I'm the former CEO and founder of a boutique digital marketing agency in Chicago; and I just got acquired! I don't want to get too detailed about the history of the agency, because I really want this post to help anyone in any type of business or startup. However, a few things in this post may apply more to service providers or people in the digital marketing industry, but most of what I am about to share with you applies to any type of business looking to position themselves for an acquisition.
(Read the Press Release)
I started The Ocean Agency in 2003, out my two-bedroom apartment in Chicago. Within 6 months I had a team of three people working in my kitchen selling digital marketing services like web strategy, web design, graphic design, and SEO. A few years later we had about 30 employees on Michigan Avenue, in a 3,000 square foot office. It was unbelievable; we were working with some of the biggest brands in the world.
Sounds amazing right? You’re probably asking yourself why I would give that up to get acquired. Well, all I can say is that I'm one of the entrepreneurs that get very anxious to try new, bigger and better things. I wanted to enter the world of SaaS because as Steve Jobs once said, “Humans are tool builders.” I wanted to take advantage of the era we live in by developing online tools that people would pay for monthly. So, I began my journey of getting acquired, and here are 50 things I remember specifically doing differently to make sure my company was very appealing for a possible acquisition.
1. I got lean.
Remember the office I mentioned on Michigan Avenue? Gone! I moved us to a very cool and trendy loft in River North. My rent went from $6,000 per month to $1,800 per month. I also got rid of a front desk person, canceled my printer lease, and reduced my internet and phone costs by 80%. Those extra costs saved me, and made me, an extra $10,000 per month. So, not only was I making more money, but my company's value skyrocketed.
2. I decided to "work smarter, not harder".
This philosophy changed the way I work forever. Essentially, this means that if you want to make more money you’ve got two choices. You can either work harder or you can work smarter. I choose to work smarter, and my life has never been the same. In fact, most of the items on this list are examples of ways I started working smarter.
3. I found leverage.
Finding leverage allows you to focus on other more important things. I found leverage in an awesome assistant (you know who you are). One of the worst mistakes I made in my early years was not hiring someone to handle all of my tedious tasks. Those tedious tasks consumed 80% of my day and consisted of things like writing contracts, printing big documents, crunching numbers, setting up meetings, following up with prospective clients, and much more. My time was the most valuable asset in the company, and 80% of it was going to tasks that any entry level person could do. Like any good CEO, my time should have been focused on closing deals in sales meetings.
I want to give you an example of this because it’s really important. Let's say, as the CEO of your company, your time is worth $200 per hour. Well, if you have 8 billable hours per day that means you bring over $400,000 in revenue per year to your company. However, if all of your time is going to administrative, tedious tasks, valued at $20 per hour, then your value to the company is only $40,000.
So, my suggestion is to hire an assistant at around $40,000 per year, keeping your value at $400,000 per year. Now your company is up $360,000 annually.
4. I gave my employees incentive.
Every employee in my company made part of their salary through incentive, whether it was commission or bonuses. If someone wanted $50k per year, I offered them $60k; however, they would only a get $40k base, and have to earn the other $20k through commissions, bonuses and by reaching goals. Let me be clear, these were not just sales people. Everyone had to have incentive to work for me. I made more money than ever doing this.
5. I made my team self-sufficient.
I would not allow people to come to me with problems. They could only come with solutions. Then I would approve those solutions. I also made it super clear that all problems and concerns must first go to the team leader. If anyone skipped that process and tried to go to me, I would send them back to their team lead almost every time.
6. I started being brutally truthful when hiring.
I used to sugarcoat the job descriptions to applicants because that's what I thought I had to do to get the best people. Huge mistake. Once I started being brutally truthful with my applicants about the hard work and rewards, I started getting better employees who were much happier because they understood what they were getting themselves into.
7. I stopped being a control freak.
I use to be a control freak. I wanted a say in everything. That was a big mistake. I was making myself an irreplaceable part of my company’s successful formula. That means if I ever got acquired, I would have to stay with the company so it made the investor money. So, I decided to step back and let my team do their thing. Not only was I happier with less work on my plate, but they did an amazing job. You have to trust the people you hire.
8. I started focusing on retention.
For years I focused on sales, sales, and sales. Then I learned that is was 10 times easier to retain a client than to gain a new one. So I offered big incentives to my employees who resigned clients, not just sales people. That's all it took. We started selling and retaining more clients like crazy. I wish I did this sooner.
By the way, one thing that attracts investors and buyers is residual income, or income that automatically comes in on a periodic basis. In addition to company stability, this also helps investors and buyers forecast your financials. This makes the decision to invest or buy a much easier one.
