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New Ventures Find a Home In and Close to Home

December 18, 2009 By Lee Egerstrom, Economic Development Fellow

Few forecasters are bravely stating what the Minnesota economy will look like when it emerges from the lingering recession, but we're getting hints that a lot of commerce will be based close to home.
Secretary of State Mark Ritchie announced in late November that Minnesota is on track to see the greatest number of new business startups this year since 2002. The number of new business filings with the state is projected to reach 63,000, a 15 percent increase from 2008's 55,137 and well above the 55,782 recorded in 2007.

This doesn't come as a surprise to Karen and Tony Trow at Glenville, whose Soap Wizards Inc. business near the Iowa border helps entrepreneurs start businesses at their homes. It is no surprise to Cheryl Mohn or Laura Bergen, either, who launched businesses from their homes because they wanted to work from there - and did so well before the recession hit and eliminated jobs.

Let's look at the Trow, Mohn and Bergen families because they may well represent the small business owners and operators of Minnesota's future.

Karen and Tony Trow started Soap Wizards at their home in Minnetonka in 1997, they moved to their family hometown of Albert Lea in 2000. "We were thinking about buying a cabin at a lake 'up north'," Tony Trow recalls. But a lakefront home became available in Albert Lea and, with family considerations playing a part, they moved as far away from 'up north' as you can get and still live in Minnesota.

Soon after, commercial space was discovered in Glenville, 4.5 miles southeast of Albert Lea, and an expanding manufacturing, distribution, training and retail business has evolved with the Trows providing products and materials for people in the bath and body, candle, fragrance and related products sectors.

Only 5 percent of Soap Wizard sales through its website and its Minnesoyta Nice retail product line are to Minnesota clients and customers, Tony Trow said. Their computer database has 14,600 client-customers of which 500 to 600 are regulars who often need weekly supplies.

Cheryl Mohn, meanwhile, started her side business to cope with a time management problem. She has more energy than most two Minnesotans. After she quit teaching school, she said she sought something to do between morning and evening milkings on the Mohn dairy farm and the additional chores of getting children off to school and back home each day.

Revving up her sewing machine at Mohn Dairy in a rural Lakeville, she created a "Towel Tote" in 1994 that she soon began selling to other dairy farmers south of the Twin Cities. The product won't make much sense to you unless you know your way around a dairy barn. But if you do, the product is both sensible and helps explain why we have a clean, safe milk supply in this country that starts out on the farm.

One good idea inevitably leads to another. Some Minnesota and Wisconsin dairy customers began suggesting ideas for other products, an artificial inseminator from North Dakota had another idea for a helpful product, and Cheryl and Bruce Mohn keep thinking of ever more ways to make dairy farming efficient, clean, and dry for the farmer. Calf blankets are also popular this time of year.

Udder Tech Inc., the business she founded, now offers 35 products for dairying, A.I. breeding, and a line of children's barn clothes for children who like to be around the cattle and dairy operation. These clothes are like those made for the grown ups and helps keep the little ones dry and clean.

Most of the products from the catalog can be found online. As of 2008, she said, the side business now generates more income than the dairy farm.

Laura Bergren is hoping her business - My Green Closet - will follow a similar success path. She and husband Paul have two young children and she wants to work from home. Together, they formed My Green Closet that sells kid's clothes that are made by socially and environmentally conscious manufacturers.

All clothes are currently made with 100 percent certified organic cotton. They are made with environmentally low impact dyes and adhere to fair labor standards by American laborers. Packaging and shipping materials are made from at least 30 percent recycled content and were ordered from local businesses.

The three-year old business accomplishes two family objectives. First, it allows her to work out of the home. "Brick and mortar retailing takes a lot of capital," she said. And second, it allows the Bergrens "to sell the quality products we want to sell" through the Internet, at the annual Living Green Expo at the Minnesota State Fairgrounds, and through a few retailers who carry their products.

Going forward, Minnesota policy makers and entrepreneurs alike should address Internet and technology access questions, such as broadband access, for potential entrepreneurs like the Trows, Bergrens and Mohns in every corner of the state.

What's more, access to venture capital and operating funds will be important, as will access to business services and training. Home based enterprise is not necessarily the shape of commerce to come, but it will be an important part of it.

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