Keep your head up, and don’t be afraid to think big just because you’re small, there are real people selling there businesses for real reasons, the opportunity may be just right for you!

When you hear the word acquisition, you may like many think; big deals for big companies, and  alot of the time I guess it is, but we’ve just today completed our first purchasing web design business Good Use, to extend our web design business Decisive Flow, and it feels like a really great move. I’ve put a few points that guided the decision and may help you consider acquisition an option for growing your small business.

1. Have a reason to Acquire
2. Get into Acquisition thinking
3. Understand what you’re buying
4. Valuation & Funding
5. Make Everybody Happy
6. Make it Complimentary
7. Acquire with a Partner
8. Finding Acquisitions

1. Have a reason to acquire

Simply to grow is enough, this is the primary reason for acquiring, but for us we have some other pretty compelling reasons to acquire. We’re not far away from launching a new business we’ve been quietly pulling together over the last couple of months, a web based business planning tool PlanHQ. As a result both Natalie and my time is largely committed to this, so we needed a strategy for keeping the web design business, Decisive Flow, moving ahead still at full pace. Now at this point you might be wondering why with less time available for Decisive Flow we decided to grow it by buying another web design company? (Well, we may actually just be mad, but heres the rationale).

razón de adquirir (some 1am spanish)

Nat and me both really want to see Decisive Flow continue strong while we’re pushing PlanHQ, Its our little baby and it’s a good business so we want to see it keep growing. Also our time has fast been compressing with PlanHQ moving along at lightening pace, so it was time to dream up some smart way of growing the business with less of our ongoing time.

2. Getting into Acquisition thinking 

As I pondered options, at the same time I concluded a deal with one of our new business partners and angel investor in PlanHQ, consequently I felt mentally free of capital constraints and back into where I’m at my best, big thinking/moving mode. What we needed was to build a bigger business that can afford to support more good people, the only way to build the business in the time we’ve had/got, is to merge or acquire, the seed was planted.

Opportunities & experiences passed

On a capital raising trip in the US several years ago, I remember meeting a company in Florida who’s parent company was facing litigation, so the subsidiary was up for sale. At the time we had very little cash, and were looking or capital ourselves, it seemed crazy to think we’d be looking at an acquisition, but from a different angle we suddenly had a US market position immediately, which stengthened our investment/capital raisng proposition, so it became very achieveable. Unfortunately at the time the Board of the business I was representing didn’t see the world the same way so we had to stop talks. 12 month later the comapny had outstanding results, the parent comapny (NASDAQ listed) bounced back and the stock price had shifted from 22c at time of the possible acquisition to just over $2. Moral of the story, don’t be constrained by your percieved smaller position.

3. Understand what you’re buying: Domain Expertise

I’d never say there aren’t opportunities to buy buisnesses outside of your domain, there really can be remarkable deals everywhere, and at the right price, you may even just be a short term staging point while you find more buyers, broker a better deal, and make the gain in the resell. I’m no expert in this, I’m not an investment banker nor habitual investor, I focus on creating things and making money in the process, so I’ll talk about acquisitions where they help you grow or get into business you understand. In many cases, when it comes to an acquisition, there will be domain experts on the buy side, businesses already invested in the space who will know how to best leverage a business for sale, so they’re likely to provide the seller with a better valuation, plus they’ll have confidence to run it successfully. You’re best to be in this boat, buy something you know.

4. Make Everybody Happy 

A good acquisition is all about making everyone happy; 1.) the buyer, 2.) the seller and importantly 3.) the sellers/your new customers. In our case the Good Use Principal, James Westlake, is going to be travelling for some time and wants  to know the relationships he’s built up will be looked after in the same way as they have been if not better, and that he’s got a fair price for the business. We want to take on new customers who are already atuned to our approach, which is similar to that of Good Use, so we can serve customers well, you can never really buy customers, as they’ll make there own choice, you can only earn and retain customers, and the best way to do that is to be the right fit for each other.

