What does it take to build a SaaS product from scratch, turn it into a multimillion-dollar company, and then exit for a “life-changing” amount of money? If you ask Dave and Jon Dickson, the father and son duo behind MyShopManager, a SaaS tool for auto shops, the answer might be surprisingly simple: learn to scale, plan your exit from the start, support your employees and emphasize customer service.
Before joining forces, Dave and Jon were both successful businessmen in their own right. Dave had built a successful consulting business that helped auto repair shops grow their customer base, while Jon was thriving in real estate.
But over lunch one day, their paths shifted.
“It’s just dad and son having lunch,” Dave says. “But I started to realize Jon might be able to do something with my business, and he started to realize that I had some interesting stuff to work with.”
Combining their skills – Dave’s customer-focused, people-first, one-on-one, analog approach and Jon’s forward-thinking, data-driven knack for optimization, sales and streamlining – they had a recipe for success.
Streamline Your SaaS Business
Before Jon came into the picture, Dave was running his consulting business one customer at a time and would coach them through the process of improving their shops. It was working, but it was hard to scale. “I helped hundreds and hundreds of shops. But it didn’t scale, which is where Jon’s story comes in,” Dave says.
When Jon started working with Dave’s consulting business, the first thing he noticed was the way they did everything by hand. Jon introduced marketing ideas that simplified their whole process and changed everything.
Jon jokes, “They would meet a new customer, fall in love with him, learn their whole life story, meet their wife, meet their children and talk about their feelings together. That’s great, it works, and we still love those old clients! But, it’s also not scalable. “
The first big breakthrough came when Jon wrote a program that made it possible for the auto shops to hook directly to the MyShopManager database. Instead of sending Microsoft Excel spreadsheets back and forth between them, the program would instantly send Dave and Jon the shop’s customer data.
“When a shop came on board with us, I could say ‘go install this thing,’ and we’d have all the data stream up to our side continuously. Then, we could do the marketing and reporting whenever we wanted to. It started with postcards, that was our first thing. But, as we began to scale up, we started to explore other marketing avenues,” Jon says.
The second breakthrough followed when they started using the same customer data to send automated text messages.
Jon says, “We would start by texting just a few of our client’s best customers. We would tell the shop owner that we won’t be blasting a bunch of people with ‘10% OFF YOUR NEXT OIL CHANGE!'”
The key, Jon found, was to send soft, personal messages because the texts were coming from small individual shops. It would say something along the lines of, “Hey, it’s Joe from Joe’s Auto. We haven’t seen you in a while. How’s the Honda running?” Jon says these were simple, friendly and open-ended texts.
The effect was instant and profitable. “A message like that to 100 good previous customers would get 95 responses. Even if they are not buying work right away, people would respond positively because they have a relationship with the shop owner. They would have nice conversations through our platform and, consistently, with a 100 of those conversations, you’re going to sell 10 or 20 repair jobs.”
That’s when the business took off.
From there on out, their focus was scaling. Finally, Dave and Jon found a simplified way to manage their existing customer base and could focus on acquiring new customers and hiring a team.
Set Yourself Up for an Exit From the Start
The father-son duo had salability in the back of their minds from the beginning. Dave explains, “When we were up in my attic, just getting started, we asked ourselves, ‘Does this make us sellable? Is there anything we’re doing that would cause us not to be sellable?”
For MyShopManager, that meant making sure everything they built was scalable.
“We would go back and forth on certain things, and Jon would challenge me and say, ‘Show me how it scales,’ and I’d be like, ‘Well, I could hire a bunch of sub coaches.’ He’d say, ‘No, I don’t want to do that.’ And I’d realize that it wouldn’t scale. So that’s how we would work through those things,” Dave says.
Dave’s advice is clear: think about your exit as early as possible and consider how your business will look to a potential buyer. Then, take actions from day one that make the company attractive down the line.
“Set up your business in a way where it could run on its own, regardless of whether you’re involved or not. That’s attractive to a buyer, and that’s how you know you’re ready to sell,” he says.
A People-First Approach to Scaling
There’s a saying: you’re only as strong as your weakest link. This mindset guided the two entrepreneurs while building their team. When hiring programmers, they looked for a small group of skillful and “bought-in” coders, meaning the ones they hired would have to support and participate in building the company actively.
A team of people with “skin in the game” is the best option, in their experience. And, they had a standing rule for their employees: no side gigs.
“Our philosophy was: if you offer to pay more than market, you attract the best talent you can, and you get to be choosy, instead of paying bottom dollar and managing unhappy, unskilled, unambitious employees. We didn’t want any of our employees to be doing side gigs to make ends meet. We wanted to pay enough to have the full attention of the best people we could attract,” Jon says.
They attribute their success to their people-first approach.
“It’s all about the people,” Dave says. “At the end of the day, even the most tech-oriented people have feelings, and they like to go to a place that’s happy to work.”
Early in his career, one of Dave’s mentors shared a piece of advice on keeping employees happy. It’s a lesson he implemented and has lived by: “Customer satisfaction through employee satisfaction, resulting in long term profitability.”
“I think the environment you create in the workplace, even if it’s remote, even if it’s happening on a Zoom meeting instead of in an office, that’s a vital part. You can’t scale without that. Scaling doesn’t happen without the people,” he says.
Communicate Directly with Your (Unhappy) Customers
High-quality customer service is the heartbeat of any SaaS business. When done right, it prevents churn and helps retention rates. It’s a must if you want to succeed.
“Our customers constantly left us five-star Google reviews. The business still has hundreds of five stars and maybe only one or two one star reviews, but even the one star reviews we would personally call up. We would ask them, ‘What did we do?’ And we often gave them all their money back. If they paid us for two years’ monthly fees, we’d give it all back and say, ‘Sorry, we screwed up,'” Jon says.
Dave emphasizes the importance of honest feedback. When you’re at the top, the unhappy reviews don’t always reach you, so Dave and Jon would find their most frustrated customers and reach out to them personally for an open, honest conversation. “We would find out how we disappointed them and ask, ‘What can we do differently?'”
Some customers would be challenging to please, no matter what. But, even then, they would stand by their “the customer is always right” mentality. “Done right; it’s really powerful,” Jon says. “What it means is that when the customer spends a dollar with us, they should always be able to see how they get $2 in value back. And when I pay an employee, they should always feel like they’re at the peak of their career, making more than they have ever made before, and doing better work than they have ever done before.”
“At the end of the day, our customers were happy with us; our employees were happy with us. The machine worked. That’s a business that scales forever because everybody’s winning,” Dave says.
Beginning with the end in mind, as Dave and Jon scaled MyShopManager, and ultimately exited, their focus was to steer the business in a direction that would make the company salable down the line. A mindset that paid off in the end. They made decisions along the way that rendered their business attractive to buyers. Focusing on streamlining processes that were too cumbersome proved to be worthwhile in the end. Even as numerous procedures were optimized, they never lost sight of the people.