A Community Resource: Emerging Prairie

Guest Blog By: Annie Wood, Director of Community Programs, Emerging Prairie

Founded in 2013, Emerging Prairie began with the goal to create a community we all want to be part of. We want to do our part to make Fargo a great place to bet on ideas, start companies and improve the human condition through technology-based solutions. In 2016, Emerging Prairie became a non-profit organization and maintains its mission to connect and celebrate the entrepreneurial ecosystem.

At Emerging Prairie, we live out our mission in multiple ways:

– Platforms: we have an online content publication and several events that create opportunities for people to share and spread their ideas. We also utilize platforms like 1 Million Cups (caffeinated by the Kauffman Foundation) and TEDxFargo to help champion these ideas.

– Coworking: we run The Prairie Den, a coworking and event space in downtown Fargo. The Den provides a home for startups, small businesses, entrepreneurs, an office away from the office for other organizations, and a place for people to meet.

– Connecting: we run multiple programs and groups that are designed for authentic connection for entrepreneurs to connect to other entrepreneurs, as well as build connections between members of the community.

– Convening: we play a role in helping bring entrepreneurs together so our community learns together and can share what we collectively need when folks like the Bank of North Dakota are working on new ways to serve the startup community.

Companies of any stage can connect with us. Some of our programs are geared to companies of different sizes, stages and industries. For example, 1 Million Cups Fargo (which is supported by the Kauffman Foundation) is curated to be primarily tech-based founders or entrepreneurs who have a product or software as a service (SaaS) companies. We work to put founders first, so many of our programs are more geared toward supporting founders versus the size and stage of the company.

The Prairie Den is an inclusive space in the heart of downtown Fargo – it’s truly a place for community to be built. We think of it like a student union for our city. Just like a student union on a college campus is a place for students to study, hold meetings and social events, The Prairie Den provides a similar area to the community. It’s a place for connecting, for working, for moving ideas forward, and for groups to gather. We offer workspace for teams, individuals, and as an office-away-from-the-office for employees of many organizations. We also have conference rooms, a classroom and even an event space that we rent to members and non-members.

The Den is also where Co.Starters is hosted by our friends at Folkways. Co.Starters is a nine-week course to help people with ideas turn them into businesses, or people with young businesses strengthen them.

Emerging Prairie subscribes to the Fargo Thesis, which Co-Founder and Executive Director Greg Tehven first wrote about in Fargo Monthly. The Fargo Thesis is to Connect It, Believe It and Love It. This is how we operate in our community –Connecting people; Believing that Fargo is a place of possibility; and showing love by celebrating and caring for community members.

As an organization, Emerging Prairie is excited about continuing to support our startup community. We believe ideas matter. We know it’s a leap of faith to start something new, so we want to celebrate those who take the leap. And we want to be an organization that helps pave the way for founders to bet on their ideas, to build teams around them and to pursue possibilities to create a community that we all want to be part of.

Setting up for Success: Part 2

Welcome to our “Setting up for Success: Part 2” blog post. Part one focused on selecting a basis for your accounting and determining what information you need to track in your business.

Now that you understand what you need to track, how do you track this important information?

You can start by developing your chart of accounts. We know what you’re thinking: “develop my what?!”

Your chart of accounts is a listing of accounts that are needed to prepare financial statements and reports. A typical structure looks like this:

1000-1999 Assets

            2000-2999 Liabilities 

            3000-3999 Equity

            4000-4999 Sales

            5000-5999 Cost of Goods Sold (COGS)

            6000-6999 Operating Expenses (General and Administrative)

            7000-7999 Other Income and Expense

            8000-8999 Income Tax Expense

Account numbered 1000-3999 are used in preparing the balance sheet, while numbers 4000-8999 are used in preparing the income statement, which focuses on profit and loss. Of course, the number of individual accounts within each category will depend on the specific needs of your business.

A good rule to keep practice is to try to use the least number of accounts to attain the financial information you need, and structure it for growth.

