Startups
5 Ways For Startups To Succeed Making Acquisitions
After catching up with Marcus Lim of Oneflare it has become very apparent that startups need to take a leaf out of their book and become bolder. To demonstrate that boldness, Oneflare has just completed its second acquisition of an Australian company called WOMO, after acquiring Renovate Forum last year. WOMO is Australia’s largest online review website and has over 422,000 reviews. Given that both Oneflare and WOMO target the local services market, this is a great match. To see a startup making these bold moves is very impressive and shows that they understand the power of cash flow and scaling quickly.
Australia is very lucky as we have been the market leader for these types of marketplace businesses and have had success stories such as Carsales, Envato / ThemeForest, Seek and 99 designs.
Oneflare is another startup to join the online marketplace niche, and they connect customers and service providers together that span across over 250 categories. They then send that request out to all the businesses that are relevant to that category. A customer can then hire a person to complete that service based on price and reputation. Their vision is to be the most trusted source for local services, and they do this by checking details about their service providers such as ABN, insurances and licensing. In order to be successful at local services online, Oneflare realised that trust was much more important to their clients than the price – WOMO really helps complete this circle of trust nicely.
Their vision is to be the most trusted source for local services, and they do this by checking details about their service providers such as ABN, insurances and licensing. In order to be successful at local services online, Oneflare realised that trust was much more important to their clients than the price – WOMO really helps complete this circle of trust nicely.
Their revenue model for an online marketplace is unique and rather than charging for a successful job, they charge based on a monthly subscription that gives the service provider a specified number of leads. Charging by the job can be tricky because people can go outside of the platform to avoid paying service fee’s.
A lot of startups overlook acquisitions because they don’t have the capital, and it’s an area of unknown to them because they have never acquired a business before.
Marcus is going to share with us 5 ways for startups to succeed with acquisitions.
1. Find your target
Once you have decided that you want to look at an acquisition Marcus says that the best thing to do is pick up the phone to some founders of potential businesses that you’re interested in and see where they stand. A lot of success with this comes down to whether the founders of these prospective companies are motivated to sell.
When you’re looking for targeted companies to acquire, consider things like market fit, a big user base, strong traction, immediate income accretion with a positive EBITDA (the business makes a profit), unique content and a strong business model that’s been around for a few years.
Also, look at what opportunities might exist if you acquire your target. Is there something that the target company you are looking at doesn’t do so well, where you can add value? In Marcus’s case, when they acquired Renovate Forum, the previous owner was not that tech savvy, so they had an instant opportunity to use their expertise in page optimisation, to adjust the position of the ads on the page, so that good content was not being deprioritised over ads. Googles algorithms picked up this change, and they began to see an increase of 30% in traffic.
The other tip to remember when you are talking with a target company for acquisition is that founders are typically emotionally attached to their company; it’s like their baby. In order for them to be comfortable to sell it to you, you need to show them that their business will have a good home with you, you will help grow their baby, take care of their baby and both businesses will be a perfect match.
Finally, make sure the target company aligns with the vision of your startup and don’t give up too quickly when looking for the ideal acquisition. Marcus had looked at 3 or 4 before he decided which one to go for.
2. Think about how you are going to fund your acquisitions
Oneflare have raised $1.5 million to date and have a strong cash flow position because they bill monthly and annually in advance. This excess cash has allowed them to save up and look for strategic acquisitions. The beauty of a strong cash flow is that they haven’t had to raise a lot of cash and thus been able to retain more equity amongst the founders.
Trying to raise money from private equity and venture capital to fund acquisitions is really difficult to do. The reason for this is because it’s very hard to know how much the acquisition is going to cost.
3. Scale is important
In order to scale quickly, Marcus said that acquisitions were the quickest way for them to do that. There were incumbents coming into their space, and the local service marketplace was very hot. By being able to make two acquisitions, they could build traction and users a lot quicker. With your startup, think about what your plan is and whether just building users in your niche is enough or whether and acquisition into a similar niche could be of value to you.
