Kickstarting a business: Crowdfunding start-ups another option for entrepreneurs

A wall of wine corks thanks Kickstarter campaign donors who helped Melanie Owen and Lauren Kniebes establish their business. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — Lauren Kniebes didn’t know what Kickstarter was until her business partner proposed they use it.

In the years Kniebes and Melanie Owen spent working at a Coloma winery, the two developed an idea for a business of their own. However, their plans were put on the fast track last year when a spot at 315 State St. became available in downtown St. Joseph.

The two went to a bank and secured a loan to begin what is now called Lazy Ballerina Winery.

With summer approaching, the cousins decided they wanted to open in time for the wine season. In order to do so, they needed more funding to renovate the tasting room and cover construction costs.

Obtaining funds can be one of the biggest hurdles entrepreneurs have when starting a new business. If a bank loan won’t cover everything a person needs and there are no connections to potential investors, it can be tough to know where to begin.

Online crowdfunding – which includes raising small amounts of money from multiple backers – has become a go-to solution to this dilemma because it allows startups to reach out to a large number of potential investors all at once.

Owen first heard of crowdfunding through a business course she took while attending Siena Heights University.

“It’s a marketing tool that helps people become more aware of what you’re doing,” Owen said. “It’s a way to generate revenue before you open. That was important for us because it was a mad rush in the beginning.”

Kniebes and Owen signed their lease at the downtown location in early March and opened by late June. In that time frame, they completed their licensing, construction and created labels while seeking approval from artists.

Kniebes said they were confident in what they were doing. The problem was getting started.

“Our friends and family were behind us, but we don’t come from a lot of money,” Kniebes said. “I had never heard of Kickstarter, but I knew a little of GoFundMe. I learned Kickstarter is more focused on people with ideas or inventions.”

Crowdfunding ideas

Where reaching out to a bank for financing is considered the normal option, many small businesses believe banks aren’t doing enough to help.

Crowdfunding has revolutionized the way start-ups fund projects in a short amount of time. There has been a surge of crowd-investment platforms in recent years, especially since President Barack Obama signed the JOBS Act in 2012.

However, it’s not a magic bullet.

As with traditional fundraising models, there will be challenges, but if an entrepreneur does their homework, the positives will far outweigh any roadblocks they encounter.

Success isn’t guaranteed as some of the most popular crowdfunding platforms fail to appeal to investors. For every project that meets its goal, there are dozens that don’t pick up enough steam to get funded.

As co-founder of Crowdfund Capital Advisors, Jason Best has years of experience in crowdfunding. Best co-authored the crowdfund investing framework used in the JOBS Act to legalize equity and debt-based crowdfunding in the U.S.

He sees crowdfunding as a big opportunity for small and large businesses. However, Best said business owners have to understand it’s not an easier way to raise funds – but a new way.

“The first time you raise funding, the majority of people investing in you have at least met you,” Best said in a phone interview with The Herald-Palladium. “You begin to reach unknown investors when the early investors begin sharing what your business is about.”

Best said there are three things entrepreneurs must do to make crowdfunding work in their favor.

First, businesses can’t crowd fund without a crowd. Entrepreneurs need to access their online and offline social networks. That includes reaching out to friends, followers and any email subscribers. Best said it doesn’t hurt to be a “good community member.”

Second, it’s important how much capital is needed. Entrepreneurs need to set a goal and make financial plans and explain to investors what the money is needed for.

Lastly, communication is the key. Best said it’s important to consistently talk to investors and give them updates on any successes or obstacles.

“There’s a serious gap in funding for small and medium-size funding for businesses. Crowdfunding has the opportunity to close that gap,” Best said.

Small and large efforts

According to the Sage Small Business Index, 67 percent of small businesses are looking at alternative sources of funding.

While some look to friends and family for investment, platforms like Kickstarter, Indiegogo, Kiva, Peerbackers and Fundable are making it possible for small businesses to leverage the power of the crowd to grow.

A report published last year by Goldman Sachs revealed the crowdfunding economy has more than tripled in the last three years. More entrepreneurs are using crowdfunding for proof of concept, early idea validation and even customer pre-orders.

Whirlpool Corp. launched a beer fermentation product aimed at home brewers through a crowdfunding campaign earlier this year.

The Benton Harbor-based appliance maker exclusively revealed the Vessi Beer Fermentor and Dispenser system on Indiegogo, a global crowdfunding platform, to engage with early adopters and to test the market for a product that crafts beer.

The Vessi system was pitched as a new way to ferment, carbonate and dispense home-brewed beer in seven days – compared to other beer-fermenting methods that can take up to four weeks. Whirlpool received an overwhelming response in the process.

