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FIND YOUR EDGE. Where’s your sweet spot in a competitive marketplace? p. 7

TECH REVEALCryogenics technology saves business owners cold, hard cash. p. 4

GETTING REALGot an idea? Start the process of protecting it—now! p. 5

THE DEALKnow your idea’s real value before approaching investors. p. 6

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We each have dreams of what we want to be when we grow up. I’m sure that you did, and maybe you still do. But did you ever dream of being an entrepreneur—starting your own company, being your own boss?

Many shy away because of fear of the unknown, or not being aware of what entrepreneur really means. It’s more than good ideas that make an entrepreneur. When you look around at other entrepreneurs and what appears to be an individual’s overnight success, what you rarely see is how long it took. The collaboration. The sacrifices. The ways they tried and failed and tried and failed again.

Here in MUSE you’ll get the uncensored truth about being an entrepreneur. It’s the information you need to know—but might not know to ask.

Entrepreneurs are the backbone of our strengthening economy. They’re calculated risk-takers. They thrive on passion to bring their ideas to reality, outweighing any fears that they have, and they capitalize on every opportunity.

If you have what it takes, you want to realize your dream, and you want to make things happen—there’s no better time to start.

Use this information as a guide to do something to inspire us all!

Publisher’s Letter

Erin StrangPresident & CEO

DEVIL’S ADVOCATE Evolve your idea into something even more amazing than it is. How? Get used to viewing things from all sides. And surround yourself with people who can provide a counterargument.

BET YOUR BOTTOM DOLLARPeople invest in people. Your idea may be important, but investors are placing a bet that you—not your idea—are a sure thing. If they believe in you, money will find you.

ACHILLES HEELWhat’s your weak spot? Find your vulnerability, and create a solution that might change the way things are currently being done. Problems are opportunities—if you act on them.

FINDING YOUR WAY

7 10 14 TABLE OF CONTENTS

OWN IT

FEATUREFind your edge.

FEATUREOperating agreements deflect arguments, aggravations, and animosity down the road.

DATA DRIVEN Tech startups lead venture capital funding and foster job growth.

TECH REVEALCryogenics technology saves business owners cold, hard cash.

GETTING REALIntellectual Property 101.

THE DEALKnow your idea’s real value before approaching investors.

PUBLISHER: Erin Strang | SENIOR PUBLICATIONS ADVISOR: Elissa Richmond-Gagne

EDITOR: Mimi Bell | CONTRIBUTORS: Lorrie Bryan, Laurie Hileman, Joanne Sammer, Ryan Sullivan, Kathryn Will, and Ilene Wolff

PROOFREADER: Stacey Tetloff | ART DIRECTOR: Chad Hussle | DESIGNER: Carol Quade | PHOTOGRAPHER: Doug Julian

MUSE, Volume 1, October 2015, is paid for by CMURC and published by Great Lakes Bay Publishing, 1311 Straits Dr, Bay City MI 48706. Copyright© 2015 at Great Lakes Bay Publishing. All rights reserved. Reproduction in whole or in part without permission of Great Lakes Bay Publishing is prohibited.

VOL. 1, OCT. 2015 • MUSE • 3

4 5 6

A cryogenics treatment helps customers cash in.

Is It Cold or Is It Hot?

Tech Reveal

A Michigan company is using a game-changing technology that can help all kinds of businesses save all kinds of money.

Industrial Cryogenic

Engineering (ICE) incorporates a process to manipulate materials with extreme temperatures to make them Superman strong and, as a result, much longer lasting.

From excavator, snowplow, and lawnmower blades to wood chippers, entire engines, golf clubs, and gun barrels, the process can help companies boost bottom lines by reducing their equipment’s downtime and replacement parts budgets.

“It takes out the small fracture lines and ‘welds’ them (materials) at the molecular level,” says Gary Moeggenberg, who owns

ICE and thinks like an engineer as well as an economist. “If cryogenics were adopted by American manufacturing, it would allow them to become more competitive.”