4. Understand whether you are going to acquire assets of a business or the business itself
In Oneflares case, they had made an acquisition last year of the Renovate Forum, and they brought the user base, the site and the traction, not the actual business itself. When you’re making these types of decisions, you need to look at whether the talent of the company is something that you’re interested in. One thing that is popular in the USA right now is acqui-hiring, which is the process of acquiring a company for its talent rather than assets or user base. If you were keen on the talent of a company, then you would probably be more likely to buy the whole company, not just the assets. If you have an acquisition in mind where the product is specialised, then you would want to try and keep the founders on as employees for as long as you can.
If you have an acquisition in mind where the product is specialised, then you would want to try and keep the founders on as employees for as long as you can.
“When you buy an asset you are not exposed to any outstanding liabilities of the old business, and you are also not responsible for the staff and their employment contracts”
5. Understand the process of negotiation and get good at it
When a company is for sale, the first thing you do is read through the information memorandum (investment summary, financials) and decide how much the business is worth to you. From here it’s time to get the boxing gloves on and go round for round in negotiating the final price. Ideally at this stage you hope there is no competitive tension (the opposite of Let’s Pop’s sale story) and that you’re the only bidder.
It’s always best to start at a price that is a value buy for you, and then the seller will usually come back with a higher price, and eventually you will probably meet in the middle. If the founders of the business are throwing out crazy numbers, then you need to come equipped with examples of similar types of acquisitions that have already been publicised. Your ability to present similar cases, in a simple form, will help you get the price you want. Oneflare used examples like when Yelp brought Qype and when Zomato brought Urbanspoon as Qype and Urbanspoon are both online review directories that are competitors to WOMO
Your ability to present similar cases, in a simple form, will help you get the price you want. Oneflare used examples like when Yelp brought Qype and when Zomato brought Urbanspoon as Qype and Urbanspoon are both online review directories that are competitors to WOMO
Once you reach the agreed price, you then sign a term sheet (a non-binding, indicative offer) where you need to work out payment terms. The payment terms Oneflare agreed on were two payments (industry standard), one payment up front and a second payment in 6 months from the acquisition. Out of these two payments, the first payment would usually be a lot larger than the second one
For Marcus, the due diligence took 4 weeks and they were really clever and used a checklist from when they were raising funds and had due diligence done on their company, as well as adding a few extra things.
After completing due diligence, it’s time to sign a SPA (Sales Purchase Agreement) which outlines the earn-out period, the payment terms and the final purchase price. As part of the SPA, there’s a warranty section that says that all the information they have given to you is correct, and they don’t have any outstanding liabilities. If later on something wasn’t disclosed then part or all of the second payment could be used to cover that liability. The only time this gets dangerous is if the loss from the liability is greater than the second payment you owe the founders. Once the SPA is signed, then it’s time to transfer the money for the sale.
If your startup has not made acquisitions before then, you need someone who has done this process. For Marcus, he hired a Commercial Director (Howard Leibman) who had a lot of experience, so he could guide them through the different stages.
Some books that helped Marcus with his startup journey were “How Google Works,” and “Good to Great”.
If you would like to know more about any of Marcus’s businesses, then you can visit Oneflare, WOMO or Renovateforum to find out more
Startups
What Remote CEOs Get Wrong About Their Home Office
Most remote founders will drop thousands on a laptop, a big monitor, a premium chair and maybe a standing desk converter. That’s the easy part. Then the whole lot ends up crammed into a spare bedroom with bare walls and a wobbly table, and by 2pm they can’t work out why their brain has packed it in.
Here’s the thing: if a founder is running a company from that room, it’s their headquarters. Compare the thought that goes into designing a proper company office with the care that goes into the room where the CEO makes every hiring call, every investor pitch, every product decision and every fire drill. These are the mistakes that keep showing up, and how to fix them before another quarter disappears into the fog.
