When you’ve worked hard to build an agency from the ground up, the ultimate goal is to get the highest valuation possible. While some agency founders stay on for the duration of their careers, most are looking to build a great business and sell for the highest price possible. If that’s your plan, here are a few tips to make sure you get the highest valuation you can.
Stepping Away From Operations
One of the first things you’ll have to do is set your ego aside and realize you may not be needed in your business. Before worrying about valuation, your focus should be on building the most efficient and stable business operations by creating an amazing team around you. Once that’s done, you can trust that the business will be fine when you’re not there.
When founders stay around too long, they often cause a bottleneck. An agency might cap out at around $20,000 to $30,000 when the founder is still involved, or maybe $50,000 if there is a co-founder. If you want to get that number as high as you can, step out of day-to-day operations and let your team do its thing.
Say No To Invoice Based
One of the more difficult forms of business is those that are invoiced based. No matter what the size of your business, if you’re invoicing you are likely spending a lot of time chasing down people to pay their invoices. One of the best things that you can do to help your valuation is to transition to a cash based business.
When you’re ready to move to a cash or credit-based business, get your clients on board with the idea by explaining the added value that comes along with the switch. Avoid just sending an email with the information. Make a point to have a personal conversation with each and every client to talk through the change.
EPIC Operations
EPIC agency operations are a huge commodity for someone who is acquiring a business. This can build strength and stability in your business and make the business more predictable. So what are the steps to make sure your operations are the best they can be? First, document everything. You need to have an SOP for everything you do so they can be followed step by step and work can be done more efficiently.
Next, invest in training for your employees. You need to teach your employees how to think and to make good decisions. You also want your employees to have the most updated information and education, so these training sessions should be updated throughout their tenure with you.
Finally, prioritize people operations. You need to have great managers and people who can handle audits and keep running things smoothly. If you are able to get all three of these factors in line, you are looking at a business that is continually building valuation.
Start Building Value
Are you ready to start building value but not sure where to start? Our experienced and motivated team is here to guide and support you through your growth journey. Schedule a free consultation with us today, and we’ll show you where to go from here.