What do we mean by growth? Let’s take a closer look at the assets section:

1000 Petty Cash

            1005 Checking

            1010 Savings

            1100 Accounts Receivable

            1200 Inventory

            1300 Prepaid Expenses

            1400 Fixed Assets

            1450 Accumulated Depreciation

You probably noticed the account numbers aren’t in sequential order. This allows for room for growth in your business.

You can also use the chart of accounts to track different jobs, departments, segments, etc. For example, maybe your business has locations across the Midwest in Fargo, Minneapolis and Sioux Falls. You want to be able to see how profitable you are at each location. You can track each location by assigning a division number, such as 01-Fargo, 02-Minneapolis, 03-Sioux Falls, and then attaching each division number to each of the accounts, like this:

            4000-01 Sales

            4000-02 Sales

            4000-03 Sales

            5000-01 COGS

            5000-02 COGS

            5000-03 COGS

Now that you know what information you need and how to track it, you can select an accounting system to help you track and keep information in order.

There are two options for tracking your information: manually or electronically (think desktop or cloud based). While there is no right or wrong way, computerized accounting is usually more efficient, which is leading to manual accounting becoming a dinosaur in today’s accounting world. Cloud based accounting also gives you the freedom to access your information anytime, anywhere. Who doesn’t love simplicity and accessibility?

It’s important, as always, to remember that each business is different, so accounting systems usually aren’t one size fits all. Doing your research and truly understanding your business’ needs can help you select a system that gives you the best possible results.

If all of this seems overwhelming, fear not. We have the resources and talent to help you design an accounting system that can set your business up for success.

Cheers to 100 Years

By: Clinton Larson, Eide Bailly LLP

Raise your hand if you’re 100—hey, that’s us! We’re celebrating our centennial this year, and like wine and cheese and lots of other good things, we keep getting better with age.

Reaching a century in business didn’t come easily, as you could probably guess. It takes commitment and foresight, the right people and the right attitude. Lots of companies have come and gone in that time, and even our own heritage involved two different Fargo firms growing, pinnacling and deciding to forge a new path together.

So how can your company make it to 100? Well … there’s a lot of variables that go into that equation. However, there’s no specific formula to share, and it’s hard to know what the world will look like in 2117 (although we hope it involves some cool, legitimate hoverboards, or something went terribly wrong.).

However, we can share five areas of focus that have helped us reach 100. Even if your business is just a year old, or maybe 10, our advice can help your business grow and prosper.

Innovation

For most of the 20th century, accountants relied on pencils and ledger books to do their jobs. Then came calculators and computers, and now smartphones can do it all. Through every step, we’ve embraced technology to help us work more efficiently and better serve our clients. Change is inevitable, so be innovative and learn how to harness it to your advantage. For example, we’ve made technology consulting a part of our suite of services, and we’ve recently created a cyber security team to help clients deal with the ramifications of that technology. Always be on the lookout for ways to innovate.

Culture

Simply stated, culture is the personality of your company. It often develops organically from your company values and actions. But that doesn’t mean you can’t make it official or create goals. When Eide Bailly merged in 1998 (formerly Eide Helmeke and Charles Bailly), the partners sat down and listed the qualities they wanted the new firm to represent. That list turned into the culture statement, and it’s at the heart of who Eide Bailly is as a firm — and we make sure to walk the walk when it comes to those words. We have regular celebrations and outings to encourage fun, and we have benefits that promote a positive firm, like a wellness benefit and a branded apparel allowance. Make sure your own goals for your culture are well-known and show in everything you do.

People

Hiring the right staff is a critical component of any successful business, as we’ve discussed before, but it doesn’t end there. You need to give your staff all the tools they need to succeed, and that includes the proper training. Our managing partners have all believed in giving staff the keys they need to unlock their potential, which includes robust training both inside and outside the firm. Be sure you not only hire the right people, but give them every opportunity to grow and improve themselves.

“My business philosophy in a sentence is we have great people, trust them to do their work,” says our Managing Partner/CEO Dave Stende.

