Back in 2015, University of Minnesota graduates David O’Neill (B.S.B, ’15) and Jason Dayton (B.S.,’15) were in the process of launching Lionheart Cider Co., a craft cidery they had conceptualized during a Carlson School of Management Entrepreneurship in Action course, created and taught by John Stavig (B.S.B. ’86), director of the University’s Gary S. Holmes Center for Entrepreneurship.

While assembling their business plan and raising capital for the company (which has been renamed Minneapolis Cider Co.), one of the required documents was a list of potential risks the business could face. Their lawyer helped them put it together, and one of the items on it was a pandemic.

Dayton recalls. “I saw that and chuckled. I thought, ‘There are a lot bigger things that will impact us.’”

For writers of suspense novels and screenplays, this is what’s known as “foreshadowing.”

As in a suspense thriller, co-owners Dayton, O’Neill, and cidermaker Rob Fisk never expected such a seemingly unfathomable event would become their reality, posing the biggest challenge to their business to date.

The term “pivot” has become something of a business cliché. But it’s useful to sum up the way each of the entrepreneurs on the following pages—all U of M alumni—were forced to make quick course-corrections to guide their businesses through one of the most challenging events in a century.

Rob Fisk, Jason Dayton, David O’Neill: Minneapolis Cider Co.

Jason Dayton says he learned to make cider with the help of his father-in-law, former University agricultural Professor Will Marsh, who learned the craft as a teenager in his native England and took up the brewing hobby after he retired. Marsh had set up a commercial kitchen to brew cider in his basement, and “that got us started,” Dayton says.

The company opened its taproom north of the river at 701 Southeast Ninth Street in May 2019. While the business now carries 10 varieties of cider, as well as food, it wasn’t fully established when the shutdown began in March 2020. In fact, that February had been their best month to date: “We were just ramping up into what we thought was going to be more normal volume,” Dayton recalls. The partners were also hosting events and had launched a pickle ball league for customers.

Unfortunately, when Minnesota Governor Tim Walz’s order to shut down came through, the founders had just taken delivery of a “massive” new fermentation tank. They had also taken out a sizable bank loan and were not yet able to begin paying it off.

At that point the company did not have a full distribution operation to sell to outside vendors and was only selling its cider at the taproom and to a few bars and restaurants. As even those establishments closed due to the stay-at-home order, the three owners sped up their distribution launch, beginning wholesale sales by April. Fortunately, their bank helped them tap into other resources.

“We got going as quickly we could,” filling cans by hand, says Dayton. By doing so, they were able to keep most of their employees working almost full time in the expanding canning operation. They were also able to obtain an $81,900 Paycheck Protection Program loan from the federal government.

“Thankfully, as things opened up [a year ago] last summer, we were able to adapt the business and have an OK summer,” Dayton says. It helped that they have one of the largest taprooms in the Twin Cities, conducive to social distancing.

“Business is a constant evolution,” Dayton says. “We are successful because we have been willing to throw everything out the window and change the playbook if we need to. We’ve done that several times for various reasons.”

One of the concepts Dayton took from his time at the Carlson School was the importance of “minimum viable product,” which means the ability to learn as you offer a new product. It’s about the importance of “getting something up and into the market and adapting and building as you go.” Improvements like an online ordering system were also important in adapting to the pandemic, he notes.

“In our situation, we’re not taking our business for granted. Business changes constantly, and you need to think about worst-case scenarios and, when planning, really game out what to do when something goes sideways,” he says.

Kiara Ellis: The Nail Bar

Kiara Ellis’s path to becoming a business owner started when she served as a volunteer with the Minnesota Black Chamber of Commerce, where she was inspired by other Black entrepreneurs. She’s also the community engagement and education manager at the Masonic Cancer Center at the University of Minnesota.

Ellis (B.S. ‘12), had long loved the craft and artistry involved in womens’ nail care, and decided she wanted to start a nail salon that would “support the diversity of the work force that I wasn’t seeing in Minnesota.”