Don’t Ignore How the Room Sounds
A remote CEO will agonise over the webcam, the ring light, the desk background and the microphone, but if the room itself sounds like a tiled bathroom then none of that gear will matter. Hard walls bounce sound around and every echo will muddy the voice on calls. The team and investors can both hear it, and most founders have stopped noticing because they’ve been in the same reverb for months.
The fix is absorption. Echo exists because sound has nothing soft to land on, so the more of those bare surfaces get covered, the tighter the room sounds. A few acoustic panels for walls placed behind and beside the desk will deal with the worst reflections, and there’s no need to treat every surface to hear the difference on the next call. The concentration benefit matters just as much as the audio quality, because a room that doesn’t rattle with every sound is far easier to think in during long strategy sessions.
Is the Desk Facing the Right Direction?
A surprising number of remote CEOs will face a wall all day. They’re convinced it helps them focus, but all it actually does is box them in and drain their energy across a full working day. Facing towards the room, or angling the desk towards a window, works far better, because natural light from the side will reduce eye strain and keep the circadian rhythm in check, which directly affects how well they sleep and how sharp their decisions are the following morning.
Monitor placement matters too. If the screen is placed directly in front of a window, every video call turns into squinting or a silhouette, and the glare will wear the eyes down by mid-afternoon. Light should come from the side, not from behind the screen and not from behind the person. Get that right and a CEO will look better on calls, carry less fatigue by the end of the day, and stop reaching for the headache tablets at four o’clock.
Does the Space Have Optimal Separation?
If the office doubles as a guest room, a storage cupboard, a laundry folding station or the spot where the kids do homework, the founder doesn’t really have an office. It’s just a desk in a room that belongs to everyone else for the other sixteen hours of the day. That blurred boundary between work and home will chip away at their focus every single day, whether they realise it or not.
Even a basic room divider or a door that closes can create the mental separation needed to switch on properly in the morning and, just as importantly, switch off in the evening. If dedicating a whole room isn’t possible, the workspace should at least look and function differently from the rest of the house. A distinct setup that the CEO walks towards, sits down at and leaves at the end of the day gives the brain the cue it needs to treat the space seriously.
Treat the Office Like It Matters, Because It Really Does
A home office isn’t somewhere a founder just ended up by accident. It’s the place where they make hiring calls, close deals, map out the company’s direction and handle every crisis that lands in their lap. If the room they run the business from got the same level of thought as the business itself, most of these problems would have been fixed months ago.
Sorting the acoustics means sounding like a professional on calls, not someone working from a hallway. Fixing the lighting keeps energy levels up past lunchtime. Rethinking the layout makes the room work with the day instead of against it, and drawing proper boundaries around the space tells the brain when it’s on and when it’s done. These are crucial operational upgrades, and the difference in performance will show up faster than you expect.
Startups
What to set up before you pay your first employee
The first payday was a transfer from an account with my name on it, and a text that said it should be there.
She had started on a Monday. We had agreed on a number. I had not agreed with myself on what that number became after tax, or who was sending the form, or what I was supposed to keep. On the fourteenth I moved the money, felt like a company for an afternoon, and put the rest on a list. The list already had the operating agreement on it. Lists were how I stored the parts of the job I did not want to do wrong in public.
A paycheck is a public document even when you send it quietly. It says the person is employed, that you withheld something or did not, and that the date will happen again. A transfer says you are generous and organized this once. I learned the difference when she asked, politely, whether she would get a stub. I said yes. Then I went and looked up what a stub was supposed to contain, which is not the order you want.
We had already written the piece for the stage before a payroll exists, pay stubs when you are not on a payroll yet. A stub you build by hand is a favor. A job is a date. The date is the part I had been treating as a mood. There is also the blunter version, about stopping the Venmo transfer once the work is a real job. This is the list I wish I had finished before the text went out.
What to set up before you pay your first employee is shorter than the software market wants it to be.
Classify the person before you celebrate the hire. An employee and a contractor are not a tone of voice. If you set the hours, supply the tools, and expect them on a Tuesday, calling them a contractor because the form is shorter is how a quiet year becomes a bill. If they are genuinely a contractor, pay the invoice and keep the agreement. Do not invent a third category called helping out.