Community

When our clients succeed, so do we, which is why we invest so much into helping the communities we serve. Part of our growth strategy through the years has been to expand in the Midwest and western regions of the U.S., but we do more than just add offices in new cities and states. We engage with the communities through volunteering, sponsorships and more. We even have a corporate responsibility initiative that officially encourages giving back by our staff. Build up the people around you—thriving businesses grow in thriving communities.

Vision

This may sound cliché, but part of the way to make it to 100 is to simply envision yourself achieving that goal. Having a vision for your business is critical to longevity. Eide Bailly’s first Managing Partner/CEO, Darold Rath, felt being located in Fargo shouldn’t be a hindrance to hiring the best and being a major player in the accounting industry. Both Managing Partners/CEOs after that, Jerry Topp and Dave Stende, achieved visions of doubling the size of the firm every five years. Dream big about what you want out of your company. You can’t reach goals you never visualize.

Reaching 100 isn’t easy, and unfortunately, not every business makes it. However, by following some of these tips, your business might just make it to see if hoverboards do, in fact, show up in 2117.

Setting up for Success: Part 1

You’ve decided to start a new business – how exciting! There are many important things to consider when getting everything set up, such as your human resources policies (your employees matter!) and software and solutions (you want everything organized and running smoothly). Another important component you need to consider is your accounting – after all, these numbers lay the foundation for your business and essentially tell your story.

Accounting is an important part of your business, and getting it right the first time is crucial. So where do you even begin?

First, it’s important to understand your business and industry. This understanding can help you answer some important questions for designing your accounting system. Some of the questions that may come up include:

  • “What basis of accounting should I be using?”
  • “What information should I be tracking in order to make informed decisions?”
  • “I know what I want to track, but how do I track it?”

Let’s start with the first question: selecting your basis of accounting. Your basis of accounting is essentially a framework used to record your transactions. There are a few different types to choose from, with the following being the most common.

  • U.S. GAAP (United States Generally Accepted Accounting Principles) – Try saying that one ten times fast. This is an accrual based framework in which revenues and expenses are recorded when they are earned and incurred, respectively. This is the most commonly recommended type.
  • Cash Basis – In this framework, revenues and expenses are recorded when cash is received or paid, respectively. Cash basis presents two different methods of accounting: pure and modified. The difference comes in that under modified cash bases, some transactions follow U.S. GAAP. Check out this blog to learn more about cash versus accrual methods.
  • Income Tax Basis – This is a framework in which revenue and expense recording depends on tax regulations. This helps eliminate the need for converting from one basis of accounting to another for tax return purposes.
  • Regulatory – In this framework, a regulatory agency prescribes the best method.

Now that we’ve looked at the different basis types available, it’s time to determine what information you should be tracking. The key here is to capture all of your business transactions in the simplest, and most efficient, way possible. This includes both cash and noncash transactions.

Depending on your specific business or industry, you might need to consider tracking your transactions in greater detail. Here are some areas to consider tracking:

  • Should you be tracking direct and indirect costs related to construction or manufacturing contracts so you can see the profitability?
  • What sales tax jurisdictions do you need to track for sales tax reporting?
  • Do you need to track certain items for tax return purposes?
  • If you do business in multiple states, should you be tracking transactions by state for tax purposes?
  • Do you have different departments or divisions that you need to track in order to view profitability?

Once you decide what information you should be tracking, you can select an accounting solution, and start designing your accounting system.

Stay tuned for the second part of this blog, where we go in depth about how you track your information. Although we’ve shared similar posts about these topics in the past, we think a refresh and reminder is important. If you need help in the meantime, just ask!

The Stay Interview

When it comes to your employees, you likely conducted interviews on them when you first hired them. If you’ve had employees leave, maybe you’ve conducted exit interviews. But there’s another type of interview that often gets overlooked: the stay interview.

A stay interview? What’s that?

While exit interviews are conducted when an employee leaves to help management get a better understanding of what went wrong or why the employee left, stay interviews give management an idea of how they can help their employees stay with the company.

Stay interviews can help management gain a good understanding of what the company is doing right that makes employees want to stay, but it can also help determine what it is that would cause an employee to leave. This gives management a chance to identify strengths and weaknesses, and to work on improving those before it’s too late.