After opening the 100 percent-women-owned-and-operated Nail Bar in Uptown Minneapolis in 2019, Ellis spent the ensuing months building a loyal clientele and a staff of six beauticians. When the pandemic hit, she initially had to shut down her fledgling enterprise. About three months later, she was able to reopen under the new procedures and guidelines necessitated by the virus.

“We had to create an entire Covid protocol, and we invested in additional equipment, stations, and furniture, with a big investment in PPE [personal protective equipment]”, which included masks and gloves, among other items, she says. “No one could have been prepared for this.”

Initially, Ellis had to finance those expenses out of her own pocket, but she eventually secured a $10,000 Paycheck Protection Program loan from the Small Business Administration. That enabled her to cover payroll and use part of the loan for rent and overhead items. To restart the business, Ellis also had to hire and train a new staff. “Two of my leads had moved back to their home states, and one made a career change,” Ellis says. Other employees had to stay home due to childcare responsibilities.

“What really helped is that I am used to being resourceful,” Ellis says about the pandemic and guiding her business through it. “When I do community work, I know how to advocate for clients and help them find resources ‘out there’ that will help them. I’ve used those same skills as an entrepreneur.”

Being closed for several months caused Ellis to lose an estimated 30 to 40 percent of her annual revenue. But in recent months, the business has rebounded, and the biggest challenge now is recruiting enough replacement employees to keep up with a long waiting list of customers. “We have more customers than staff time, but we have a good buzz going in the community.”

The tumult of 2020 brought home the importance of being resilient, says Ellis.

“There were absolutely days I thought ‘I’m done,’ but then I was able to power through it.” She took periodic rests when needed, and maintained an optimistic state of mind in the face of uncertainty, all while dealing with the stress of the death of George Floyd and the turmoil that followed, she says. And as a mother of three young kids, including one born last spring, “I have a lot going on, and I’m used to juggling a lot of things,” she says.

Kristen Denzer: Tierra Encantada

The determination that has made Kristen Denzer a business success has served her well during the pandemic. Seven years earlier, Denzer founded Minneapolis-based Tierra Encantada to provide innovative, Spanish-immersion early education daycares, with on-site commercial kitchens to provide fresh, organic meals. The company has six corporate locations in the Twin Cities and a franchisee in Virginia. (Other potential franchisees are looking for sites in Alabama, North Carolina, Texas, and elsewhere in Minnesota.)

Tierra Encantada enjoyed steady growth from the start, posting 2020 profits of more than $1 million on revenue of $10 million-plus. Denzer also recently opened a $2.5 million headquarters on the Minneapolis Greenway, was named an Ernst and Young Heartland Entrepreneur of the Year in 2020, and made the Inc. 5,000 list of America’s fastest-growing companies.

Denzer (B.A. ‘06, M.A. ‘08) earned degrees in advocacy and leadership from the U of M. She’s also completed coursework and passed the exam for a Ph.D. from the University in evaluation studies. She recalls meeting the pandemic “with the mindset that I was going to do whatever I needed to make [my business] succeed. If that meant working 90 hours a week, that’s what I was going to do.”

Even in a high-touch sector not exactly tailormade for social distancing, her daycare business not only stayed open through the pandemic; it grew. “We had some families that had to leave because of lost jobs or other reasons, but we also opened a new location,” she says. The new Minneapolis Hiawatha Avenue location, which opened in June 2020, is its largest and first new construction.

Along with instituting standard public health measures during the pandemic, Tierra Encantada opened a new early elementary distancelearning support program when Gov. Walz announced that schools would no longer be required to stay open. “There were so many families interested, we ended up opening three classrooms,” Denzer says. “Some schools required parents to be there (at the computer) for the entire school day. That’s where we stepped in,” she says of finding opportunity in chaos.

To lead a business through crisis, Denzer emphasizes the importance of finding a good balance between competing interests.

“When the pandemic started, a lot of different stakeholders were affected. Staff were concerned about their jobs, and parents were concerned about paying tuition after losing their jobs. Parents wanted us to hold their spots, but we [also] have hundreds of people on our waiting list. In situations where parents lost their jobs, we made exceptions. Balancing the decisions you make and those interests will have a lasting impact on the goodwill you have in the community.”

