Selling an agency is an emotional affair. It's your extra child. The one you genuinely did see grow up between 8am and 8pm and now it's time to sell it. Selling your baby is also not easy from a practical point of view either. Apparently only 20% of businesses sell. The others owners either just close the doors and walk away or keep working until God steps in to make the decision for them.
OK, I've said 20% and any good datahead is already screaming, EVIDENCE. Good statistics are really hard to come by in this area. The numbers I've seen range from 8% to 20% so I chose the highest (because I'm an optimist). But you also have to look at the data. In this case anecdotally because decent quant stats don't exist.
What do the boards tell us?
Go to any business broker or business sale site like Daltons or KBS and you'll immediately see part of the problem.
The universe of businesses for sale in the SME sector includes kebab shops, hairdressers and convenience stores. There's nothing wrong with any of these businesses of course, but if you're trying to gauge probability of a successful sale outcome for your creative agency, their fortunes and yours are not linked.
There are also scores of 'businesses for sale' that are actually just jobs. And pretty crappy jobs to boot. They are one person companies making £80k in sales and £50k in profit (if they don't pay themselves) and they're trying to sell the 'opportunity' to someone else. Most won't of course.
So where does that leave us?
Quality will always out. If you run a quality agency, serving quality clients providing value-adding services, you will be able to sell. Of course, you have to be honest about how 'quality' you really are, because it's relative. But if you are quality and it's a genuine business (as opposed to a hobby/one-person-band/lifestyle statement) I'd rate your chances at 90%.
How do I make myself saleable?
Making a business buyable is the best way to sell your agency. Here are a few tips... I may expand on these if this blogette gets enough traction.
- Immediately empower your #2 and #3. You need to be able to demonstrate that the agency can run without to making all the decisions.
- Get your numbers up to date and keep them there. It's hard to sell a business that only does management accounts once a year. Frankly, that's just lazy.
- Either hit the industry standard KPIs or have a credible plan to get there. You can find them explained on www.marketingtrek.co.uk - look for the episode with Paul Winterflood.
- Get help. Don't go to the big generic brokers, seek a specialist because they have groups like ours on speed dial. I will always take a call from a specialist but will almost never take an agency with a generic broker seriously. Again, it's lazy and shows they haven't done their research.
- Be realistic. Your agency value is linked to the cashflow it can create for an acquirer in the future. Not how shiny your website is, how much it cost, how qualified your team is or how large it is. The point of all those things is they create value measured in cash flow. So, understand the link between your prize assets and how they generate cash and you're half way there.
Want to talk more? Find me on Twitter (@domhawes) and we can chat.
...the numbers that exist show that small business owners who want to sell their business will find the odds are against them – a one out of five chance at best. Your ability to sell your business has nothing to do with how many other owners are able to sell their business. It has everything to do with whether you’ve built a business that someone else will want, and be able to buy.