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Sunday, 28 May 2017 16:29

Emerging entrepreneurs wrestle with challenges to scale, grow in West Michigan

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Pictured: (clockwise, from left) Nick Manes, Brian Edwards, Emily Richett Hughes, Sara Moylan, Bob Moylan, Joel Potrykus, Carlos Sanchez, Marshall Rader and Stanley Samuel. Pictured: (clockwise, from left) Nick Manes, Brian Edwards, Emily Richett Hughes, Sara Moylan, Bob Moylan, Joel Potrykus, Carlos Sanchez, Marshall Rader and Stanley Samuel. Photo by Katy Batdorff

West Michigan continues to attract people looking to start, scale and grow all manner of business ideas.

Entrepreneurs are capitalizing locally on new opportunities in burgeoning industries such as craft beer, fitness clothing and health food. But despite the region’s established entrepreneurial heritage, gaps still exist in the support systems that can help them succeed at a higher rate. 

MiBiz convened a handful of emerging entrepreneurs to analyze the current business landscape in the region. Participating in the conversation with this writer and MiBiz Publisher Brian Edwards were: 

  • Emily Richett Hughes, owner of Grand Rapids-based public relations and marketing firm Richett Media LLC
  • Sara and Bob Moylan, owners and co-founders of Jenison-based sports bra company SheFit Inc.
  • Joel Potrykus, independent filmmaker with Sob Noisse
  • Marshall Rader, president at The Gluten Free Bar, a food products maker in Grand Rapids
  • Stanley Samuel, founder and president of Grand Rapids-based Caseq Technologies LLC, whose process allows brewers to capture carbon dioxide created during the brewing process for later use
  • Carlos Sanchez, director of the Latino Business & Economic Development Center at Ferris State University

Here are some highlights from the discussion.

It seems like barely a day goes by without Grand Rapids or the broader West Michigan region receiving some kind of small business accolade or appearing on a list as one of the best places to do business. To what extent does all that attention help you as entrepreneurs?

Sara Moylan: (People frequently ask whether we) have any thoughts of moving out to L.A. We said no. Sure, we’ll go back and forth and we’ll have an office, but this is home to us. It’s extremely important to us, as we expand and grow, that we’re staying true to our roots. Our family is here, too. We love Grand Rapids. We just love it here … plus, (we have) the ability to provide jobs.

Bob Moylan: We coincidentally started the company in Grand Rapids, which is an entrepreneurship hotbed in my opinion. There are so many opportunities, so many places you can go. There’s actually a lot of money in Grand Rapids for investing into your business. I think there’s a huge portion of the successful people that are in Grand Rapids who really want to give back. We’re just coincidentally here, but I traveled all over the country, a lot, and this town is awesome.

Sanchez: If you were to ask a Mexican restaurant or a Mexican grocery store on Grandville Avenue about Grand Rapids being one of the top places, they just opened here because that’s where they live. Our charge, we feel, is to bring those two worlds together in a way. Let the Mom and Pop shop in the Latino community take advantage of all that support that we’re talking about. Of course, we’re talking about two different ways of doing business. But when you boil it down, the core of entrepreneurial spirit, if you will, is similar. It’s exactly the same. It’s the same thing as anybody else who develops an app or this and that — there’s a market for it.

So what has West Michigan done for you in terms of being a place where you could start and grow your business, whether in the form of tax credits, the climate — anything?

Potrykus: That’s the big question everybody asks me: Why aren’t you living in L.A. to make these movies? I couldn’t do the kind of movies I want in L.A. that I can do here. From the logistical perspective, we don’t need certain permits. We can be out on the sidewalk shooting and people are just going to be like, ‘Cool, you’re making a movie.’ Whereas in L.A., it’s like, ‘Do you have permission to be here? Where is your insurance?’ You need to get waivers for all these things. It’s much easier for us to make movies here and we can make them for about a third of the cost.

Are there challenges to making movies here?

Potrykus: We don’t have a lot of the contacts around here who want to be investing in movies and understand what that really means, unless we’re making something that’s uplifting — “Spirit of Jesus,” or something like that. Because it’s really difficult to find people who are on the same page as us here, which is fine, because again, we can make (movies) cheaper here and we find money outside of West Michigan.

Is the talent here? 

Potrykus: There is. The lead actor who’s been in most all of our films, he went from his second movie with us to “The Revenant,” so he was having Thanksgiving at DiCaprio’s house. He almost has more success than I do as the writer and the director because he’s able to bounce around and work on other people’s films, where I’m trying to just do these small visions of mine.