Moeggenberg is no newbie to cryogenics. He has been perfecting the process for over eight years.

He’s got the numbers to prove he’s not just full of cold air, too. For example, an ICE treatment costing about $1,650 per part can save a contractor more than $7,000 by tripling the lifetime of an excavator’s $4,500 biting edge.

The exact recipe ICE uses is secret, but using extreme cold to toughen materials is a very old concept adapted from Swiss watchmakers who buried their wheels, gears, and pins in snow to make the metal harder and longer lasting.

The temperatures ICE uses are much colder, of course, but the idea is the same, and it’s one that Moeggenberg’s customers can bank on.

WICKED COLD GOOD.

Tim Trudell thinks green every time his mowing crew trims the grassy road shoulders in Grand Traverse County (Michigan).

But Trudell, fleet and facilities manager for the county’s road commission, isn’t thinking about vegetation. It’s the money he’s saving by having the mower blades treated at Industrial Cryogenics Engineering (ICE).

Untreated blades are trashed after a day and a half of chomping through the grass and weeds that grow out of Grand Traverse’s sandy, rocky soil. But ICE-treated blades last close to five days.

As a result, Trudell saved taxpayers about $1,000 this season, even with the ICE-related cost.

That’s like getting 30 mower blades free.

And who can argue with that?

Plastic and metal parts last way longer after a deep freeze.

By Ilene Wolff | Photo By Doug Julian

Industrial Cryogenic Engineering’s Gary Moeggenberg

4 • MUSE • VOL. 1, OCT. 2015

TRADE SECRETS: Secret device or technique used by a company.

TRADEMARK: A symbol or words legally registered or established by use as representing a company or product.

PROVISIONAL: Established by an early filing date, they do not mature into issued patents unless the applicant files a regular non-provisional patent application within one year.

NON-PROVISIONAL PATENT: Governmental authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention.

COPYRIGHT: Exclusive rights to print, publish, perform, film, or record material, and to authorize others to do the same

OPEN SOURCE SOFTWARE: Software for which the source code is available for modification or enhancement.

Intellectual Property 101

Getting Real

Got an idea? Start the process of protecting it—now!

From new software to faster manufacturing processes, intellectual property (IP) is a driving force behind innovation.

The World Intellectual Property Organization says IP

refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce.

There are different ways to protect an idea, if your business chooses to move forward with a patent. However, the process of filing for and maintaining a patent may be even more difficult than coming up with the initial idea or invention.

Patents protect inventors and their works, “but obtaining a patent and enforcing the accompanying rights is an inventor’s burden, not the government’s,” points out attorney Robert Corbett of Corbett & Kreisher, PLLC.

So, if you’ve got an idea and your strategy is to file a patent, here’s how to get started protecting it.

Who files first is what counts. Patent protection is granted to the first to file, not the

first to invent, so applying for a patent should come immediately after the idea.

Start with provisional coverage. Because the process is long, inventors may want to start with filing a provisional patent to ensure their rights are protected down the road. A provisional application is a quick, inexpensive way to establish a filing date for an invention, according to the United States Patent and Trademark Office (USPTO).

Lawyer up. An inventor’s best bet—especially if competition is looming (which it usually always is)—is to work early with an experienced IP attorney. Saving a few dollars with a DIY job on the front end could threaten earnings down the line.

You’ll need to be patient. An inventor should expect back and forth completing interim steps in the process after submitting an application to the USPTO.

It’s not enough just to own a patent. Inventors may need to defend patents multiple times. Take note that many established companies have hundreds of claims of infringement on their patents.

IP GLOSSARY

By Kathryn Will with Ryan Sullivan

Here’s lingo to know.

VOL. 1, OCT. 2015 • MUSE • 5

“Never start courting investors when you need the money,” says Ray Gunn, CEO of MexAmerica Foods and former managing partner of Wingspan Capital Partners.

As someone who has been on the giving and receiving end of capital, Gunn says it all comes down to relationships—relationships that are built over time on a foundation of trust, transparency, commitment, and capability.

