It Pays to be an Arkansas Based Company

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Navigating how to fund a startup venture is often one of the largest barriers to getting started in a new business. It is perhaps even more difficult when you are trying to start a company that requires extensive research and development before getting to a product or service that can be sold. The purpose of this article is to provide an example of how multiple programs can be stacked on top of one another to provide financial continuity to a technology-based business.

Allow me to propose a fictional technology-based company located in Arkansas that has a high degree of technical risk. This example is written with the greatest degree of optimism possible, stating the shortest conceivable timeline, maximum possible funding and highest probabilities of success. Please keep in mind that not everyone will be eligible for each of these funding programs and even if you are eligible, these are competitive programs and even good applicants may not receive an award.

Phase 0 = $30,000

First, let’s look at what I consider Phase 0 Funding. The proposed venture applies for and receives a TTAG grant of $3,750 matched by $1,250 from the company itself to support grant writing of an SBIR proposal. 

At the same time, the founders enroll in a concept stage training program such as the Delta I-Fund or I-CORPS GO that could each provide up to $25,000 in funding and valuable training on customer development methods to de-risk later research and development, saving money in the long run. Note that the traditional I-CORPS program is open to university-based teams. The GO program is a pilot in 2018 to allow non-university companies to participate in I-CORPS. 

Phase I/SBIR Match/Seed Round = $475,000

After understanding the customer and having basic scientific principles observed, the company applies for Small Business Innovation Research (SBIR) Phase I Funding. Using the National Science Foundation as an example, suppose this company applies for and receives a Phase I grant of $225,000 in seed capital to conduct the first phase of product Research and Development (R&D) over a minimum of 6 months.

With the SBIR Phase I Funding, the company also receives an SBIR Match. The Arkansas Small Business Innovation Research Matching Grant Program provides AR companies a matching grant of $50,000 for their Phase I award.

Note that SBIR/STTR funds cannot be used for business development, marketing and sales, production, patent costs, entertainment, and sometimes equipment purchases. Additionally, grants may be on a reimbursable payment schedule, meaning it might be several months between when the business must be able to cover the expenses and when cash is in hand. To cover these expenses, the business needs capital. 

At this point, what will happen most commonly is that the entrepreneur puts in $50,000 of their own money and raises another $50,000 from friends and family, effectively raising Seed Funding.

Alternatively or in conjunction with the friends/family raise, you may also apply for the Technology Development Program (TDP) which provides a total maximum award of $100,000 for the development of a given technology. A match of private dollars may increase your likelihood of award but is not required under the TDP. You can expect to pay a negotiated royalty (say, +/- 1%) on future sales generated from the developed technology for up to ten years, or until 1.5x the investment is paid back, whichever comes first. 

Phase II and III = $2,350,000

After successfully completing the Phase I award, our fictional company applies for a second-round investment of $750,000 over 24 months in the SBIR Phase II Funding. Again, the Arkansas Small Business Innovation Research Matching Grant Program provides a match, this time of $100,000. 

Now entering Phase III (or commercialization), the company is ready to scale up and is raising $1 million in risk capital, known as a Series A Investment. At this point, the company is in a position where they are likely to add new jobs and is, therefore, a good fit for the Arkansas Department of Finance Risk Capital Matching Fund, which provides a co-investment to augment investments made by angel or other institutional investors. This program could provide $200,000 with a matching investment of $800,000. (Note the maximum co-investment is actually $750,000 but that would be for a much larger investment round.) The match would come from a syndicate of high-net-worth individuals, Angel funds, and investment groups like Fund for Arkansas’ Future. Raising this $1 million makes the company eligible for the NSF SBIR Phase IIb supplement of an additional $500,000. 

Incentives

The proposed venture will also consider Tax Incentives. An Equity Investment Tax Credit of 33 1/3% could be used to leverage the $800,000 private investment and generate a $266,666.67 tax credit for the investor(s). Your investor would then either use these tax credits to offset their tax liability or sell them at a discount for cash.

R&D Tax Credits are a powerful tool that can put cash flow back into the business. Since our fictional company is in a targeted business sector, they are eligible for the In-House Research income tax creditsequal to 33% of the qualified research and development expenditures incurred each year for up to five years. These tax credits may be sold. It is reasonable to assume that at least 60% of the expenses were direct, leaving a 40% indirect rate. Since essentially all of the direct work was R&D up to this point and the business has spent $2.855 million, there are $1,713,000 of qualified R&D expenditures eligible for the 33% incentive. The company sells these tax credits for 90% of their value and receives $508,761 in cash.

