Entrepreneur Kenny Schumacher recently went through the exit process with FE International for a second time. This year, he divested of his company, Delesign, a high-growth B2B recurring subscription business in the graphic design services niche.
As an experienced entrepreneur with a strong belief in the concept of delegating, Kenny grew Delesign to a flourishing business with 60 designers on staff. Below, he shares his best tips for aspiring business owners in the startup phase, great pointers on mistakes he made early on and the lessons he learned the hard way. He also has valuable advice to share for those who want to scale and set their business up for a successful exit.
What led you to build Delesign, and how did you identify this as a need in the market?
With Delesign, our specialty is delegating design. Many entrepreneurs aren’t too familiar, but it’s essential for their business.
I always had a decent track record of hiring designers for my projects. But many of my entrepreneur friends didn’t have great experiences with freelancers. They started asking if they could borrow my designers, and that sparked the idea for Delesign; taking care of the issue of having to find and hire a designer.
It can take months to find a designer, and even then, you may end up with someone who isn’t a good fit for you. For those that can’t afford a full-time, US-based designer, this is an excellent option at a fraction of the cost.
At Delesign, we want to take all that stress of design away from the entrepreneurs so they can focus their attention on what they do best.
I want to help them delegate so their business can see the same success as I’ve seen through delegation.
What makes you most passionate about Delesign?
I always had an interest in creating repeatable processes and using these processes to scale a business as I hire more people. I love business in general, but what I enjoy the most is the delegation aspect and how delegating can scale a business.
Delesign started with a relatively small team of four of us initially and then grew to a team of 60+ people. Scaling, growing the team, and delegating is where I’ve found the most joy and excitement in running Delesign.
Can you share more about the philosophy of delegating?
To be a successful entrepreneur, you need to understand that delegation is the key to growing and scaling.
When starting a new business, I try to do most of the tasks myself to understand them well. But once I know them, I’ll make processes and procedures and then hire and train others to take some of those tasks off my plate.
As I hire people, whether it be for marketing, sales, social media, or account management, it frees up time for me to focus on the next aspect of the business that’s not being delegated but is still high value. For example, after completely delegating customer support and the management of customer support, I might use the extra time I’ve gained through delegating to improve our marketing. I’ll then focus my efforts to delegate our marketing and continue this process.
A lot of entrepreneurs find it scary to delegate. They might believe the person they’re hiring won’t be as good as them, and a lot of the time, that’s probably true. But the reality is that even if they’re only 60% as effective at the job as the entrepreneur, it still gives you many more hours to focus on other areas. Over time the people you hire will get better and probably do that job better than you can. Start by hiring people for lower-value tasks so that you can focus on activities that really move the needle.
How has the feedback been from your customers?
The feedback has been great for Delesign, and I’m proud of the work we’ve done.
For those that don’t have designers, Delesign is a huge help because many of them have had negative experiences working with freelancers. It’s a big contrast for them, integrating their system easily by submitting their projects and getting design projects back quickly and with high-quality communication.
Clients who already have designers often have either budget restrictions or don’t have the time to spend months looking for another designer to help them full-time with their projects.
We provide high-quality designers that would otherwise be difficult to find on your own.
Can you tell us about the way your designers communicate with clients?
Our focus is user experience, and our goal has always been to make it a seamless process that integrates with the clients’ systems and processes.
Communicating with your designer should be just as easy as working with your employee.
Our clients submit their projects through our portal, and that’s created into a ticket. From there the designer and client can communicate through this portal. We also have a Slack integration. Clients can use our integrations to communicate with their designers through the app that we built or through Slack directly, just like you would with your in-house designers.
What made you decide to exit, and how did you know it was the right time?
Delesign was going well, but I wasn’t doing much for the business anymore.
We have managers in place, and the designers work directly with our clients, so they’re pretty much self-sufficient. Managers are also directly involved in the hiring and training process.