5. Valuation & Funding

This naturally is a very important part of the above, making everybody happy, everyone needs to feel good about the valuation. Theres no hard and fast rules on valuation, it depends hugely on the specific circumstances, ideally as I’ve said, you want to be acquiring in your domain of expertise, so you’ll have a good idea of how much revenue you can get from the business and what control you have over lowering costs/increasing profitability. In our case, we’re small and pushing multiple ventures so spread thin on capital, and therefore can’t afford to carry much of a cash risk.

Return on investment & Staying cashflow positive

We’re financing the acquisition through debt/bank loan, so it’s crucial that the investment is cashflow positive from day 1, so that the debt can be serviced and paid off in a reasonable timeframe (In this case two years). So we did the valuation based on 1.) the base cashflow of the business (in this case monthly web hosting revenue), and 2.) Discounted sales forecast (very conservative additional sales to existing customers, as they all still require work to close.)

6. Make it Complimentary and Strategic

We know what our core competencies are: we’re experts in usability, web marketing, and business growth, so everything we do is centred around this. Our move into PlanHQ draws on these capabilities and is complimentary to Decisive Flow. We know that while our focus is on PlanHQ, we’ll be able to provide higher quality input into Decisive Flow, in a shorter time, so long as we have good people in it and partnerships around it. (And yes we’re putting people in it right now, so if you work with us don’t expect any slow down! : ) Strategically, it also enables us to build up talent inside Decisive Flow, and then potentially bring them accross to PlanHQ to assist, and vice versa.

7. Acquire with a partner

This may not always suit your circumstances, but an acquisition is an opportunity to build a commercial partnership with a company you want to work with closely, an existing or potential partner. The thing I’ve learnt abaout business partnershps over the years is, you’ve got to make money together in order to have the time and space to build the relationship and a joint strategy. We jointly acquired Good Use with brilliant opensource content management and web development company Silver Stripe, and this is a great way of widening the breadth of capabilities of our businesses, spreading the risk of the investment and growing each others businesses together.

8. Finding Acquisition Opportunities

My main advice on this answer to this relates to  another post I’ve done on growing a business you love, specifically the section on Talk to EVERYONE about your ideas!

There may be places where you can look to find an acquisition opportunity, businesses for sale… but more often than not, these opportunities are not promoted openly, they are instead circulated through networks, so you’ve got to build them and work them, good networks will yield!

How we found the Good Use Opportunity

I came accross the opportunity to buy Good Use in a conversation with someone I’d just met at lunch on a friday before heading away for a weekend at a family beach house in the lovely Ohope Beach where nat and me lived for a year or so. He was interested in my businesses and particularly experiences as an entrpreneur, so like everyone I ran him through what we’re up to, how I got here, what I’m seeing out there and what he could do to get himself out there. He then mentioned he’d looked at possibly buying a web design company, but had little idea how to assess it, I asked which one it was, and it was Good Use, a company very like ourselves, perfect! so after returning from Ohope surfed out with a tan and a smile, I contacted Good Use and we met immediately.

9. The Transition

Now we’re completing the transition phase, and starting to deal with the new enhanced workload, having left a rather large flow of work in the wake, I’ll leave it to Nat to say whether she’s happy about that’s going : ), but we’ll have someone coming on board very shortly. Any more is probably too much for this post, If there’s enough interest I’ll write more on Acquisitions and keep the story rolling.

A week or so ago, I wrote about the effectiveness of your business cards, and Matt from Polon was nice enough to inform me about Moo.

Moo is awesome. Moo makes business cards exciting and different. Moo is also mastering the art of word of mouth marketing by offering various promotions in conjunction with various very cool and talk-friendly companies (ie. 10,000 FREE sets of 10 Flickr mini cards, or 10,000 FREE sets of 10 Skype mini cards)

Redefining Business Cards 

The concept of the mini card is interesting for business owners, gone are the days where a business card was really kept. These days, they are simply the way of transporting your contact information from you to someones elses phone/contact database or other contact storage device, and once this task is complete, they are trashed.