We know that a portion of the employee salaries were actually spent on indirect activities that weren’t eligible for the R&D tax credit. Hypothetically, this might total $100,000 in payroll over the multi-year time period. The business may also apply for Payroll Income Tax Credits, which are transferable income tax credits equal to 10% of payroll (so long as it is not for the same expenditure claimed by the R&D program, above) for up to five years. This would be another $10,000 in income tax credits generating $9,000 cash upon sale.

The venture may decide to forego the Payroll Income Tax Credits and instead take advantage of a Payroll Rebate equal to five percent (5%) of the payroll for new full-time permanent employees for a period of up to ten (10) years. I will skip estimating this benefit as 10 years is past the startup phase and payroll/employee growth will vary greatly depending on the commercialization strategy selected.

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The proposed fictional company has received $3,372,761 in financial resources with a private investment of $901,250 ($266,666.67 of which was immediately returned to the investors).

 

A few tips to keep in mind:

  • Non-dilutive funding early on can significantly de-risk a product and add value to the company, making it much easier to raise capital.

  • You can apply for up to two TTAG grants annually and may be eligible for multiple SBIR awards during the same cycle (if for clearly separate projects). Since funding levels are often lower than 30%, it can be a good strategy to have multiple proposals in play.  

  • Cash flow is important. You should have reserves to float expenses in between paying for an item and getting reimbursed for it. Always take the full 7% for-profit fee when applying for federal grant funding as a small business, but know this will not sufficiently cover legal and general business expenditures.  

  • Some state incentive programs are only available to startups in their first 5 years of business. Also, they may not be able to claw back retroactively, so at least establish contact early in the process.


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Haley Allgood

Haley Allgood, Executive Director of Startup Junkie Foundation, leads programs focused on entrepreneurial education, inclusive ecosystem development, technology commercialization, and workforce training. Outside the office, Haley enjoys traveling, playing with her two pups, and and relaxing at the pool with friends!

Numbers Fib, Statistics Lie!

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Numbers Fib, Statistics Lie!

Facts are stubborn, but statistics are more pliable.

Mark Twain

During the darkest days of the Second World War, Allied bombers were being shot down in alarming numbers. To address those losses, a study was commissioned to examine aircraft that had returned to base damaged by enemy fire. After studying where thousands of bullets had struck aircraft, a recommendation was made to armor areas that were being hit most frequently. This would give an aircraft the maximum protection without overburdening the airframe with unnecessary armor. The logic ran sound to the upper echelons of command, but they wanted a second opinion.

One might think top bomber pilots would have been consulted, but the military turned to statistician, Abraham Wald. In this world of numerical connections and probabilities, Wald was a rock star. Wald looked at the data sets provided to him and found the highest percentage of bullet holes were in aircraft fuselages and the lowest percentage fell on engines. The military wanted confirmation from Wald that the fuselages should be armored. Wald answered with a simple question, “where are the missing bullets?”

No one understood what Wald was getting at and asked him to explain. Wald told them that they were examining airframes that had returned to base and not ones that had been shot down. Therefore, a bomber could take hits on the fuselage and return home. The engines were where new armor needed to be applied. The recommendation was put to Wald’s recommendations into production and after doing so, bomber losses dropped significantly.

Great innovators fall in love with the problem they’re trying to solve before they fall in love with a solution. They objectively articulate their underlying assumptions and they test them relentlessly. They’re willing to fire their ideas if they are deemed implausible. Wald’s missing bullets illustrates that we must question our assumptions before seeking solutions and have the fortitude to speak up against flawed conventional wisdom.

Likewise, highly trained professionals in virtually every industry often have a hard time stepping back from their grueling pace to ask themselves tough questions like, “Where are we going? What are our goals? What are we trying to accomplish? How are we doing? How am I doing? How are my customers doing?” and etc.” Instead they set about expending thousands of dollars and innumerable hours creating the solution to a problem that no one is willing to pay money to have solved. As a result, they miss the mark with their chosen innovation(s).

Innovation isn’t just about doing.  It’s about THINKING and DOING in harmony with one another. Unfortunately, the pressures to create, to launch, to run fast often get in the way of deep, true exploration. We don’t explore the world around us (including our own habits & behaviors) for possible innovations. We don’t question our leadership of others. We don’t ask ourselves whether we are headed in the right direction. We don’t honestly assess our own individual performance. As a result, we don’t achieve what we could otherwise.

