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When there’s new client money on the table, it can be all too easy to ignore red flags and gut instincts. Our judgment can be temporarily clouded if it means account and wallet growth. However, I’ve seen how signing the wrong clients can cause agencies to lose money, reputation and even employees. Likely, you’ve experienced this kind of client before -- or perhaps you’re currently dealing with one -- but don’t worry. It’s a problem all agency owners, including myself, have dealt with at one time or another. To make things easier, consider a proactive "client filter" approach. To identify the ideal client for your agency, follow these simple steps: Organize your tangible needs: These can include a client’s industry size, marketing department size or company location as well as client budgets and potential future marketing goals.  Create a list of intangible needs: These can include how collaborative a client is or whether a client has worked with an agency before. Keep in mind what kind of workplace culture your agency promotes—straightlaced, laidback, or something in the middle? Determine levels of sophistication: Sophistication meaning how established are your clients and how will that affect the amount of work they expect from you and what you can feasibly commit to completing. These scales will be unique to everyone, but try to find clients who are in a happy medium of sophistication in order to avoid problems from “big fish” and “minnow” clients. Draw your lines in the sand: Based on the needs and values you lined up in the first three steps, make sure you proceed forward by ranking every prospect according to that list. Will you accept clients who possess 50% of the traits on [...]

You might be wondering if love really adds value to a business.” Warren Buffett sure thinks it does. You’ve probably heard of him. He’s done pretty well financially by making a few wise investments in companies. Indeed, he’s generally regarded the best ever at making savvy investments. One day I came across a video interview with him on The Motley Fool website. They asked him a question I’m sure he’s heard a million times about how he determines whether a company is worth buying. And he gave the answer you’d expect. He talked about analyzing the numbers (for which he has a legendary, uncanny ability) and reviewing the competitive landscape and doing his due diligence on the management team. But if all of that comes up good, he still has one more step. He sits down with the CEO and looks for the love. “I look into their eyes, and I try to figure out whether they love the money or they love the business,” Buffett said. “Everybody likes money. If they don’t love the business, I can’t put that into them.” If they do love it, he said, then he buys the company and it becomes his job “to make sure that I don’t do anything that in effect kills that love of the business.” It’s not hard science, I know, but if you analyze Buffett’s 15-second answer, he uses the word love four times. Buffett knows love matters, because we, as human beings, do all we can to nurture and grow the things we love. If he sees dollar signs in the CEO’s eyes instead of love, then Buffett knows that the only thing this person is interested in is his exit strategy. [...]

The world was supposed to end in 1954. It didn't, obviously. But that didn't seem to matter much to the people who believed it would. Remember that. It's important, especially if you want to change people's opinions or behavior. Looking back at 1954, though, you might not be surprised that some folks thought we were facing our end here on Planet Earth. While the year began with the happy news of Marilyn Monroe marrying Joe DiMaggio, there were plenty of not-so-happy things that followed. The Hydrogen bomb test in the Bikini Atoll. The McCarthy hearings, which inflamed the Communist "Red Scare." The introduction of the "domino theory" that suggested that any Communism we let pass would lead to Communists taking over (and the end of the Capitalist world as we knew it). The seeds of the Vietnam War. There were even appearances from outer space, in the form of a meteor crashing through a house. But Dorothy Martin of Oak Park, Illinois, got something else from outer space. Her outer space-based sources told her in no uncertain terms that the world was going to end on December 21, 1954. Before the world flooded that night, a flying saucer was going to come and pick them up from Martin's home altar (also known as her sun porch). She believed. So did her followers. They sold their homes and gave away their possessions. That night, the minutes ticked by. The saucer didn't come. The world didn't end. What did Martin and her believers do? The rational answer would be that they realized they were wrong, and in varying levels of sheepishness, admitted it and went on to rebuild their lives. Right? I mean, that's what rational people [...]

When digital was a novel offering, we saw agencies with that narrow focus receive extravagant valuations.  Today, digital expertise has become a given rather than a point of differentiation. I heard the comment at an AMI event that basic online digital services are part of the “table stakes” that every agency must put up in order to be seriously considered by a prospective new client, or by a current client for some types of projects.  That is consistent with my experience. Most agencies have it in-house and the others outsource it. But it’s a very rare agency today that just doesn’t offer digital services. Agency values continue to be simply defined as a semi-subjective combination of profitability, size, the client list and the services the agency routinely provides. There are plenty of other factors that influence the final number but we always start with these. So, what about the seller’s goals?  Many agency owners begin down the path of selling their agency only to quickly retreat once they are shown the valuation and what they can hope to get as a purchase price/package A very important aspect of the transaction is the actual structure of the deal. How, how much, and when are you going to get paid?  In many cases, the sales price doesn’t matter as much as when are you going to get paid. First of all, how much cash are you going to receive at closing?  What can you expect? And, how negotiable is it? Let’s assume that your agency is profitable, with a respectable margin.  Say that the net margin is 15%. (Note: net margin is the percentage of revenue remaining , after‌ ‌all, operating expenses, interest, taxes and preferred stock [...]