications,” Pricesaid. “When they have a server godown, they don’t think through howfast they need to be back up and

how much it costs for them to be down.”As with insurance, businesses often fail to see the

value of a good disaster recovery plan until it’s needed.Planning can prevent real disaster for your company.

“It’s an ongoing process, and a lot of what you’ll wantto do depends on your tolerance for risk,” Judge said.“Think of it as an operational expense.”

A data disaster can result from something as mundane as a power failure. On Penn Avenue between 24th and28th streets in north Minneapolis, a utility pole was down after a tornado devastated the neighborhood in May2011. (File photo: Bill Klotz)

How to decide which social media tool is right for you

“You don’t have to be constantly on Twitter to have it work well for you,” advisesKyle Meehan at PH Digital Labs, a Minneapolis digital marketing agency. “It can be agood way to entice people to other places, like your Facebook page or yourcompany site or your blog.” (Staff photo: Bill Klotz)

“It really comesdown to howmuch data can you afford to loseand how muchtime can youafford to lose?”

— Brian Dimatteo, Indecomm Global Services

SOCIAL MEDIA TO PAGE S-5

“Find out where the conversations aboutyour industry are happening,” Matson says.“If there’s activity on LinkedIn about whatyou provide, you should definitely makesure to be in on that conversation.”

The brand builder: FacebookBecause it allows users to link to other

sites and articles, and include photos andvideos that can be embedded on a page,Facebook is a robust tool for building abrand’s image.

For example, take a look at the Face-book page for the HopeFULL Co., a localcreator of healthy food kits. Started in2010 by two sisters, the business buildsits customer base by using Facebook forbrand development. The founders includeinformation on products and links to ar-ticles about nutrition, parenting andhealth topics. They also offer coupons onthe page and photos of customers usingtheir products.

“As a startup, we knew we had to mar-ket ourselves in a way that was afford-able,” says co-founder StephanieWilliams. “Facebook gave us the ability toreach out to a very wide audience withoutany cost except for our time.”

The conversationalist: TwitterIf Facebook and LinkedIn are the din-

ner parties of the Internet, Twitter is thecocktail hour. Many people find the siteintimidating, given the rapid-fire tweets,re-tweets, short-form insights and directmessages. But others thrive with such abrisk pace.

“Those who love Twitter are usuallyvery outgoing, and they love to be con-stantly connected,” says Martha Mc-Carthy, co-founder of the Social Lights, aMinneapolis-based agency specializing insocial media and digital marketing. “Theylike to be the first to know about things,and they’re great at multitasking.”

Twitter can also be used to directusers to other sites, such as a new blogpost, advises Kyle Meehan at PH DigitalLabs, a digital marketing agency in Min-neapolis. “You don’t have to be constantlyon Twitter to have it work well for you,”he says. “It can be a good way to enticepeople to other places, like your Facebookpage or your company site or your blog.”

The deep thinker: blogTwitter is intimidating because of its

rapid pace, but blogs can be nerve-wrack-ing because of that huge, tough-to-answerquestion: “What do I say now?”

In general, blogs are ideal for establish-ing yourself as an expert in a topic. Ratherthan using the space to promote a product

or service, a blog is a way to broaden aconversation within your industry or pro-vide insight on a particular topic.

For instance, Steve Borsch, chief exec-utive officer of trend forecasting for Mar-keting Directions, gives general thoughtson market opportunities and sprinkles insome personal experience. A recent postabout appealing to baby boomers startedwith thoughts on helping his elderly fa-ther stay in his home.

“Blogs do classify as social media, be-cause you’re communicating a messagethat can be tied to other social media ef-forts,” Meehan says. “Also, it lets yourpersonality come through. You can showpeople how you think and demonstrateyour expertise within a certain industry.”

The early adopter: Google Plusand Pinterest

Although it was designed to be morefeature-rich than Facebook, Google Plusisn’t getting a groundswell of adoptionyet. But that doesn’t mean it won’t bevaluable in the future, and that’s why Mc-Carthy believes that the site is full of“first-movers,” people who like to stay ontop of new technologies and dive head-first into fresh approaches.

Similarly, Pinterest is just starting togain wider adoption. An online pinboard,

the site is mainly a way for people to sharetheir thoughts, inspirations and ideas.

For example, someone might “pin up”a group of recipes as a motivator forcooking more often. In terms of businessapplication, it remains to be seen whetherthe site will be valuable for connecting tocustomers. But if you’re an early adopterand like playing around with new socialmedia sites, it’s likely that you’re alreadypinning.