He suggests you start by sharing your story with potential partners. Ask if they’re interested, make promises and commitments, and keep them informed of your progress. Then, when it comes time to ask—for time, money, or resources— you’ve got your best chance for a yes.

The Deal

Identify your real value before approaching investors.

We’d all like to think we have the next billion-dollar idea. But, when it comes to soliciting funding for

your venture, an accurate valuation is key to garnering enough capital without giving away too much of your business.

Value your idea too high, says Jeff Barry, a partner with Plymouth Ventures, a growth-stage venture capital firm, and you risk coming across to investors as green or inexperienced—or worse, an entrepreneur with unrealistic expectations.

Value it too low, and you risk giving up more of your company than necessary, again marking yourself as green or inexperienced. “It’s not about it being way out of market; it’s about what it says about that entrepreneur,” explains Barry.

The key? Be reasonable. “You don’t have to have the right valuation, but as long as it’s reasonable, people are not going to look at you poorly,” says Barry.

So, how do you narrow in on a just-right valuation, one that’s not too high and not too low?

“You have to be prepared,” says angel investor Paul B. Murray, CPA/ABV, CFF, a founding member of Blue Water Angels and managing shareholder at Robert F. Murray & Company, CPAs.

“Know your market and know your product,” adds Murray. He notes a lot of research can be done on the Internet and suggests looking for local resources to narrow in on a valuation strategy.

Fear not. A less-than-perfect valuation is not always a deal killer. “If it’s a good company and product, with a strong founder/CEO, most investors will be okay with working toward a valuation together,” says Barry.

By Laurie Hileman

A shared vision is key when seeking potential partners.

BUILD IT BEFORE THE ASK

Your Idea Is Not Worth What You Think It Is

6 • MUSE • VOL. 1, OCT. 2015

Feature

Where’s your sweet spot in a competitive marketplace? By Lorrie Bryan

FIND EDGE

your

VOL. 1, OCT. 2015 • MUSE • 7

wasn’t just a lucky shot when golfer David Toms swung his 5-wood to ace the 15th hole during the third round of the 2001 PGA Championship. He had spent the last two decades preparing, perfecting his ability to make optimal contact with the ball to find the sweet spot. His dramatic 243-yard hole-in-one remains one of the longest shots in major championship golf history. It’s like legendary golfer Arnold Palmer observed, “The harder I practice, the luckier I get.”

In golf and in business, the words of philosopher Seneca written nearly 2,000 years ago still ring true: “Luck is a matter of preparation meeting opportunity.” For a Michigan air quality testing company, the opportunity came when 60 Minutes aired a segment earlier this year purporting that a U.S. consumer retailer of laminate products was selling Chinese-made laminate flooring laden with excessive amounts of formaldehyde. As a result, business at Prism Analytical Technologies Inc. has rocketed, with record orders for its home air quality testing, Prism’s sweet spot.

Like a seasoned golfer stepping up to the tee, Prism was well prepared for the opportunity the 60 Minutes spotlight presented. Les Keepper, CEO and co-founder of Prism, notes that the “overnight success” was 20 years in the making. Prism has zeroed in on its sweet spot from the beginning. “We began offering air quality assessments in 1995, and that has been our focus ever since. We take a different approach than other companies,” says

WHEN PREPARATION MEETS OPPORTUNITY

Keepper. “We don’t just tell you what chemicals are in your air; we explain the probable source of those chemicals and suggest ways for you to resolve the problem. Sometimes the resolution is as simple as putting a cap on an open gas can in the garage.”

Keepper says he helped found Prism because he had a need for the service his company now provides, and no other company offered that service. “I recognized a problem and a need that wasn’t being met. It was a readily identifiable niche because no one else was doing it—there was no available solution, and I knew that we had the knowledge and resources to provide the optimal solution.”

