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Student's project turned into a million-dollar baby

  • Article by: Dick Youngblood
  • Star Tribune
  • March 7, 2006 - 11:24 PM

When I introduced you to Joe Keeley four years ago, he was a University of St. Thomas junior who was generating $8,000 a year with an inventive business that recruited college students to be summer nannies and mentors for busy parents around the metro area.

By the time he graduated in 2003, he had expanded to a year-round service that grossed $25,000. That was only slightly more than the $20,000 he collected for winning local, state, regional and national college entrepreneur awards.

He's come a ways since then, however: Thanks to a partnership with Peter Lytle, a veteran investment and turnaround specialist, Keeley is president and CEO of College Nannies & Tutors Inc., a Wayzata company that grossed more than $500,000 in 2005 with a franchise strategy that combines the nanny concept with a chain of learning and tutoring centers. Three franchises, opened in 2005, grossed another $450,000 last year.

And if all goes according to plan, Keeley figures the chain will gross about $2 million this year -- $700,000 for the parent company and $1.3 million for the franchises. He said the plan is to open another five franchises this year, which should shift the revenue mix more toward the learning centers. They generated 35 percent of 2005 revenue.

Not bad for a whippersnapper who's just 25 and looks a couple years younger. But don't be fooled by appearances, said Lytle, whose successful acquisitions hereabouts have included Velocity Express (née United Shipping & Technology), Faribault Woolen Mills and the Creamette pasta business.

"He might be 25, but he has the business savvy of a guy twice his age," said Lytle, chairman of College Nannies & Tutors, functioning in part as a sounding board for his young partner. "He knows more about operations and marketing than people who have been in business for years."

Keeley credits both the St. Thomas entrepreneurship program and his business: "I was living a case study, applying concepts I learned in the classroom to marketing, planning and risk-taking," he said. "It was double the education."

But he acknowledged that the crucial ingredient in the success has been Lytle, who has invested about $1 million, used his connections to secure loans and applied his expertise to help develop the company's operational systems.

Keeley started his business after spending a summer as a nanny and getting several queries from neighbors asking him to recruit some friends to care for their children.

More important to his success, he soon added a customized education and role-model element to the business. Rather than offering only child care, he sought to identify a youngster's needs and interests -- trouble with math or reading, for example, or an interest in sports or music -- and then recruited nannies with strengths in those areas.

Kim Griffin, a Wayzata mother of two, applauds the concept: "It's much more than babysitting," she said. "They have people studying in fields related to working with children, so it's not only about entertaining them, but also working with them on everything from arts and crafts to manners to toilet training."

Keeley and Lytle met in 2003, when Lytle was keynote speaker for a program at which Keeley won the Minnesota Collegiate Entrepreneur award. Keeley's presentation wowed Lytle.

"He gave the most concise, crystal-clear description of a business I've ever heard," said Lytle, managing partner of Wayzata-based Business Development Group. "I thought, 'this kid really has it figured out.'"

But what really caught his attention was the educational side of the business. A former teacher of students with learning disabilities, Lytle had studied several educational concepts in his years in the investment business and saw a significant growth opportunity there.

So he offered to help Keeley finance a company that would include a learning-center component with the college-nanny operation, a combination he felt would support a franchising concept that could leverage their capital into rapid growth.

Since then, they've opened two company-owned learning centers as demonstration sites in Wayzata and Shorewood and sold franchises in Edina, Woodbury, Maple Grove and Phoenix.

The centers are served by a licensed psychologist who helps diagnose learning disabilities and other educational needs. There are licensed teachers and special education consultants involved in training college students, recent graduates and others as tutors. The company also partnered with several companies that provide reading, math and science programs and materials.

To at least one client, the results have been spectacular. Holly Adams is a Shorewood mom with a sixth-grade daughter who has been diagnosed with attention deficit hyperactivity disorder (ADHD) and dyslexia, a combination that created severe educational problems.

"But they [College Tutors] had exactly the reading program my daughter needed for her dyslexia as well as a niche for her ADHD," Adams said.

The bottom line: In little more than five months, "her English teacher says she's gained a grade and a half in reading comprehension," Adams said. And thanks to the tutors, "getting her daily homework done is no longer a battle."

Dick Youngblood • 612-673-4439 • yblood@startribune.com

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