In our valuations work, I can pretty much count on two things. 1) The agency owner believes the agency is worth more than the valuation says and 2) the owner could have done something about that by making different choices along the way.
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Hey, everybody Drew McClellan here from Agency Management Institute. This week coming to you from the beautiful Pacific Northwest. We’ve been spending a lot of time with agency owners who are getting ready to sell their agency. And so we’ve been doing their valuations, talking to them about their sales options, and without exception, there are two reactions when we start doing this work with agency owners. Number one is, “oh, I wish, or I thought, or I expected my agency to be worth more than it is.” And number two, “I should have been smarter about building my wealth while I own the agency and while I was still engaged in it and active in it.” Too many agency owners do not think of their AGA as their agency, as an ATM machine. They do not think about the fact that they can be building wealth while they own the business, because they assume that they’re going to get their big payday at the end when they sell their agency. Number one, most agencies don’t sell. And number two, very few agencies sell for the multiples that you hear people talking about. For many of you, the best time, actually, for all of you, the best time to take care of yourself and your family for the future is while you own the agency. I’ve had many agency owners say to me, you know what? I look back and I think about all of the times that I should have cut staff or I should have cut expenses, but I didn’t because I was worried about culture or I was worried about the team’s reaction. Or I really liked that person even though we didn’t have work for them. And what I realize now is that I sacrificed myself and my family, and the money that I spent, foolishly spent, on some of those things that honestly, the business could not support could have ended up in my bank account. And instead, my bank account’s super thin. And that person left me anyway. So please don’t make that mistake. Don’t wait until you sell your agency to make money on your agency. You should be making good money every year, and you should be thinking of your agency as an ATM machine to help you build wealth outside of the business while you still own the business. Okay? I’ll see you next week.