[01:00:00:00 - 01:00:01:06]
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[01:00:01:06 - 01:00:27:05]
Shawn FitzGerald
Hello, and welcome to Intentional Change, the podcast for business owners and leaders who want to navigate growth, technology, and transformation, not by accident, but with intention. I'm your host, Shawn FitzGerald. With my co-host Joshua McNary, we explore practical ideas and share insights to help lead you through change with clarity and confidence. Be sure to follow, share, and subscribe so you don't miss the next insight that could change how you think, lead, or grow your business.
[01:00:27:05 - 01:00:29:01]
(Upbeat Music)
[01:00:29:01 - 01:01:59:06]
Shawn FitzGerald
What if I told you there's a gold mine sitting in your own backyard? No, it's not the gold bars buried under your garden gnome sort of thing, but it's something just as valuable for your business. And just like the old prospectors that had to scout the land and test samples and stake a claim before they struck pay dirt, today's business owners need to be just as intentional. You can't just start digging anywhere. You need a plan, a clear target, and the right tools so that you can refine what you find into real value. And that's where the Small Business Development Center comes in. And the Small Business Development Center, SBDC for short, exists in every US state and is probably closer than you think. They offer free, real world support in everything from funding and marketing to strategy and scaling. But just like any gold mine, the value doesn't reveal itself until you show up, you make a plan, and you do the work. Today, we're digging deep with someone who knows exactly how to help business owners tap into that hidden potential. Mitchell Kearns is the Technology and Commercialization Director at Iowa's SBDC. He works every day with entrepreneurs who are turning big ideas into real businesses, especially when it comes to innovation, tech, and getting products ready for market. If you've ever wondered where to start, what resources you're missing, or whether the SBDC can really help your business, today's conversation will be your map to start working your own claim.
[01:02:00:08 - 01:02:03:22]
Shawn FitzGerald
Mitchell, welcome to Intentional Change. I appreciate you being here.
[01:02:03:22 - 01:02:20:04]
Mitchell Kearns
Yeah, Shawn, thank you for that introduction. I think that was really well said, and it just brought a smile to my face because it reminds me every day of why we do this work. I think you're kind of in the grind of it, and you kind of forget the value you bring to people, but hearing that just, it just makes me feel all my work's worthwhile, so thank you for that.
[01:02:20:04 - 01:02:51:02]
Shawn FitzGerald
Having been a business owner myself, I got started leveraging some of the work with SBDC to help get set up, business plan, just the common things. And as time went on, I didn't really think of you guys, because I think it's one of those resources that we don't leverage enough, or we use it early stage, and then we don't come back as we're scaling, or we have issues, or whatever, because there's a lot of resources that you offer, which we'll get into today. So let's start off.
[01:02:52:09 - 01:02:57:15]
Shawn FitzGerald
Let's explain what is the purpose of the SBDC.
[01:02:57:15 - 01:04:07:17]
Mitchell Kearns
Yeah, so the SBDC, we just provide no-cost business counseling to Iowa entrepreneurs. We're federally funded through the Small Business Administration, and we're co-hosted by region institutions like Iowa State University, University of Iowa, University of Northern Iowa, and then some partnering community colleges throughout the state, and that's kind of where we set up our shop. And then, yeah, folks will sign up for our services, and they'll get, usually within 24 to 48 hours, a business counselor reaches out to you and says, "Hey, I'd like to meet with you "and talk about your business, "talk about your business plan, figure out your needs." And from there, we kind of come up with a game plan to help that small business. And anything from startup to succession planning, I think a lot of people do see us in that startup world where, hey, they might need financing, they might need projections, they might need a business plan. A lot of people see us in that area, but I have been, since my tenure at the SBDC, I've had lifelong clients that come back to me for problems, for issues. How do I hire that first employee? How do I pay sales tax? How do I pay myself? And then some clients who have been with us for a long time,
[01:04:09:00 - 01:04:32:18]
Mitchell Kearns
hey, I'm at retirement age now, you helped me set up my business. How do I value my business? How do I sell it? How do I help someone finance this to make sure the business is successful after I'm gone? So yeah, we do anything from startup to succession planning and everything in between. We help with continuation plans in case of a disaster or an emergency, projections, helping folks get loans. Yeah, a whole bunch of stuff.
[01:04:32:18 - 01:05:06:11]
Shawn FitzGerald
As I've known more of the people at the SBDC, I find that the network that you have, the people that you know, or the other branches around the state, or the other states that you're connected with, that is a tremendous resource because I'm getting the knowledge of everybody. But your job is slightly different. So when those regional counselors that we would normally talk to right at the beginning, you have a slightly different role. So tell us about what you do and how you end up getting into the picture.