Know the pay date before you say the start date. I had said the fifteenth because it sounded like a company. The fifteenth is fine if the money and the filing can meet it. Pick a date you can hit in a bad week. Twice a month or every other week is a choice, not a personality. Write it down and tell them. A surprise payday is not a perk. It is a sign the calendar is yours and not theirs.
Withhold what you are supposed to withhold, and do not catch it up from memory. Federal income tax, Social Security, Medicare, and whatever the state wants are not a tip you add in April. The amount that lands in their account should be the amount you can explain. If you cannot explain it, you are not ready to send it. A rough transfer that you plan to true up later is how people end up owing both the tax and the apology.
Get the forms before the first day, not after the first deposit. The federal withholding form, the work eligibility form, and the state version if there is one, belong in a folder that is not your camera roll. Direct deposit needs a voided check or the routing numbers, and it needs them before you are texting that it should be there. I have chased banking details on the morning of payday. The person waiting is not comforted by how busy the morning was.
Keep the business money in the business account. Paying a wage from the personal account feels faster and reads, later, as if the company was never separate from you. Run the payroll from the account that receives the client money. If that account cannot cover the wage and the tax, the hire was early, or the invoice was late. Both are fixable. Mixing the accounts to hide it is not.
Tell them how time off works before they need it. Even a plain rule, unpaid for the first ninety days, or a set number of days, is better than we’ll figure it out. People get sick in week three. A rule you invent while they are sick is a rule they will not trust.
When the payday cannot be a transfer anymore, I send people to OnPay. Not so a founder can become a payroll department. So the wage, the withholding, and the filings stop depending on a text from a personal login. Patriot is the other small-shop name that comes up when you do not want a platform that also wants to run your apps. Homebase fits if the work is hourly and the schedule is the actual mess. Gusto is already the name on the other payroll piece here, so I am not sending you back to the same door. If one of those is the system you will open before the fifteenth, use that one. I point here because the failure I kept seeing was not the logo. It was a founder who could move money and could not show what the money was.
The first run will look fussy. You will mistype a filing status. A direct deposit will need a day you did not leave. Stay long enough to finish one cycle and read the stub yourself before you forward it. If you cannot tell what was withheld, do not send it with a shrug. After that cycle, the text message can retire. The date cannot.
If you sell payroll software, or you are the person who cleans up the first year of transfers, write about the fourteenth, not a tour of the dashboard. The Write for Us page is where that goes. OnPay is already named. A pricing table in the first line will not go up.
She got the money. The stub came a week later than it should have. That week is the part I would set up before the welcome email, if I had the Monday back.
Startups
When the bookkeeping was still a spreadsheet
The spreadsheet had a tab for income, a tab for expenses, and a tab I had named “later.“
Later was where I put the receipt I could not read, the Stripe payout that did not match the invoice, and the flight I was pretty sure was the business and not quite ready to swear to. I updated the sheet on Sundays, which meant the business only existed, on paper, once a week, and only in the version of the week I could remember. If I had been out on the Sunday, the business skipped a week. Nothing crashed. That was the danger. A bad system that does not crash will run for a year.
I knew the rough number. I could tell you if the month had been better than the last one. I could not tell you, without opening four tabs, what I owed, what was late, or which client had paid the deposit and not the rest. The rough number was enough for a mood. It was not enough for a tax conversation, or for a hire, or for the afternoon a partner asked what the margins were and I answered with a sentence instead of a figure.
The receipts lived in a folder in the kitchen and in the camera roll. I would photograph one at a table and feel organized, then never send the photo anywhere. At tax time the folder came out, and with it the particular shame of a person who has been busy and also sloppy. Busy was true. Sloppy was also true. I had been using one to excuse the other.
We had already written the personal version of this, the stretch where the books lived in my head because looking at them felt worse than guessing. A spreadsheet is a step up from guessing. It is not a set of books. A set of books can be handed to someone else. A spreadsheet can be handed to someone else only if you are willing to sit next to them and explain the tab called later.