On top of that, stay interviews can help build stronger relationships within the company, which can ultimately lead to more trust throughout. When employees realize their thoughts and needs are being considered, they are often more likely to have positive attitudes and relationships. Following up on information learned in the interviews can help solidify this.

Stay interviews are also sometimes a better option than other ways to measure employee satisfaction, such as sending out surveys that often get buried in inboxes. Stay interviews provide a two way, face-to-face conversation that allows for questions and dialogue.

What questions should I be asking?

There are many questions you can ask during a stay interview, and often times, these questions depend on your business. If your employees do sales, you might want to ask them about a specific goal or initiative. If you’re in the world of technology, you may find value asking your employees how they feel about the software they’re currently using.

While a lot of stay interview questions can and should pertain to your specific business, there are also common questions that may be beneficial to conducting a worthwhile interview. Some common questions to consider asking include:

  • What keeps you coming back to work here every day?
  • What do you look forward to here?
  • If you could change something about your job, what would it be and why?
  • What would make your job more satisfying?
  • What do you want to see from upper level management/staff?
  • What might cause you to leave the company?
  • What can the company do more of for you?

What do I do next?

After you have conducted the interview, it’s helpful to do a quick run through of the employee’s answers to make sure you didn’t miss anything important. You may even notice a pattern of similar answers from different employees.

Once you have a good idea of what needs to change and improve, act on it! The purpose of the interview is to help you help your employees, and to improve employee retention based on the answers you hear.

Stay interviews can be a powerful tool to help you improve work-life for your employees, and to keep them around for years to come. When stay interviews and the information obtained in them are acted on properly, you’re more likely to retain your employees and avoid exit interviews.

Small Business Loans 101

Guest Blog By: Matt Gruchalla and Shelly Kegley of Bell Bank

In today’s banking environment, securing a small business loan takes more organization than one may anticipate. There also seems to be a correlation between how organized a borrower is, and success in getting approved for a small business loan.

Financing for a New Business

It is important to plan well in advance for starting a business so the business owners are financially well positioned for success. This gives the bank an idea of the owner’s capacity to support the business if additional cash injections are needed at any point. Some items to consider prior to starting a business include:

  • Personal credit – The owner’s credit report should be free of anything derogatory, and reflect that all accounts have been paid as agreed. Revolving debt and credit card balances should be minimal. Assuming the owner’s personal accounts have been handled as agreed, personal credit scores should be acceptable.
  • Personal income tax returns – Typically, lenders require three years of personal income tax returns, as well as income tax returns for any business ventures the owners have been involved with.
  • Personal financial statement – This is a detail of the owner’s assets and liabilities. Potential lenders will look closely at owner’s cash, liquid investment balances and equity in homes or other real estate, as these can be sources for initial or ongoing business capitalization.
  • Outside investors or loan guarantors – If a business owner feels they may not be financially positioned to start a business, a good option may be to consider outside investors or loan guarantors.
  • Business plan – A great business plan includes a market analysis that’s backed by real data. The business plan should explain why there’s a need for the product or service that the potential business will sell, as well as what differentiates them from their competitors. The business plan should include a summary of the background and experience of the owners and key employees. Obstacles and success barriers should be discussed and mitigated.
    • A business plan shouldn’t be lengthy or redundant. Keep it clear and concise! SCORE and the Small Business Development Center are two outstanding resources available in the FM area to contact if you need assistance with completing your business plan.
    • Projections are a key component of a business plan, and shouldn’t be overly optimistic. The assumptions used to formulate the projections need to be explained so the lender understands how they were determined. The projections should include a “day one” balance sheet, along with year-end balance sheets for the first three years. Income statement projections should include monthly projections for the first year and annual projections for the next two years.
  • Sources and uses summary – This gives the lender an idea of what the loan funds will be used for, and will detail the equity that will be contributed by the owners. There isn’t a hard and fast rule for the amount of equity needed but typically 20% to 25% is normal.