9. I stopped chasing receivables.
I stopped accepting checks on residual income. In other words, if you had a monthly payment due to us, you had to pay with a credit card and you had to agree that we could charge it automatically each month. It was costing us too much money chasing after people for payments. Plus, bad cash flow can bankrupt a small business. So, if you wanted to do business with me, we needed a credit card on file. My peace of mind, saving on bill collectors, and positive cash flow was worth the extra fees.
10. I created simple contracts.
I simplified everything, starting with my client contracts. They went from 25+ pages to 5 pages or less, making it much easier for my customers to understand and say yes. This was a huge win for me. My sales skyrocketed, making my company much more attractive.
11. I created a process.
I implemented a mandatory process that my team took each new client through. Not only did this impress clients, but it dramatically improved our quality of product. Our process was: Discovery, Strategy, Execution, and Analysis. This process made sure each client got the right attention and that we did quality work that was up to my standards.
12. I became super transparent.
I realized that people buy from people so I hired a video team to shoot a video of our company. I also videotaped each employee and put them on the website. Clients loved it. One client even told me he used our team videos in seminars when speaking to small business owners.
In addition to video work, I made sure the team members, who would be working with the prospective client, were involved in every sales meeting because clients would rather work with people they have met, know and like.
13. I started listening to my gut.
I'm not a spiritual guy, but I do believe humans are born with natural instincts and vibes. You know when you’re making a bad decision, but sometimes you do it anyway because you hope it will turn out well. What you should do is always listen to your gut. It won’t let you down.
14. I put a huge focus on communication.
It's not who has the best service or product, it's who communicates it the best. ~ Lee Iacocca.
I must have said that 3-4 times a day every day, whether it was to my team or prospective clients. It's my favorite philosophy. In fact, that's why I stopped saying we were an internet, web design, SEO company, etc. Instead made sure everyone on my team, and all of our clients, understood that we were a "Boutique Digital Marketing Agency". Once we started communicating ourselves better, we started landing huge clients, like CareerBuilder.com.
15. I focused our trade.
In our early days we provided a ton of pretty good digital marketing services. We would do almost anything. This was another huge mistake, because we didn't do any one thing great. I didn't want to be just OK at a bunch of services. I wanted to be great at something! So, one day I cut about 10 extra types of services we did and just focused on two to three so we could be great at those two to three. This made a huge difference.
“You can do anything, but not everything.” ~ David Allen
16. I moved to simple accounting software.
I used QuickBooks for years. This was before their cloud based small business software. Back then, QB had 1,000 options in their software, but I only really needed about 10 of those options. It was too bloated with options and too difficult. Luckily I moved to Less Accounting, whose motto was, "All small business accounting software sucks, we just suck the least." So simple. So easy. I loved it.
17. I moved to simple payroll software.
I went from payroll to payroll company. All of them were too big and too bulky. When I found SurePayroll I never looked back. They are perfect for small businesses. Here's why. One of the biggest problems small businesses have is paying payroll taxes. You can get into a lot of debt very quickly, and if you’re not careful, you can go out of business because of not paying payroll taxes. SurePayroll took my employee payments and payroll taxes out of my bank automatically. I was never responsible for sending in payroll taxes on my own, which got me into trouble early on.
18. I started using better project management software.
We went through various project management software, including a poor attempt at making our own. Once I found Basecamp, it changed our business. It was super simple and developed right here in Chicago. Always invest in the right tools for the job. Otherwise, you risk losing money from poor productivity.
19. I made Monday morning checklists.
Like many entrepreneurs, I have severe AHDH. It's hard for me to stay focused. A game changer in my life was when I started making Monday morning checklists. Before I did anything on Monday, I had a cup of coffee and made my checklist for the week. Checklists have changed my life.
I even built an a free online website application so everyone can create and save checklists for free. Visit checkli.com.
20. I made checklists mandatory for everyone.
One of the most important books ever written was “The Checklist Manifesto” by Atul Gawande. He showed how every industry you can think of, from healthcare to airlines, uses checklists for everything they do. You can't have surgery or take off in a commercial airline without someone checking off items on a checklist. So, I figured if it was good enough for billion dollar companies it was good for my boutique digital marketing agency.
21. I provided alternative benefits, if I couldn't afford them.
This might seem harsh, but I decided to cut healthcare in 2010. I had a bad breakup with a business partner and I had to cut some corners to keep the company stable. However, I still offered a solution. I hired a lot of younger people who didn't even know how to find a healthcare plan. So I made sure a rep from Blue Cross Blue Shield came in and spoke to each new employee. The employee at least had an option to get healthcare, even though I didn’t pay for it. I never heard a complaint.
22. I created a livable and fun work environment.
I added comfy couches, video games, and basketball hoops everywhere because I wanted my team to enjoy being at work. Plus, nothing takes the stress away like an old school Golden Eye tournament.
