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We all think about it. Anyone who owns a business will eventually exit—whether by selling, transitioning to family or team members, or closing up shop. The most important question in this process is how prepared you’ll be when that time comes.
Have you built a solid foundation that is attractive to buyers and will deliver you a maximum profit?
This is about setting you and your team up to be successful today and to earn a premium when it comes time to sell. Our Q4i Growth Platform helps agencies create strategies to improve business performance and develop into well-run, efficient, and profitable businesses, which is exactly what buyers are looking for. When you have a premium business, you get to be in the driver’s seat during your exit.
To do that, you have to pay attention to the foundational business operations and have a well-run business from marketing and sales to service operations, team culture, and financials. Selling your agency is a numbers game, and if you’re not tracking and reacting to your numbers (key performance indicators), you'll never make the sale of your business as attractive as it could be if you had spent time preparing well before you were ready to put it on the market.
What drives your agency’s value and how to prepare for it
What helps you run a thriving business today ensures a maximum earnout when you're ready. So what does that look like?
Profitability and growth
- What buyers want: Consistent profitability and growth with strong top-line and bottom-line revenues.
- How you can prepare: Improve profit margins with defined growth strategies, consistent prospecting activity, and a proven sales process that makes growth predictable. For some of our clients, this focus alone has meant millions more in buy-out offers than they would have received with previous inattention to the sales systems they were using (or not using).
Client retention
- What buyers want: A stable, recurring revenue stream. Retaining clients is critical for maintaining a book of business.
- How you can prepare: Define your client experience and train everyone on your team to know it and live it. The happier your clients, the more likely they are to stick around and promote you, and the healthier your book of business.
Operational efficiency
- What buyers want: Streamlined, efficient operations that minimize risk and improve productivity.
- How you can prepare: Develop and follow processes (hiring, team member onboarding, client onboarding, renewals, marketing, sales, etc.). I cannot emphasize enough how powerful processes are for your overall efficiency, productivity, and team satisfaction.
Quality of the team
- What buyers want: A skilled, engaged, and loyal team that can maintain the agency’s success after the sale.
- How you can prepare: Build strong cultures that attract and retain top talent. Focus on training, team development, and culture-building to ensure a high-performing team. Happy team members who feel satisfied in their roles tend to stick around, and that makes everyone happy.
Niche focus and market position
- What buyers want: Agencies with a clearly defined niche and strong market position.
- How you can prepare: Develop clear niches and focus marketing and sales efforts to establish yourself as leaders in that space. The more engrained you are and seen as a go-to resource within that market, the more opportunity there is for a strong and stable revenue stream.
The emotional side of selling
Selling is both a financial transaction and an emotional journey. You’ve poured years of hard work into building this business, so the decision to sell can be tough. Sometimes, it’s about retiring or starting a new chapter; other times, it’s due to burnout or realizing that a new owner or a cash influx could elevate the business further.
Think through your financial and personal goals to make a thoughtful decision.
Wherever you are in your journey to exit your business, it’s important to remember that suitors (especially roll-ups) are selling you on selling your agency. They’re salespeople looking to meet a quota, and you’re their target.
Don’t be flattered.
For over a decade, we’ve listened to agencies tell us that THIS is the year they will get the best deal, so they HAVE to sell now.
“It’s a tax advantage we won’t see again.”
“The administration is changing, and the opportunities will be different.”
But we’ve seen that it shifts further in favor of the sellers every year.
There is so much private equity money being thrown around that if you’re looking for a financial upside, you just have to get the word out that you’re looking, and you’ll have suitors lined up.
I’m not encouraging you to sell. In fact, I’d prefer you didn’t. (But that’s another blog post.)
What’s important to understand in the face of all this financial potential is that the grass isn't always greener on the other side. If you haven't built a solid foundation that is enjoyable for you, you are more prone to seeing the grass in the next pasture as greener than it really is. Unfortunately, we’ve seen a lot of those situations, and it’s honestly heartbreaking to watch.
If you’ve done your work to build an amazing business that has served you well, and you see retirement on your horizon, it’s the right time to find the right answer. We’ve watched some very happy retirement plans play out this way.
Timing the sale: it’s a long game
Preparing your agency for sale is not a short-term project. Sure, some deals are struck and closed quickly, but the best offers come to those who plan ahead. Consistent revenue, strong systems, and a well-organized team can make the difference between getting a fair offer and top dollar.
- We’ve helped agencies prepare by scrutinizing their book of business, recognizing that a large portion is unprofitable, and devising ways to turn it around. Over the years, we’ve counseled agencies through multiple approaches to achieving their preferred approach to profitability. There is not a single path; this is very personal.
- Others have focused on new business by committing to a consistent, consultative sales process (our MORE System).
- Some have turned a good team into a thriving, cohesive group with strong leadership firmly and kindly taking the helm.
- A significant focus on marketing helped others create a presence that allowed their sales teams to be wildly successful.
There is no one right answer to what will make your organization shine and reach maximum operating potential today. It’s about leadership: the personalities of the owners and how they want to run their business. We help steer people toward their desires.
When you run a business you feel proud of, others will likely see a similar value and want to reward you for your hard work.
The work we’ve done to help agencies improve their operations has returned untold millions to owners they never expected or conceived. While a job well done in structuring a successful business may feel priceless, it most definitely has a price. Our clients who have exited have experienced those numbers firsthand and consistently give us credit for the increase in the wealth they acquired through their buyouts.
Start early, exit well
When you build a foundation that makes your agency as attractive as possible, you also create one that is more enjoyable to operate. As you work to build this structure, you may find your timeline to sell gets pushed back, allowing for more time to build revenue and increase the sale price.
Your competitive nature may kick in when you can shift from wearing all the hats to only a few because you have a strong team that pitches in to run the business without your intimate involvement in every aspect. This can dramatically shift your interest in continuing vs. selling to get out from under it.
The best way to ensure a successful sale is to start preparing long before you’re ready to sell. Building a well-run, profitable agency that delivers consistent results will reward you and your team today and pay off multiples in the end.
At Q4i, we specialize in helping employee benefits agencies strengthen their foundations, improve processes, and build strong teams—everything you need to maximize your agency’s value. Don’t wait until you’re ready to sell to get your house in order. The time to build your exit plan is now.
Join Goose today to get started.
Content originally published on Q4intelligence
Photo by deagreez