Top tipNo matter what you pick, be sure to

stay consistent and post regularly, Mc-Carthy advises. Even so, cut yourself someslack. Few people have the skills, time andinterest to use every social media tool, sojust find the one that works for you andexpand your empire accordingly.

Also, start with a goal, Matson says.Think about your purpose for being in so-cial media, rather than jumping into it justbecause that’s where you’re expected tobe.

“Ultimately, it comes down to the qual-ity of the content, not necessarily the plat-form where the content lives or is beingshared,” McCarthy says. “Plus, if peoplelike your content enough, they’ll share iton their own favorite social networks andspread the word for you.”

May 2012 finance-commerce. com Finance & Commerce S-5

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BY DAN EMERSONSpecial to Finance & Commerce

About five years ago, Mike Werch,president and CEO of Bloomington-basedVideo Guidance Inc., decided to offer anincentive plan to allow roughly 30 em-ployees to share in the communicationscompany’s success.

If the company reached certain finan-cial goals at year’s end, each employeewould get a 5 percent bonus based onsalary.

Werch said the bonus plan hasachieved the desired results, helping thecompany see healthy annual growth indouble digits, sometimes exceeding 20percent.

“Everyone here — not just the sales-people who earn commissions — under-stands the goal, and it has really helpedus succeed,” Werch said. “It’s a really nicereward for employees.”

Variable compensation plans and otherforms of profit sharing can prove effectivetools to help recruit and retain valued em-ployees and to motivate and reward re-sults. While variable-pay plans were oncelimited to executives and key employees,many companies have adopted them tomotivate rank-and-file employees to pro-duce better results.

When developing an incentive plan,the first step is to determine the objec-tive, said Steve Yakesh, vice president ofsales and marketing at the McKinleyGroup Inc., a St. Louis Park-based execu-tive search firm. “Typically, it’s done toget the entire leadership team in synchand laser-focused on the company’s endgoal,” Yakesh said.

A small company also needs to estab-lish a baseline that will preserve the own-ers’ equity, he said. Two owners of acompany might decide they each want totake a $500,000 baseline distribution, andany profits above that $1 million figurewill be distributed among the others in

the profit-sharing plan. “That protects the ownership group

and their income levels but also offers a‘carrot’ to the others based on year-endfinancial results,” Yakesh said.

He also noted that not everyone needsto be equal in a profit-sharing plan, whichcan include everyone in a small company,to get more people involved.

“The senior leaders might each take 15percent in profit-sharing and people atlower levels could get a smaller percent-age, all the way down to the receptionist,”he said.

Profit-sharing plans often include avesting period, such as requiring employ-ees to stay with the company for three orfour years to qualify for profit sharing.That approach can be effective in retain-ing valued employees, Yakesh said.

One recent trend in incentive plans is

that companies are switching from an-nual goals to quarterly goals, which canmore quickly affect employee perform-ance, said Brian Belisle, chairman of theemployee benefits group at Minneapolis-based law firm Oppenheimer Wolff &Donnelly.

Last year, Werch tweaked VideoGuidance’s plan, adopting quarterlygoals. The change has made a good planbetter, he said, making it easier to setgoals “that are attainable but make usstretch a bit.”

“Not having to anticipate businesstrends as far in advance makes it easierto set realistic goals,” he said. And, in achallenging year, “it gives us the opportu-nity to hit the mark in some quarters, ifnot all of them. Last year, we hit three outof four.”

Belisle emphasized the importance of

setting realistic goals to avoid setting em-ployees up for failure. “You don’t want toset goals that are unlikely to be achieved,”he said.

It’s also vital to communicate perform-ance objectives and potential rewards toemployees early in the year, Belisle said.

He recommends developing a writ-ten document that spells out the basicterms of the plan, including who is eli-gible, how bonuses are calculated andservice (length of employment) require-ments. It should also spell out whathappens in unusual situations such asan employee going on leave or becom-ing disabled.

“There are a number of things to con-sider,” Belisle said. “You can have differ-ent plans for different employeecategories. A bonus might be a percent-age of (annual) pay, maxed out at 15 or 20percent. You need to communicateclearly so the employees know it is a fairplan.”

There are also tax ramifications toconsider. Incentive payments sometimesfall into the category of deferred compen-sation — income that is paid at a futuredate after being earned. The InternalRevenue Service applies certain tax rulesto individuals who receive deferred com-pensation. Deferred compensation comesin many types, and different tax rulesapply to each type.

