Oct 23, 2018
What is your digital agency worth? Or, how can you improve its value? I think it really comes down to three things:
1. Get the attention of the audience you're serving.
When I was in a position to sell my agency it was because we had the big brands and other agencies were looking at acquiring us in order to grow their market share. The agency was actually worth more then because we had desirable clients.
I'm not saying you need the marquee clients, but what I do suggest is having their attention. Get your agency on their radar and get noticed for something you do better than any other agency out there!
2. Work with mentors to help you build a business worth
You need to have a mentor or a sounding board that has been there and done it. That way you can look at what they've done as your foundation to build upon.
Now, this is not a plug to work with me. Not at all! Just find someone who's content resonates with you. If you like their content and if their business advice makes sense to you, then chances are good that you'll really benefit from working with them.
3. Set up the right systems.
Don't do everything yourself. Increase the valuation of your agency when you have amazing systems that someone else can take over. No one is going to risk buying your agency if you're the one doing everything. The only want to buy into an opportunity that can run itself without its owner.
Your agency should not be depending on you for its entire
existence. Leave day-to-day ops to your team. As an agency owner
you have these 5 important roles:
-- communicate the vision to the team
-- coach/mentor your leadership team so they can do the same
-- understand the financials at all times
-- assist with sales (just for key accounts!)
-- be the face of the company
TIP: one of the things I wish I had done differently when I was running my agency was being the face of the company. I wish I had known the great value in connecting with people and building relationships.
It's always about multiples... the biggest factor I see with my agency and lots of others is PROFIT. A lot of agencies focus on their gross revenue, but what matters most is net profit. Think: EBITDA -- Earnings before interest, taxes, depreciation, & amortization... that will get a 5x - 10x multiple on your profit.
At the end of the day, your agency is worth whatever someone is willing to pay for it and what you're willing to take for it. There's no magic formula but like anything else, it comes down to fair market value.
If you want to know what your agency is worth right now, figure out 5-7X on your agency's true profit. Then, if you're not happy with that figure go out and do what needs to be done in order to get to the number you would be happy to get.
Bottom line, you need to keep investing in yourself and your agency. Think about building a business worth selling, even if you're not ready to sell yet.
What can you do to improve your agency's valuation? Comment
below and tell me your challenges and struggles. We may even
feature your question in a future episode!
JASON SWENK IS AN AGENCY ADVISOR THAT GUIDES MARKETING AGENCIES THROUGH A PROVEN FRAMEWORK FOR GROWING THEIR AGENCY FASTER & EASIER. http://jasonswenk.com
In 1999 he launched a digital agency that quickly grew to a multi-million dollar operation working with brands such as AT&T, Hitachi, and Lotus Cars. After 12 years of amazing growth, his agency was acquired in 2012.
Now, Jason leads JasonSwenk.com, a unique media company & consultancy helping marketing agencies grow, scale, and enjoy running their agency by applying the framework that he used to grow, scale and eventually sell his agency. Jason has helped over 20,000 agencies in 42 countries meet or exceed their business goals.
Jason generously shares it all as a frequent guest on popular radio and podcast shows. He has been featured as an expert in top media publications such as Entrepreneur and Inc. Magazine. Plus, he currently hosts two of the best agency podcasts:
The Smart Agency Master Class Podcast, dedicated to providing
tactics and strategies to agency owners and decision makers that
cut through the BS, focus on exactly what works and what doesn’t;
The #AskSwenk Show, a video show that answers agency questions about successful, multi-million dollar agency.
TUES & THUR VLOG #SwenkToday
Q&A from my digital agency audience
(Digital Agency Interviews)
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