A few rules would have saved that Sunday, and none of them are clever.
Separate the money before you separate the software. A business account, even a plain one, is the line a spreadsheet cannot draw for you. Client payments go there. Groceries do not. If a personal card paid for a business expense, move the money across and note why, in the week it happened, not in April. The transfer is the record. Your memory of the transfer is not.
Photograph the receipt the day you spend the money, and send it the same day. A camera roll is not a filing system. A photo you did not attach is the receipt you will not find. If the amount is small, it is still worth the thirty seconds. The small ones are what turn a folder into a confession.
Do not count a deposit as earned when it hits the bank. A deposit is money you are holding until the work is done. I inflated more than one month by treating the first half of a project as income and the second half as a future problem. The future problem arrived, and the month I had felt good about had already been spent.
Look at who owes you, not only at what came in. An invoice that is thirty days late is not a vibe. It is a name. Once a week, the list of unpaid invoices is worth more than another tab of categories. I avoided that list because it meant writing to someone. Writing to someone was the job.
Keep one month clean before you try to clean the year. The year is how people quit. They open January, see the mess, and go back to the sheet, where the mess at least has their handwriting on it. One reconciled month against the bank statement will teach you the categories. Twelve will not, if you attempt them on a tired Thursday.
What I tell people now, once the money is real enough to be confusing, is to stop building a smarter sheet and put the transactions somewhere that already knows what a category is. I send them to QuickBooks. Not so they can become their own accountant. So the payouts, the expenses, and the invoices stop depending on a Sunday I might not have. Xero is the one a lot of operators prefer if they came up outside the usual small-business default. FreshBooks is simpler if the work is mostly invoices. Wave is the free door people try first. If one of those is the place you will actually connect the bank, use that one. I point here because the failure I kept seeing was not the brand. It was a founder who could feel the month and could not show it.
Getting the money right is a bigger job than software. Software is the part that stops the bigger job from being a reconstruction.
The first month in a real tool is annoying. Things land in the wrong category. A transfer looks like income. A Stripe fee shows up separate from the payout and you will want to call the whole thing a rounding error. Stay long enough to reconcile one month against the bank, not against your memory. That single month will show you the expense you had been calling marketing and the income you had counted twice. After that, the sheet can be a note. It should not be the books.
Set a tax set-aside the same week the tool is connected. A percentage, moved to a second account when the payout lands, beats a brilliant estimate in March. I did not do this, and the bill was not a surprise so much as a number I had agreed not to look at. Looking at it monthly is the value. The software will not feel the sting for you.
Hand the file to someone else once, even if you are not ready to hire them. A bookkeeper who can open the month without a call is the test. If they have to ask what “later” means, you do not have books yet. Pay for the hour. It is cheaper than the reconstruction.
If you sell this, or you are the bookkeeper who inherits these files, write about the tab called later, not a tour of the dashboard. The Write for Us page is where that goes. QuickBooks is already named. A pricing table in the first line will not go up.
The folder of receipts is thinner now. I still photograph them. They have somewhere to go, which is the whole fix.
Startups
What I sent the new hire instead of an HR system
She was starting on Monday. On Friday the offer was still an email I had not sent.
I had the number. We had said it out loud on a call that ran long because I kept explaining the work instead of the job, which is what I do when I am not sure the company is solid enough to hand to someone else. She asked about the start date. I said Monday, and then I heard myself say it, and the rest of the afternoon was me trying to make Monday true with a document I was editing in the browser.
The contract was a file a friend had used for a contractor. I changed the name. I changed the rate. I left a sentence in there about equipment we did not provide, and I only caught it because I read the thing out loud at the counter while the coffee went cold. Under that file, in the same thread, was a logo I had exported twice because the first one looked soft, and a note to myself that said “tax form?” with the question mark still on it. That question mark was the company. I just did not want to call it that.