Moo makes this process more fun - each card is different and very nice to look at, they are more convenient and earth friendly (being smaller) and they have managed to single handedly refresh the way I look at business cards. Excellent work :)

Keep and Eye Out 

Not entirely convinced by my gushy blog post? Keep an eye on their blog for the next freebie and send away to see for yourself (I seem to be a bit slow off the mark these days and am yet to be one of the top 10,000) 

You can look at the world in a million and more different ways, the trick to having a great day is to see things from the right angle, preferably the angle that makes you feel no less than fantastic!

1. Keep your vision clear, everyday

We all need a clear vision to get us really pumping enough to drive through each moment with a passion and consistency that leaves us looking back at the day with nothing less than, a woohooo, or that quiet confidence you get from knowing you're on fire. We've all got vision, but you don't have to always be visionary to get your vision clear, if you lose sight temporarily turn to those who can see, and feed off them until you're clear again yourself. Remember, vision is always yours, whether you've created something from scratch, or seen someone elses and developed it in your own way, its your vision.

2. Use Other Peoples Vision to wake you up

I've spent the majority of my business life full of ideas and vision, its what pulls me along, I feel if I follow it, life will get better everyday. Theres a lot ahead you can see, when you see something that fires you up try not to just sit looking at the potential of the future in your minds eye, you've got to head towards it, make it happen and roll around having fun in the middle of it once you get there. Vision and getting everyone involved and seeing there own view of it is what drives businesses, and any action. In business, I spend alot of time in detail making things happen in everything from designing products, to marketing and sales, supporting customers and sorting funding, but it seems that my mainstay is seeing and developing the vision so when someone in the crew, a customer, anyone who's connected to the business gets bogged down or lost in the woods, they can use me to get pumped back up, and inspired, be this person, or recognise who they are around you and use them.

3. A clear vision comes from living a lot of detail

If you subscribe to the thinking that theres ideas people and theres doers, then this goes right against that. People often say I've got great vision, All I can say back is, I just spend and have spent time involved in the details of enough things so that my mind can in its own time see whats really happening and present a vision. You don't just make a vision, you go around doing things with your eyes open and give your mind something to create a vision from. Even with people who don't think they have good vision, you ask whether they currently see something they don't agree, everyone does, you ask them how they could see it being better, they usually see at least something of the new way. This is the start of vision, it just needs to be expanded, you just need to follow it, find out more about why things are as they are, what things are part of changing things and get on board.

4. Connect what you spend your minutes doing with what you're really trying to achieve

In the end the big things you're trying to achieve require a bunch of detail, heaps of end on end moments to bring them to life. So you have to keep this perspective when you're in the moments. You may feel like you're low down chugging away, but if you feel like this, or use this sort of language thats just cementing a persepctive that you can and should let go of, in reality you're doing exacty what you need to do to get what you want, so enjoy the moments, they'll pile up soon enough into your dreams coming true! If you're unhappy with what you have to do today because your vision is further ahead, then you've got to get yourself further towards it, let the fact that you're not quite where you'd like to be, be inspiration for powering through whats on your plate so you get out and past it faster.

Virtually every day since we've been back in Wellington, there has been a different charity having their annual fundraising day. On my walk to work, I invariably scramble round my bag for coins, grab my sticker and be done with it. Generally, on the streets those with the stickers are the minority.

It all changed this morning.

Today is Daffodil Day, and I must say that the Cancer Society has fully grasped that they are part of this marketing game as much as any company is. These day's the charity market is chocka-block, charities face many of the same problems as small businesses do, which boils down to the challenge of how to stand out in the crowd. But they face a much harder problem: consumer fatigue - Basically, as the number of charities grows, so, it appears does the number of problems this planet faces. We still haven't cured world poverty or cancer, although we've been giving for years, we're kind of swamped with the enormity of it all, and we're starting to wonder if our money just falls down a dark hole.

Five Steps to Fundraising Success

1. Give the fundraising day a name.

   No more 'The SPCA's Official fundraising drive', it's Daffodal Day

2. Own the town.

   Because it's all about atmosphere. We love streets lined with yellow balloons, the feeling of spring being on the way, the thought of being part of something cool.

