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When two become one: Making sure a merger maximizes efficiencies without creating redundancies can be tricky

Oct. 29, 2007
The following was showcased in the Toronto Star's Small Business section on October 11, 2007. 

Oct 11, 2007 04:30 AM
Rosie Del Campo
special to the star

Max Kalles, an owner of a WSI Internet Consulting franchise, is merging with another WSI branch in Markham.

The companies specialize in Web design and marketing for small businesses.

The branches are still finalizing the agreement but are already starting to see growth.

"Before our merge, we were on the lower end, competing with single `Basement Bobs'... live-at-home Web developers that run home-based businesses," says Kalles. "Now we're starting to compete with ad agencies."

The two WSI branches started sharing office space last November, giving Kalles the opportunity to get to know his future partner.

"After being in the (same) office for several months, we knew that we had the same vision," Kalles says. "We knew that we had different skills that fit well together and that we could work together, because we survived being in the same office.

"You have to find (a partner) that is a complement to your business skills," says Kalles.

"If you're both good at sales and you're both very bad at business operations, then merging doesn't make sense."

For Kalles, a business merger is like marriage: entrepreneurs should be honest about what they're willing to share with other business owners.

"If you lie to someone you're dating and you get married, you're probably going to get divorced," Kalles says. "You can't pretend to be someone you aren't for the rest of your life."

The WSI branches have a steady relationship so far. The companies decided to merge in June and expect the union to be complete in October.

Kalles says he thinks the merger will help cut costs in half.

The companies are already saving about 30 per cent by sharing the same office.

"Our goal this year, once the merge is complete, is to almost double our revenue from our combined sales in the previous year," he says. "But the true benefit is from the efficiencies that we have been able to gain from working together to streamline our operations."

With skills combined in the same office, WSI employees can now specialize in specific job duties.

"It's very hard to find one person these days that can handle doing the design, building the website, implementing the technology and then marketing it and managing the whole process," says Kalles. "But now that there are five or six of us in the office, each person can become an expert in one area of the business, and our clients end up getting better results because of that."

The companies are now pursuing clients with annual advertising budgets of $10,000 to $50,000, Kalles says, and manufacturers that have up to $50 million in annual revenue and want to modernize through online technology such as e-commerce.

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