23. I only rewarded productivity.
I realized that my team didn't work on an assembly line, nor was it their job to make phone calls all day. So, I stopped judging them based on whether or not they were in the office sitting at their desk. They were judged by two things: the numbers on the board and client satisfaction.
24. I met with my entire company once per week.
An awesome employee of mine once told me years ago that our biggest problem was no internal communication. They were so right. So I started holding mandatory Monday morning meetings were we talked about the week’s goals, the previous week, sales and other things.
25. I encouraged working from coffee shops.
My team really loved this because sometimes there can be a ton of distractions at the office, whether it's people chatting or phones ringing. Again, my team was judged by productivity, not how long they sat at their desks.
26. I empowered my team with responsibility.
I made my team take 100% responsibility for every client problem we had. No excuses ever! If a client wasn't happy, it's our job and responsibility to fix it. This may sound like a typical cliché (the customer is always right) but here's why I did that: if you blame other people, like clients, for your problems, you will never change because you feel you did nothing wrong. So, the person who changes has all the power to control the situation. Taking responsibility is the most powerful thing you can do in business.
27. I offered flexible work hours.
The Ocean Agency was a small to medium size business. So when a bigger company, like the Chicago Bulls, offers one of my employees a bigger and better offer, I couldn't compete. So, I focused on little things that bigger companies wouldn't do, like flex hours. My team could come in any time before 10am and leave after a full day’s work. This was huge for my team. If you had kids or a late night, no rush. Just come in and get your work done. I also never counted sick days or vacation days. The policy was pretty much, you know and I know when you abuse the system. Yep, I always paid for all sick days and holidays.
Yes, the Chicago Bulls, who I am a huge fan of, grabbed one of my favorite employees. But if someone had to snatch this guy, I'm glad it was my Bulls.
28. I created scales to measure everything.
Doctors often ask patients to communicate pain on a scale of 1 to 10. So that's what I started doing with my employees. I would always ask how happy they were and how stressed they were on a scale of 1 to 10. It may seem impersonal but it worked. Eight was the magic number. If they were at least 8 out of 10 on the happiness scale, I didn’t worry; and if they were over an 8 on the stress scale, it was time to worry and possibly jump in to help them find solutions to any problems they were having.
29. I made our goals visual.
I hung a white board with our company monthly revenue goal where everyone could see it. Because my team was incentivized, I saw them walking by the big board every single day to see if we hit our monthly goal yet, because if we did, they got a huge bonus.
30. I visually held PM’s and AM’s responsible.
In addition to the big company goal board, each project manager and account manager had goal boards where they had to list monthly goals and dates. That way everyone, including me, could walk by their desk and see who is hitting their goals and who is not.
31. I stopped being friends with my team.
I love people and I love to have a good time. But I had to stop doing that with my team. I had to draw the line. Back in the day I think I hung with employees a little too much and it really hurt my credibility, authority and respect. Team outings are fine, but you have to draw the line.
32. I stayed inspired.
I always try to find inspiration. For me, I it in movies, TV shows and documentaries. Some of my favorites are “Tucker: A Man and His Dream”, “The Social Network”, “Gung Ho”, “Steve Jobs: The Lost Interview”, “Silicon Valley”, “The Profit”, “Shark Tank”, “Kitchen Nightmares”, “Pursuit of Happyness”, “Office Space”, “Pirates of Silicon Valley” and a ton more I am forgetting to mention.
33. I sold rockstars.
I made sure my team knew that we were all rockstars, and it was mandatory to speak about other team members in client meetings as if they were actual rock stars. “Oh, Jane, she is the best in the business. You will LOVE working with Jane.” After all that's what clients want. They want rockstars working for them.
34. I paid myself.
Every business goes through tough times. I remember a few months, back in the day, when I didn't take a paycheck. That had to stop because it was depressing. I made a decision to always put payroll first then me. If rent was late, then it was late, but I always got paid second, after my team to get paid, but I was never last. This kept me motivated and inspired during tough times because nobody likes working their ass off and not getting paid. It’s too depressing.
35. I started saying, "no" to bad deals.
Remember this, some of the best deals are the ones you don't make, because sales don't always equal profits. Sometimes you’re just keeping the lights on. I remember one year I made X amount of dollars. Two years later Ocean doubled in revenue for the year. We were doing awesome, until I woke up one day and realized I was making the same salary as I did two years earlier. Essentially, I just did double the work for the exact same pay. Bummer. Understand your margins and what makes you money. Not all sales make money.
36. I personally created new revenue backups.
Years ago, I started creating back up revenue sources. I didn’t want all my eggs in one basket. In fact, that's how MySiteAuditor got started. I wanted to create more and more opportunities for myself. My acquisition is awesome, but I'm not going to retire on it. Luckily my backups are now startups that are generating a ton of revenue.
