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Jill Blashack Strahan Tastefully Simple Alexandria, Minn

A passion for gifts to build a $140 million-plus easy-to- prepare food business

This profile is excerpted from Bootstrap to Billions: Proven Rules from Entrepreneurs who Built Great Companies from Scratch by Dr. Dileep Rao. Copying or reproduction in any format or medium without the prior express, written consent of the author is strictly prohibited. For additional profiles or information: InterFinance Corp. Phone: 763-588-6067; www.uEntrepreneurs.com; www.infinancing. com

Summary: Jill Blashack Strahan dropped out of college because she wanted to “connect the dots” of what she was learning. She worked at a department store and a gift store, and then co-owned and managed her father’s restaurant before starting her own gift basket business. Though these efforts were not huge financial successes, they were very rewarding in providing some of life’s greatest lessons.

When her son, Zach, was born, Blashack Strahan realized that the scarcest ingredient in life is time. To make every hour count, she closed her gift basket business, which required long hours but resulted in earnings less than $6,000 per year. And then another door opened. She was invited to sell foods from her gift basket line on the Holiday Crafter’s tour in Alexandria. She decided to offer taste-testing, and to her surprise, her easy-to-prepare foods sold out. But there was no big “aha.” A year went by and the search for her mission continued. She repeated the tour the next year, and again sold out. One week later, after reading an article about the success of home parties, Blashack Strahan says something suddenly went, “Ding-ding!” She got the inspiration to sell exceptional convenient foods through home parties. She shared the idea with Joani Nielson, who loved the idea and offered to invest as soon as she heard it.

With humble beginnings and big dreams, Blashack Strahan bootstrapped the business with a total of $36,000 – personal savings, an investment from founding partner Joani Nielson and a $20,000 Small Business Administration loan. She discovered that people were interested in hosting parties, buying and selling delicious products, and she was off to the races. She had a clear vision, set goals, did taste-testing parties, and one by one recruited a sales team. But it was a slow start, causing Blashack Strahan to lose confidence and get frustrated. Realizing that she had begun to lose faith and that she needed to believe before others would, she renewed her determination and expanded beyond her wildest dreams. When she finished her five-year business plan Blashack Strahan was not sure she could ever run a company with sales exceeding $11 million. In 2008, Tastefully Simple’s sales were in excess of $140 million, the company was debt-free, and Blashack Strahan continued to hold 70 percent of the company. Until 1998, Blashack Strahan had never earned more than $14,000 in any year. Dreams don’t just come true. You make them happen. This is how she did it.

Before the Startup

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1. Find meaning. After finishing high school in a small farming town, Jill Blashack Strahan decided to major in English at the University of Minnesota (Morris), where her stay was short. She soon bade farewell to the U because she did not find any inspiration there, and the learning was not “hands on.” She started attending the local technical college because her brother Mike had attended the same college. Her advisers suggested Fashion Merchandising as a major, but because she wanted a broader base of study, Blashack Strahan decided to enter the Sales Associate Program and then the Marketing and Sales program. While there she created a business plan as a class assignment. She decided to write a business plan on a gift shop called Rainbow’s End (where you can find your pot of gold). Blashack Strahan dedicated herself to this project and was pleasantly astonished when she won second prize at a state business- plan competition and became a finalist at the national competition. This success boosted her confidence and became one of the key steppingstones in her life. The first lessons she learned were the importance of branding a business, as well as the numbers in a business plan. But perhaps most importantly, she realized that she did well when she dedicated herself, invested the effort, and was passionate about what she was doing. To Blashack Strahan, this meant 100 percent passionate, not 15 percent. She decided that she was not going to do anything that did not fulfill her purpose.

Lesson: Jill Blashack Strahan learned that meaning and purpose, as evidenced by passion, were her key motivators – not money or security. Unlike many entrepreneurs who try to avoid the numbers, Blashack Strahan learned why entrepreneurs need to make the numbers work. This knowledge can save you a lot of grief, and later on it helped Blashack Strahan structure Tastefully Simple and make sure that it was profitable.

