Small Grants, Big Returns: Venture North’s new program assists clients with cost of doing business

Tax assistance. Product labeling, rebranding and marketing. Surveying land.

These are services that can be small business building blocks, but sometimes are not so easy to afford. Enter Venture North Funding & Development, with a new program to assist its loan clients with such costs.
The organization, which in 2017 became a Community Development Financial Institution with a deeper focus on the 10 counties it serves, has found businesses needing more than just its financing to grow.

“Many clients that Venture North assists with lending need more technical assistance,” said Venture North Executive Director Laura Galbraith. “We have learned that access to professional services is extremely difficult in the more rural communities and also difficult for entrepreneurs and emerging businesses to cash flow.”

Tapping a $30,000 grant it secured earlier this fall from the U.S. Department of Agriculture (USDA), Venture North is re-granting the money to help subsidize costs of services like legal, accounting, human resources and marketing assistance.

“The lens that we’re using as we talk to these folks is how is this is going to impact the bottom line of your company and create jobs,” Galbraith said. “We can fund 66 percent of their need … capped at $1,500 that we will pay through the grant. It’s amazing how much $1,500 can really do.”

For Courtney Lorenz, owner/operator of Cultured Ferments Co. LLC, a $1,500 grant is helping the three and a half-year-old growing business pursue organic certification and nutritional labeling for its line of kombucha, a fermented sweetened tea.

The certification and labeling expense had been pushed down on the list of priorities, even thought it would have attracted new business, Lorenz said. She said sending products to a laboratory to be verified for information that would appear on a nutritional panel “was a bit of a barrier for us,” about $750 for each of the five kombucha flavors, or $3,750. Organic certification through the USDA National Organic Program costs about $2,000, plus an annual renewal fee, Lorenz said.

“Both the nutritional panels and the USDA seal for organic are frequently asked for by customers,” she said. “There were certain markets we knew we couldn’t service … even though [there was] demand for the products.”

Earlier, Venture North had loaned Lorenz $7,750 to purchase an automatic labeling machine and conveyor, enabling the company to move beyond hand-applying labels and dates – a process that, at 1,200 bottles a week, “was getting old pretty fast,” Lorenz said.

The company’s subsequent expansion into a 4,800 square-foot production and headquarters building near Chums Corner prompted discussion about other things the business wanted to do, like nutritional labels and organic certification. Lorenz said the $1,500 Venture North grant made pursuing those items “a little more approachable for us” and will help open new markets and sales, including to large downstate grocery stores, college campuses and health care institutions. That in turn could mean adding employees to a staff that numbers four year-round and in the summer grows to about eight.

Another Traverse City food company, The Redheads, is putting a $1,500 Venture North grant toward hiring a consulting, marketing and brand assistance company. The company will fashion branding and marketing for products soon to appear in new packaging bearing gluten-free, vegan and other certifications.

“For a small business like us, we don’t have these large categories and budgets for marketing and all these different certifications,” said President Sarah Landry Ryder. The grant was “extremely helpful to getting us saying yes, we can do this. It helped take a piece out of cost for me for that marketing company.”

Ryder said that small business owners often forgo professional services “because it’s hard to justify that kind of money” amid tight margins and operating priorities like employees and inventory.

She said the first phase of the marketing company’s services costs $4,000 and will entail rebranding and creating a marketing plan for the launch of the new certifications and packaging, with an ultimate goal of reaching new markets in-state and expanding to surrounding states.

The Redheads’ 18 products are sold among more than 300 retail locations in Michigan. A 2016 move into production space at the Grand Traverse Food Innovation Hub, aided by another Venture North loan, is expected to accommodate significant future growth for the business operated by Ryder and two other employees.

Galbraith said she sees the need for professional services in virtually every client “and it’s because a lot of these folks who are operating businesses are extremely busy, and they’re having to wear many hats.” Venture North awards grants after internal review and reports to the USDA on how the grants are deployed.

Grants can help businesses pursue something that has been planned or envisioned but not yet funded, as well as face challenges.

Maxx Disposal in Bellaire, for example, put its grant money toward paying for a CPA/attorney to prepare and file its first full years’ business taxes. The company, which started in December 2016 with six customers, provides trash removal and other services to about 172 customers in Antrim and Charlevoix counties.

When owner Harold Ahrens applied for a Venture North loan to purchase a garbage truck, he had not yet filed his 2017 business taxes. After getting his $18,000 garbage truck loan approved, he applied for a small grant to hire a tax attorney.

“As a small business starting off we don’t have much money,” said Ahrens, in comments emailed for this story. “Filing taxes for the business was very overwhelming. Having the use of a tax attorney to help us through it was very vital and gave us such peace of mind.”

A more unique grant usage is at Xpert Fulfillment Inc. in Benzonia. The order fulfillment and logistics provider is using a $1,500 grant to help pay for about $3,400 in survey services on its 37 acres, approximately 31 of which it plans to sell to a developer for an industrial park.

The Venture North grant “certainly helps with our expansion plans,” said President Bob Boylan. He said the financial resources that will be required in association with developing the park, such as roadway improvements, “are going to be substantial. So every little bit helps.”

The company in 2017 received a $90,000 Venture North loan for equipment purchases and working capital and a $330,000 Community Development Block Grant loan for additional equipment purchases, inventory and working capital for advertising and training. Both loans were related to Xpert’s move into its Benzonia site, its second location and fourth expansion in the company’s 13 years.

Boylan, once a student at Benzie Central High School who moved away upon graduation because “there wasn’t a lot of opportunity in the area,” said that while the survey work is a step toward a property sale that will bring Xpert cash, there’s a bigger goal.

“The long-term benefit is the community building. We want to bring some jobs back into the area,” said Boylan, who currently has 14 working at Xpert. “My goal is pretty simple. I want to work toward creating opportunities for tomorrow’s youth. Throughout the park, I would love to see 300 or more jobs.”

Galbraith said the grant program is likely to use all its USDA funding by the end of first quarter 2019. She is looking for new sources.

“I’m hoping there will be some other funding streams out there that are interested in continuing this program,” she said. “It will help our region increase its tax base, increase jobs, it will only positively impact the region if we can keep this going.”

Amy Lane is a freelance journalist and former reporter for Crain’s Detroit Business, where she covered business, state government, energy and utilities for nearly 25 years.

 

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