3. Get a cooler giveaway than stickers

   I'm not a huge fan of plastic, one use flowers, and wish we could get a real Daffodil, but in the meantime, it's generally accepted that a sticker is not worth donating for, but a lovely yellow flower is.

4. Choose your collectors carefully

   Yes that's right. Those tired and disillusioned collecters do nothing for 'team morale'. If you're going to do it, get the type of people who call out a cheerful 'thanks' when you pass them, or a 'good morning'. Also get school kids involved, especially polite ones who make us workers feel like there's hope for the future ;)

5. Make people feel good

   It is a well known fact that encouragement is better than punishment. Most charities seem to try to entice donations by showing us just how bad things are (starving children, dead whales etc etc), whereas Daffodil Day makes us feel positive and happy. Yes, there is a serious message behind it, and yes, we have a lot to feel guilty about in this world. But psychology is a funny thing and guilt is not inspiring!

The Cancer Society is a fairly substantial organisation, however, none of the above list requires a lot of money, just a bit of smarts and creativity - Simple and Loveable. Happy Daffodil Day!

If you're a small business and want to advertise on TV and live in the USA (the criteria sound quite stringent but really aren't), head straight over to Spotrunner to enter this very cool competition.

It's not often small businesses get anything for free so grab this chance while you can. If you are like me and excluded from the competition due to geographical reasons, don't be sad! You automatically get the spot prize of seeing a successful buzz marketing campaign in action (I got the news from Becky at Small Biz Survival, who got it from The Small Business CEO, who got it from…)

Entries close on September 5th - Good Luck!

When you are a computer geek it is difficult to find the time to leave your computer and get active. Web 2.0 has responded to this dilemma in true web 2.0 style, combining the real world, communities, goal tracking and feedback, all mixed together in simple, fun looking applications that give you that same 'I will really stick with it this time' feel as you get from infomercials.

When Tim from Silverstripe put us onto Traineo, I instantly fell in love. Aside from their magnificent website, what is suprememly cool is the fact that you nominate 4 friends to act as your excercise interrogators - if you fail, they will know and they will taunt you and make you feel like the loser that you are. Excellent. I guarantee you that if you pick the right friends, you are well on your way to the fit, happy lifestyle you've always wanted.

It's been a while since we profiled a web 2.0 tool. There are a few reasons for this, one of which is the 'stagnation' of the space - Although there are about 5 Basecamp clones launching weekly, the stream of tools that attack different problems is fast turning into a trickle. However, this is not a gripe, because I found one such tool, and I think it's great.

LogoPond Helps you Test Your New Logo

I f you're feeling particularly brave, push your current logo into the viper nest to see if it's time for an upgrade - or try your competitor's logo for a bit of Monday Morning Sport.

I break out in a cold sweat when I consider saying ANYTHING negative about Basecamp out in the open -  I have seen others bombarded with hate mail for mentioning 'Basecamp' and 'Not perfect' in the same sentence. However, over here, we're thinking very seriously about web 2.0 applications, what is missing and what holes need filling. So my eyes just got a whole lot more critical. 

We have a running joke about how 37 Signals can proclaim 'We just cut features from Basecamp' and have crowds flock to sign-up/pay more. How they have the perfect marketing pitch - 'You can pay us more to offer you less!'. For the most part I love it, but recently I worked on a project that involved 3 seperate businesses and 22 page layouts, and Basecamp left a lot to be desired.

3 Business 22 Pages, Not Huge Right? 

But a couple of weeks into it, I had no idea where each page was at, and the only way to find out was to trawl through the messages to locate the last message/comments posted about a particular page. Tim can vouch that it drove me insane. We even resorted to email just to de-clutter our project space!!! It struck me that we weren't so unique. All projects have tasks, and all those tasks need tracking. If you have more than about 5 individual tasks, I'm just not sure how Basecamp caters for you.