Consider this …

  1. List the potential areas of “flawed conventional wisdom” that you have in your business, work area or project.

  2. What numbers or underlying assumptions in your business do you need to re-examine?

  3. What are the key metrics in your business that you need to be looking at on a regular basis to ensure your business is operating effectively and efficiently?

When you’ve figured out the answers to those questions, make the necessary alterations.  Then, develop a process to ask the same questions again, and again, and again.

(Adapted from “The Innovator’s Field Guide.”)


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Jeff Standridge, Ph.D.

Dr. Jeff D. Standridge helps organizations and their leaders generate sustained results in the areas of innovation, strategy, profit growth, organizational effectiveness and leadership.  Formerly a Vice President for Acxiom Corporation, he has led established and startup business units in North & South America, Europe, Asia and the Middle East.

Jeff serves as Chief Catalyst for the Conductor (www.ARConductor.org), is Co-founder of Cadron Capital Partners (www.CadronCapital.com), and teaches in the College of Business at the University of Central Arkansas (www.UCA.edu).  He is the author of “The Innovator’s Field Guide” and “The Top Performer’s Field Guide.”

Dr. Standridge has been an invited speaker, trainer and consultant for numerous companies, institutions and organizations across five continents. He and his wife, Lori, make their home in Conway, Arkansas.

In addition to his executive coaching and custom-tailored consulting, he has received accolades for his World Class presentations, training programs and workshops.  

Keeping Up With K

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Entrepreneurs are a rare breed, oftentimes willing to go the distance when others won’t. Staying resilient in the barricade of “no’s” they receive, entrepreneurs tough it out, knowing that quitting is not, nor ever will be, an option.

We spoke with K Clarence Lawrence, and got the scoop on his entrepreneurial journey and where he is now. K is a familiar face around this office, as he participated in the Accelerator 2.7.0. back in 2015. Designed to help entrepreneurs advance their companies in the food, retail and supply-chain industries, the Accelerator 2.7.0. focused on incorporating female, minority and veteran-owned businesses.

K was raised in Little Rock, but has recently moved out to LA to pursue his ventures and eventually scale up. A graduate of Full Sail University in Florida, K studied Business Entrepreneurship and Business Management. Six months prior to graduating, K started his own small-scale video production company. Upon graduating and realizing that Florida’s market was saturated with similar businesses, K moved back to Little Rock and began developing what has become his legacy today.

K has founded three video production companies, each filling a different niche in the video production industry. FirePix Media is a full-service video production company that creates indie films, music videos and web series, catering to the entertainment aspect of video production. Shooter and SimplyVideo both produce video content specific to the e-commerce world, with Shooter specializing in 360 product videos and product photos, and SimplyVideo specializing in video content creation and video marketing subscription services.

Currently, K is going through the process of establishing a parent company to manage his three brands, so he has his hands full. Leaning more toward tech, K is in the process of developing apps for Shopify and Wix, which will help scale up his businesses in the future.

When we spoke, K was happy to describe his participation in the Accelerator 2.7.0., and how it affected his entrepreneurial endeavors. K said that the Accelerator was great for networking and did exactly what it was advertised to do – accelerate small businesses. The environment of the Accelerator program was conducive to learning and the mentoring aspect of the program was especially great. Walking away from the Accelerator, K left with more knowledge on startup strategy and business acumen. From learning how to perform evaluations, create an exit strategy and hone in on selling to investors, the Accelerator experience was extremely helpful and perceptive. Through the Accelerator program K was able to connect with investors and receive input from the Startup Junkie team, establishing the right mindset for business.

Now that K is living in LA, one would think that he’s made it, and can take it easy. As an entrepreneur, that’s never the case! K is working as hard as ever, and gave us some solid advice to pass along. As a realist, he said that you’ve got to understand that nothing happens overnight. You have to learn how to do the small things really well first and then work your way up.

As an entrepreneur, you have to have tough skin – you’ll get a lot of “no’s,” but understand that these rejections are only pushing you to be better.“You have to really want it to make it happen.”

We couldn’t agree more.

Check out K’s work on his website here.
Reach out to K at kclarencelawrence@gmail.com.