2. The first job(s). After graduating from college, Blashack Strahan got a job doing advertising and displays at the local JCPenney store. After one year she quit and accepted a job at a local gift shop for less money and no benefits. Her grandmother wanted to know why she was quitting her job at JCPenney, especially since it had pension benefits. Well, Blashack Strahan wanted to learn more about the gift business, apply her business plan and expand her skills rather than just dust displays. To her immense surprise, the manager at JCPenney encouraged her to pursue the opportunity, even though a new employee would have to be trained. The manager knew that the new job would give Blashack Strahan a broader set of skills and experiences and help her growth.

Lesson: The experience at JCPenney taught Blashack Strahan that “if we believe there’s more than enough to go around, there will be,” which she has termed the Law of “Abundancy,” and is one of her fundamental principles. Develop arrangements where everyone can maximize their gifts to increase the size of the pie and share in the growth. Some call it “win-win.”

3. Get real. Be humble. About this time, Blashack Strahan’s dad bought a café in her hometown near Alexandria and asked her if she would manage it if he matched her salary at the gift shop. Blashack Strahan was 21 years old and clueless about the restaurant industry. But she accepted the offer and learned a number of details about the restaurant industry and about herself.

• When she was placing her first order for hamburger patties, her food vendor asked her whether she wanted 4:1, 6:1 or 8:1. Blashack Strahan was confused since she thought she was being asked about the odds on hamburger gambling! Actually she was being asked how many beef patties she wanted in a pound. She knew that most of the people with whom she worked knew much more about the restaurant industry and that she needed to be humble and accept the limits of her knowledge (rather than bluffing) and ask questions. Acting as if she knew everything could lead to disastrous consequences, rather than just saying “I don’t know.”

• Onherfirstdayasthecafé’smanager,shefounddelinquentbillsgalore–salestaxes,unemployment taxes and workers compensation withholdings. She wondered how she was going to “eat this elephant.” The answer was one bite at a time. She eventually paid all the back taxes and brought the café to a sustainable position. This taught her the importance of organization and structure.

© Copyright Dileep Rao 2010 (for additional profiles: www.uEntrepreneurs.com) 2

• She had an employee who decided to leave Jill’s Grill in order to take a job across the street that offered higher pay. Blashack Strahan objected to the employee getting unemployment benefits, and the employee was enraged. Blashack Strahan learned to handle conflict, be calm and simply accept that sometimes one is not liked by everybody.

• Blashack Strahan also learned the power of the right mentor to handle tough situations. A local businessman, who owned an implement dealership and was a regular customer at her restaurant, gave her encouragement and guidance when she needed it most. This helped teach Blashack Strahan how to encourage others to reach their own full potential.

Overall, Blashack Strahan managed the restaurant for three years. What she learned there was that good teammates help, especially when you are a leader who is out of your depth. And she also learned that sometimes you need to get out of your comfort zone if you want to grow.

Lesson: Step out of your comfort zone. But be humble, know what you don’t know and admit it. Acting as if you know it all could be hazardous to your business. It also helps others who work with you to ask for assistance when they need it. And surround yourself with good mentors and become a good mentor to others.

4. New start in Alexandria. Blashack Strahan then moved 20 miles away to the slightly larger town of Alexandria. When she moved, Blashack Strahan had less than $200 and no job. She tried to borrow money from the local bank, but it denied her the loan. One day she got a call from Jan Strauss, her high school teacher and adviser, who was opening a tanning salon. Strauss’s father had been Blashack Strahan’s mentor in her restaurant. Strauss offered her a job, and after thinking it over, Blashack Strahan accepted. Now she had the job of managing the salon, which they opened in two months. Part of their marketing strategy was to rely on a grassroots, word-of-mouth marketing campaign to build the salon’s sales. This meant that Blashack Strahan had to make sure that all the customers had a great experience at the salon and would spread the word. To encourage it, they developed a referral program and offered customers a free tan if they brought a friend. There was another tanning studio in Alexandria, and Strauss’s strategy was to offer a newer facility with better equipment, an excellent brand and higher standards of customer service, and charge a higher price – $6 vs. $5 per tan. This was new to Blashack Strahan, who was used to seeing businesses compete with lower prices. Strauss installed timers so that the tanning session would end at a pre-arranged time rather than relying on someone pounding on the wall. They offered fresh towels, headsets, bigger tanning beds and cooler rooms in a new building. They became so popular that they had more than 100 clients in a day and started to show a profit in less than one year. Blashack Strahan learned about excellence and the value of a great partnership from Strauss. Even though Blashack Strahan was not a financial partner in the business, she was the operations manager, and she and Strauss ran the business as a partnership. They made a good team and offset each other emotionally. When one was down, the other was up. Blashack Strahan left Sun Studio when she was offered a sales position at First American Bank to cross-sell services. After that, she and her husband went to live in Sweden for one year.