For entrepreneurs, finding the edge in a competitive landscape might not be as obvious. Keepper offers these two key tips to help entrepreneurs recognize their sweet spot:

YOUR SWEET SPOT

IT

8 • MUSE • VOL. 1, OCT. 2015

Identify and understand a problem and then provide a solution. “Recognize the potential problem before it becomes a problem,” Keepper says, “then when the problem emerges, you are in the position to offer a solution.”

Learn to listen to your customers, because they will help you recognize the next product or service that you need to focus on. “They will ask you if your product or company can do this or that, and that is what you need to be working on. Focus on the solution you can offer to solve their problem or reduce their pain threshold,” says Keepper.

When preparing, golfers can do a little research and read the reviews and rankings for the golf course along with ratings, slope, yards, and par for each tee. But they will gain significantly more insight by actually walking the course and making direct observations. A global auto parts manufacturer prefers the direct approach as well.

While many businesses increasingly rely on big data and social media for customer insight, David Stevens, senior VP of American Mitsuba Corporation, says that Mitsuba also relies on ancient Japanese business principles that value direct observation and contact. “When a customer requests anything, we take it seriously. Usually, we meet face to face with the customer for any significant request. We frequently have customers visit us in our plants so they can better understand what makes us tick and see how good we are,” he explains. Mitsuba practices genba or san-gen-shugi in most elements of its business management. “This means we go to the actual site (genba),” Stevens says, “and see the actual thing or condition (genbutsu) with our own eyes,

to understand and respond to the actual situation (genjitsu).” Stevens says this is the most valid method to conduct situation analysis and respond appropriately instead of depending on reports and comments from other people. “We go directly to our customers and see their actual situation and needs firsthand. Then, we can propose changes and solutions that more than satisfy them,” he says.

In today’s competitive business market, you are likely not the only person offering a solution to a recognized problem. Competition can provide a learning opportunity. “You don’t learn to play good golf by beating poor players,” Hall of Fame golf coach Harvey Penick often told his students. On the golf course and in the marketplace, you need to size up your best competition and build your competitive advantage. Objectively examine where your strengths are and what sets you apart from your competition.

Then identify and articulate your value proposition, a statement that explains what benefit you provide and for whom, and what is special about how you do it. In other words, it describes your target customer, the problem you solve for them, and why you’re distinctly better than your competition at doing this. This is your sweet spot.

Golfers contend that from putt to drive, there is no better feeling in golf than hitting the ball directly in the sweet spot of the clubface. Armed with a solid value proposition—one based on your ability to solve your customers’ problems better than your competitors can—you are prepared for any opportunity and poised for success. Step up to the tee with the confidence of a Masters champion, take aim, and swing.

ZERO IN ON YOUR MARKET NICHE

Build your value proposition around what your

customers need and want. 1. Stop thinking about your product or service and start thinking about the problem you are solving.

2. Do your homework to understand the competition, remembering that not all competition is direct or obvious.

3. Develop the solution—your market offer—based on an alignment of market needs and your core competencies.

4. Translate your solution in to a strong value proposition by addressing the direct customer benefit.

Feature

GET TO KNOW YOUR CUSTOMERS

ANALYZE YOUR COMPETITION

To find your market niche, Kristina Marsh, owner of Marketing Flexibility, recommends that you:

VOL. 1, OCT. 2015 • MUSE • 9

Feature

10 • MUSE • VOL. 1, OCT. 2015

Protect yourself, your partners,

and your business—with a clearly

defined operating agreement.

DIS/AgreementBy Laurie Hileman

The Winklevoss Brothers made rookie business mistakes (including not having an operating agreement in place) that cost them millions—if not billions—of dollars. That may be the reason why the name “Mark Zuckerberg” is associated with the founding of Facebook and the name “Winklevoss” is not.

Hollywood dramatized Facebook’s early days in the 2010 hit film, The Social Network, which zeroed in on lawsuits brought by the Winklevoss brothers—who claimed that Zuckerberg, the then Harvard sophomore, stole their idea after they hired him to do a similar project—and Zuckerberg’s friend, Eduardo Saverin, who supplied initial seed money.