The most common form of profit shar-ing for small companies is retirementplans in which the employer contributesto each employee’s plan.

In that category, 401(k) plans, SEP(Simplified Employee Pension) plansand SIMPLE (Savings IncentivesMatch Plan for Employees) plans arethree options even for tiny businesses,according to Buddy Horner, manager ofretirement plan solutions for the Min-neapolis office of Chicago-based ac-counting firm Baker Tilly VirchowKrause LLP.

Steve Yakesh, vice president of sales and marketing at the McKinley Group in St.Louis Park, said that when developing an incentive plan, the first step is todetermine the objective: “Typically, it’s done to get the entire leadership team insynch and laser-focused on the company’s end goal.” (Staff photo: Bill Klotz)

How to introduce profit sharing to a small company

Social media ‘If people like your content enough, they’ll share it’Continued from page S-4

much promotion is worth it. North didn’t want to over-solicit for

votes when Moss Envy was nominated,but when the vote got close, he used thestore’s e-mail list of 3,500 and its text-message club to win.

Preparing for a mobIf a business wins a cash mob, the

owner needs to make sure to have enough

help, resources and inventory on hand. Integrating social media also can

bring more success, i.e., taking photosduring the event, tagging people inthem, live-Tweeting the event and post-ing video.

“Use the real time as an entry point tothe virtual connection, then ride the vir-tual connection for the future of yourbusiness,” Kane said.

More advice: Charge the camera bat-teries, set up a laptop to update the busi-ness’ Facebook status or Tweet duringthe event, or set up a Web cam.

To encourage more social interactionon the spot, consider offering snacks.Moss Envy had a masseuse available forquick massages while customers waitingin line to make purchases.

A cash mob is somewhat akin to a

performance for a business, so makesure everyone who helps out under-stands that.

“Even one person who comes outwith a bad experience will talk to therest,” says Maikel van de Mortel, co-founder and marketing director forThreeActive.com, a Minnesota-basedsports clothing and gear retailer. “Don’tgive them anything bad to say.”

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S-6 Finance & Commerce finance-commerce. com May 2012

Cash mob Make sure to have enough help and inventory on handContinued from page S-1

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May 2012 finance-commerce. com Finance & Commerce S-7

BY NANCY CROTTISpecial to Finance & Commerce

African Development Center of MinnesotaAddress: 1931 S. Fifth St., Minneapolis,MN 55454; also has offices in Mankato andRochesterPurpose: Provides training, lending andtechnical assistance to guide African im-migrants and refugees in Minnesota toeconomic success.Phone: 612-333-4772 or 877-232-4775Email: info@adcminnesota.orgWebsite: adcminnesota.org

Asian-American Chamber of Commerce of MinnesotaAddress: 2429 University Ave. W., St. Paul,MN 55114Purpose: Promotes and advocates forAsian-American businesses in Minnesota.Phone: 651-642-1331Email: info@asianamericanmn.comWebsite: asianamericanmn.com

Hispanic Chamber of Commerceof MinnesotaAddress: 401 N. Robert St., Suite 150, St. Paul, MN 51011Purpose: Provides training, technical as-sistance, college and careers pipeline,homeownership counseling, financial liter-acy, college scholarships, mentoring andother resources to Latino individuals, stu-dents, families and entrepreneurs.Phone: 612-312-1692Email: luke@hispanicmn.orgWebsite: hispanicmn.org

The James J. Hill Research LibraryAddress: 80 W. Fourth St., St. Paul, MN55102Purpose: Provides clients with access toand assistance in finding practical busi-ness information.Phone: 651-265-5500 or 877-700-4455Email: info@jjhill.orgWebsite: jjhill.org

Latino Economic Development CenterAddress: 1516 E. Lake St., Suite 201, Min-neapolis, MN 55407Purpose: Transform the community bycreating economic opportunity for Latinos.Phone: 612-724-5332Email: info@ledc-mn.orgWebsite: ledc-mn.org

LegalCORPSAddress: 600 Nicollet Mall, Suite 390A,Minneapolis, MN 55402Purpose: Volunteer lawyers provide regu-larly scheduled, no-charge consultations(up to 30 minutes) to owners of small busi-nesses at locations in St. Paul, Minneapo-lis, St. Louis Park, St. Cloud, Mankato andRochester.Phone: 612-752-6678 or 888-454-5267Email: info@legalcorps.orgWebsite: legalcorps.org