[01:05:06:11 - 01:05:18:08]
Mitchell Kearns
So I'm the technology and commercialization director, and that's just a bunch of big words to say that I'm also a business counselor, but I specialize in technology startups, innovative startups,
[01:05:19:08 - 01:05:27:14]
Mitchell Kearns
folks who maybe have a back of the napkin sketch, a concept, and yeah, I help get those folks to a point where they can go out and look for investors,
[01:05:29:00 - 01:05:48:22]
Mitchell Kearns
engineers, lawyers, intellectual property attorneys. So yeah, my role is a little bit nuanced because we have our 15 regional centers. Within those regional centers, we have counselors, and anytime there's a signup through one of those regional centers that rings innovation or technology startup, usually they get forwarded to me and then I do the direct one-on-one counseling.
[01:05:50:06 - 01:06:11:09]
Mitchell Kearns
Those type of startups require a little bit more handholding. Usually funding's a little bit more difficult to get going to market, right? It's not like a coffee shop where you can set prices and you know what the beans are gonna cost. It's a lot of future projections that we're kind of uncertain about, and then finding investors and engineers and pairing all that up and manufacturing.
[01:06:12:14 - 01:06:53:09]
Mitchell Kearns
There's a lot to it, and so that's why this position exists because I do a lot more, I would say, I would say our average business counselor, depending on the need of the businesses anywhere from five to 10 hours, and mine can be triple that per client. So it just takes a lot more work to get those folks to a position where they can go out and feel very confident in front of investors. Like you said, we do a lot more. So if you do go to our website at iosbdc.org, you'll see all the services we provide. There's these very specialized grants that the federal government provides. They're called Small Business Innovative Research Grants. The acronym, of course, is SBIR.
[01:06:54:16 - 01:08:00:17]
Mitchell Kearns
If the federal government has a problem that they're trying to solve, right? So if the war fighter has a problem that they're trying to solve, and they're trying to do R&D, the government will sometimes do that research, but they really are trying to get small businesses to do that, so that way they have a manufacturing resource and a supply chain here to solve those problems. So this federal grant provides non-dilutive funding to do that research. And then the second phase is to provide funding for commercialization. So phase one is to do the R&D. Yes, the thing works or the science works. And the second phase is to, okay, can you get this to market? Can you build the facility to get it to market so the government can actually purchase from you? And I help folks apply for those federal grants as well. They usually meet with me and then a couple other stakeholders in Iowa who are very valuable in preparing a really good quality grant, and then you submit it. And then our goal is that these non-dilutive grant dollars come back to the business and we can really have an innovative ecoscape here in Iowa.
[01:08:00:17 - 01:08:08:04]
Shawn FitzGerald
How competitive is that? Is there a lot of businesses chasing after the same dollar? What level of competition do you see?
[01:08:08:04 - 01:08:42:04]
Mitchell Kearns
It's very competitive. Every state's competing for them and there's 15 different agencies that are funding them and with their own priorities and prerogatives. So part of the method is, is you have this innovation or research, how do we pair that with the right agency? And then how do we find the best kind of, it's kind of like a matchmaking, right? You have this innovation, how do we apply it to the problems that maybe the Army has or the Navy or how do we apply this to the medical field through the NIH? Most applicants, first time applicants, it's only about a 15% success rate, 10 or 15%.
[01:08:43:05 - 01:08:53:17]
Mitchell Kearns
And you're competing against other states. But yeah, that's why I exist because there's a lot of bureaucracy. A lot of times folks have to apply. There's very strict font size, very strict word count.
[01:08:54:18 - 01:09:11:14]
Mitchell Kearns
And if you mess that up, it's an automatic rejection. And a lot of these grants can take anywhere from 50 to 100 hours putting together. And it's really sad to see someone who submits something and just gets thrown out for a bureaucratic reason. I help a lot of folks with the matchmaking process, with drafting the initial proposal,
[01:09:12:19 - 01:09:26:06]
Mitchell Kearns
doing market research in these highly innovative areas, which is kind of hard to find. And then getting them linked up with other key stakeholders in Iowa, like Anne McMahon. She works with, she now works at IEDA, but was formerly with Iowa Bioconnect.
[01:09:27:13 - 01:09:43:15]
Mitchell Kearns
And she is in charge of helping also assist with preparing really good applications and then matching it. If there is an award winner, there's additional state-backed dollars that will follow the federal grant dollars. So it's kind of like another pot of money if you win one of these.
[01:09:43:15 - 01:10:10:22]
Shawn FitzGerald
So for our listeners, they're hearing money, money, money. Here's the money tree. It's what we all hope to have access to. But what about the back end? What's the expectation or what's that lift that's required to back it? Because although the money may be free, it's not free. There's a commitment. Can you talk about some of the things that a business has to do in order to either keep qualifying or to meet whatever criteria is set?
