Business Scaling Strategy

Episode 68: Business Scaling Strategy, with Shane Perkins

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Business Scaling Strategy — Propel your business forward and unlock success. Join us as we reveals the ultimate business scaling strategy.

Business Scaling Strategy? I’m thrilled to bring you our guest expert on this episode of Sell With Authority, Shane Perkins. Shane is the CEO of Unite Digital Holdings, a remarkable holding company dedicated to creating a growth-oriented ecosystem for privately held agencies across the United States.

Business scaling strategyShane’s primary focus is on expanding the company’s reach through strategic acquisitions, and that’s precisely why I invited him to join us today on the podcast. I had the pleasure of meeting Shane at the Build a Better Agency Summit in Chicago, an event organized annually by the Agency Management Institute. For agency owners, the Build a Better Agency Summit serves as an ideal environment to gather key takeaways and insights, helping them build profitable agencies that they may choose to sell in the future.

Here, I serendipitously bumped into Shane, and we briefly talked about the remarkable work he and his team at Unite do and best business scaling strategy. Instantly captivated by his insights, I couldn’t pass up the opportunity to invite him to join us on the podcast.

If your goal is to sell your shop someday — or to run as profitable of an agency as possible so you can build your wealth outside the agency — Shane’s advice and recommendations are incredibly helpful.


What you will learn in this episode is about business scaling strategy:

  • Why an agency owner should consider what they want personally, and for their clients, incorporating elements of business scaling strategy.
  • Why packaging solutions around our right-fit prospects will make scaling easier
  • What represents secure and stable clients
  • Milestones for agency owners to put themselves in the best position to scale their business successfully
  • Pitfalls that agency owners should be thinking about if selling is the right path – and how to sidestep them



Business Scaling Strategy: Full Episode Transcript


Welcome to the Sell with Authority podcast. I’m Stephen Woessner, CEO of Predictive ROI, and my team and I created this podcast specifically for you. So if you’re an agency owner or a strategic consultant, and you’re looking to fill your sales pipeline with a steady stream of RightFit prospects to get the at-bats, the leads, the qualified leads that you need in order to build and scale, well, then you’re in the right place. Do you want proven strategies for becoming the known expert in your niche, in attracting all the clients that you need? Yep. We’re gonna cover that. You wanna learn how to step away from the sea of sameness so you actually stand out and own the ground that you’re standing on. Yep. We’re gonna cover that too. Do you want to future-proof your business so you can successfully navigate the next challenge that you know is coming your way?


Well, absolutely. We will help you there as well. I promise you each episode of this podcast will contain valuable insights, tangible examples, and best practices, never theory, from thought leaders, experts, and owners who have done exactly what you’re working hard to do. So, I want you to think practical and tactical. Never any fluff. Each of our guests has built a position of authority and then monetized that position by growing their audience, nurturing leads, and, yes, converting sales. But all the while, they did it by being helpful. So every time someone from their audience turned around there, they were with a helpful answer to an important question. So the right fit prospects never ever were made to feel like they were a prospect. I also promise you every strategy that we discussed and every tool we recommend will be shared in full transparency in each episode so you can become the known expert in your niche, fill your sales pipeline with a steady stream of RightFit clients who, again, we’re never, ever made to feel like one of your prospects.


Learn more about business scaling strategy by listening to this podcast by Shane Perkins: Accelerating Your Agency By Hiring A CEO & Preventing Agency Failure Through Successful Outbound Business Development


Business Scaling Strategy: Shane Perkin’s Introduction


Okay. So I’m super excited for you to meet our very special guest expert today, Shane Perkins. So, if you’re meeting Shane for the first time, he serves as CEO of Unite Digital Holdings, which is a holding company designed to create a growth-oriented ecosystem for privately held agencies throughout the us. So Shane’s focus is to expand the company’s reach through strategic acquisitions, and that’s exactly why I invited him to join us today on the podcast. So, here is a little bit of context here. Shane and I met at the Build a Better Agency Summit, or Baba Summit in Chicago, which was just a few short weeks ago, which is put on every year by the Agency Management Institute. So, for agency owners, the Baba Summit is the ideal environment for them and their teams to collect key takeaways to build a profitable agency that someday they could say or sell if that happens to be their goal.