Financing for an Existing Business

Securing financing for an existing business is normally an easier process because a lender can rely on a proven history rather than on projections. A projection may be needed if the financing request materially changes the business operations; however, these projections may be easier to complete since the business owner will have a better understanding of their business and industry.

From the business a lender will require:

  • Three years of business financial statements
  • Most current year to date financial statements
  • Three years of business income tax returns

From the business owners a lender will require:

  • Three years of personal income tax returns
  • A current personal financial statement

Obtaining a small business loan may seem daunting, but an organized, financially healthy borrower will have a much easier time securing a small business loan. Taking the time to prepare a well thought out business plan, and becoming financially healthy, will make the financing process go more smoothly.

An Exit Interview with Jim Ramstad

Jim Ramstad is no stranger when it comes to business. From starting businesses to selling businesses and every step in between, Jim has done it all. After all his time and experience, Jim has decided it’s time for a new path in life – retirement!

Jim has been an important part of our work here at Eide Bailly, and we know his advice and knowledge will be missed. We sat down with Jim to ask him to share some of his thoughts and advice with you, fellow business owners and entrepreneurs.

How long have you worked in the business world?

Altogether, I’ve spent 49 years in the business world, involved in various aspects of business.

How/what made you want to get involved in business?

Growing up and in high school, I never even thought of getting involved in business. In fact, I wanted to be a teacher and a coach. As I grew up, I watched as my dad’s family did very well for themselves in business. As I watched their successes and trials, I became more and more intrigued, and decided it was the right path for me.

If you weren’t in business, what would you be doing?

As mentioned before, I thought about being a teacher and a coach when I was younger. Now looking at it, I think it would be fun to be in politics. Twenty some years ago, I took a personality test that determined the top two areas that would make sense for me career wise. My top two were politician and ambassador, and accountant wasn’t even on the list. I feel like ambassador made sense, and I’ve gotten to do some of that in being an ambassador for other businesses.

How long have you been at Eide Bailly?

I’ve been working at Eide Bailly for 12 years, and I was a client here before I started working here. I’ve always had a connection with the Firm, which has led me to some of the career positions I’ve been in.

What positions have you held prior to being at Eide Bailly and at Eide Bailly?

Prior to being at Eide Bailly, I held many different positions. I’ve been an accountant, controller, CFO, COO and CEO. I’ve also done business development and government relations for a company in which I got to propose a piece of legislation that actually got approved into law in the energy bill.

Here at Eide Bailly, I’ve always worked in business advisory. In 2005, I started working with entrepreneurs to help get their businesses to take off. Throughout this role, I’ve been blessed and fortunate to take my personal experiences in business and apply it to other clients and help them learn from it.

What was your favorite position and why?

I don’t think I could really pick a favorite – I’ve enjoyed them all! I’ve really enjoyed the last twelve years here at Eide Bailly. I’ve enjoyed getting to apply my past experiences while also learning new things from our clients. Although there have been challenges, I’ve found it very rewarding.

What changes did you see take place in the business/accounting world during your tenure?

The biggest and most obvious change I’ve seen is in technology. From everything being completely manual to now being nearly all online and in the cloud, it’s been a total change. When I was 26, I worked with for a trucking company that completed everything manually. I gradually helped introduce them to technology, which was a process. Now, they use technology for everything.

What advice would you offer small to mid – sized businesses just getting started?

Get an advisor. It’s important to find people who are truly and genuinely interested in you and your success, not just in selling you something or getting a fee for the job. Find these people and rely on them – don’t try to do it all on your own.

What will you miss most about Eide Bailly?

The people, hands down. I am also sad that I won’t be around to watch the Possibilities Center grow into a bigger, Firm-wide practice, but I will be paying attention and willing to help if the need arises.

What are your plans after retiring?

I’m going to stay busy. I’m going to use my facilitation skills to start some groups in the FM area, such as mastermind groups and a bible study type group. I always want to continue to be a mentor and resource for Eide Bailly professionals who may need my help. The rest of my time will be spent with family, being a grandpa and a great grandpa.

While Jim isn’t leaving us for a few more weeks, please join us in wishing him well and thanking him for all his hard work and dedication.