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REDHEAD CREAMERY: Arrayed by their granchildren, Linda and Jerry Jennissen (left), owners of Jer-Lindy Farms near Brooten, partner with Redhead Creamery, a cheese-making business launched by their daughter Alise Sjostrom and her husband Lucas.

Survival Strategy

Small businesses are the economic engine of Central Minnesota. 
The Initiative Foundation is helping to see them through the challenges of the COVID-19 pandemic.

By Gene Rebeck

Photography by Michael Schoenecker and John Linn

For Alise Sjostrom, the first three months of 2020 brought a lot of life changes.

In January, she was awarded an Initiators Fellowship from the Initiative Foundation. The fellowship is a two-year program that provides training, mentoring, funding and other support for early-stage social entrepreneurs in Central, Southwest and West Central Minnesota. And in February, Sjostrom gave birth to Conan, who joined his two older siblings in the Sjostrom family.

Then came COVID-19. Sjostrom had been making and selling her own cheeses at Redhead Creamery, her Brooten-based company, since 2014. In mid-March, when the state government closed nonessential businesses, she feared Redhead Creamery also might close–perhaps forever.

Small businesses like Sjostrom’s took a huge hit when the lockdown came. Locally owned and operated restaurants, bars, salons and fitness centers all were forced to close. And restaurants were a significant percentage of Redhead Creamery’s business. Sjostrom also had to shutter her farm-based store.

The viability of Sjostrom’s business required her to think creatively and act quickly. Thanks in part to an emergency small business loan from the Initiative Foundation that tapped funds from the Minnesota Department of Employment and Economic Development (DEED), Redhead Creamery pivoted to a home delivery model by purchasing a refrigerated vehicle.

“The loan really helped us get that up and going,” Sjostrom said. “We could get cheese safely to its location, instead of having to throw coolers in the back of our pickup.” Redhead Creamery was able to establish routes to fans in the Twin Cities, Rochester, Fargo and Sioux Falls.

The loan wasn’t the only help Redhead Creamery received, but it was crucial. And it’s the kind of assistance the Initiative Foundation has been able to provide to hundreds of regional small businesses to get them through the pandemic-driven economic slowdown.

IMMEDIATE ACTION
On the evening of March 16, Minnesota Gov. Tim Walz announced the closing of non-essential businesses. By March 18, the Foundation made the decision to offer loan deferments to any lendee who needed one, according to Jeff Wig, the Foundation’s vice president for entrepreneurship. Wig and his team sent emails to the Foundation’s 120-plus clients and offered to defer payments for three months. About 40 borrowers took up the offer.

On March 23, the state of Minnesota announced it was establishing an emergency loan program through DEED for the types of businesses affected by the governor’s executive order. The program’s funds would be parceled out to a small group of nonprofit lenders throughout the state. The Initiative Foundation was one of those lenders.

“We received our first application within 45 minutes after the end of that news conference,” Wig recalled. “Then they came in fast and furious, sometimes up to eight or 10 an hour.” The Foundation pulled staff in from other parts of the organization to help manage and process the applications.

Using a first-come, first-served process, the Initiative Foundation allocated 53 loans totaling $1.2 million. To qualify for the loan program, applicants needed to operate a Central Minnesota-based standalone business that was affected by the emergency order. The loan could cover three months’ worth of operating expenses during a partial shutdown, such as mortgage payments, utilities, insurance and a percentage of labor costs.

Though the loans could be as much as $35,000, the average loan size was just over $20,000. “We made a good number of fairly small loans,” said Wig. One loan was for $2,500, which was to support a sole-proprietor hair salon. “This was meaningful money for them, even in small amounts.”

THE RIGHT THING
Businesses that received larger amounts also found that money meaningful. Scot Ziessman, who owns three Fantastic Sams hair salons in the region, was given DEED loans via the Initiative Foundation for each location (Albertville, Clearwater and Monticello). The loans ranged from $20,000 to $35,000.