John Sturgess: Adogo

Lifelong dog lover John Sturgess (M.B.A. ’08), a Carlson School graduate, applied what he learned working for 23 years in the hotel business to the canine world, founding Adogo Pet Hotels in 2011. The business offers boarding, daycare, grooming, and other services for dogs.

As of early March 2020, everything was smooth sailing: Adogo was highly profitable, with margins in the high 20-percents at all four locations and increasing at least 5 percent year over year, he says. Sturgess moved to the Twin Cities in 2000 when he was recruited to Carlson Hotels as an executive. In fact, Adogo was coming off its best year in 2019, with plans to open a fifth location and some potential new acquisitions, including one outside Minnesota.

Then came Covid-19.

“When the pandemic hit hard in mid-March [2020], everybody was saying ‘Holy cow, what’s happening?’” Sturgess says. “By April, everything had stopped.”

Adogo’s revenue dropped like a stone, falling 85 percent from the same period in 2019. “We were trying to understand the scope of how it would affect us, initially and over the long term,” Sturgess says. “Based on previous pandemic scares, the government was talking as if this would be a short-term [event]; the [original] PPP program was set up to cover people for just 2.5 months.”

One of Sturgess’s first moves was to contact the firm’s creditors and make new arrangements, assuring them “We are going to pay our bills; can you work with us?” Creditors like Xcel Energy, Wells Fargo, Comcast, and Centurylink were helpful. “They looked at our credit history, and over a 10-year period, we had not been late on anything.”

That’s one pandemic—or other crisis—lesson for business owners, he notes: “Make sure you are consistent, and people will work with you” if something unforeseen happens. As it became apparent the pandemic was not going to be a short-term event, the company had to weigh the pros and cons of furloughing employees. “We got to the point where we were asking, ‘Should we be open?’” Sturgess says. The business eventually wound up furloughing about half of its staff for a time.

Fortunately, the state included dog daycare and boarding in its classification of essential businesses. Customers still needed a place to take their dogs, so the business kept its boarding and daycare open. Grooming was temporarily discontinued as a non-essential service, although the company did train some of its front office staff to give dogs baths when needed. In addition, Adogo obtained a PPP loan to help cover payroll for several months.

Today, 95 percent of the company’s once-furloughed employees have returned to work.

Always be prepared for the worst, Sturgess says. “And try to keep two if not three months’ worth of payroll costs in reserve, and a couple of months [in] reserve for creditors—but that can be difficult for low-margin businesses. From an academic perspective, it’s easy to say, but not so easy to do.”

He also stresses knowing what resources are available if needed. “I’m not a tax person, but I needed to understand any [tax] ramifications” of pandemic decisions, he says. He consulted his CPA firm, banker, and lawyer early on to stay current with the rapidly evolving PPP program. “And don’t forget your friends in the business world,” he says. “What is the circle you work in that can help you in good and bad times?”

Felipa Cespedes: FotoGenic MN Photobooth

Detroit native and U of M alumna Felipa Cespedes (B.A. ‘13) started her business FotoGenic in 2014, a year after graduating with a degree in communication studies and political science. The business provides photo booths for weddings, graduations, and other large gatherings.

When the pandemic began, Cespedes had 10 contractors who helped her cover events and she’d just invested $5,000 in another new booth. At the time, she was anticipating her biggest year to date, with 12 dates on her calendar that were double-booked with two or three booths operating simultaneously. Unfortunately, her primary client base then was colleges and universities, all of which cancelled upcoming graduations and other events shortly after the pandemic hit. (Cespedes also works days for the Office of Higher Education.)

Faced with this dramatic business challenge, Cespedes didn’t waste time. With in-person events cancelled for the foreseeable future, she switched to a strategy better suited to the conditions, developing a cloud-based format that allowed her clients to use their own cameras or phone links to create online galleries of their events. Online, she created decorative “overlays” to frame clients’ photos, and she encouraged clients to post new photos hourly during events to attract online viewers.