Samuel: I think one of the biggest strengths that we’ve found has been the support structure. My previous startup, that I started also in Michigan, did not have that support structure. It was in the direct-delivery space. We were developing these extended release technologies, but there weren’t companies around. By then Pfizer had left the state. In the pharmaceutical space, you want to be near what we call the Mother Ship, where eventually there’s no way — you don’t have the capital to go through all the clinical trials to get to market. So you are responsible for the innovation, the discovery, get it through certain stages and then hand it off to somebody. 

How does that play out in your current business supporting the craft brewing industry?

Samuel: What we’ve found is all the breweries around here have been so supportive from the very beginning. Partly, we just happened to be in an industry where they are so collaborative anyway. I haven’t found another industry like that. They will have people come in from another brewery across the country and watch them make their (beers).

What other advantages do you find here?

Samuel: The other thing I’ve found is if you’re a bootstrapping startup, this is one of the great cities to be in because your dollar goes such a long way. Your cost of living is so low. You could probably raise quite a bit being in Boston or San Francisco, but that money is going to be gone in no time.

Sara Moylan: That’s what our struggle is. There’s a lot of great things that Grand Rapids offers, but for us, from a business perspective, we manufacture our product. So we were manufacturing out in L.A., and it was astronomical. We finally went overseas. Ideally, we would like to keep things in the States. We’ve tried the Carolinas, we’ve tried everywhere, … even here with Kendall (College of Art and Design) and the School of Fashion. There’s nobody that can make the product, unfortunately. I think our biggest issue is it would be great if we could make that here, but we can’t. Every aspect of the components that go into our products, we’ve tried to find them in the States. It’s all overseas.

How is a company like SheFit, with a lot of buzz in the market, dealing with business realities?

Sara Moylan: Our biggest problem is our product is in such high demand. We literally just brought product in and we thought we’d be flush. … We just brought in triple the amount of inventory we had last year, and thought it would last us nine months. It’s barely lasted us a quarter. We are beginning to be the best sports bra you can’t purchase. That’s a really difficult thing. … So here we are in the same position we really didn’t think that we’d be in this quickly. It’s a 120-day lead for us to get our product here. The likelihood of us shortening that to 60 to 75 days is getting better.

What major challenges are others experiencing?

Rader: One of the big differences for us compared to other kinds of natural foods companies is that we make our own products. Most companies in our space outsource manufacturing. It’s a really good advantage for us, but it’s also super challenging at times. One thing that kind of dominates our world is trying to find a way to market and sell really well, at the same time we’re trying to make products really, really well. We’ve got to be world class in two different things, so it’s challenging.

Samuel: I would say, the biggest bottleneck is space. We have such a unique need for space — it’s not just hardware, it’s heavy machinery. We’ve got compressors, chillers, heat exchangers and not every space will work for it. I went through a couple of almost closed deals, and then I found out those places were not zoned appropriately. Then we had to pull out, just because they didn’t want to go through the rezoning process. The spaces that typically work for us are in the tens of thousands or hundreds of thousands of square feet, but we’re not quite there yet. How do you kind of tip those dominoes at the early stage to get there? 

Bob Moylan: We’re on our third place now. We’re finding a space that sort of works. But the first place had no back door, garage door. I’m loading stuff off trucks by hand.

Sara Moylan: Or we’re going to have to build out. We find a great space, but my god, we’d have to put so much money into this just to make it how we need it. It would be great if the investors in this area recognized the need for those things and were able to tailor potentially some of that.

Sanchez: We can diversify the offerings in that (Latino) community. I feel that the more we talk about entrepreneurship in the Latino community, all of a sudden, someone is going to say, ‘You know what, I’m going to make a Latino snack,’ rather than another grocery store or another restaurant. Nothing against them, but try to diversify, or do something in clothing, or film, whatever the case is. I feel that my job is just keep working on that, trying to show them other examples.

While Grand Rapids is a cheap place to do business, are we going to become victims of our own success with these escalating prices?

Bob Moylan: We’ve probably got a long way to go before that matters. It could be here sooner than later, but it could (happen).

Sara Moylan: Another one of our struggles is this doesn’t tend to be an area where there’s a lot of experience in the apparel industry. For us, especially, there’s very much a lack of (apparel) mentors, other businesses, people that can help. Start Garden is a really good example. We went there before Shark Tank. At the time (we were seeking) $5,000 (but) we needed so much more than that. They’re like, ‘We really love what you’re doing, you’ve got some great traction. But we have nobody here who can help you,’ which is actually a bummer. It just doesn’t make any sense to me how there is no help — you know, just an incubator of some sort, just anything would be phenomenal.

What about the film incentives that we had, Joel? Would bringing those back help?

Potrykus: Yeah. I know once that film incentive for filmmakers and the people who thought they could rely on working on crews and everything, they all just instantly left, especially for Atlanta or L.A. That’s one thing. I also teach filmmaking, specifically how to make movies in Michigan, that you don’t need to go somewhere else to do it, because people are just programmed to think that it doesn’t happen here, it only exists on the coasts or Atlanta. That’s mostly because everybody got so excited when the incentives came here, and then, when they left, it just depressed everyone.