“The loans allowed me to not make decisions based on, ‘Can I afford to do this?’” Ziessman said. “Instead, they allowed me to do what you always want to try to do as a business owner, which is, ‘What’s the right thing to do, regardless of money?’”

His three shops shut down March 17 and would remain closed till June 1. “I started searching for products that I’d never had to look into before,” he said, mentioning face shields, masks and Plexiglas panels. Then there was hand sanitizer. Ziessman’s salons have always had plenty on hand. But when the pandemic hit, prices skyrocketed. “The first time I saw a gallon of hand sanitizer available, it was $70,” he said. “ It was ridiculous. But I bought three gallons because I didn’t know whether I’d be able to find hand sanitizer again for another month.”

Ziessman says the loan money helped the business get ready to reopen in the right way, which required more than following state law and Board of Cosmetology protocols. “We had to change from non-appointment based, which was our business model,” Ziessman added. His Fantastic Sams locations also had to institute different cleaning processes. “Hair salons are always pretty darn good at cleaning, but we took it to the next level.”

Not surprisingly, the first month after reopening was extremely busy. “People wanted to look how they used to,” Zeissman said. “We had some amazing before-and-after photos.” His staff also repaired the damage from numerous home haircuts. All told, Ziessman’s team was happy they were able to provide a semblance of normalcy to their clients.

Business at the salons did slow down after that initial burst of pent-up demand. “Industry-wide, hair salons were down in July about 25 percent,” Ziessman said. “That additional money has helped us ride the tide of what’s going on now.”

Another hair-care business that has benefited from the emergency loan program is The Fine Line Salon and Spa. Kathy Bjork has owned and operated the salon, which is located in a historic three-story house in Brainerd, for nearly three decades. But even that longevity didn’t guarantee its survival during the three months of the COVID-19 lockdown.

Bjork’s husband, Rick, took care of the paperwork for a loan The Fine Line received in April. He was offered guidance from Initiative Foundation Finance Specialist Carie Verley.

“It really helped save us,” said Rick, who also runs his own retail business, The Gallery of Brainerd. The loan funds helped cover overhead and payroll for The Fine Line, which employs 18 people, for what he described as “a long, long three months. The pressure and the sleepless nights—we weren’t sure how we’d get through everything.”

But they did get through—The Fine Line reopened June 1. Business is “not back 100 percent, but it is steady,” Bjork said. Both he and his wife are delighted that it’s back, period.

The-Fine-Line-Hair-Design_Kathy-Bjork.pngSELF-CARE IN HARD TIMES: Kathy Bjork is the owner of The Fine Line Salon and Spa in Brainerd.

MORE HELP COMING
In July, DEED once again tapped the Initiative Foundation, this time as a recipient of state funds from a new $62 million Small Business Relief Grant program. At the time of publication, the Foundation was in line to award up to $7.8 million in emergency small business relief grants to more than 765 regional small businesses. Priority was given to any business with fewer than 50 employees operating at a reduced level because of the governor’s May 15 executive order. This includes retailers and other establishments not covered in the governor’s earlier orders. All told, the grant and loan programs the Initiative Foundation has been handling will aid over 1,000 businesses.

The support Sjostrom received has helped her take advantage of new opportunities. Despite the pandemic-induced stresses and restrictions, Redhead Creamery has continued to grow. The company has re-established sales to restaurants and retailers, even as it continues its residential deliveries. Though Sjostrom’s husband, Lucas, has been doing all that driving, he’s able to use the drive time to conduct phone calls for his work as executive director of the Minnesota Milk Producers Association.

Redhead Creamery also continues to sell its products online, and it has started carrying other Minnesota-crafted cheeses to help get those dispersed across the state. In mid-August, Sjostrom and her staff were working on holiday gift packages.

“We’re seeing a lot of businesses struggling, and we’re actually adding on to keep up with growth,” she added. “We’re feeling very fortunate to be in that position.”

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Red-Head-Creamery_Cows.pngSUCCESS STORY: At a time when many businesses are struggling, Redhead Creamery continues to adapt and grow. 


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