I wrote “welcome” at the top of the email and deleted it. Welcome sounded like a lobby, and we did not have a lobby. We had a Slack she was not in yet, a shared drive with three folders, and me, hoping the tone of the email would cover the gap between a conversation and a job. I sent it at 6:40. She replied in twelve minutes. She was in. I felt the particular relief of a person who has moved the problem into someone else’s weekend.
Monday was ordinary, which is how you get fooled. She showed up. The work was real. She asked where files lived and I sent a link, and for a few hours I got to believe the email had been enough. Then the week kept going. She needed a login for a tool I was paying for on a card with my name on it. She asked, lightly, what the pay date was. I said the fifteenth, because the fifteenth sounded like a company, and then I went and checked whether the fifteenth was possible.
It was possible if I moved the money myself. It was not possible in the way she meant, which was a stub she could look at, a withholding number that was not a guess, and a place the next one would come from if she was still here in November. I had answers. They were postponements with better manners. Every “I’ll send that today” became another file in a thread nobody else could search. By Wednesday the thread had the contract, a photo of her ID that I should not have been keeping there, a half-finished form, and my own email saying “circling back” as if circling were a department.
I knew this shape. I had kept the numbers in my head for the same reason, because looking at the real one felt like opening a door I could still pretend was shut. A hire is that door with a person standing in it. You can be warm. You can be fast. You cannot be the system and also be the person doing the work she was hired to take off you.
We had already published something on the site about pay stubs for people who are not on a payroll yet. I understood the document. I could even make one. What I did not have was a place that produced the next one without me remembering to. A stub you build by hand is a favor. A job is a date that arrives whether you are inspired or not.
The gap showed up in small ways that were hard to joke about once she was in the room. She asked if she should be tracking hours. I said no, then wondered if I was wrong. She asked who to tell if she was sick. The honest answer was me, and also that I had no rule for what sick meant, because the company had never been sick. It had only been me, working through it. I heard how thin that sounded and I still did not fix it that week. I added it to a list in the same inbox. The list was called operations. It was a graveyard of Fridays.
A friend who had hired before me told me to stop building the welcome packet and put the person somewhere the next payday already existed. I sat on that for a week, because buying a system felt like admitting the email had been a costume. It had been. The costume was polite. It just could not withhold tax, replace a laptop, or tell her what happened if she was out on a Thursday.
When the offer is real and the company is still a thread, I send people to Rippling. I am not trying to turn a founder into an HR department. I needed the contract, the pay, the machine, and the logins to stop being four different acts of memory. Gusto is the one a lot of small teams already know. ADP and Paychex are what a bigger shop will mention. Justworks and BambooHR will cover pieces of it. If one of those is the system you will actually open when she asks about the fifteenth, use that one. I point here because the mess I kept seeing was not a missing brand. It was payday in one tab, a laptop login in another, and a new hire trying to work out which of those was the company.
The books being in your head is the same stall, one drawer over. A legal name on a form does not mean the form has a home. I had filed things properly and still been forwarding a W-9 from Sent. Those can both be true, and the second one is the one she feels.
If I had that Friday back, I would not write a longer welcome. I would decide the pay date before I said Monday. I would put the offer in a place she could open without me forwarding it. I would know, before she asked, who she tells when she is sick. The email can be short. It cannot be the filing cabinet.
The questions in the second week were reasonable. She was not demanding a department. She was trying to find out whether the job I had described on the phone existed on a Tuesday, when I was in another tab and the thread had slipped under a logo file. I kept experiencing those questions as admin. They were her checking whether she had been hired by a company or by a person who was still assembling one in the evenings.
There is a version of this that stays charming at two people and turns ugly at four. The second hire asks the first where the form is. The first forwards your email. You are now the archive, and you are also late to the work you hired them to do. I have watched that happen in group chats that started as a celebration. Nobody is cruel in them. The links are just old.
If you sell this, or you run the version a small team actually survives, write about the Friday before someone starts. Not a tour of the dashboard. The Write for Us page is where that draft goes. Rippling is already in this piece. A pricing table at the top will not get published.
She did good work. The thread was the part I had been introducing as the company.
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