As agency owners begin to think about creating an agency that they can sell, one of the easiest ways to make the shop more attractive to a buyer and more valuable is to build a consistent new business machine inside the agency.
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Hey, everybody, Drew McLellan here from Agency Management Institute, this week coming to you from Washington DC. You know, we’ve been doing a lot of work with agency owners who are beginning to think about the future of their agency and whether or not they want to sell their agency someday. And for some of them it’s in the immediate future, two or three years. And for others, it’s a decade or more away. But one of the common conversations we’re having with all of these individuals regardless of their timetable, is how do you increase the value of your agency. In two ways; one, so you make more money and two, so it’s more attractive to a buyer, whether it’s an internal buyer, some of your employees, or it’s an external buyer. And one of the biggest factors, one of the biggest multipliers of agency value or the greatest sort of downgrades to an agency’s value or the greatest sort of downgrades to an agency’s value is your new business program. If you get clients primarily through word of mouth, through referral, through your own network, through you picking up the phone and just reaching out to people, for you, that’s something that you’ve been doing for a long time, and you’re good at, and it’s always worked for you. But remember if you’re the agency owner and you’re selling your’re not going to be there anymore. And all of the things I just listed are not replicable for a new buyer. They don’t have the same network, they don’t know the same people. The agency’s reputation may change as you walk away, depending on how strong the agency is associated with you. And so for a buyer, one of the things that’s very unattractive is a business development program that is very tied to the owner’s personal relationships and professional relationships. But if you have an agency new business program that is tied to the agency’s subject matter expertise, that is tied to the agency’s deliverables and successes over the years, and you have a new business machine that runs all the time, whether you’re on vacation, whether you’re super busy with clients, whether you have plenty of time to sort of nurture it along, no matter what’s happening, biz dev is happening inside your agency every single day and every single week, and it’s something that is repeatable, it is something that’s scalable, it is something that somebody else could step in and do as well as you could, that is a huge multiplier in terms of the value of your agency. It is also a huge sort of point of relief for the buyer It is also a huge sort of point of relief for the buyer to know that the agency is going to be able to continue to grow, because they’re going to need that to finish the buyout with you. They’re going to be able to continue to grow because this biz dev machine is working on their behalf just like it worked on your behalf, it’s not tied to you, it’s not about you and your personal relationships. So, whether you are ready to do this in a couple of years, or you think you’re ready to do it in a decade or more, you should be starting to think about how do you build a new business machine, a new business system or process that is absolutely manageable by anybody in the shop within reason that is something that you can replicate and keep going, even when you’re busy, because as you know, when you get super busy in the agency, all the sort of BizDev things that you do, the networking meetings, the phone calls you make, the, “hey! let’s grab coffee or a drink”, all of those go by the wayside because you’re so busy onboarding or serving a new client. A great new business program could care less how busy your agency is, it just keeps chugging along. And it is one of the biggest factors in increasing the value of your agency and also increasing the attractiveness of your agency to a buyer. So, give that some thought and I’ll be back next week with another tip. All right, see you then.