Lesson: Do not settle for lower standards and do not necessarily compete on price. There is nearly always someone bigger and cheaper than you. You may get sales but not profits, and you may end up in a price war where the strongest win. Learn how to compete with higher standards of quality and service, and you are more likely to succeed. And never underestimate the importance of a good partner.

From Startup to Profits

5. Back to gifts. When Blashack Strahan returned from Sweden, a friend suggested they get into the gift-basket business. Blashack Strahan took a class at the technical college on business plans (many entrepreneurs proudly point out that they started their businesses without a business plan, but it is noteworthy

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that Blashack Strahan insisted on doing one for every business before she started and now encourages her sales consultants to create a “dream map”). When she finished the class, Blashack Strahan decided to get into the business on a full-time basis. Her friend, who wanted the business as a part-time hobby, started another business. At first Blashack Strahan sold baskets out of her home. Then she rented a kiosk at the local mall during the holidays. As her business grew and she could afford it, she graduated to a storefront and lived in the back of the store with her husband. There were other gift-basket businesses in the state, so she examined what they did and learned from them. Blashack Strahan not only experimented with the contents of the basket, but also with gift occasions and themes. She found that creativity in names, themes and designs had a strong influence on sales, and she added unique gourmet foods. Because Alexandria is part of the lake country of Minnesota, she started a fisherman’s bait cooler called “Bait & Bobber.” It included pretzels, nuts, snacks, chocolate fish and other candies, a fish-shaped pencil and soda pop. It was practical and innovative. To save labor and money, Blashack Strahan planned to build just one basket of each kind and try to sell via special order. But her first employee, a woman named Glenda, convinced her that “You can’t sell out of an empty basket!” She needed to have multiple baskets of each style to fill the store. People like to see, touch, feel and pick up the products they are buying, and want the “experience.” Blashack Strahan found that Glenda was right. Sales increased, and she built the business to more than 3,000 clients.

Lesson: Creativity is a huge part of standing apart from the crowd. Blashack Strahan learned that when she had little money, she had to get the maximum bang for each buck. To get that, she had to develop products for occasions that no one had thought of, and do it with flair and creativity. And she needed a plan. A plan tells you whether you are going in the right direction to reach your goals. Think before you act.

6. Know the time value of money and the money value of time. Although the gift-basket business grew, it did not reach Blashack Strahan’s expectations. She was netting about $6,000 per year and “putting in unreal hours.” Her son, Zach, was born and now she wanted to spend time with him. She realized the importance of being effective and efficient and wanted each business hour to show a reasonable return. She had never earned more than $14,000 per year, and she had to open her mind to greater potential and higher value. So she closed the store.

Lesson: Learn the scarcity of time. Blashack Strahan learned that it sometimes takes a child to help set priorities and goals. All of us have a limited amount of time. Those who accomplish much know the value and scarcity of it.

7. New direction in gifts. After she closed her store, Blashack Strahan was invited to join the local Holiday Crafter’s tour. She accepted. This was an annual event in Alexandria where shoppers would go on a tour of various houses, and five or six artisans would sell their products in each home. The event was held during hunting season, when Blashack Strahan often said “the men kill animals and the women spend money.” She offered six gift basket themes and also decided to sell seven of her best, easy-to-prepare food products from her gift basket business. The second year she included her very popular Reindeer Chips (flat pretzel chips dipped in almond bark with colored swirls) and offered those in the Holiday Crafter’s tour along with samples. When she began selling specialty foods at Care with Flair Gifts & Gift Baskets, she had been skeptical whether people in a small town like Alexandria would buy them. But she had found that they sold very well when combined with food tasting “experiences.” As Blashack Strahan puts it, “There are no new ideas, just tweaks on old ideas.” The results? She nearly sold out her inventory. But the idea for Tastefully Simple did not strike Blashack Strahan just yet. She repeated the Holiday Crafter’s Tour for a second year and sold out again. And she was still trying to find her mission.