Although the nitty-gritty details of Facebook’s beginnings are murky, one business lesson is crystal clear: Written operating (or partnership) agreements are really, really important.

“Disputes about decisions and the direction of the business can become a problem between potential partners,” says Michael Formsma, a CPA with Boge, Wybenga & Bradley, PC. Ideas conflict. Feelings get hurt. Ambitions change.

“An operating agreement will settle any disputes, as it establishes ownership and identifies the ultimate decision-maker,” says Formsma.

If you have more than one investor, or others that play a critical role in your business, an operating agreement can protect you, your partners, and your business down the road. Here’s what you need to know.

OPERATING AGREEMENTS DEFINED“When you’re talking about having a partnership or anything where several people are trying to work together, it’s good to put something down on paper so from the start everyone agrees who is responsible for what,” says Formsma.

Depending on the legal entity you select for your business, the shareholder agreement (for a corporation), operating agreement (for an LLC), or partnership agreement serves as a governing document that outlines the rules by which members and managers operate.

Agreements are required in some states. And while not required by the State of Michigan, the state does consider them “highly advisable” according to its Guide to Starting and Operating a Small Business. It describes operating agreements as “the basis on which you establish consistency and understanding about how meetings are conducted, how the company will be managed and decisions made, duties of members, what contributions are required from members, how profits and losses will be calculated, limitations of liability and protection of members, and how members might be added, terminated, or exit.”

In short, operating agreements aim to answer all of the “what ifs.”

What if one partner wants out? What if founders can’t agree on an important business decision? What if a member dies? How are the profits divided among shareholders? (Okay, not a “what if,” but you get the idea.)

Hammer these out while everyone’s feeling good about the business (and each other!).

DECISION MAKING. Outline management structure and company roles to avoid needless confusion. Determine who ultimately decides the course of action for your business.

MONEY IN. Capture how much money each person puts in to start the business. Is one partner the money and the other a workhorse?

What happens if the business needs more money?

MONEY OUT. Clearly define how money is allocated among the owners. When can partners draw from the business? What if one wants to reinvest and another prefers a comfortable salary?

TIME SPENT. Will one person be logging 80 hours a week and another only eight? Identify

how much time each individual will be putting in and if they’ll be getting paid for their time.

DEATH (AND OTHER BAD THINGS). Trigger events such as a death, divorce, member bankruptcy, or a partner leaving the business should mandate clear procedures for buying or selling shares in the company.

THE END. Develop clear exit strategies to head off legal hassles when the time comes.

Unless you’re a cash-rich, business-savvy, big-picture thinker with lots of time on your hands, chances are at some point you’re going to need to bring in partners to help along your business. Or maybe you’re already established and want to incentivize a key employee with a share of the pie.

One of the most important things an operating agreement does is clearly define the ownership percentages and final decision-making power in the business.

Without clear definitions, you may find yourself in a never-ending cycle of management and financial misunderstandings based on verbal agreements made long ago. Even worse, you may be relegated to following generic state rules that do not consider your unique circumstances, which may lead to unfair profit splits, infighting, and other messes.

“We see a lot of relationships, partnerships, and companies go bad because they haven’t outlined all of the rules and responsibilities in association with the equity,” says Erin Strang, president and CEO of CMURC.

And the most important responsibility that comes up, adds Formsma, “is who gets the final decision.”

“If you have four people and each owns 25 percent, and two think one thing and two think another, it’s hard to move forward and get anywhere,” he says. And, while some might argue everyone with equal share should have equal say, “at the end of the day, somebody has to be given the ability to make a decision so the company can keep moving forward,” says Formsma.

Timing is critical. “You need to talk through and have those conversations on Day 1, not a year in when you get in to an argument,” notes Strang. “And not when money is on the table.”