37. I always stayed a student.
Nobody knows it all, especially in the digital or tech industry. I forced myself to always read the top blogs and watch the best videos on everything going on in the industry. In fact, I made it a job requirement for my employees. I told everyone that if they weren't studying they weren’t doing their job.
38. I stayed very ethical.
So many companies in my industry cut corners to make money and be successful. But I always tried to stay on the ethical path. That's why I have seen so many companies come and go throughout the years. Call it what you want, karma, laws of probability. Whatever it is, the more good you put out in the world, the more comes back.
39. I started using contractors to keep overhead low.
One of the worst things you can do is hire too quickly. Having too much overhead is a recipe for disaster, so I started doing contracts to hire. That gave our team enough time to meet our new team members before we made a huge commitment. It also kept our expenses down because a contractor only gets paid for what he or she is working on.
40. I paid contractors when we got paid.
Cash flow is king. I was so stupid back in the day. I use to pay contractors on their schedule and when they finished the job. Then one day I stopped. I told every contractor that they get paid when we get paid or we can't work with them. This made a huge positive impact on cash flow. When we got a down payment they got a down payment. When we got a final payment, they got their final payment. Cash flow was so much better after I started doing this because we had been paying people before we got paid. Crazy, right?
41. I signed every check.
As I may have mentioned, I once had a business partner, but that was over once my accountant identified thousand and thousands of missing money. When that happened I remembered something I heard about Oprah Winfrey. To this day she signs every check. I'm not sure if she really does that, but I didn't care. It sounded like the right thing to do. Nobody ever had access to my bank accounts again, and I always signed every check.
42. I moved super close to my office.
I hate commuting. But it was my company, so why should I have to. I wanted to love going to work every day, but I dreaded commuting, so I moved about a 10 minute walk from my offices. This made a big different on my happiness scale ;)
43. I began leading by example.
You know that saying "do as I say, not as I do"? Well, that's for parents. It doesn’t work in an office. You need to lead by example. If I was always late, my employees would be late. If I dressed like a bum, they would too. A CEO is a leader, and therefore, should lead by example.
44. I found a new focus.
I found a smarter way to make money in SaaS (Software as a Service). Luckily I found leverage so I could find time to focus on it while I was the CEO of The Ocean Agency.
While in the digital marketing industry I noticed a big problem. Digital marketers, like SEO and web design companies, needed a way to instantly generate white-labeled website audits for prospective clients. Not only did I develop this tool, but I also added a feature that allows my customers to embed the audit tool on their site to generate more leads. This became my new focus.
Learn more about my new focus at http://mysiteauditor.com
45, I reached out to top entrepreneurs.
One day, I decided to Google, then email some of the top entrepreneurs and CEOs in Chicago to ask for their advice about how to get Ocean acquired. One guy, a professor at the University of Chicago and CEO of a very large company, gave me five minutes of his time. To make a long story short, he ended up introducing me to my buyer. Sometimes, you just have to pick up the phone.
46. I found an outstanding attorney.
My original attorney wanted to charge me $30,000 to do the acquisition paper work. I guess he saw huge dollar signs. After making a few phones calls, my accountant hooked me up with my new attorney. She did an outstanding job, and only charged me a few thousand.
Shout out to Christine Hunt, my awesome attorney!
47. I found a STRATEGIC buyer.
I have had a few offers to buy Ocean out in the last few years. But none had impressed me more than Chris O'Neill at Logical Media Group. My buyer was already in my industry, except he was in a different vertical. This made his decision and the transition easier because he wanted into my vertical and this was an easy way to do it.
He genuinely wanted to get to know me, my company and my team. It took us about 10 months to close the deal, but I felt good because I got to know my buyer so well.
48. I found a buyer who put his family first.
I had a few offers to buy me out over the years, but none was better than the person I found. He was great guy with a great family. In my opinion he had more to work for, because he had more to lose. This made me feel so much better about whom I was going to spend the next few months with as he acquired my company.
49. I recorded sales meetings.
I did this for my new buyer and his sales team. It was really important that he understood what I said and how I said it in sales meetings. After all, he didn't want to rock the boat; he just wanted to buy the boat.
50. I let it go.
The Ocean Agency was my baby. This is something every entrepreneur goes through. Well, babies grow up and eventually they leave the nest. If I wanted to accomplish new goals and achieve new dreams I had to move on. So, I let my baby go, knowing she was in good hands.
One of the winningest basketball coaches in NCAA history, John Wooden, believed that if you focus on the little things, big things will happen. So that's what I did. I focused on the little things you see above; and because I did that, big things are now happening.