Whirlpool surpassed its $100,000 goal within a week of being on Indiegogo. It has since amassed more than $220,000.

Lazy Ballerina’s goal was not as high, but also received a lot of response.

Because Kniebes and Owen were using Kickstarter as their platform, they had 30 days to raise the funding for their goal. If they did not reach the goal, the two entrepreneurs would have gotten none of the investors’ funding.

Owen said part of the problem at first was explaining what Kickstarter was to people.

“It didn’t really sell itself. We had to self market this to get people to do it,” Owen said. “They weren’t aware of it. A lot of people were nervous and skeptical because they thought their money would go somewhere else if we didn’t reach our goal.”

To reach their goal, the co-owners of Lazy Ballerina Winery offered prizes and gifts to donors.

“We offered incentives in different tiers,” Kniebes said. “We couldn’t give away wine, so we went about it different ways. It worked and we made our goal.”

The higher the investment, the better the incentive. The incentives would range from “thank you” cards to a four-course dinner made by a professional chef.

Kniebes admitted she was a bit unsure of the platform, but said she was glad Owen recommended a crowdfunding platform.

“After I did my own research I felt more comfortable. I thought it was a fabulous idea,” Kniebes said. “It’s a great way to initially promote yourself and your product. One of my friend’s posted something about a fidget cube and I became interested. It can catch someone’s interest that easily.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 11, 2016)

The king has returned: Elvis tribute artist relishes emulating rock and roll legend

Brian Lee Butler has performed as Elvis several times this summer in downtown St. Joseph. As a tribute artist, Butler says the best part about performing is meeting new people. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — Sitting in the heart of downtown St. Joseph, it’s hard not to notice him.

Adorned in a black jumpsuit with a contrasting green silk shirt poking out near the chest, Brian Lee Butler hits the nail on the head with every “Thank you very much.” Testing out different twists and shimmies, Butler breaks down what made the king of rock and roll such a polarizing and entertaining fixture in music.

Butler, who lives in Hebron, Ind., began singing Elvis Presley songs when he was in the first grade.

He remembers his mom telling him to stop because his teacher was getting upset that he wasn’t paying attention in class. While he eventually stopped at the behest of his teacher, Butler picked it up again – this time professionally – in 2011. Since then, he’s performed to thousands from Michigan to Florida.

“People kept telling me I looked like him and I sing like him,” Butler said. “I didn’t take it seriously because there’s so many people out there who are doing Elvis. Then my wife told me I should do this and began to consider it more.”

Butler’s performances have become well-known in the area for his recurring appearances in downtown St. Joseph the last three years. While he’s cut back on his performances this summer, Butler could be seen and heard nearly every Friday last year.

He often incorporates other songs into his act by singing with an Elvis vibrato. These songs differ from “The Star Spangled Banner” to “Sweet Caroline” by Neil Diamond.

With a twist and a few shakes of the arms and legs, Butler says he summons that Elvis vibrato from the bottom of his stomach.

Other than the fan favorites of “Burning Love” and “Love Me Tender,” Butler tries to mix up his track list for each performance.

“I have probably over 150 Elvis songs up here,” he says tapping the side of his head. “But I know probably close to 300 songs. I always try to sing songs by other artists and think what would Elvis do if he sang this song? How would he sound?”

But let’s get something straight. Butler is not an impersonator.

“That label shouldn’t apply to me because of the amount of hours I put into this. I’m a tribute artist.”

Becoming the king

Before this, Butler has played in a few different bands and dabbled as a magician and hypnotist.

When Butler began practicing Elvis material, he would lose his voice.

“Sometimes I couldn’t talk for a week. I would practice singing for hours everyday,” Butler said. “I would practice on the hardest songs. I think your voice is like a muscle. The more you use it, the stronger and louder it gets.”

Butler admits to being nervous the first time he performed professionally. It was a free show for a VFW on New Year’s Eve.

“I was surprised how much I was shaking, but it was alright because Elvis normally shakes anyway,” Butler jokes.

It’s not an easy voice though. It requires some tremble. Some vibrato. It took him at least two years before he learned how to use the tone in his voice and inflections from the diaphragm.

Butler said it’s important to get the look right. He has five different jumpsuits and various silk shirts. Some of the suits can be expensive.

His wife bought him his first suit. They run more than $1,000 if legitimate. If he goes with a shirt and bell-bottom pants, like he did last Saturday in St. Joseph, the outfit costs $200.

It doesn’t stop there. Butler wears a big belt that can go with several of his outfits, along with five or six large rings. One of the gold rings is emblazoned in the initials “EP.”