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Sarah Van Doorn

Sarah is a Content Strategist at Startup Junkie. Currently a senior at the University of Arkansas, she’s studying Journalism with an emphasis in Advertising and Public Relations. Sarah assists in content creation through writing client feature stories and managing the promotion of the Startup Junkies Podcast. In her free time, she enjoys reading, writing and playing Mario Kart.

Kasim’s Comeback

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Sitting with Omar Kasim at his organic cold-pressed juice bar, I got the scoop on his comeback, as well as the process of building Juice Palm in the wake of losing Con Quesos a year ago.

Con Quesos had originally started out as Omar’s honors thesis, which he accelerated into a full-blown business plan. Upon pitching his idea, he realized that this was something that he could jump into head-on. In need of capital, he connected with an investor that had a strong background in franchising and the restaurant world. In its first year of business, Con Quesos flourished, winning accolades left and right. From being listed as one of the “Top 10 Restaurants in Fayetteville” on TripAdvisor, to being “Best New Restaurant” runner-up, Con Quesos was quickly becoming a hot spot in the city. After such a successful year, Omar met with his investor to renegotiate their agreement in the hopes of expanding. Rather than renegotiate a deal, the discussion resulted in a hostile takeover – Omar was effectively relieved of all managerial duties and pushed out of his business. Omar said that, while the takeover was hard to handle, he had seen it coming. With Omar out of the business, quality quickly fell to the wayside, with the unnamed investor foregoing the finer details that made Con Quesos unique. Omar could only watch as quality spiraled down due to high turnover and customer service falling out of focus.

After the hostile takeover, Omar took some time to soul search. Rather than taking a job at a larger corporate company, he rekindled his entrepreneurial flame. He had been conceptualizing a juice bar, and came to build Juice Palm in Uptown Fayetteville. His idea was so well-received by the community that Omar had actually signed a lease in the 8th Street Market in Bentonville – before even opening his first location.

In March of this year, Con Quesos’ investor reached out to Omar – basically the business was insolvent. It needed an influx of capital just to keep the doors open. Omar met with the investor and walked away sole proprietor of Con Quesos. He told me that the decision to take back Con Quesos was initially unappealing, but the thought of being able to take a dwindling business and make it successful again was what got him on board. Not to mention, the business in question was like his first child.

He had put blood, sweat and tears into building Con Quesos, and he had brought it to its peak – it can only go up from here.

While still running Juice Palm, Omar has fallen back into Con Quesos with a passion to bring it back to its former glory. He met with the staff, restructuring and re-organizing the restaurant. By focusing on the 3 C’s: cleanliness, customer service and consistency, Omar believes that Con Quesos will be back on top.

Splitting his time between his two businesses has been a challenge, and he often pulls 16 – 18 hour days. Omar explained that Juice Palm, while successful, is still in its infancy stage. With such a heavy customer focus, he has to make sure that staff and customers alike are educated on the variety of products offered. Omar is still at Con Quesos every day to help with rushes, plus it helps to show that he’s back, and is making things better. Omar was welcomed back by older employees, offering to come and work with him again, and even vendors, who, upon hearing he’d returned, offered to extend pay schedules to help cash flow. A testament to his leadership and positivity, maintaining these positive relationships (in business and in life) is not only the right thing, but the practical thing to do.

Omar hopes to have Con Quesos restructured and running smoothly soon, especially with plans to build another Juice Palm. The second location, in the 8th Street Market, is scheduled to open in October. In addition to managing two Juice Palms and Con Quesos, Omar will also be teaching an upper-level entrepreneurship class at the University in the fall. Why did he sign up for all of this, you might ask? Omar loves the restaurant world, and is excited to be a part of the students’ journey. He’s looking forward to helping others chase their dreams, even though it’s exhausting on his part. “As an entrepreneur, you always say ‘yes’ to opportunity.” Omar left me with a short story relevant to his journey – the lobster story. A lobster is a soft creature with a hard exterior shell. Once a lobster outgrows its shell, it sheds it and grows a new one. Discomfort is what allows a lobster to grow – if the lobster didn’t feel uncomfortable, it would never grow. He may be sleeping less than the recommended 8 hours a night, but as he put it, “Sleep doesn’t matter when you’re living the dream.”

Con Quesos is a fast casual fusion taco restaurant based in Fayetteville offering traditional Mexican cuisine tacos as well as fusion options from around the world. Juice Palm is a cold-pressed juice bar located in the Uptown Fayetteville Apartments & Shops offering pressed juices, smoothies, acai bowls and salads made using only USDA-Certified Organic products.