[01:10:10:22 - 01:10:26:03]
Mitchell Kearns
So you put together a quality application. It'll go through a review process of experts in the field who can ask really high quality questions and really make a good assessment. And then after it passes that review, it gets graded.
[01:10:27:22 - 01:10:38:09]
Mitchell Kearns
And then you're notified either of why you lost and things you could do to improve. Sometimes they'll ask you to resubmit at the next cycle.
[01:10:39:12 - 01:10:48:16]
Mitchell Kearns
And then let's say you are awarded, right? Hooray, we got this money. But so most of the grants, phase one grants are only up to about $250,000.
[01:10:49:20 - 01:12:36:07]
Mitchell Kearns
And that's like a weird spot of this is enough to probably pay for a person's salary to do the research, maybe two people, and then the research required for about a year. And that's how long the grant expectations usually are. They're usually 10 months to 12 months long. To do your research, to kind of come up with a white paper or you have to keep the program manager, the person who oversees your project, you kind of have to keep them informed. At the same time, about month seven, eight, or nine, you have to start kind of working on an application for your phase two. The phase two isn't as competitive because phase one usually weeds out a lot of these applications. So the phase two success rate is higher, roughly 40 or 50%. So let's say you get awarded the funding. Now you have to come up with accounting principles, right? So you have to come up with a way to make sure you're tracking that fund. So that way when you do submit for a phase two, they're gonna ask simple questions of like, what's your accounting principles? What are your indirect costs? What are your direct costs? So we help, you know, on the back end, we help set up some of those principles, how to best allocate those dollars. So the other side of SBIR, the Small Business Innovative Research Grants, is the STTR, they're the same thing, they're the same grant. The STTR basically just means that they're partnering with a research institution and that the PI, the principal investigator, the person who's in charge of the financing within the institution is someone employed by the university. So basically if it's technology that is owned by the university that wants to apply for these grants, that would be in the STTR category. If it's a small business that isn't partnered with an institution, but is interested in a non-dilutive grant funding, research funding, that would be the SBIR program.
[01:12:36:07 - 01:12:42:01]
Shawn FitzGerald
What are some of those things that a business should be doing before they come and talk to you about this?
[01:12:42:01 - 01:13:30:17]
Mitchell Kearns
A lot of these folks know the state of the innovation, the research, but a lot of them don't. When I get in a room with them, I'm like, okay, who are you selling this to? Who's your target market? And then they're like, well, I think it's gonna be these people and they think it's really interesting. So then I kind of bring up, well, could it be applicable here? Could it be applicable in this industry? Could it be applicable in that industry? And a lot of these folks don't have an ideal market. They just know that this is a really cool thing that they solved in a lab. But then I'm like, well, how are you gonna make money from it? Who's gonna buy it? And so a lot of folks, when I would start my counseling, if they just have the research or the innovation, I would have them walk through a tool that all of our SBDC directors use. It's called a business model canvas. It's kind of like a nine segment platform
[01:13:31:17 - 01:13:52:21]
Mitchell Kearns
that we use basically to answer kind of the skeleton of a business plan. So it's gonna walk you through what problems are you solving? We would call that your value propositions. It's gonna ask you who you're solving them for, and that's your customers, your target customer. There's a marketing kind of, they call it channels, but I would just say like, hey, what's your marketing plan? So this is a novel innovation.
[01:13:53:22 - 01:14:50:20]
Mitchell Kearns
Your marketing's a little weird. You're probably not gonna do Facebook ads for something that's really novel that you're trying to sell maybe to Pfizer or Merck or something like that. So I would have my clients say, okay, who specifically within this large organization do you need to contact to make these sales? There is a customer relations segment, and for my clients, I kind of edit my business model canvas. I always wanna know who's your competition, and what I would mean by competition is who isn't doing this novel thing like you? I wanna know how this problem's currently being solved and how you differentiate from them and what value ad do you have to take market space from these other competitors. And then the backside of it, that's kind of all forward facing. The backside of it is like, tell me the list of steps that you need to take to get this thing to market. Who needs to be in your corner? You might know the innovation, but do you have a CFO? Do you have some type of operating officer that can get this thing over the finish line? Do you tend to
[01:14:50:20 - 01:15:15:08]
Shawn FitzGerald
get a lot of startups or existing businesses approach you? They have this thought that they think, oh, this is gonna be stellar. And then you realize there's been no vetting, there's been no research or going through some of the things like you normally would do the canvas. Do you get approached with a lot of these ideas? They just think, oh, if I just build it, it's gonna be gold.
[01:15:15:08 - 01:15:26:03]
Mitchell Kearns
If I build it, they will come. That's usually a horrible approach to take. Do not do that. So we've done the canvas, right? And I always say that the canvas is kind of like a hypothesis.