And I will tell you the q and session that Michael Port led with Mitch Joel, who did exactly that and was super insightful. So, Mitch Joel, if you’re not familiar with Mitch and his story, Mitch and his team of three other co-owners created a niche for their agency. They stepped away from the sea of sameness of their competitors. They built a position of authority and then eventually sold the agency to a holding company. The session was packed. I mean, when you looked around the room, it was packed. And one of the questions that Michael Port actually may have been Mitch, who asked this at the beginning, how many in the room want to be able to sell their agency at some point in hands around the room, shot up in the air? Because for many agency owners, I will tell you, of course, selling their agency for X multiple is the dream.


Business scaling strategy? The path to get there might seem a little bit murky. So, if you were in that session too, by chance, then you heard Mitch not only describe the amount of work it took to get there but how selling the agency was their goal from the beginning and how he and his team ebbed and flowed along the way as they made preg progress toward the plan and the goal. So, as I was leaving that session, I bumped into Shane. Now, we didn’t know each other up until that point, but I bumped into Shane, and we had this brief chat about what he and his team at Unite do. Well, of course, I was immediately intrigued. So I invited him to join me on the podcast today because the insights he shares with you during this conversation could help you decide if, at some point, selling your agency is truly the right path for you, could help you decide what the right path is, and then what some of the key milestones are that you might, that you might need to accomplish. And then what are some of the pitfalls that you might need to sidestep along the way, too? Lastly, what is a reasonable timeframe that you and your team should consider for the past? I promise you that if your goal is to someday sell your shop or to run it as profitably as you can so that you can build your wealth outside the agency, then Shane’s advice and recommendations will be incredibly helpful. Okay. So, without further ado, welcome to the Sell with Authority podcast. Shane.


Thank you, Stephen. I completely remember talking to you back behind all the seats after the speech. It was really interesting talking to you. It goes like, who’s that guy in that red jacket, not only the red jacket but also a red sweatshirt?


Coincidentally, I’m wearing it today, too, which probably speaks to the depth of my closet, I guess. But anyway, Yeah. So it was a fun conversation.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Setting Goals for Your Agency’s Future


But it was great. And we got right to the point, and we said, Hey, it makes sense to have a discussion. And I’m really looking forward to adding value to whoever’s listening, especially if they own an agency because it really comes down to their end goal should start with a plan. And they really should think about what they want for themselves, what they would want for the company, and what they would want for their clients; even if they’re not looking to sell right now if they plan that out, they can have a more successful sale. Best business scaling strategy? I would encourage somebody listening to think about what they really want. Like, how much do they want to sell for? What would, and then what does it really take to get to that? I mean there’s a lot we can do dig into there. But to get them started planning is, even if it’s, even if they wanna sell now, even if they just formulate a plan, they set some parameters of what they wanna sell to. They see if it’s realistic or not, and they take a step back and say, Hey, I guess I don’t wanna go for that goal, but I can do what I can do now, and I can exit on these terms. So I’m happy to dig into whatever you think your listeners wanna hear.


It’s gonna be great. There’s no doubt a large list, or a long list, of topics that we can cover. Before we do that, though, take us behind the curtain here just for a couple of minutes and give us some, share context about your path and journey because, obviously, I gave a little bit of an introduction but not, not much about you. And, so give us that or share that with us again in a couple of minutes, and then we’ll dive in with the long list and the barra of questions that I promised. I would toss your way.


It is funny, most people think I’m a finance guy. Hmm. But I fail. Did I fail to account? I can’t remember if I failed accounting in college, but I feel like I did. Anyway, I basically graduated in 2010 from college. I have a management information systems degree. I went to AutoZone and was an IT project manager there and also a communication specialist. So, I was in the realm of software technology and design. I was creating images and graphics and messages, and I had a vision, and I wanted to become a CIO. Eventually, I became, and then in 2013, I started learning about SEO. Lemme take a step back. I started learning about drop shipping. And I was just looking at what I was doing at my full-time job and wondering how I could make some side income here.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: From Drop Shipping to Agency Acquisition


And I learned, got a drop shipping course. I sold a birdcage and created a birdcage side. I sold, sold my first cage on AdWords. And I was like, man, I don’t really like this product. These are just not what I’m interested in personally. Yeah. So I was like, what else can I do that can sell services for something conceptual, right? And then that’s when I got into SEO, mostly local SEO, for small bus business. I decided that I would learn SEO to become a specialist, and I would work with a business person who could help me get new business. Cause I had no clue how to do it. Okay. Ultimately, it took about 12 months for me to get some clients because I had to learn how to get the business.