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Sarah Van Doorn

Sarah is a Content Strategist at Startup Junkie. Currently a senior at the University of Arkansas, she’s studying Journalism with an emphasis in Advertising and Public Relations. Sarah assists in content creation through writing client feature stories and managing the promotion of the Startup Junkies Podcast. In her free time, she enjoys reading, writing and playing Mario Kart.

My Entrepreneurial Journey

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There is no standard journey or common path to becoming an entrepreneur. Each of us has our own story and our own reason for choosing this path. The entrepreneurial path lacks “perceived” security, elements of prestige, and can be a lonely journey. However, I’ve found that the fear can be properly managed when security is objectively analyzed.

My journey began really taking shape after spending around 20 years working in large Fortune 500 companies. As I began thinking about my next 20 years, I found myself not being excited about the different paths and potential positions that were in front of me.

I longed for a career that didn’t have me checking my 401k and wondering regularly if I had the “security” needed to walk away and enjoy life.

I built out my entrepreneurial transition plan that was based on security and financial independence. I shared that plan with a few mentors that I trusted and asked for their thoughts and feedback.

Sharing my desires and my plan was the first step of my entrepreneurial journey. Getting serious about a transition and what possible next steps I would make changed my mindset radically. Things I previously ignored, I now looked at as opportunities, and in my case, the timeline I laid out for myself got pulled forward by a chance encounter that I would have ignored if I hadn’t laid my plan out earlier.

Jumping into a brewery partnership didn’t match my “strategic plan,” but it aligned with what I had written and shared with mentors. I approached it in a minimum viable product manner while still working within a large corporation. Mistakes were numerous and expensive, but they didn’t bankrupt the business. Step by step, the brewery gained momentum and new opportunities came our way. My strategic plan had now been radically accelerated, and the time came that I had to pull the plug from my perceived security provided by working within a large corporation.

I’ve got a few pieces of advice for others that might be in a situation similar to mine:

  1. Develop a work forever mindset: If you are doing a job that you really love and you’re passionate about, you’ll never consider retiring. Retiring and doing nothing is a recipe for misery.

  2. Develop a plan and share that plan with a few people you trust: Be strategic about what you could see yourself doing for the rest of your life. Do research on what skills you’ll need to gain, what capital you’ll need, and what your timeline will be.

  3. Take an iterative approach: Going “all-in” shouldn’t happen until ideas have been tested and business plans have been validated. Make small investments and your new vocation should start as a hobby.

  4. Make the leap: Once the business has been validated, it’s time to make the transition. Risk and danger are two different things. It’s risky to start a new venture on your own, or with partners. It’s dangerous to work without passion, or excitement. You only get one life to live. Living it with passion, purpose, and excitement is worth the risk.


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Jeff Charlson

Jeff Charlson is partner/CEO of Bike Rack Brewing Co. and Senior Entrepreneur in Residence for Startup Junkie. Jeff helped found Bike Rack Brewing Co. in 2014 while he was still working at Walmart Stores, Inc. in Bentonville, AR. Jeff spent nearly 25 years working for three Fortune 500 companies. Jeff had various roles in technology, management & sales throughout his career. The last 7 years of Jeff's career at Walmart were as a corporate officer/VP within the technology division. Jeff has lived in NWA for the last 17 years, and loves connecting with the community, working with entrepreneurs, listening to live music, mountain biking and spending time with his family & friends.

The Top Five Most Important Tax Reform Items for Startups & Small Businesses

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Hey small businesses and startups! I’m sure you’ve heard a thing or two about the grand tax reform and it may have left you a bit more shell shocked than ready for action. The reform made some of the biggest changes we have seen in the history of our tax code. It simplified individual tax, but it doesn’t appear to have done the same for small business. Although, that does not mean it’s absent of some heavy-hitting benefits.

As a business owner, understanding these changes and benefits can feel about as easy as swimming through mud. As your priority lies in working and growing your business (and not mastering the foreign language of tax code), here is the five-minute version of the top five changes impacting you this next year.

1. Deduction for Qualified Business Income

This one has received the most attention for small business in the new tax code and for good reason. It is by far the biggest potential game changer for small business.