So Is Less More? Or is it Just Less? 

Maybe this is more of a rant about extreme simplicity in the general Web 2.0 space. Can you seriously use something that just doesn't do much? I'd say Basecamp is one of the more complex of the web 2.0 tools, and it's just managing to balance successfully right on that line between exceptionally cool, and kinda useless. And I wonder if it would be so bad to add a feature or two (I mean, Basecamp is quite well established now as a product), add a little task tracking functionality, even in it's most simple form (ie. Assigning messages/files to an item (task) on a to do list)? 

But 37 Signals are so clear on there 'less is more' approach that I can't help but be peer pressured into believing that I'm of the old school of complex software, that I'm just not making full use of the simple, elegant flexibility they offer. And even though I was left frustrated and confused at many points in that particular project, it was still completed on time, which may mean that 'project management utopia' simply means something a little different from what I had imagined?

If you ask most people in business if they would like to have an up to date and useful business plan that they feel they are going to achieve, most say absolutely! if you ask the same people if they have this plan, most say, no.

So Whats the problem?

Is it that planning is one of those nice to haves that you just dont have 'real' time for unless you absolutely have to because you're getting investment or applying for a loan? We think not. Nat and me have always have various versions of plans for our business as its continued to take various changes in course, and among other things we're about to start a new venture very shortly (more on this soon), so its again on of those required times to get right up to the moment with our planning,

not the main reason to plan, but one that certainly kicks you into gear. Also in my previous working life I was involved in international business development for a New Zealand energy efficieny technology business and my final work there was helping secure $11million in an 18 month capital raising effort that saw myself and the Chief spend 3 out of 12 months roaming the US from Sanfran to New York selling the story to investment bankers and VC's seriously re-hashing our buiness plan some 13 times. In the end the money came from home, New Zealand. You really do get sick to death of a this sort of document, but all the while understand its importance in getting you and the team focused, growing the business, and getting investment.

Business Planning Fails because:

• Provide limited value in daily, weekly activities
• Have to be read top to bottom
• Provide no means of monitoring, evaluation and feedback
• Difficult and boring to digest
• Very time consuming to maintain currency
• Lacks integration with other business activities, information and systems
• Difficult and costly to keep all stakeholders informed (eg. Investors, team members)

The Solution

Business plans need to be simple and loveable, and useful for your whole team, and anyone else who has a vested interest in your business (investors, banks…). Read

The Zen of Business Plans by Guy Kawasaki for some really useful ideas.

Business plans need to be simple and be something that you can immediately link to your daily actions. They need to be easy to update, and easy to monitor progress against. They need to provide people quick insight as to when they've changed and let everyone whos contributing to or benefiting from the plan know whats happening.

Put yourself together a simple and loveable business plan and bring your planning to life. 

We spend alot of time churning through new ideas, for our customers and ourselves. Having the luxury to think and work on new ideas is most often supported by having some business as usual ticking away, and theres a constant balance to be struck between the two. Natalie and me are working on a couple of significant business opportunities now, set to take our business to the next level, they fit with the 'simple and loveable' philosophy, but they're very new business streams additional to our marketing; branding and web design services and will take us back to the world of web product developers for another shot.

The hard thing is that new ideas are exciting and can quickly become the focus of your attention, which is essential to getting them off the ground, but the simple reality is that theres still plenty of client work in progress to be completed. And me and Nat are pretty much the business at the moment so we're stretched between the worlds, with a proportionally larger volume of the client work falling onto Nat. Which again is tough, because we really need to have both of our heads together on these new business opportunities, at the same time, and the last thing we want is to be imbalanced with our thinking, and Nats pretty good at keeping us on track with that.

So the answer is to let most of our clients down and focus on the new fun stuff : ), no ofcourse not, but getting the balance right is hard, so we're doing our best to find as many strategic angles on our clients projects as possible, so that we see each of them as key in taking us where we're headed, and that new opportunities for us still spell great results for our current customers.

PS. Existing customers if you're reading, we know you've helped us get here, and we'll always look after you.