Ready to SELL YOUR AGENCY? Answer These 6 Questions and Find Out
00:00:04 - Clear Direction and Team Awareness
00:00:25 - Multiple Channels for Business Growth
00:00:57 - Scaling Existing Channels
00:01:19 - Predictability and Reoccurring Revenue
00:01:41 - Client Diversification
00:02:01 - Profitability and Growth
00:02:23 - Scalability and Streamlining Operations
00:02:35 - Key Performance Indicators (KPIs)
00:02:57 - Audited Financials
When I’m buying an agency I analyze the business and look for several things that should be clear if you’re looking to sell.
So if you’re an agency owner that plans to sell in the near future, ask yourself these questions, because potential buyers will be asking them as well:
1. Do you have a clear direction for the business and have you communicated it to the team? The vision must permeate throughout your organization, not just reside with leadership. A well-communicated strategy that your entire team understands and executes is crucial for potential buyers.
2. Have you developed multiple inbound channels? If your business depends just on word of mouth and referrals, that’s risky. Instead, having multiple channels demonstrate a robust business model. This might include advertising, SEO, and strategic partnerships, showing not just current value but future growth potential.
3. Do you have recurring revenue and long-term contracts? Put yourself in the buyer’s shoes, recurring revenue through long-term contracts provides security, while monthly or easily-cancellable arrangements raise red flags. After all, buyers need assurance that their investment won't evaporate through immediate client departures.
4. Do you have a diversified client portfolio? Your client portfolio should be well-balanced, with no single client accounting for more than 20% of revenue. Of course, having large clients isn't necessarily problematic, but a diverse client base reduces risk for potential buyers.
5. Are you growing every year? Buyers analyze your agency’s scalability potential. You need to show top line growth every year, even when you are investing profit back into the agency.
6. How are you profitable? Buyers will examine key sales KPIs, including conversion rates, show-up rates, and sales cycle length, looking for opportunities to streamline and improve operations.
The final piece is documentation to back up answers regarding your financial status. You must be prepared to immediately support any financial claims with concrete evidence. Many agency owners overestimate their profitability, so having a comprehensive audit ready is essential. This level of preparation and transparency can make the difference between a successful sale and a failed negotiation.