Previously: All of an owner’s pass-through income would be taxed at the individual’s standard tax rate.
Now: Basically, it allows 20% of your income from a pass-through entity (sole-proprietorship, partnership, s-corp, and some LLCs) to be free from tax. Of course there are restrictions, limitations, and flaming hoops you must jump through, but this is a big win for businesses that qualify. An entire blog could be written about how this one alone is calculated (like this one, and this one, and this one).
Impact: Very positive for some, neutral for others

2. Limits on Business Interest Deduction

Have you had average revenues of at least $25 million over the past three years? Then this one is for you. Everyone else, skip on to the next one as this will not apply to you (at least not yet ).

Previously: Any interest from debt taken for trade or businesses could be fully counted as a business expense (and therefore would reduce the income subject to tax).
Now: For entities exceeding the $25 million in revenue threshold, interest expense now has a cap: 30% of EBITDA, which is another crazy accounting acronym for your business earnings before you subtract out your interest, taxes, depreciation, and amortization expenses.
Impact: Negative for some, neutral for others

3. Limit on Losses (NOLs)

Previously: Individuals could use business losses to offset their nonbusiness income (i.e. interest, dividends, and capital gains) without limitation and could carry it back 2 years and forward for the next 20 years to offset income.
Now: Beginning in 2018, the amount of business loss you could, as an individual, use to offset nonbusiness income is limited to $250,000 ($500,000 for married filing jointly) per year. Any loss beyond that limit is now carried forward indefinitely to offset income in future years and cannot be carried back. Unused or “excess” loss amounts have an additional limitation once carried forward: they can only be used to offset 80% of the taxable income in the future year it is applied.
Impact: Mostly negative: limits the loss, but can be carried forward indefinitely

4. Immediate Expensing of Capital Purchases (Machinery, office equipment/furniture, computers, software, etc.)

Previously: Companies had two tax break opportunities for capital purchases: IRC Section 179 and Bonus Depreciation. With Section 179, you were allowed to immediately expense (i.e. 100% depreciation) up to $500,000 of qualifying property in a given year and you would be phased out when more than $2 million of property was placed in service. After Section 179 would be applied, Bonus Depreciation could be used to expedite depreciation for brand-new equipment at 50% of the cost in the year purchased.
Now: The limits for Section 179 have been raised to $1 million and $2.5 million, respectively. Bonus Depreciation has been increased to 100% and now includes both new and used purchases.
Impact: Very positive, especially for growing companies that require capital equipment for expansion

5. Corporate Tax Rate Drop

One of the major headlines for business in the tax reform was the drop in the corporate tax rate to a flat 21%. It may surprise you that this is the last point I make in the list and for good reason: it actually is not highly impactful to your business unless you are already taxed as a c-corp. Making the designation change is more of a long-term strategic move than a short-term tax benefit. This is why: c-corps face double taxation, first on the corporation’s profits and second at the individual shareholder level on dividends paid by the corporation. If the company is not planning to pay out dividends and instead wishes to retain profits to reinvest in the business for a long-term strategy, a c-corp conversion may be beneficial. Unfortunately, the process to convert in the state of Arkansas is not as streamlined as most and you will have to pay in both time and money (consulting lawyers and accountants), so make sure to weigh the benefits. Finally, keep in mind that the lowering of the tax rate may not be permanent as Democrats could retake a Senate majority and vote through changes to the law.

Impact: Positive for c-corps and investors in publicly traded companies, neutral for others

This article contains general legal information and does not contain legal advice. Startup Junkie is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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Megan Frohardt, CPA

Megan is an Executive Consultant at Startup Junkie. She leverages her master's in Accounting and MBA to assist clients by creating financial projections, cash flow analyses, pricing strategies, and financial budgets, ensuring startups launch on the right foot on all things accounting related. When she's not crunching numbers, she's likely outdoors running, hiking, or kayaking through the Ozark mountains.

Libby Primm, RHU

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This week we sat down with Libby Primm, founder of Primm Risk Solutions. Located in Springdale across from the Country Club, Libby’s office hosts less than ten employees – each of them adamantly offering us Skittles as we walked through the door. Primm Risk Solutions specializes in providing employee benefit services for employers and their employees, as well as coverage support for individuals. Their main focus is on businesses that have 100 employees or less – a small business focused on influencing business owners to be great employers, as we like to put it.