“He was so up on fashion. If you don’t have the look it ain’t going to work,” Butler insists. “I’ve seen people go out there in a $25 outfit. It doesn’t look like him. Elvis, he went all out. He made sure his clothes were nice. If you’re going to do Elvis, you need some nice material.”

But being authentic comes at a cost.

“I move around a lot while I sing – just like Elvis would. In a half an hour, this suit gets drenched,” Butler said. “So, you have to have them dry cleaned too.”

One-man act

Butler’s wife, Brenda, serves as his manager in booking gigs. She, too, is a big Elvis fan, with memorabilia from purses to desk calendars.

Butler uses a ton of equipment because most of the time he performs without a band. He says Elvis tribute artists can get away with this because of how much he moves and “entertains” during his songs.

He began performing in St. Joseph along the bluff and on the beach.

“I asked the city of St. Joe first and got permission,” Butler said. That continued until State Street Stuff owner Cindy Barinholtz noticed him.

Barinholtz originally found him playing on the bluff three summers ago and witnessed crowds of spectators who laid down on beach towels around him listening.

Barinholtz convinced him to come play in front of her shop because “people going to the beach don’t have money to tip you.”

“I have customers stop in to see when he’s playing next. We’ve had quite the audience the last two times he played,” Barinholtz said. “People really enjoy him. We sell tons of Elvis stuff, so it works out for everyone.”

Butler says he likes to think he gets the same feeling that Elvis did whenever he performs. Pure joy. In person, Butler’s just as energetic and talkative as he is when he performs to strangers.

The tribute artist says he does this to meet new people and to hopefully change lives. He also hopes that some day, at least one of the kids in the audience becomes a fan of Elvis.

“I feel I’m doing something good. Just seeing people smile when you play a song they like, is amazing,” he said. “Things like that to me are more important than making a lot of money. I found my path in life.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 10, 2016)

Going where the wind blows: Wind turbine project several years away

The Hoopeston Wind Farm in Illinois, pictured above, was built and is managed by Apex. Apex officials spoke with The Herald-Palladium’s Editorial Board on Thursday about proposed wind turbines in Southwest Michigan. (Contributed photo)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — With 25 coal power plants scheduled to shut down in Michigan by 2020, an energy company is looking to invest in Southwest Michigan.

It’s been more than two months since it has become public that Apex Clean Energy was interested in leasing land from farmers in southern Berrien County in the hopes of building the area’s first wind turbine farm.

On Thursday, representatives from the Virginia-based company sat down with The Herald-Palladium’s Editorial Board to discuss the specifics of the energy project they are calling Galien Oaks Wind.

Apex development manager David Guillory said the company is looking at Baroda, Buchanan, Galien, Three Oaks and Weesaw townships as possible locations for the turbines. Efforts to get in touch with residents began in January and evolved into door-to-door visits.

“The biggest obstacle is making sure people want to do it,” Guillory said. “That’s why we start talking to land owners. There’s no way to put these up if there’s no land to lease it from.”

Apex public affairs manager Dan Blondeau said they are focusing on states throughout the Midwest, including Indiana, Illinois and Ohio. Apex has more than 60 projects total with five in operation.

Blondeau said the energy company is interested in these five municipalities because of their recorded high wind speeds, their feasibility of getting the electricity to the grid and the easy access to I-94.

Blondeau said they want to build 40 to 50 wind turbines, each of which would be 500 or 600 feet tall and cost $3 million.

“The thing to keep in mind is this project is in its infancy,” Blondeau said. “We haven’t chosen a specific turbine yet and no land has been picked out. We have several years of tests, studies and wind analysis to do before we get going.”

The company would take a few years to develop a site plan, test the winds, install meteorological towers and study the wind turbines’ effect on birds and bats.

Blondeau said Apex would like to lease 15,000 to 20,000 acres among the five municipalities.

David Guillory, left, development manager with Apex Clean Energy, and Dan Blondeau, public affairs manager, speak with The Herald-Palladium’s Editorial Board on Thursday about a proposed wind turbine farm in Southwest Michigan. (Don Campbell | HP Staff)

Not all of the leased land would be used. Guillory said they want to lease as much land as possible to give Apex more options to place the turbines and to use some of the land for underground collection lines.

The collection lines send energy to substations. The lines would run 3.5 feet underground, below plow depth.

Guillory said if there is a 160-acre parcel being leased, a turbine would take up about 1.25 acres – which includes the concrete base of the turbine and the access road to get to the turbine.