[01:15:27:05 - 01:16:04:11]
Mitchell Kearns
A lot of academic and PhDs will understand and that's why I use that metaphor. Think of it as the scientific theory and this is our hypothesis. The business model canvas is what we think we know, who we think we're gonna sell to, the problems we think we're solving, how we think we're gonna market to them. We don't really know until we go through a process of called customer discovery. And that's where a lot of these folks, a lot of people will tell me their idea and they're like, well, so what do you think? Is this a good idea? Should I go for it? Should I get money for it? Should I pursue it? And I said, I don't know. My gut reaction says XYZ, but I wouldn't take that for anything. What I would rather you do is talk to your customer.
[01:16:04:11 - 01:16:10:11]
Shawn FitzGerald
Right, you might not even be the target customer. You may have no need for their idea, even if it was solid.
[01:16:10:11 - 01:16:16:20]
Mitchell Kearns
When we go do our target customer segment in our business model canvas, I want them to make different buckets of potential customers.
[01:16:17:23 - 01:16:28:14]
Mitchell Kearns
And then I want you to approach each one of those different buckets, maybe five to 10 different people and actually ask them, hey, what are some of your pain points? What are some of the things that we could help you solve?
[01:16:30:05 - 01:16:46:05]
Mitchell Kearns
And if you're getting resounding answers of like, yeah, the things that you're solving for actually have a need, that's usually a good sign. So using the business model canvas as a hypothesis and then testing it through the process of customer discovery to narrow down a way into market.
[01:16:47:20 - 01:16:57:12]
Mitchell Kearns
A lot of people do not do that. They miss that step of customer discovery. They just get so wrapped up in the problem they're solving that they forget, oh, there's a customer that has to buy this.
[01:16:58:12 - 01:17:35:20]
Mitchell Kearns
And I think that's probably the most tragic cases of businesses that I see that they don't kind of heed that warning of, we need to do a lot of customer discovery to make sure that there's a market for this on the backend, because you'll see some businesses that get so caught up in the idea or innovation, and they go out and they finance their 401k, they use their houses leverage to create a thing that ultimately you find out that no one wanted or the features need to be changed. So you're gonna have to spend a lot more money to satisfy your customer. So those are the most tragic cases, the folks who don't do customer discovery realize that, oh, there's no market for this. And then they're in a really bad financial position to move forward.
[01:17:37:04 - 01:17:49:00]
Mitchell Kearns
So, but customer discovery is something that's free, it just takes your time. You have to go out and actually do the work of talking to the customer and asking these questions and kind of pivoting your idea to make sure
[01:17:50:03 - 01:17:52:12]
Mitchell Kearns
that it is actually something that is needed.
[01:17:53:20 - 01:18:07:09]
Mitchell Kearns
But yeah, that I would say is the biggest gap with folks who come in and they're like, customer discovery, that sounds kind of intimidating. I know who my customer is, but do you? Sometimes I'll spend three to six months on customer discovery because it just takes that long.
[01:18:08:10 - 01:18:15:16]
Mitchell Kearns
Then I usually break it down a lot more in my counseling sessions. Usually this process is about a three to six month process in my counseling.
[01:18:15:16 - 01:18:27:01]
Shawn FitzGerald
Do you have those resources to find the demographics and the psychographics and all those different types of data points? Do you have that or do you have to send your business entrepreneur somewhere else?
[01:18:27:01 - 01:20:38:21]
Mitchell Kearns
Yeah, so we do do some market research. We do have the resources of Iowa State University, the library, so IBIS World and Biz Miner and some of these research platforms. What I've found, and this is kind of just specifically for me and my clients, is there's not a lot of good information. This hasn't been done before, so we don't really have a blueprint. It's a new tool that we just picked up here about two or three weeks ago and I've been using it with a lot of my SBIR STTR clients. It's called Turbo Innovate. And it's a very expensive subscription and I paid for it through some of our dollars that help folks get SBIR STTR awards, but it gives you some of that insight that you wouldn't normally get from a traditional market research. You can identify the number of coffee shops in your geographical location with a standard market research, but if it's something really highly innovative, you're never gonna have a finger on the pulse, this does exactly that. This will tell you different type of federal grants that exist, even if they're not SBIR STTR, it'll give you a list of all the grants that might be applicable to your innovation. It'll give you different competition and where you stand against your competition. It'll give you your likelihood of getting a patent and it'll list some of the other patents that have been filed and give you the patent number. It'll give you private investors, so who are private investors that work in this specific space. And then it actually works, they have a LinkedIn scraper, so it'll actually give you connections to those people. So if you see a private investor or an investment group, you can get their contact information through LinkedIn and just pull that straight. So that way, because that usually takes a long time, right? You identify your target customer, now you have to find someone there that will actually talk to you. And this will actually give you some of that stuff. So it's a really cool program. This program will help draft an initial proposal, so that way it fits kind of those, the frameworks of what an SBIR STTR wordy, if it's a framework, and then the user can then go in and kind of edit it and make it their own. But it's really neat software.