We met Libby at the Springdale Country Club so as to avoid the distractions that come along with being the president & CEO of one’s own company. Libby has been a natural in the field of insurance for a long time, since she was 14-years-old, in fact. She got her start at a family friend’s insurance agency doing mostly secretarial work. By the age of eighteen, Libby was licensed, and had received a risk management scholarship to attend college, where she studied finance and insurance. Upon graduation, she was offered a position at one of the largest brokerage firms in the nation. Working there, Libby told us, she had high expectations on herself, as she was a young woman in a primarily male-dominated industry. Having employees working with her that were older than her was challenging, but proving her knowledge and expertise ensured (that was almost an insurance joke) that she earned their respect.

Upon the election of Barack Obama, the Affordable Care Act (ACA) came into effect, which led Libby to a realization – there would be a change in the business, and a change in the way insurance brokers worked. Businesses would have more laws to comply with, and small businesses would face demand from their employees to offer health benefits.

Libby made it clear to us, however, that change can be good, and should always be seen as an opportunity.

Following this, Libby was inspired to begin working with small businesses. She dabbled in insurance auditing for businesses in Arkansas, Oklahoma and Louisiana, explaining that she’s passionate about “being there for people,” and providing services that help business owners be better employers.

Shortly after, Libby founded Primm Risk Solutions in 2015. Her business has taken off, especially with its focus on small businesses. Libby reported growth of about 100 – 120 percent year over year, and the business has limited its clients to referrals only (hey, seven employees can only do so much in one day).

Libby worked with us here at Startup Junkie in 2017, and participated in ScaleUp Ozarks, a 16-week business growth program funded by the Small Business Administration. She tells us that the weekly seminars and lectures were very beneficial, and they helped her establish a better game plan for the future. Additionally, she was able to develop business goals that were challenging, yet attainable. She admitted that it was comforting to see other small business owners at these seminars, and that Startup Junkie provided a place for these entrepreneurs to ask questions and receive the help they needed from industry experts. When we asked her whether these seminars helped her improve her business, she explained a concept that many business owners face. Startup Junkie provided knowledge and support that helped her get through the ‘growing pains’ of being a business owner. We know what you’re thinking, growing pains? I’m not a teenager, I don’t get those anymore! ‘Growing pains’ refer to the stresses that a growing business faces when it begins expanding its client base and employee pool. Many business owners will reach a certain point and feel overwhelmed with the influx of clients and management of employees, and they’ll get frustrated and throw their hands up and quit, Libby said. We’re glad that we could be of service, and we’re happy to hear that Libby is looking forward to the future of her growing business.

Speaking of the future, Libby told us that she sees women excelling, and that soon there will be more female decision-makers in the small business community. Libby is passionate about people, and wants to empower women to be the best they can be. “Giving women confidence is empowering,” she said. On the subject of empowerment, we will leave you with some well-given and well-received advice that we learned from Libby: “Live lightly, and stay humble – but hungry.”

Learn more about Primm Risk Solutions here.


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Sarah Van Doorn

Sarah is a Content Strategist at Startup Junkie. Currently a senior at the University of Arkansas, she’s studying Journalism with an emphasis in Advertising and Public Relations. Sarah assists in content creation through writing client feature stories and managing the promotion of the Startup Junkies Podcast. In her free time, she enjoys reading, writing and playing Mario Kart.

LFLS Shoes

We’ve had the opportunity to work with Eric and watch his business grow this past year, and we’re excited to see where the future takes him!

Last week I sat down with Eric Jones, CEO and founder of LFLS Shoes, a designer dress shoe company that offers many unique styles of shoes. Known on social media as ‘Doctor Dapper,’ Eric is a recent apparel merchandising and product design graduate from the University of Arkansas. Growing up in Helena (in eastern Arkansas), Eric knew he wanted to get out of the area and pursue something more. Attending college, he realized his passion for design that eventually pushed him to become the entrepreneur he is today. Eric’s mother was his biggest supporter, yet sadly, she wasn’t able to watch him sell his first pair of shoes. She passed away several weeks before Eric graduated college. As a new grad with no financial or familial support, Eric persevered. His passion and dedication unwavering, he established LFLS Shoes, and has been working diligently (out of his apartment!) since.

Asking for the story behind the brand name, Eric told me LFLS Shoes was originally Like Father Like Son Shoes. It stemmed from Eric’s observation that fathers and sons frequently dress alike (be it shirts, suits, or even branded tennis shoes), but they rarely, if ever, wear the same designer dress shoes. Ladies, no need to feel left out, despite the story behind the name, Eric is releasing some designs for women’s styles as well! LFLS Shoes fills a niche in the market in that it provides unique designer dress shoes in various styles and colors.