The online option was well received, Cespedes says, even though it didn’t provide as many bookings as she hoped. But it helped her stay in touch with her event clients during the quarantine. “It felt good to get any bookings when the world had stopped,” she says.

In retrospect, Cespedes also reaped benefits from using downtime to work on back-office functions. She updated her website, reviewed contracts and bookkeeping, processed reports, and obtained online reviews from her clients. She also ramped up her marketing efforts, using Google Ads, promoting “word of mouth” to increase referrals, and doing whatever media interviews she could. The event business finally started rebounding in April this year, mainly in the form of weddings, birthdays, and other family celebrations, Cespedes says. “We have seen an increase in bookings, for sure."

Chris Bjorling: Copper Hen and Copper Cow

A 2009 accounting graduate of the U of M, Bjorling (B.S.B. ‘09) and his wife, Danielle, opened Copper Hen Cakery & Kitchen in Minneapolis in 2014. Four years later, they opened the Copper Cow restaurant in Minnetonka.

Before the pandemic, the restaurants had produced $2 million in revenue for 2019. In addition, their Gray Fox Coffee Bar in downtown Minneapolis generated another half million. The company had about 100 employees.

Then in March 2020, the need to close suddenly created a “yo-yo” effect, Bjorling says. He would reopen Copper Cow the following month for takeout only; the other two businesses remained closed because they didn’t lend themselves to distanced service. But the Bjorlings had previously added a drive-through pickup window at the Cow, which proved to be “huge” to ramp up sales, Bjorling says.

Back when he was preparing to open his first restaurant, Bjorling received business plan assistance from the Carlson School’s entrepreneurship department. Looking back, Bjorling appreciates his professors’ emphasis on the uncertainty that business owners typically face. “You work really hard to build a business model that works for what you created, and then build a solid-performing business. But this experience just shows that anything can happen, and the need to stay flexible and nimble is always there,” he says. “My accounting degree also helped quite a bit. Staying close to the numbers is important in any business, especially when you’re going through significant change. Inventory is perishable and there are a lot of things that can go wrong. It’s easy to see dollars walk away really fast.”

Bjorling says his Gray Fox Coffee concept is showing more promise now as landlords try to draw tenants back into office settings and buildings by offering more amenities. The Bjorlings have opened several additional lobby coffee shops since March.

“It’s been a horrible year and tough to get through, but we’re starting to see unique opportunities on the other side,” he says. “It shows that when things seem challenging or difficult, there are still opportunities if you stick with it and know where to look.”

How to Manage Through a Crisis

“Whether you’re an entrepreneur or in sales, it’s important to be able to separate the conditions you’re facing from your own ability and develop the confidence and persistence to continue,” says John Stavig, managing director of the Gary S. Holmes Center for Entrepreneurship at the Carlson School of Management.

“We always teach that failure creates opportunity; the more movement, growth, technological change and innovation there is, the more opportunity there is for new entrants to come in. People who are able to launch and build companies are used to dealing with that type of environment and thriving.”

A lot of entrepreneurs aren’t necessarily risk takers, Stavig says, but “they can see opportunity from change, and can identify trends and problems and see those as opportunities and enjoy solving those problems.” For instance, faced with quarantine conditions, restaurants shifted to takeout, and found ways to be more efficient and get closer to their customers and the community.

In a crisis, “the mindset of being opportunistic doesn’t mean taking advantage; often, it involves helping people,” says Stavig. “In lot of ways entrepreneurship is learning how to survive and stay open. Entrepreneurs deal with challenges every day, but over the past year, the challenges been much bigger and greater.

“As an entrepreneur, you realize that there are a lot of people depending on you and the continuation of your business. That’s what a lot of entrepreneurs take the greatest pride in—what they do for their employees and their families and customers and the broader community,” he adds. “Nobody would have blamed [these business owners] for quitting. The rational thing might [have been] to throw up their hands and say, ‘This isn’t fair,’ but they were committed to finding a way through this.”