Metropolitan Economic Development Association Address: 250 Second Ave. S., Suite 106,Minneapolis, MN 55401Purpose: Advises and helps clients toidentify market opportunities as well asprepare applications, certifications andregistrations necessary to do businesswith government entities.Phone: 612-332-6332Email: info@meda.netWebsite: meda.net

Minnesota Black Chamber of CommerceAddress: 401 N. Robert St., Suite 150, St.Paul, MN 55101Purpose: Dedicated to the economic de-velopment, job creation and advocacy thatare critical to the growth and future suc-cess of its member businesses and thecommunity.Phone: 651-224-4320Email: info@minnesotabcc.orgWebsite: http://minnesotabcc.org/

Minnesota Department of Employment and Economic DevelopmentAddress: First National Bank Building, 332Minnesota St., Suite E-200, St. Paul, MN 55101Purpose: Offers information on starting,financing and managing a business in Min-nesota.Phone: 651-259-7114Email: DEED.CustomerService@state.mn.usWebsite: www.positivelyminnesota.com

Minnesota Hmong Chamber of CommercePurpose: Dedicated to creating opportu-nities and cultivating relationships in theendeavor to promote the growth and suc-cess of each member business.Email: info@hmongchamber.comWebsite: hmongchamber.com

Minnesota Indian Business AllianceAddress: P.O. Box 1902, Detroit Lakes, MN56502Purpose: To help Indian businesses launchand grow both on and off the reservation.Phone: 218-847-9554Email: info@mniba.orgWebsite: mniba.org

Minnesota Minority Supplier, Development Council Address: 111 Third Ave. S., Suite 240, Min-neapolis, MN 55401Purpose: Helps connect minority-ownedbusinesses and corporations throughoutthe Twin Cities community and Min-nesota, North Dakota and South Dakota.Phone: 612-465-8881Email: info@mmsdc.orgWebsite: msdc.adaptone.com/mmsdc

Minnesota SCORE District OfficeAddress: Butler Square, 100 N. Sixth St.,Suite 210-C, Minneapolis, MN 55403Purpose: SCORE offices are scatteredthroughout the state to offer free guidanceby retired executives to businesses.Phone: Minneapolis, 952-938-4570; St. Paul, 651-632-8937; South Metro, 952-890-7020Email: Minneapolis, Minneapolis@score-mn.org; St. Paul email accessiblefrom website; South Metro, southmetroscore@qwestoffice.netWebsite: score-mn.org

Minnesota Small Business Development Centers Address: First National Bank Building, 332Minnesota St., Suite E-200, St. Paul, MN55101Purpose: Nine SBDCs scattered through-out the state, most with satellite outreachcenters, offer free business consultingservices, including business planning, fea-sibility studies and marketing assistance.Phone: 651-259-7423 or 877-653-8333Email: lyle.wright@state.mn.usWebsite: positivelyminnesota.com/sbdc

Minnesota State Colleges and Universities Minnesota,Small Business Management Education ProgramAddress: Wells Fargo Place, 30 SeventhSt. E., Suite 350, St. Paul, MN 55101Purpose: Instructors target instruction toareas that enable entrepreneurs to meettheir goals.Phone: 651-297-1484Email: richard.joerger@so.mnscu.eduWebsite: mgt.mnscu.edu

Minnesota Technical Assistance ProgramAddress: 200 Oak St. SE, Suite 350, Min-neapolis, MN 55455Purpose: Provides free technical assis-tance to businesses to develop and imple-ment industry-tailored solutions tomaximize resource efficiency, prevent pol-lution, and reduce use and cost.Phone: 612-624-1300 or 800-247-0015Email: mntap@umn.eduWebsite: mntap.umn.edu

Procurement Technical Assistance Center Address: 250 Second Ave. S., Suite 106,Minneapolis, MN 55401Purpose: Assists Minnesota businesses insecuring government contracts.Phone: 612-332-6332Email: skomrosky@mnptac.orgWebsite: ptac-meda.net

QuorumAddress: 540 N. Fairview Ave., Suite 303,St. Paul, MN 55104Purpose: The chamber of commerce forGLBT-owned and allied businesses in theTwin Cities.Phone: 651-646-1029Email: info@twincitiesquorum.comWebsite: twincitiesquorum.com