[01:20:40:00 - 01:20:42:09]
Mitchell Kearns
I'm trying to get it to grow here in Iowa.
[01:20:43:11 - 01:20:51:13]
Mitchell Kearns
I'm kind of being the test dummy and opening it up to other folks in the SBIR, federal grant funding space to show the capabilities.
[01:20:53:18 - 01:20:58:01]
Mitchell Kearns
That's one of the really cool tools for the highly innovative space, I would say for other small businesses out there.
[01:20:58:01 - 01:21:23:01]
Shawn FitzGerald
That's incredible. That's like a tremendous tool. So what's the process if I've got a product and I need to prototype it, or I need to take this idea, I've done the market research, I think I'm pretty solid, but now we've got to take this contraption and turn it into something that people can touch and feel and use and visualize, things like that. Talk to me about some of the prototyping things that you may offer or help.
[01:21:23:01 - 01:22:39:14]
Mitchell Kearns
So I have a really cool program that I oversee, it's called the Rural Business Innovators Program. And it does do some of that prototyping, assisting with small batch manufacturing. This program, it's kind of like a 10 to 12 week counseling, I don't wanna say week because sometimes we meet once a month, sometimes we meet once a week. It kind of depends on the schedule of the entrepreneur. But this program does that, right? We walk through a business model canvas, we do customer discovery, we've refined what we think folks want. And then I do have a group of prototyping engineers that if you just need a CAD or a STL file or something like that, I can get you in touch with those folks, they can do kind of those rudimentary drawings. You kind of have to have a large pool, right? Cause a lot of people are now doing embedded stuff, so embedded sensors. So it's kind of an interplay of like, okay, you have the physical thing and then you need a sensor inside of it. So yeah, I do have a group of engineers that I usually get folks in touch with, at least to get like the preliminary drawings done and to test it. Usually it's like you have a concept or a prototype, you have to test it a bunch of times, break it and then fix the things that you break. And then that ultimately will result in an MVP, right? So you might go through five or six different iterations before you get your MVP.
[01:22:41:00 - 01:23:54:20]
Mitchell Kearns
MVP means minimal viable product. It's the product that you plan to sell and market. And then simultaneously what we're helping with is the intellectual property. Cause at some point you're disclosing this to some people you might need funding to get through the prototype. So we have to have a very serious conversation about how you're gonna protect your intellectual property. And so usually we're having those conversations of, okay, when do I need to file my provisional patent? Did I already make my initial disclosure? Should I have filed my patent before? And then so I also have a pool of intellectual property attorneys that I work with to get them squared away from an IP perspective. The cool thing about my history is, so I have a legal background. I'm an attorney by trade, but I have to tell all my clients, I can't be your attorney. I can kind of help you avoid common pitfalls, but I can't write your contract for you. I can get you in touch with an intellectual property attorney or maybe do like a quick patent search to see what's out there, but I can't write your provisional patent or your full patent application. So yeah, I feel like coming from an attorney background, my initial brain is spot every single liability that's out there. What are all the problems that can go wrong? And let's come up with a contingency plan to solve for all those.
[01:23:54:20 - 01:24:13:22]
Shawn FitzGerald
When you think about the people that come in and you're like, oh, if you would have only taken care of this easy thing, something that was within your ability to handle before you've come to see me, what are some of those things that a business might try to do now to get better prepared?
[01:24:13:22 - 01:24:36:22]
Mitchell Kearns
I think having customer discovery done, maybe a sketch of the concept, the features, right? If it's a software, having some of the feature lists that you want done, those are all things that help me because it does take a lot of time. If it's coming off the institution, the thing that you can really do to save yourself a lot of time is you need to be talking to the tech transfer office. You need to be talking to the folks who actually own the intellectual property.
[01:24:38:04 - 01:24:56:00]
Mitchell Kearns
So if you're a professor at an institution and you want to get a grant or you want to take this as a business, you have to get consent and a licensing agreement from the university because the university is actually the person who owns it. So that takes a lot of time. There's usually negotiations that happen between the university and the small business.
[01:24:57:19 - 01:25:03:20]
Mitchell Kearns
So that's one thing that you can do is have a conversation if you're an academic or a PhD or employed by a university.
[01:25:05:09 - 01:25:08:21]
Mitchell Kearns
Talk to the tech transfer office. Every university has one.
[01:25:10:20 - 01:25:18:03]
Mitchell Kearns
Talk to those folks and they'll kind of walk you through the steps of how you can go about getting a licensing agreement so then you can start to pursue the federal grant funds.
[01:25:18:03 - 01:25:30:04]
Shawn FitzGerald
Where's the checklist? Where's the thing that I could go to after listening to this interview with you and go, okay, I'm gonna start working through this checklist. Is there any resource or anything out there that would help?