“Most of the properties that we do end up leasing are not going to have turbines on them,” Guillory said. “Farmers can continue to farm the land like they have been. They’ll still get profits from their farming and an income from the turbine’s lease.”

While no landowners have yet signed a lease, Guillory said he believes they are close to a few joining the project.

Apex faces a hurdle with Weesaw Township, which has an ordinance preventing any commercial wind generating facilities. Guillory said he and a few others visited the township’s board to answer questions in July.

“We spoke to their board awhile back and they did say if the townsfolk are in favor, they would not rule out addressing the ordinance,” Guillory said. “As it stands now, we can’t be in Weesaw. But if we do get a lot of interest from landowners, we would present the leases to the Township Board.”

For each lease, Guillory said Apex pays everyone the same rate on a per-acre basis. Each lease would last 35 years, while the average lifespan of a wind turbine is 25 years.

Once the lease ends, Apex can either work out a new lease with the property owner and retrofit the turbines or decommission them. Guillory said Apex will likely break even on its investment on year 10.

The biggest negative that comes with the turbines is how big they are, Guillory said.

“The one argument we don’t have is if someone doesn’t like how they look,” he said. “You can’t change someone’s mind.”

To address this concern, Guillory said Apex added a new wrinkle to its leases.

If Apex is able to lease land to property owners in any of the five townships, Guillory said they plan to pay neighboring property owners that still have to look at the turbines.

“Residents within the project area should get something,” Guillory said. “They’ll be in on part of the payday. It’s not a ton, but it’s something. We would literally want to sign everybody in our footprint.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 9, 2016)

Benton Township to get new police vehicles

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BENTON TOWNSHIP — Trustees have agreed to update the vehicle fleet for the Benton Township Police Department.

At Tuesday’s board meeting, trustees voted to buy two new 2017 Ford Explorers. Each vehicle will cost $29,510, with an additional $345 for one of the vehicles to include a bumper hitch for pulling a trailer.

Both are 2017 Ford Police Intercepter Utility vehicles with all-wheel drive.

Controller Kellie Nelson told trustees the money is available as the township budgeted to replace two police vehicles in 2016.

The vehicles will replace two squad cars – one rendered unserviceable due to severe engine problems and another that will be transferred and used as an ordinance vehicle.

“(Public Works Supervisor) Andy (Jordan) is usually pretty good about getting everything out of the cars that we can use,” Supervisor Kevin White said. “It’s pretty much a shell of a car once Andy is done with it.”

M-139 property update

Trustees were given an update Tuesday on the two lots along M-139 that are in the process of being bought by a Kalamazoo car dealership.

Benton Township trustees in July approved a sales agreement with DeNooyer Automotive Group LLC for property at 2860 S. M-139.

“We have been in touch with DeNooyer and there are just a few more pieces of information they have requested,” Nelson said. “We anticipate the sale will close this year as everything is progressing very nicely. We’re working on finalizing their requests and are working on a closing date.”

Nelson said the property’s buyer is working on the title. The agreed upon price is $390,000.

The township bought the nearly 10 acres in 2013 and eventually demolished the former Holiday Inn that was on the property in 2014.

Todd DeNooyer, general manager of DeNooyer Chevrolet in Kalamazoo, has said there are no immediate plans for the two parcels.

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 8, 2016)

Nelson to become next Benton Township superintendent

By Tony Wittkowski | Business Reporter | The Herald-Palladium

BENTON TOWNSHIP — Kelli Nelson is tabbed to replace Elden Piontek as Benton Township’s superintendent.

During Tuesday’s board meeting, Piontek recommended Nelson succeed him after trustees voted to accept his letter of resignation. The board agreed to this unanimously.

Nelson takes over as superintendent Oct. 1. Piontek announced last week he would resign from his post on Sept. 30.

“Thank you for your support and the trust that you’ve placed in me,” Nelson told trustees Tuesday. “I’m excited for the opportunity to serve the board and the township residents. I know the position of superintendent comes with a great level of responsibility.”

Nelson thanked Piontek for his mentorship and said she has “big shoes to fill.”

Trustees further accepted Nelson’s resignation as controller. She had already assumed a lot of Piontek’s responsibilities at the start of her most recent contract. Nelson’s increase of work days from three to four in January were made to assume additional duties.

Piontek gave trustees a breakdown of Nelson’s contract and why he recommended her to be his replacement.

Nelson was given a three-year contract, which ends Sept. 30, 2019. Nelson will be paid about $80,300 a year – a figure that remains the same as she was being paid to be controller.

Nelson now works four days a week, but she was allowed to work up to two days from home. Piontek said the new contract calls for her to be on site all four days per week.

