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When Saloni Doshi and her husband decided to go into business together, they didn't want to bootstrap on their own. Instead, the couple decided to acquire a business already up and running. But they didn't want just any business. They had a detailed list of criteria, including supporting the environment and making a difference.
They settled on EcoEnclose, in Louisville, Colorado, which provides eco-friendly custom packaging options to firms that ship goods, and bought the business in 2015.
“Many of the businesses we work with are innovating in unique ways, such as making skateboards out of discarded fishing line," Doshi said.
1. Please describe, in three sentences or less, what your business does.
EcoEnclose provides e-commerce companies with Earth-friendly shipping solutions. We are a one-stop shop for 100 percent-recycled poly mailer bags, shipping boxes, paper mailers, shopping bags, padded envelopes, void fill, tape and more. We offer custom-cut shipping boxes and custom branding on all of our packaging solutions at relatively small quantities, helping our clients create unique, memorable, eco-friendly experiences for their customers that lead to improved retention and sales.
—Saloni Doshi, COO, EcoEnclose
We serve about 7,000 small to mid-size e-commerce businesses that have a commitment to environmental sustainability and are seeking more eco-friendly packaging options to ship their products. Our clients range from creative artisans who sell their goods on marketplaces like Etsy to well-known multi-channel brands with a strong e-commerce presence. The companies we serve span many industries, including apparel, health, beauty, toys and children's goods, outdoor gear, food and beverage, jewelry, art, home goods and more.
2. Why did you choose to acquire EcoEnclose?
By the time we found EcoEnclose, we had been searching the Front Range [mountains in Colorado] for the ideal business for three years, so we knew as soon as we learned about this company that it was an excellent fit.
We're avid outdoor enthusiasts and are committed to sustainable practices personally. Additionally, having run a social venture and helped develop the Northwestern University Kellogg School of Management's social enterprise program, I was drawn to EcoEnclose's core mission of making the business of shipping products more eco-friendly.
Given our passion for the importance of entrepreneurship and small business, we loved that EcoEnclose is a business whose focus is supporting the work of mission-minded small businesses worldwide. In 2015, we served over 4,000 small-to-medium-sized businesses, most of whom have a stated commitment to the environment.
The founders had pulled together an excellent team, all clearly exceptional in their role and commitment to the company's success.
3. Why did you decide to acquire another company?
Kyle grew up in small business (his parents owned and operated his hometown's plumbing and heating company), so he'd seen firsthand how small businesses build communities and create economic opportunities. I went into business school after working with a nonprofit, and quickly caught the social entrepreneurship bug, recognizing the power of business to make social and environmental change. After business school, we began looking for a company to purchase—one that was a solid small business that we believed in and could invest in and grow substantially, giving us a chance to run all aspects of a single operation and create great jobs.
The process took three years of networking with brokers and bankers, searching for listed businesses, evaluating businesses through due diligence, and then a lot of negotiating. With each business we assessed and pursued, our framework and requirements got clearer, we learned more about what got us excited, and we better understood our financing options. By the time we found EcoEnclose, we felt confident that it was the right fit and put our energy into making the deal happen.
4. What advice would you give someone looking to acquire a company?
First, know it will take awhile. Keep your day job while you search for the right business and investment. Second, get clear as quickly as you can on your investment framework. What size business are you looking for? What geographies are you comfortable with? What type of business—manufacturing, online, services, etc?
Think about the skills you are uniquely qualified to bring to a business to help it flourish.What does that mean for the business characteristics you are looking for? For example, if you excel at cost cutting and operations, consider finding a business with excellent sales and growth, but whose margins aren't at industry standards. If you excel at sales, look for a business with an excellent product or service, whose current owner is not an excellent salesperson.
Develop your likely financing strategy early, and if possible, get pre-qualified for loans or line up equity investors. If you anticipate pursuing a loan, know that the process will take a long time and be upfront with a business's seller about this strategy.
Finally, try to avoid analysis paralysis. Do your due diligence. Study the company, the industry and the team you'd be inheriting. Run your numbers and understand the potential return opportunity. But recognize the limits of this type of analysis. At some point you have to listen to your gut and instinct (and your heart). Does the business make you excited? Can you really and truly picture yourself getting excited to go to work every day (even on the real drudgery days) for this business?
5. What are the biggest mistakes businesses make when purchasing packaging?
Businesses that sell durable, high-quality goods often make the mistake of treating their e-commerce packaging and shipping strategy as just another operational step. They think only about cost and not about the entire customer experience. That might be fine when you're selling utility items like diapers or laundry detergent. But, for a company selling something special—such as unique apparel or perfume or a monthly subscription box—a thoughtful packaging experience can go a long way at building a brand, solidifying customer loyalty and encouraging referrals.
Search for #unboxing [on social media] and you'll quickly come across superfan customers who love packaging so much that they promote their package opening process—a pretty amazing way to acquire new customers. Additionally, a wasteful packaging experience can really frustrate a customer, and disincentives them from ordering again. Search for #packagingfail or #excessivepackaging and you'll find countless consumers frustrated with something they've received.
Finally, companies don't build the exchanges or returns process into their packaging and customer ordering process. An e-commerce company that makes this process seamless by providing return labels, instructions, and packaging that can be reused for this step can better maintain a long-term relationship with their customer.
When a company invests resources in searching for and designing a packaging strategy that reflects their brand and their values, it conveys that their products are high value and that they care deeply about their customers.