You know, I switched from somebody wanting to be on the backend to developing myself into the new business person and leading from that side. So I got up to about a hundred, a hundred KA per year, between a handful of client contracts, mostly PPC and SEO. And then, I got too overwhelmed by doing too many things. I took a step back, and I basically productized, which is a podcast I just heard you post. Hmm. My productized a service, on local SEO for small biz. And then I just said, I’m gonna just do that. And I didn’t really grow it into too much. And it wasn’t until 20fast forward several years later that I was basically the jack of all trades of digital marketing for a team of one with contractors. And then in 2018, I was like, man, What am I gonna do next?


I’m really bored of this. And, I basically started asking myself, well, how could I grow something as big as possible in the agency space without having to grow the agency myself? Acquiring one client at a time is just really overwhelming. And I thought I could do it faster. You can do it faster by acquiring companies that have batches of clients in them. And that’s what I set my vision on. And and to do that, you have to have a team around you to help you go as fast as, as you want. The team that I formed was aboard, one that had advisors that could help me understand how to do m and a, understand how to get to this vision of a several hundred million dollar company. You know, how does that grow?


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Focusing on Solutions Over Services


And so I learned that from them. I give them a small equity stake in what I’m going to be building in the future. And then we get our accountants and lawyers, and then we get our financiers, and that builds our m and a team. And from there, fast forward to 2021 July of 2021, we closed on our first company. We had several failed, failed deals before that. But at that point, I could call myself having succeeded. And we acquired our second company in January of this year. We have a very strong pipeline of deals and one that we’re projected to close over the next few months. So we’re, I mean, it’s just like acquiring clients. Yep. And more than long-term clients that take several months to close. You know, that’s how the process works. Our goal is to just get 20 to 30 companies in our group and be able to have them work together to better serve clients and ultimately sell it up to another company that can take it to the next level. So that’s how I got to where I’m


What is a business scaling strategy? Okay. So, there’s a couple of things to, well, several things, to unpack in there, that as you’re, as you’re going along, I was noting, I’m like, Ooh, okay, curve ball. we’re changing plans before the list of questions that I had already prepped. I wanna also go back to your mentioned jack of all trades. So, when you became the jack of all trades, did you find that made the business more or less complex and or more or less desirable to prospective clients?


It’s more complex. And it’s harder to communicate what they should desire amongst everything else. I don’t want to say it’s less desirable, but it’s harder to communicate.


And why do you believe that to be true?


Because if you set, if you have so many things to sell, it’s just hard to focus on what you should really sell to them. And that’s the biggest thing, if you can, and this comes down to not overwhelming your client and really looking at what their problem is in packaging a solution around their problem. Okay. And just focusing on that and doing that, you can scale a lot easier. You have, your life’s gonna be easier, it’ll be easier to fulfill, it’ll be easier to sell. You don’t have to create a new thing every time. And then we want to create something custom, you can, it’s just not as overwhelming because you already have everything planned out.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Simplified Success


Business scaling strategy? Love that. Okay. So I’m gonna, I’m gonna like fast forward and ask you kind of a, a question as you, as you evaluate deals. And then we’re, and then we’re gonna go backward. So I hate, I hate when that happens, like in movies, my wife knows, like, if they set like an original scene, or excuse me, like the first scene in act one, and then it’s sort of like a cliffhanger, and then it stops, and it’s like four days earlier, and then it goes backward. I’m like, no, but anyway, we’re gonna do that.


Take your listener through a story here. And it sounds like it’s getting exciting.


No. Anyway, so leaping forward for just a second. So, when you and your team at Unite are looking for agencies, and you happen to find an agency that is streamlined, that hasn’t created an overwhelming sort of value proposition, if you will, for clients, and what they deliver over and over and over again, with success creates a steady stream of happy clients, and their biz dev process, as a result, is smooth, they’ve removed all the friction. This might seem like a really simplistic question or an obvious answer, but is that agency more or less attractive to you and your team at Unite?