“Ms. Nelson and I have worked very closely together on all the township projects. She certainly is informed and up to speed on what is happening in the township. She’s been here for many years, and tonight I am honored and proud to recommend you approve her contract. While her contract requires her to be here four days a week, the job is 24/7.”

Although Nelson is entitled to insurance benefits from the township, Piontek told trustees she’s turned them down.

Nelson was first hired to serve as the township’s controller in December 2009 and worked through December 2012. She then took one year off and came back in the beginning of 2014.

Piontek said the township should consider filling Nelson’s former position as controller and told trustees he has a candidate in mind.

“I do have someone in mind. They would be looking at three days a week to keep the position part-time,” he said. “The reason I say that is because the township will save on benefits. I hope to bring something back to you before I leave.”

Piontek has one more board meeting left before he resigns. Trustees meet at 5:30 p.m. Sept. 20.

Piontek’s role within the township was simultaneously reduced in January when Nelson’s contract was reworked.

His work hours were lowered from five to one day per week with a reduction in annual salary from $57,000 to $28,000. Piontek was attached to the township through December 2018.

Piontek started working for the township as a controller in 1975. After he retired in 2010, Piontek came back as a superintendent in 2013.

“Elden’s been here since I was 4,” White joked Tuesday. “He’s been very important to the township and we’ll miss him.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 7, 2016)

Gotta cash ’em all: Downtown SJ business owners discuss ‘Pokemon Go’ impact

The I Love St. Joe store in downtown St. Joseph is among area businesses taking advantage of the Pokemon Go craze. (Don Campbell | HP Staff)

By Tony Wittkowski | Business Reporter | The Herald-Palladium

ST. JOSEPH — It’s been nearly two months since Pokemon Go catapulted to popularity, but hundreds of users can still be seen walking throughout town.

Many business owners in downtown St. Joseph have taken notice of this.

Pokemon, which was first known as a trading card game in the 1990s, has found its resurgence through a mobile app that allows players to throw virtual balls to capture “pocket monsters.”

The game uses a phone’s GPS to detect where a player is in the game. As a person moves around, different types of Pokemon appear in the mobile game. Players can walk to local landmarks and various businesses, known as “Pokestops” in the game, to gather supplies and other items.

There are dozens of these Pokestops sprinkled through downtown St. Joseph among businesses and statues. Several business owners say this has added a boost to foot traffic during an already busy tourist season.

As a result, businesses are trying to cash in on the game’s mobile aspect.

Austin Bock, owner of Bound for Freedom, is a fan of the game. For the first month Pokemon Go had become popular, Bock put a sign in the front of his store stating they were a Pokestop.

“We had two of the (Poke)stops situated perfectly outside,” Bock said. “Both were accessible when you were inside the store. We used that to our advantage.”

Bock placed several phone chargers in the back for people to come and charge their phones. He gave out water and allowed others to use his air conditioning when there was 90-degree weather.

He said people would come and hang out for a while based on his shop’s proximity to Pokestops.

Throughout July, Bock would give people 20 percent off purchased items for setting a lure at one of the Pokestops. A lure is an item users can set that attracts more Pokemon to a certain area.

He also gave a 10 percent discount to anybody who was playing while in his store.

“We bought some Pokemon buttons and stickers that kids could buy for purchase,” Bock said. “It was cool because the kids would bring their parents in and save money in the process. We had people come in who have never been before. We encouraged the game and allowed people to benefit from it.”

At 219 State St., I Love St. Joe put out mannequins that wore Pokemon Go shirts.

Keren Morhaim, manager of I Love St. Joe, said the shirts have become a coveted item since the store began offering them in July. She said they got the idea to sell them based on how many people came into their store trying to catch Pokemon.

“They’ve been selling pretty well. People of all ages have been buying them. There have been kids and grandmas,” Morhaim said. “We tend to put the stuff that sells the most out front.”

Whitney Behnke, executive director of St. Joseph Today, has noticed people walking around with their phones in hand.

She said it’s not just been kids, but their parents as well. At St. Joseph Today’s welcome center, Behnke said they get questions from users of the mobile app.

“I was shown how to play it so I could talk to them about it,” she said. “We have seen more people downtown this year. I don’t know if it’s because of the game or what, but you notice them walking around with their phones up.

“It helps that the downtown has a lot of Pokestops. There’s too many to count. It’s on every corner of every block.”

Contact Tony Wittkowski at twittkowski@TheHP.com or (269) 932-0358. Follow him on Twitter: @tonywittkowski.

(Author’s Note: This article was originally published on Sept. 7, 2016)