What did the incentives do for a filmmaker like you?

Potrykus: It was more of a tourism boost, the incentives. It was to lure big productions like Batman, Superman, Transformers out here and it was never focused on ‘let’s build up the community of talent that we have here.’ They would come in, bring their crew and their team, just slam around, pay some restaurants, take advantage of some local businesses. But then, they would just move out and that would be it. It would be this very quick spike in economic boost. Well, that’s not feasible. It’s not helping us, because it was going to people outside of Michigan. That money was never allocated for Michigan filmmakers. Michigan looked cool. There was so much focus on Cool Cities. It was never focused on helping the people that are making films here.

What are some of the tricks of the trade you can use here in West Michigan?

Richett Hughes: I think the opportunity here in West Michigan is very quickly, you can integrate yourself into this business community, the startup community. You can go to the main players. People were like, ‘Oh, you’re doing the PR for Atwater Brewery? How’d you land this deal?’ I’m like, I just walked in when they were under construction and saw the owner and introduced myself. It’s very grassroots in that way. A little bit of hustle is all it takes. There are times when I’ve taken projects that can very well go to the biggest firm in the state or here in Grand Rapids. All of a sudden, you know, little Richett Media has it, and the difference is just that little bit of hustle factor that I think can go a long, long way in Grand Rapids compared to bigger markets or Chicago or L.A. or New York. 

Do you all have mentors?

Potrykus: I went to film school at Grand Valley, so I had film professors.

Sara Moylan: Our mentors are not clothing mentors, I want to be clear about that. We have no clothing mentors here. We got lucky. In fact, one of our best mentors … is John Green of Founders (Brewing Company). He’s been instrumental. He along with two other big ones prepped us for Shark Tank and just every aspect of everything. They really forced us to dive into our business, but they’ve been instrumental in so many different ways.

Richett Hughes: When I went to launch my business, I wasn’t turned down for any of the requests that I had for pretty successful and established CEOs and entrepreneurs in town. They all would meet me for a lunch or coffee to give me advice. Four of them in particular decided they agreed that my business idea would probably work for me. And based on that, I was kind of launched.

Rader: We actually participate in the JEM (Jandernoa Entrepreneurial Mentoring) program. It’s a great program with a lot of great information. I would say it’s functional mentoring. Our mentor is Paul Boyer, he’s the (vice chairman) of Meijer. We’re six months in, so this is our first year. We meet with them about twice a month. I think it’s really good, like functional business leadership, soft skill mentoring. Obviously, Paul’s got a lot of grocery experience for a long time. He can help us.

Sara Moylan: That’s the thing: There’s a gap, a big gap. Where do you start? You have a product or you have a piece of machinery. How do you make this? I think people have no clue about the ins and outs of concept to building to sourcing. It’s a nightmare. I could write a whole book on it.

Sanchez: So much of mentorship is extremely important, but for some of these folks, it is more of an access question. Some of them know people, but a lot of them don’t, either because they just arrived, they’ve been here for two years, etc., or whatever the case is. Sometimes it’s language, culture, you name it. What I do is I try to teach them the difference between a coach, a mentor and a sponsor. The coach is a person that talks to you. The mentor is the person that talks with you. The sponsor is the person that talks about you.

That’s a good point. CEOs are great mentors. But who do you turn to for help with running your day-to-day businesses?

Samuel: I don’t know if your potential customers have the opportunities to serve as mentors, because that’s one of the things I’ve found. Where you’re operating itself can be a place of mentorship. For example, let’s say I’m in the brewery back there, talking to all of the brewers, getting our system kind of put together and we need all these parts. The brewers there actually order a bunch of stuff, all the time, for their back-end work. So I have the conversation. I want our system to look very similar to what you are using, so that you’re not having to train yourself in anything different. It would behoove us to get parts that look like yours and behave like yours. How do you source yours?

Stanley, your business is a little more obscure and scientific than the others here. Do you find your customers understand what you offer or do you have to sell pretty hard?

Samuel: Yeah. Selling has not been that hard for us. It’s getting the product finished that has been the toughest, because I go and talk to the brewers around the country and they immediately get it. They’re like, ‘Oh, we’ve been producing this and we know that CO2 is coming out. We’ve thought in the back of our mind why should we be wasting this product.’ The brewing industry, from the beginning, has been a sustainable type industry because it’s only been in the last decade or so that things have gone up for them. Until then, they’ve had to figure out how to survive, which means use every little resource we have, reuse the things we have, be careful as to how we heat up the water, and all that stuff.

What are you experiencing when it comes to securing financing? 