My biggest enjoyment has been scaling the businesses and getting it to a point where it’s scaled, or in the process of scaling.
My involvement with the business has been relatively minimal the past several months because of delegation. I was left with very few responsibilities, which was great, but it’s also not that stimulating.
I couldn’t add much value to the business in terms of what I was good at, which was delegating, so I wanted to let someone else do that and focus more on other ventures.
How long was the exit process for you?
Once it was listed, the sale was completed in a few months. It was quick. Before it was listed, I had to provide the financials and information on the business and that took a month to prepare. In total, the sale took around two months, which is relatively short. It was a smooth process with FE International, and I felt like the exit went very well.
What would your advice be for people looking to start a digital services SaaS business?
It’s never too early to start selling. Many entrepreneurs, myself included, can run the risk of spending too much time building something and wanting it to be perfect before it’s launched.
I made that mistake with one of my first products in college, which was an app similar to Yelp. We spent way too much time trying to build the app instead of selling the service and getting customers and restaurants onboard.
We were building to build, not building to sell. And we didn’t get any real feedback on the app during the process.
If your customers don’t like your product and you know this upfront, you’ll see that you either need to stop building or change the product. Just remember that most likely, you’re not going to get it right on the first take.
My experience with successful entrepreneurship has been making products that people would purchase upfront, such as subscriptions with the month paid in advance, compared to businesses that don’t make money in the present but have grand visions of making lots of money at some unknown time in the future. The ability to actually have the money in the bank allows you to invest it back in the business and grow it further, while also allowing you to pay yourself. And perhaps most importantly, having paying customers confirms that you have a product that people are actually willing to purchase. It’s an obvious statement, but many new entrepreneurs create a product that is free with the often mistaken view that they’ll be able to get millions of users in the future that can be monetized somehow.
While that can be a viable strategy for venture-backed companies, I’d suggest that the majority of new entrepreneurs start by at least getting their feet wet in entrepreneurship by building a business that sells a product or service that is paid by the customer upfront. Doing this will give you the experience necessary to run a successful business, and if at that later point in time you’re confident you can build the next Facebook – go at it!
What would your advice be for people looking to scale a digital services SaaS business?
Focus on different areas of growth. We did pretty much everything from cold email marketing to all types of ads. Eventually, we landed on a few strategies that worked well.
For us, that was Facebook ads and Google ads targeting specific keywords.
We would never have known what worked best if we didn’t experiment and try all the different options. Many of them didn’t work well, and we spent lots of money and got almost no return. But doing this allowed us to discover what worked best.
It’s all about experimenting with what works and what doesn’t.
If you have a low budget and can’t afford to put too much into marketing, do a few hundred dollars per month on various marketing channels and determine what works for your company. Keep testing and changing things up. Eventually, you’ll get something that works well for your business.
What would your advice be for people looking to exit a digital services SaaS business?
I was lucky in my first exit in 2018 because how I ran the business just happened to equate to a business that would be sellable. Inexperienced people would think because their business has high revenue, it’s automatically going to be a great business to sell.
The reality is that if you want to sell a business, it must be a sellable business, and a sellable business would have to have specific characteristics.
For most sellable businesses, they are delegated in such a way that they don’t rely on the owner’s involvement.
A potential buyer wants to buy a business; they don’t want to buy a job.
Ensure the business is sellable, scalable and delegated, so the owner isn’t the one doing everything. Have people and processes in place to ensure the business can run on its own without your input.
What’s next for you?
My goal is to be able to live fully off passive income. In line with that, I’ll be converting some of the Delesign business sale proceeds to investments that provide positive cash flow – such as real estate and a few others.
I’m always working on various business projects and you can stay up to date with what I’m working on through my personal website schumacher.jp.
I want to focus more of my efforts on using the profits from Delesign and converting it into super passive income. Perhaps certain aspects of real estate and some other investments. My goal is to be self-sufficient on my passive income, so I want to funnel more of my finances into those investment sources to reach that point in the future.