[01:25:30:04 - 01:25:48:09]
Mitchell Kearns
Yeah, so I mean, if you, honestly, I think kind of the best strategy is just to sign up for our services. Go to iowasbdc.org at the very top. There's gonna be a red button that says request counseling. It's gonna be very similar for any other SBDC network in the nation.
[01:25:49:09 - 01:25:58:11]
Mitchell Kearns
So if you're in Alabama, if you're in Michigan, look at Michigan SBDC, go to their website and usually there's some type of form or registration where you sign up for services.
[01:26:00:06 - 01:26:04:00]
Mitchell Kearns
It's really helpful to start talking with those folks sooner than you think
[01:26:05:03 - 01:26:09:19]
Mitchell Kearns
and start to put together that game plan. I would say as far as a checklist goes,
[01:26:11:02 - 01:26:14:21]
Mitchell Kearns
we do have like how to start a business guide and I think that might be on our website.
[01:26:16:12 - 01:26:32:06]
Mitchell Kearns
We do have a lot of free resources, like intellectual property. I did have a webinar that I recorded and it's on our SBIR, STTR webpage about intellectual property, differentiating between copyright, trademark,
[01:26:33:20 - 01:26:35:19]
Mitchell Kearns
patents, what's patentable, the different types of patents.
[01:26:37:08 - 01:26:41:04]
Mitchell Kearns
As far as like here is XYZ on what you wanna do,
[01:26:42:08 - 01:26:43:23]
Mitchell Kearns
it's kind of tailored to your business.
[01:26:45:02 - 01:26:48:22]
Mitchell Kearns
If it's a coffee shop, I would say, hey, I wanna know, I would be a lot more heavily,
[01:26:50:12 - 01:26:59:21]
Mitchell Kearns
I wanna know locations, I'd wanna know cost, I'd wanna know what you're gonna sell it for if there's enough customers to sustain that, who your competition is. If it's like an innovative technology,
[01:27:00:22 - 01:27:06:23]
Mitchell Kearns
really doing that business model canvas, that hypothesis and then doing the customer discovery.
[01:27:08:09 - 01:27:13:12]
Mitchell Kearns
High level, I walk all of my clients through business model canvas. So that's where I would start.
[01:27:15:02 - 01:27:39:07]
Mitchell Kearns
The business model canvas is kind of like the skeleton for your business plan. A lot of folks think that you just need to start with a business plan and start writing a thousand and 10,000 words on a piece of paper and thinking that's that little suffice. What ends up happening is you get into it and you make changes or you realize something in customer discovery and now you're 10,000 words deep in your business plan, you have to go back and change it. So I start with the business model canvas, it's kind of the skeleton
[01:27:40:17 - 01:27:53:12]
Mitchell Kearns
and refine it through customer discovery. And then once we kind of know the path to commercialization, then we start to fill in the blanks with a business plan and financial projections and a budget and all those things.
[01:27:53:12 - 01:28:05:20]
Shawn FitzGerald
What resources do you have to help that business owner who has a successful business, but now they're looking to scale or the business is evolving into something completely different.
[01:28:05:20 - 01:28:08:07]
Mitchell Kearns
So I'm gonna kind of go back a little bit,
[01:28:09:08 - 01:28:14:12]
Mitchell Kearns
kind of merging the last question with this question. Anytime I have a client come in,
[01:28:15:12 - 01:28:46:07]
Mitchell Kearns
usually the initial meeting is an hour and a half, depends on how far along that they have specific questions, but an hour and a half long, somewhere along the way, I'm gonna ask what is your exit strategy? Is in five or 10 years, are you the CEO of this company? Have you sold this company? Is it somewhere in between where you hire a CEO to manage it? And tell me what your exit strategy is. It's really hard to counsel folks who don't have an exit strategy because then it's gonna change your business model canvas. It's gonna change all of those things.
[01:28:47:10 - 01:29:06:04]
Mitchell Kearns
Resources that we have for continuation and succession planning or scaling. So I would kind of put those in a couple of different buckets. So when you actually go to start your business, right? A couple of things that you need is you need articles of organization or incorporation to start your business.
[01:29:07:08 - 01:29:29:15]
Mitchell Kearns
You need an EIN number, which is kind of your taxable entity number, your employer identification number. And then a lot of people skip the really pivotal document of an operating agreement or a bylaw. And those are basically an agreement between the owners and the entrepreneur, and it details how the business is to be operated. A lot of folks don't do that. And then an emergency arises.
[01:29:30:21 - 01:29:39:21]
Mitchell Kearns
They have to add an investor, they're scaling, they need to get a loan. And now they don't have this document in place and they have to in a hurry, try and find this document.