At 22-years-old, Eric is young, but he’s hungry for success. He has big goals, and they’re selfless. Eric told me he wants to give back to the University of Arkansas. He wants to provide scholarships to Dale Bumpers College, so he can help students that want to pursue entrepreneurship. Additionally, he wants to nourish the minority entrepreneur – whether that’s in the form of providing scholarships, hosting events, or developing platforms for fellow minority entrepreneurs to learn and grow. While Eric strives to be a positive influence for African American males, he also wants to help establish Arkansas as a successful state in the fashion industry. As Eric builds up his brand, he’s never lost touch with his entrepreneurial mindset –

“Life is so short, I’d rather struggle doing something that I love than work for somebody else and be unhappy.”

Show Eric some love and visit LFLS Shoes online. Support your community’s entrepreneurs and shop local!


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Sarah Van Doorn

Sarah is a Content Strategist at Startup Junkie. Currently a senior at the University of Arkansas, she’s studying Journalism with an emphasis in Advertising and Public Relations. Sarah assists in content creation through writing client feature stories and managing the promotion of the Startup Junkies Podcast. In her free time, she enjoys reading, writing and playing Mario Kart.

Defining Identity

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When I first set out to write this blog post, I was thinking through the concept of work life balance. I’ve always been a verbal processor, so while talking this through with my husband over dinner, he helped me realize the point I was really trying to convey was understanding our IDENTITY.

(Warning, I’m an engineer, so there’s going to be a little math in this post, but I promise, you’ll be able to follow along.)

As entrepreneurs, how do we define our identity?

If you’re like many of us, our identity is mostly wrapped up in our company. However, there is a small problem with:

ME = COMPANY

If the statistics are to be believed, anywhere from 75-90% of startups fail. This means:

ME = FAILURE (approx. 82.5% of the time)

If we use that equation, that means 82.5% of entrepreneurs are failures, and that just doesn’t pass the “sniff-test” with me.

I’ve met a lot of entrepreneurs, and none of them are failures. In fact, all of them are successes, and sometimes, in areas they didn’t expect.

This is why it is so important to find balance in our identity. Aristotle tells us “the whole is more than a sum of its parts,” so we need to make sure we have multiple parts to sum up!

For me, cycling is one of my “parts.” Cycling has provided me with challenges and successes to balance the days (and sometimes weeks) that nothing goes right.

I spent a significant chunk of my time this summer training for the Roger’s Cycling Festival, “Race for the Spike.” This is an event where a team of cyclists line-up, first thing in the morning, in downtown Rogers and race the A&M train.

More math if you’re interested…. If a bike rider leaves downtown Rogers and travels 5.65 miles north on Arkansas Street to Avoca, and the A&M train leaves Avoca traveling south at the same time the bike rider leaves Rogers, what speed will the bike rider need to average to beat the train back to downtown Rogers if the train takes 34 minutes to complete the trip from Avoca to Rogers?

The answer, if you’re not: It’s about 20 mph

This race was a tough push into the wind, and provided such an amazing sense of accomplishment when I beat the train. That afternoon was also the day I found out my startup company had been declined a federal grant we were assured we’d get. That grant was worth 2 years of support, worth $750,000.

That afternoon sucked. I cried. Twice.

But I still beat the train, and I raced again that night.

Beating the train may have been the only redeeming part of that day. It stood as a testament that I could still achieve the goals I had worked hard for, even if I didn’t realize everything I wanted.

Every time I have a horrible day, I know I can find a few minutes of joy on my bike.  Whether that’s going out for a ride with friends, coaching my mountain bike team, or just peddling up to Bike Rack Brewing for a pint. If you take nothing else away from this story, build balance into your identity, because one day you’ll need it.


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Ellen Brune, Ph.D.

As the Senior Entrepreneur in Residence, Ellen’s focus is growing the entrepreneurial ecosystem for science based startups and craft food and beverage ventures. Ellen has a PhD in Chemical Engineering and is the Founder of Boston Mountain Biotech (www.mtnbio.com) in Fayetteville, Arkansas. In her role as a mentor to the startup community, Ellen has provided support in the areas of business development and strategy, research validation, commercialization studies, and patent strategy. To support youth development, Ellen is a coach with the Arkansas State Interscholastic Cycling Association and the Little Bella’s program which, helps build character and confidence through mountain biking.