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Solo engineer seeks fast track
February 2006. Ellen P. Gabler. Star Tribune.

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Paul Smallwood doesn’t think small.
Almost five years after starting his own company, the Maple Grove man has traveled the world — installing an oven on a Navy submarine in Italy, accompanying Gov. Tim Pawlenty on his trade mission to China, and supplying laboratory equipment in Kenya for the Centers for Disease Control and Prevention (CDC). But Smallwood is running himself ragged. He’s the sole, full-time employee of FlowSense, his company that manages engineering and technical projects for other companies or government agencies. The projects fall into three main areas: environmental, security and industrial projects.

One week Smallwood could be installing a carbon monoxide detector, the next week finding ways to secure building entryways with iris or fingerprint scanners. Smallwood said he’s had to “be diverse,” basically taking projects from wherever he can in order to stay afloat: the Minnesota Department of Natural Resources, the U.S. Environmental Protection Agency, the U.S. Air Force.

“You’re not yet at a point where you can demonstrate any of those things,” he said. Al Rudeen, senior vice president of commercial banking at St. Paul-based Bremer Bank, suggested Smallwood try to work as a subcontractor for a while until he builds up the staff and cash to act as contractor. That’s exactly what the Minnesota Minority Supplier Development Council (MMSDC) suggests to its small-business members — collaborative business arrangements — said Molly Alvarez, MMSDC’s business operations and marketing manager. Most importantly, small companies need to be prepared to work with another company before a request-for-proposal comes in, Alvarez said. That means hammering out legal work early so the larger company doesn’t have to wait, and in turn, choose another supplier. Smallwood could structure the deal so he owns at least 51 percent of the joint venture, making his company an especially attractive partner to non-minority businesses, she added. Bob Freytag, president of Minnetonka-based branding and marketing communications firm Introworks, suggested Smallwood reflect on what contracts he’s recently lost and why. There are likely some similarities in the jobs he’s lost out on — possibly because his company is too small. Smallwood needs to “find a pond” he can be a dominate player in, Freytag said. Terrell agreed. “If every corporation is telling you you are too small, you are knocking on the door of the wrong customer,” he said. Patti Neuman reassured Smallwood that he is not alone. As an economic development specialist for the Minnesota Department of Employment and Economic Development, Neuman meets with at least 100 startups each year that have a similar problem. She suggested Smallwood target mid-sized and/or private companies.

To survive in the short run, and not land himself in the hospital, the panelists also suggested that Smallwood focus on projects that bring in the most profitable margins. Coordinating a project just for the sake of work doesn’t make sense, Rudeen from Bremer said, and it’s a common mistake for young entrepreneurs to focus on volume, not margins. “I see businesses trading dollars all the time,” he said. “You’re setting yourself up for failure.” Terrell also suggested Smallwood approach his client with their need, not his own. At Wells Fargo, Terrell said he frequently hears about many “new,” “exciting” and “innovative” companies — but he usually doesn’t hear how they can help him. “Everyone is telling me about their technology and what they have. What about me?” he asked.

Smallwood also wanted to know how smallbusiness owners can get past supplier-diversity managers to someone in charge of a particular project. Alvarez said the MMSDC frequently hears the same thing from supplier diversity managers. “They are usually the one person in a company who can get a small business in,” she said. Helping hand Kelly Salwei asked the obvious question of Smallwood’s one-man-show: “What’s holding you back from hiring additional people?” asked the principal of Olsen Thielen & Co. Ltd., an accounting and consulting firm in Eden Prairie. Money, of course, Smallwood said. But Salwei pointed out an important detail: “You’ve got to have the people to make the money.” Terrell said Smallwood should think of “hiring” employees differently than he now does. Each new project can essentially fund a project manager to coordinate the entire operation. Then Smallwood could land multiple projects at a time and not spread himself thin. The panelists also thought Smallwood would benefit from drawing up a tightly written business plan.

Alvarez suggested tapping into the brains of some MBA students. The University of Minnesota’s Carlson School of Management is accepting applications for its management assistance program where grad students write a strategic plan for women or minority-owned businesses for free.

 

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