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portsEngine.com founder Justin Kauffenberg worked for several years at the Minneapolis-based company, which provides information services to athletic clubs and leagues.
“During particularly difficult times, we would get a new credit card to pay the wages of our first employees,” he recalls.
Along the way, he learned about working with banks, finding angel investors and establishing legal infrastructure. Patience became the norm.
In the year In 2016, more than a decade after its launch, NBC Sports purchased Motor and Kaufenberg became a venture capitalist helping other companies get off the ground.
We asked him and other founders of startup companies in the Twin Cities for practical tips on how to start a business. Here are some of their tips:
Find mentors and tools
Whether you’re trying to find mentors, build a website or talk about angel investing, the Internet is the place to start.
Startup veterans recommend turning to LinkedIn and Twitter to find new connections in your industry. “A simple Google search can help you find angel investors,” Kauffenberg said.
Morning Consulting co-founder Michael Ramlet turned to consulting during his undergraduate days at the University of Minnesota’s Carlson School of Management while building what is now a global decision-intelligence company.
“It was helpful to ask these advisors, ‘How do you open a bank account? How do you get a tax ID number?'” Ramlet said.
For those who don’t have such contacts, look for successful entrepreneurs in your area. Some respond to direct questions. “I still make one call a week with someone starting a business,” Ramlette said.
Zach Vara, founder of A to Z Creamery, started his custom ice cream business as a hobby on Instagram during the pandemic. As he grew more serious, he created a limited liability corporation, learned about food-industry regulations, and created free tools at the Wix.com website.
“When you start a business, the first thing you need to do is create a website,” he said.
Organizations like Women’s Ventures in St. Paul offer education and advise clients to develop a business plan before applying for a loan.
“It’s important that they understand the assumptions behind an estimate,” says David Luill, director of lending at Women’s Ventures. “Especially behind the revenue component, they have to have a solid understanding of how to go from point A to point B, from $0 to $50,000. This has to make sense to us and to them.”
Keep personal expenses low
Kaufenberg says he received advice to keep his expenses low, so after graduating college he began living on a modest budget. He didn’t have a car, so he sometimes painted houses to earn money for food.
Both Dori Graf and Mary Fallon, founders of online children’s gear store Kidizen, were new moms who quit their jobs at digital agencies 15 years ago to start their own. They worked part-time contract work and depended on spouses to pay the bills. “We weren’t getting paid and it was tough,” Graf said.
Even today, she says she works more in the agency world but would rather have a stake in a business with a sustainable mission.
Hire a lawyer or accountant
Kaufenberg remembers making the costly mistake of forming multiple LLCs as Sports Engine grew. That was not the best structure for raising money. Later, an attorney was hired to convert it to a C corporation.
“We believed we didn’t have the money to hire a good lawyer. We used a lot of online tools to do our law. That was a mistake,” he said. “There are wonderful lawyers who specialize in working with startups. They will do the most important thing to get your company off the ground for a small amount of money.”
It’s the same for finding an accountant, Kaufenberg said. “We were really immature in that area,” he said.
Obstacles are common.
When the co-founders of Kidizen started their first business in 2010, it failed. That was a platform for connecting digital content to physical objects as the story moved from person to person.
“We had to go back to the drawing board,” Graff said. “At this point we’ve made a pretty big pivot and talked to our user base.”
She said they focused on children’s items because of the “constant demand” for parents. In 2014, Kidizen was born.
Be prepared to do a lot
Jazz Hampton was a corporate attorney before he and two co-founders launched TurnSignl last year, an on-demand, real-time app that provides drivers with live legal representation during traffic stops and accidents.
He works longer hours now, but feels that Turnsignal has attracted enough investment to collect a salary, albeit less than before.
“I’m building something with people I really care about. It’s the most fun thing I’ve ever had to work on,” Hampton said.