[01:29:41:06 - 01:30:06:19]
Mitchell Kearns
That would be like at the onset, make sure you have an operating agreement that makes sense that's suitable for you to scale. Doing that at the front end will really help you as far as resources in, let's say the continuation or succession planning, that's kind of like the voodoo word, but I think it's on the back of everyone's mind. And I think if you look at like the demographics of our business owners, I think 60 or 70% of them are at retirement age.
[01:30:08:01 - 01:30:36:11]
Mitchell Kearns
And there's no one to fill those shoes. And so everyone's like, well, I wanna sell my business. So a hard part, people come to us for business valuations. How much is my business worth? And sometimes I have to outsource that to another like an appraisal firm that is dealing with specialized equipment and manufacturing equipment. But usually you have to try and put a fair number on what you think the business is worth. And then you have to figure out a way of who you're gonna transfer that to.
[01:30:37:13 - 01:30:43:02]
Mitchell Kearns
So who are some of the key people? Is it your kids? Is it a key employee?
[01:30:44:12 - 01:31:19:01]
Mitchell Kearns
And then figuring out a way to finance that or transition that to the next generation without putting too much of a burden on that business to where they can't manage it. Because a lot of folks will be like, well, I did this for 30 years. It's worth $3 million. I have all this equipment. But you're not gonna find someone that can come in with $3 million to manage the business. Or if it's an employee who wants to take over and their interest, their payments they're making on it are $3,000 every month. And that just can't sustain the business. So we do a lot of that too, of like walking you through the logistics of structured buyouts.
[01:31:20:14 - 01:31:38:08]
Mitchell Kearns
There's some really cool stuff going on and an employee trust buyout where you can kind of slowly transition shares to your employees. An employee owned model. There's some really good resources here in the state of Iowa. Actually up at the University of Northern Iowa, they'll help you with some of that succession planning.
[01:31:38:08 - 01:32:00:06]
Shawn FitzGerald
I know that our time's starting to come up here a little bit. I know you brought this up during our conversation already with the Rural Business Innovator Program. Tell me about what's the purpose, who's it designed for? Just because it's a great program. And I think that I want people to hear this clearly, not tied in with some of the other things that you were talking about. So tell me about the program.
[01:32:00:06 - 01:32:17:20]
Mitchell Kearns
So the Rural Business Innovator Program, it was founded before I actually was here. And we've kind of transitioned it a little bit. If you go anywhere within a 10 mile radius of Ames or Des Moines or Iowa City, you're gonna find these incubator programs that do a fantastic job.
[01:32:18:20 - 01:33:23:22]
Mitchell Kearns
You have the Papa John Centers, you have Venture School, you have the Startup Factory. But it started to feel like those programs were designed for folks who were not in rural Iowa. Folks who had to attend three courses a week and it's between the working hours of nine to five. And a lot of these folks work nine to five and they're working on their business after they get off. So we developed a program that does all the same things of these incubator programs and designed it for folks who are working nine to five and can't meet every week or they meet maybe once a month. And then ultimately that leads to 20 or 30 people signing up. We do have kind of a really fun day called the RBI Bullpen Day. And it's kind of for folks who have never pitched their business idea before. The way this day kind of works is the first half of the session is open to the public. Media comes, entrepreneur students come, stakeholders come. And it's three experienced people who have pitched in the past.
[01:33:25:01 - 01:33:34:00]
Mitchell Kearns
And they pitch and they kind of show the rookies is what we call them, the newbies who are gonna pitch in the second half of the day, how to pitch, why they pitch, who they pitch to.
[01:33:35:08 - 01:34:02:20]
Mitchell Kearns
And then so then we break for lunch, there's a chance for networking. And then the second half of the day, all the people leave and it's really just about 10 or 20 of us sitting in a room pitching our idea to kind of give the rookies a space where it's a little bit less intimidating. To summarize, the RBI program is basically, it's like an ad hoc incubator program where we're gonna walk through all the same traditional steps that a traditional incubator would.
[01:34:04:18 - 01:34:06:10]
Mitchell Kearns
But it's gonna be on your time.
[01:34:07:12 - 01:34:16:16]
Mitchell Kearns
So, maybe you only have time to meet once every two weeks, that's when we'll meet and you can only meet at a very specific time. So it's really geared for rural entrepreneurs, rural innovators,
[01:34:18:07 - 01:34:30:13]
Mitchell Kearns
folks who have a concept or a back of the napkin sketch. And they're like, I solved this problem for me and it works for me. And I think I could solve this problem for other people. Then we take that and figure out a way to get to market with it.
[01:34:30:13 - 01:34:35:01]
Shawn FitzGerald
Where can the listeners find out more information about that?
[01:34:35:01 - 01:34:38:15]
Mitchell Kearns
Yeah, so reach out to me. I actually, I run that program.