She attended a personal-development retreat for four days in September, and at the retreat she participated in an activity to build a prayer arrow – a stick wrapped with various bright colored yarns

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and adorned with leaves, feathers, and other objects she found while walking in the woods. As she created her prayer arrow, she repeated this affirmation over and over: “I’ll know what I want by November 15.” The final step: Blashack Strahan planted her prayer arrow in the ground at Brophy Park.

She had the big “aha” for Tastefully Simple at 3 a.m. November 14 following her second year at the Holiday Crafter’s Tour.

Based on the two Holiday Crafter’s tours, she knew what she wanted to sell. But she did not know how to sell these products and build a great business―until she saw her solution in a magazine article about a company that had become very successful selling household décor items through home parties. She connected the dots between the products, the sales strategy, her skills, and her passion. She knew that everything about the concept fit.

• She believed that if her affordable indulgences sold in Alexandria, they would sell anywhere. Her products had sold out at the Holiday Crafter’s Tour and everyone was raving about them. Most importantly, the feedback was real. Customers had proved it by buying them.

• People loved to taste new foods and got hooked when something connected. And they loved to chat with friends, old and new. The home parties were ideal venues for tasting, sharing and having fun. They were fun experiences for everyone.

• She knew that more and more women were working outside the home and did not have time to make elaborate meals, but they wanted to pamper themselves and their families with foods that were simple and affordable. So she developed the concept of “small indulgences for busy lives.” This has since evolved into “The food you love, the time you deserve.”

• The idea appealed to her because she could sell directly to consumers and it did not require marketing money she did not have, or distribution channels she could not access. The home party was the ideal fit. It was scalable and she had read of others who had built very successful companies using home parties. She had attended a few home parties and people (particularly women) seemed to enjoy them. They bought products and some even chose to start their own business to sell Tastefully Simple products.

• Blashack Strahan knew she was the right person for the task. She had hit on a trend that wasn’t going away — busy people and great food.

Blashack Strahan knew her direction. She committed to it with her prayer arrow, and planted the seed to build a mighty oak.

Lesson: To grow, you need to seek the “abundancy” of potential. In other words, think big. Expand the pie so others can share, and together you can achieve great goals. To build a great business, you need high-potential business opportunities – the right products, right customer segments, and the right strategy that grows on the wave of underlying trends. Most importantly, it needs the special gifts and passion that you bring, and the meaning you give to those who join you. When you do find your mission, make a commitment and go into it with full passion. Few entrepreneurs succeed at this level with half a heart. But test, test, test. Make sure that the market is right for your products, and ready for you. Success requires one foot in your vision and the other in reality.

8. Find the right partner. Blashack Strahan got the initial inspiration for Tastefully Simple on November 14. The next morning she shared the idea with an acquaintance and local hair-salon owner named Joani Nielson, who immediately agreed to invest in the plan. Blashack Strahan respected Nielson’s vision and smarts, and this was the validation that she was hoping for, which gave her the confidence to move forward.

Blashack Strahan and Nielson were aligned in their vision to grow Tastefully Simple into a large company. After running her initial projections, Blashack Strahan was fearful that she would not be capable of running an $11 million company. She called Nielson, whose response was, “If you can grow an

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$11 million company, you can run an $11 million company.” This was comforting to Blashack Strahan.

But she was not totally sold on the concept of having a partner. Over the years she’d heard horror story after horror story about the disadvantages of having partners. So Blashack Strahan spent hours talking to various businesspeople about the pros and cons of partnerships. Every person but one suggested she do it on her own and without a partner. But Blashack Strahan’s intuition told her something different. Good partners who have complementary skills and temperaments can help to build a bigger business than one person alone. Blashack Strahan respected Nielson and knew she was an astute, savvy businesswoman. She offered Nielson 30 percent of the company. Blashack Strahan retained 70 percent.

9. Why 70-30? It took Blashack Strahan about three months to make this decision. She wanted to make the number meaningful for Nielson since she had agreed to invest $10,000 – a significant chunk of the investment in the business vs. $6,000 from Blashack Strahan. But because Nielson would not be working as an employee in the company and would not have any sweat equity in building the business, they agreed to an unequal split. Clearl

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