U.S. Small Business AdministrationAddress: Butler Square, 100 N. Sixth St.,Suite 210-C, Minneapolis, MN 55403Purpose: Offers information on small busi-ness loans, grants, bonds and other finan-cial assistance.Phone: 612-370-2324Website: www.sba.gov/about-offices-con-tent/2/3122

University of Minnesota, Office for Business & CommunityEconomic Development Address: 2221 University Ave. SE, Suite136, Minneapolis, MN 55414Purpose: Promotes business opportuni-ties and job expansion for businessesowned by women, people of color and peo-ple with disabilities.Phone: 612-624-0530Email: bced@umn.eduWebsite: bced.umn.edu

University of St. Thomas, Opus College of Business, Family Business CenterAddress: Schulze Hall 200, 1000 LasalleAve., Minneapolis, MN 55403Purpose: To educate business families.Phone: 651-962-4200Email: sore2891@stthomas.eduWebsite: familybusiness.stthomas.edu

WomenVentureAddress: 2324 University Ave. W., Suite120, St. Paul, MN 55114Purpose: Provides the tools and supportto help women start and grow a business,find a new job or develop a new careerpath.Phone: 651-646-3808 or 866-646-3808Email: info@womenventure.orgWebsite: womenventure.org

Women’s Business DevelopmentCenter — MinnesotaAddress: 250 Second Ave. S., Suite 106,Minneapolis, MN 55401Purpose: Provides Women’s Business En-terprise certification to majority-ownedwomen’s businesses in Minnesota, westernWisconsin, South Dakota and NorthDakota.Phone: 612-259-6584Email: wbdc-mn@wbdc.orgWebsite: wbdc.org/MN/

Need advice? Updated guide to Minnesota small-business centers

The African Development Center of Minnesota in the Cedar-Riverside neighborhoodof Minneapolis provides training, lending and technical assistance to Africanimmigrants and refugees. (File photo)

S-8 Finance & Commerce finance-commerce. com May 2012

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SCORE volunteers screen the clientsthey pass on to LegalCORPS, but no onescreens the library walk-ins.

“You absolutely have no idea of what’scoming in the door, which is really the funpart for me because I spend a lot of timeworking with really big companies,”Rosenbaum said. “You get people from allsorts of different backgrounds and cul-tures, and it could be any sort of question.”

LegalCORPS also helps corporate at-torneys find pro bono work, which tendsto be more geared toward litigators. Theorganization was born in 2004 out of acommittee at the Minnesota State Bar As-sociation, which also houses the organiza-tion in its Minneapolis office.

LegalCORPs has in-person clinics in St.

Paul, Minneapolis, St. Louis Park, St.Cloud, Mankato and Rochester, said exec-utive director Michael Vitt. The organiza-tion plans to open clinics in Marshall andDuluth and has begun offering videocon-ferencing with Twin Cities attorneys as-sisting clients in the Small BusinessDevelopment Corp. office in Hutchinson.Future plans include videoconferencingwith clients in all nine of the state’s SBDCoffices.

“There’s clearly a sore need for legal probono in all of these other areas,” Vitt said.

LegalCORPS is one of the few au-tonomous nonprofits nationwide dedi-cated to helping business clients, Vitt said.And it is leading the way by organizing probono legal help for inventors seeking

patents.LegalCORPS lawyers have helped her

clients “immeasurably,” said Susan Mc-Closkey, president of the St. Paul SCOREchapter.

“We don’t have data to show you, ‘Dothis and you have this outcome,’” Mc-Closkey said. “They do such a range ofthings. From people that just have basic in-corporation article questions about whichbusiness form they should be to peoplewho have more complicated problems.”

LegalCORPS, which has 393 volunteerattorneys, receives funding from law firmsand their foundations and the Legal Serv-ices Advisory Committee, appointed bythe Minnesota Supreme Court. It is alsoseeking to expand the number of attorneys

who can work with immigrants with lim-ited English.

LegalCORPS helped 503 clients lastyear, up from 177 clients in 2007. Rosen-baum said he enjoys helping people whohave no idea of how to shop for legal serv-ices. He also appreciates receiving emailsfrom LegalCORPS clients who were happythat a busy attorney would offer them helpfor free. And he uses it as a training oppor-tunity for summer associates and new as-sociates to watch and listen as he helpsclients.

“It’s not just the substantive area of thelaw,” he said. “It’s that I’m able to ask ques-tions to really help the client organize theirthoughts.”

LegalCORPS ‘You get people from all sorts of backgrounds and cultures’Continued from page S-2