Sara Moylan: We’re self-financed. The banks have been pretty tight-lipped about loaning money around here, for sure, especially with startups. We don’t have a whole lot of assets. 

Rader: We didn’t raise any money, we didn’t have any outside investors, (but) we’re considering it now. We didn’t take any salaries for four years or however long it was. It’s all bootstraps. We have no investors. We do have a bank. This is different, though, because we have hard assets. Our first (loan) was for a piece of equipment. So it’s easier to get a loan for. We work with a bank today and I really am kind of wavering (on whether we) can grow this business just purely on bank debt. It’s a little more risky. 

Potrykus: When it comes to finding money, we’re trying to raise money for the film we’re shooting in July. You get money. You get offers from … investors who want you to shoot where they are. Somebody in Texas offered us money, but we’d have to shoot in Dallas. Someone in New York offers us money, but we’d have to shoot in New York. It’s just fun for them. As far as legitimate investors that take us seriously, maybe I’m not very good at hustling myself. I know I’m not very good at that, so that’s the biggest challenge, because we want to use Michigan money. We want to keep it here. Ideally, we’d be a self-contained operation.

How much money do you need to raise?

Potrykus: It is a fine balance because we’re at like a hundred thousand dollars. We’re not building a business, really. We’re building one product at a time. I know that the big mistake that so many filmmakers have is they will hit up the investor for a million dollars on the first film. Inevitably, that’s going to fail and they will never be able to finance another movie again. We’re always just kind of slowly building that confidence with the investor. The first movie was made for like $2,000. My goal was always every budget would increase by four times. That’s still what we’re at right now. Because you only really get that one chance to prove it to that investor, and if you blow it, word travels pretty quickly around there.

Even though many of you have parts of your business nationwide, do you find you get sales because you’re the local option?

Richett Hughes: I actually find it’s the reverse. There’ll be a lot of companies in Detroit that hire PR firms out of Minnesota or other places. When I was doing work with Atwater, and they’re going into Meijer, all of a sudden the Detroit offices for Meijer were sending me emails saying we’ve had no traction out of our PR. ‘Okay. What’d you guys do?’ ‘Let me check with our firm in Minnesota.’ Meijer is based out of here. Atwater’s based out of here. I’m based out of here. Why are we now hopping back to Minnesota? 

Rader: Yes and no. We find that most of our customers don’t actually know we’re made in Grand Rapids. Our package actually says Made in Michigan, even though the package gets shipped across the country. We’re proud we’re made in Michigan. A lot of food products do that, too. You see ‘Go Texas’ on a lot of products — Texas is big into promoting their state.

What advice will you give to the people who might become your eventual mentees?

Bob Moylan: Just start, just jump off the cliff. Move in the water, you’ll figure out how to swim. If not, you’ll drown, and you won’t do it anymore. Just start. Do something. Make a phone call.

Richett Hughes: It doesn’t have to be perfect, you need to just start. It’s the biggest difference between anyone out there (who) becomes an entrepreneur (and) who doesn’t. Usually, it’s just that one decided to start. There are a lot of gonna-be entrepreneurs.

Sara Moylan: I think sometimes the best advice you can have is figure out how you can solve a problem, because if you have that problem, chances are there are others who will have that problem. Try to do it in a way that’s different than what everybody else is doing. Some people tell us, ‘You’re disrupting the space.’ That’s what makes us so interesting because people that disrupt the space, it’s uncomfortable. But when there’s (discomfort), and you’re doing things different, then you know, chances are you’re onto something pretty big.

Potrykus: I always go with what I tell the students: Set a date. Because you’re never going to be ready. It’s never going to be perfect. Nothing is ever going to line up. You can just wait and wait and wait. If you just set the dates for whatever that is, then you’ve just got to go with it.

Sanchez: Start small. I get a lot of people that will say, ‘I love to cook enchiladas. I’m going to start a restaurant.’ Well, so you went from one dish to a restaurant, right? You could start selling Monday with $500, but now you need $75,000. Of course, you’re never going to start, right? Do it, but start small if it’s possible. Just do whatever it is so you can get started.

Rader: Talk to your customers that hate your product, probably more than anything, because it’s really hard to get bad feedback. … Unhappy customers are a really good source of feedback to build a business.

Samuel: I would say don’t chase the glitter. In the startup world, especially in the tech startup world, the glitter is VC money. Not that that doesn’t have a place, but there is so much that can be done to build value for your company without even getting to that place. There are so many of them who just have an idea and immediately, that’s what they want to go for. It seems for them, when they can tell people this VC or that VC put money in my company, somehow that’s become the accomplishment, whereas the business has not gone anywhere. 

Read 4196 times Last modified on Sunday, 11 June 2017 21:58
Nick Manes

Staff writer

nmanes@mibiz.com

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