[01:34:40:00 - 01:35:05:20]
Mitchell Kearns
You can find me if you sign up, if you mention RBI and you're signed up through iowasbdc.org and request counseling and just say, I'm interested in the rural business innovators program, it will get back to me. I can tell you my email, my email is gonna be mkerns, K-E-A-R-N-S at iastate.edu.
[01:35:07:02 - 01:35:15:21]
Mitchell Kearns
That's my email. If you email me, I can send you everything you need to sign up for iowasbdc services. And then I can send you, we have a separate sign up for the RBI program,
[01:35:17:01 - 01:35:31:03]
Mitchell Kearns
where I kind of vet you to make sure that you're a good person to be in the RBI and make sure that you actually have these needs. And then if you're in the program, then we do our counseling and then we get you prepared for that pitch day that we do in October.
[01:35:31:03 - 01:35:46:05]
Shawn FitzGerald
Great. Two quick questions for you. No long answers, just kind of the first thing that comes to mind. So what are some simple but powerful things someone with a new product or business idea should do this week to make a difference?
[01:35:46:05 - 01:35:56:00]
Mitchell Kearns
If you don't have a continuation or a succession plan, it's something that you can do in a week. It's something that will take a lot of grief off of your folks' minds.
[01:35:57:03 - 01:36:19:13]
Mitchell Kearns
So if you're listening to this, go back and listen to our succession planning, what we talked about a little bit about succession planning and why it's so important. You can do that in a week and I would say about 80% of your listeners, 90% of your listeners don't do that or haven't done that. And I think that's very impactful and it will solve a lot of headaches for your loved ones if something tragic happens. So do that.
[01:36:19:13 - 01:36:33:13]
Shawn FitzGerald
Awesome. The last thing is, from your perspective, what is the one thing that separates the entrepreneur, the business owner who has that idea, who's gonna make it, versus the one who has an idea, installs?
[01:36:35:12 - 01:37:10:09]
Mitchell Kearns
I'm gonna go back to customer discovery. The folks who make it are the ones who, they do their business model canvas, they do a lot of customer discovery. They put their customer discovery down on paper and they might pivot, right? They're willing to take feedback. They're willing to change the way that they thought about their business and they have grit, right? Some of these things take a long time to get the market, a long time to find an investor, a long time to find a good employee or the right fit. People who just don't quit, that's so important.
[01:37:11:17 - 01:37:53:04]
Mitchell Kearns
On the other end of that, the people that fail are the ones that don't do your customer discovery. You think they have the greatest thing in the world and their ego is kind of what traps them. So the best entrepreneurs that I see are the ones that are open to criticism. They feed off of criticism. They try to make the best product and they're doing customer discovery to make sure that it's actually solving the problem, that there's a market base for it and the ones that don't quit through that process. Because you're gonna get told a no 100 times through two investors and it's just getting up and still doing it, right? Gotta be persistent, don't you? The ones that don't are the ones that are totally infatuated with their innovation.
[01:37:54:12 - 01:38:05:22]
Mitchell Kearns
No one can tell them different. They're the smartest person in the room and they wanna let you know about it and they don't want feedback. Those people usually don't make it.
[01:38:05:22 - 01:38:26:04]
Shawn FitzGerald
Boy, when we started off and I was talking about that gold mine and I said, "We're gonna dig in." Boy, we dug deep. We got a lot of good nuggets. Thanks for being here. Again, this is an incredible resource. I hope that our listeners get online and contact because it is tremendous service and it makes a big difference. So thanks again. Appreciate you being on Intentional Change. Yeah, thank you, Shawn.
[01:38:27:12 - 01:39:18:23]
Shawn FitzGerald
I hope today's conversation with Mitchell is a reminder that resources exist to give you the guidance and support you need at any stage of your business journey. But no matter how many tools or experts are available, remember this, good ideas aren't enough to guarantee success. It's thoughtful customer discovery and the grit to continue to dig down, to validate and vet your ideas and your audiences that set the real entrepreneurs apart. Now that might sound obvious, but as Mitchell shared, too many innovators skip the critical work of discovery. They fall in love with their solutions before confirming there's actually a problem to solve. And that misstep can cost them everything. So do yourself a favor. Reach out to your local SBDC office. Take advantage of the support that's already waiting for you. And remember, real momentum doesn't start with a breakthrough. It starts when you stop guessing and start digging with intention.
[01:39:22:16 - 01:39:57:11]
Shawn FitzGerald
Thanks for listening to Intentional Change. If today's conversation sparks something within you, I hope you will apply it with purpose in your own business. I'd love to hear how our Intentional Change podcast is helping you make a difference in your business. To drop me a note, visit readytollevelup.com and click on the let's talk button in the top right. To contact Joshua McNary, visit McNarymarketing.com. And one last thing, don't forget to subscribe and share this show with others in your network. Help us bring intentional change to every growing business. Until next time, I'm Shawn FitzGerald. Take care.