Feature

SWEAT THE EQUITY—AND DECISION-MAKING POWER

THE 6 AREAS EVERY OPERATING AGREEMENT SHOULD COVER By Laurie Hileman

12 • MUSE • VOL. 1, OCT. 2015

Finding the right people to staff an entrepreneurial company is both an art and a science. While knowledge and skills are obviously critical, there are a number of other considerations when evaluating potential hires. “There are two core differences between hiring for a startup and hiring for an established company,” says Marilyn Kanas, co-founder of STRe Solutions, a search firm based in Cupertino, California. “Will that person be comfortable in a start-up environment and can that person afford to work for a startup?”

These questions get to the unique circumstances in which many entrepreneurial ventures operate. Resource constraints often mean that people have to step out of their usual roles to lend a hand where needed. This might mean the chief marketing officer handling basic accounting tasks on his or her own when the senior accounting clerk is out sick and there is no one else to do it. Or it could mean conducting final product testing to meet a deadline with a customer when the engineering staff is tied up with other priorities. “Startups often require that people wear many hats,” says Kanas. Not everyone is willing or able to do that.

Many entrepreneurial companies also cannot hope to match larger companies when it comes to compensation. Kanas recalls working with a startup that could offer less than half the going market rate in salary when hiring a CFO. The company’s CEO argued that the company would make up the difference by offering a richer equity deal with large potential upside gains when the company succeeded and went public. However, not all candidates are willing or able to forgo a certain level of immediate guaranteed pay, no matter how attractive the company’s long-term prospects might be.

For these reasons, Kanas suggests that entrepreneurial companies try to be as creative and flexible as they can when evaluating candidates. “Rather than holding out for someone who meets all 10 requirements, be open to someone who meets six of them and has the talent to develop the rest,” she says. “Hire for talent, and people will learn the skills they need. In my experience, things like raw talent, the right work ethic, and the right personality are what are so important.”

Before pen is ever put to paper, Strang recommends getting a good handle on everyone’s individual goals and what vision you all have for the company. Once these are understood, you’re ready to draft an operating agreement.

Strang and Formsma note that because operating agreements are legally binding, a professional one drafted and reviewed by an attorney is best.

According to Strang, hammering out the details of an operating agreement can be “hard conversations to have but go a long way in solidifying relationships.” These are relationships that should strengthen and propel your business forward, not cripple or end the business.

While not having a written operating or partnership agreement puts you and your company at unnecessary risk—just ask the Winklevoss Brothers and Eduardo Saverin—early missteps don’t always spell automatic doom for a solid business venture.

“The great thing about going in to business is you can do whatever you want—there’s no one way to do it. Finding people who share your vision and wish to see the business succeed is ultimately what is most important,” says Strang.

PUTTING IT ON PAPER Be creative and flexible when finding the right fit.By Joanne Sammer

How Do You Hire for Your Entrepreneurial Venture?

Data Driven

Tech Ka-BOOMTech startups lead VC funding and foster job growth.

By Laurie Hileman

UnicornTech industry name

for startups valued at $1 billion or more by venture capitalists.

Though they start lean, new high-tech companies grow rapidly in the early years, adding thousands of jobs

along the way.

Rapid Job Growth High-tech startups are a

key driver of job creation throughout the United States.*

Job Creators

Amount pumped in to U.S. startups by venture capitalists in 2014. Software startups accounted for 41% of total funding.**$48.3 BILLION

SOURCES:*http://www.kauffman.org/newsroom/2013/08/young-hightech-firms-outpace-private-sector-job-creation**http://www.bloomberg.com/news/articles/2015-01-16/it-s-official-startup-funding-last-year-was-biggest-since-2000***http://fortune.com/2014/09/25/why-startups-fail-according-to-their-founders/

1. No market need2. Ran out of cash3. Not the right team

Top 3 Reasons Why Startups Fail***

14 • MUSE • VOL. 1, OCT. 2015

The Station is where entrepreneurs & service providers come together.

It’s more than a space.

Expand your footprint.

cmurc.com/station

Entrepreneurship:

[ahn-truh-pruh-nur-ship]

1. a state of mind,

free from limitations

2. a determination to succeed

noun

cmurc.com/defined