The short answer is I would say yes, but different buyers can define attractive in different ways. But what it certainly means is that it’s easier to make a decision on whether you want to pursue that target or not. If it’s clear. It’s kind of hard to make up your mind if you put one to one or three things in front of somebody versus 10 or 20. Yep. But if you can, yeah. If you can look at a company that, even if they’re full service, if they, they put it into specific solutions they provide to clients, and it’s quite easy to define what they do, it’s a lot easier to understand how to fit them in your group and get the best use out of them with somebody that doesn’t.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: The Power of Clarity and Discipline


We have this challenge. I would say we had this opportunity with the first company we bought, a web enterprise and web design firm, but they, their whole history, have been saying we can do everything. And what we decided to do still, even the few months after buying the company, I was like, I don’t really know what they do. Hmm. I can’t really explain it. Like, I can pick some things, but I can’t really explain them. And what, so what we did is we had a, a team meeting, and we discussed, what are your, what are your strengths? Who have you served in the past? What do you do repeatedly over time? And what are you experts at? We try to break that down into something that can really position into some focuses that they can scale.


And, I think a lot of it’s more of, sometimes it comes down from the owner, and the owner wants to just get in everything you can. Yep. And it requires a step back and some discipline to say, I know we can do everything, but we’re gonna now steer the ship and focus on this one direction. We’re gonna open up doors with these specific focuses, for example. And then maybe we can get into some things that we are accustomed to. I think it could potentially be a lack of clarity from the owner or a lack of direction. Sometimes you just gotta lay the line and say, Hey, this is what we’re gonna do, and we’re gonna try it, and if we fail, we’re gonna adjust. But, sometimes, it just gets down to leadership there. I mean, and getting, otherwise you, there’s too many ideas floating around with who wants to do what in the agency.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: How Clarity Boosts Business Success


So there are a lot of things that go on, but yeah, I think it makes the decision a lot easier to pursue that more aggressively than another. just one thing to think about is imagining our group as a buyer or anybody as a buyer; I mean, they’re looking; they’re not just looking at that agency. They’re looking at several there. And there are several that are, I mean, essentially a competition. And if I have a limited amount of money that I am willing to spend, that I want to spend, that I can spend, capital that I’m willing to put on the line to invest in this company to make sure that it is successful. And it’s easy from a decision standpoint when you have the clarity to when you understand somebody’s company, they have very clear offerings, they have very clear things to serve clients when they’re, and there’s an agency that doesn’t, is pretty scattered.


So I think that it’s the same thing. Even if we’re applying for funding, for example, if you package financials together, that looks nice, and that is clear; you have deliverables from the accountants that help the bankers understand everything. If you have your tax returns in, you aren’t delaying them till October, for example. it’s easier to get a loan and fund that company instead of it being very disorganized. There are a lot of things where organization and clarity help.


So, let’s take, also, in this fast-forward paced. You mentioned 20 to 30 agencies inside the group for unity at some point. And then, these weren’t exactly your words, but just actually roll that up into maybe a larger holding company. Would it be this sound? I’m trying to think of how to ask this question. So it doesn’t sound like a leading question, but my assumption is, and then I guess you can tell me if I’m wrong, maybe we’ll do it that way. My assumption is, is that let’s say you had 30 agencies, and those 30 agencies were truly experts in their particular following your recipe that you just described, that had a very clear value proposition, that they streamlined things, that they followed your advice, and they’ve, and you’ve got 30 agencies that are doing that. And then, theoretically, 30 profitable agencies because they’ve really gone down that path that you recommended. And, and, and so then if I am a holding company and I’m looking at your portfolio of agencies, I’m like, wow, okay. These 30 agencies are following Shane’s recipe for success. They’re not 30 generalists who are competing for pros or projects all across their market. They’re very specific. My guess is that it makes you then more valuable as an acquisition target yourself because your portfolio agencies are doing what you said. Would you agree or disagree?


I would totally agree. And that would be an assumption for me, too. But let’s look at the opposite way. If the other way, if you’re not structured like that.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Planning for Agency Growth and Client Success


Will they give you a higher valuation because of that? Probably not. So I think you’re, you’re, you’re better off structuring it with a clear path on how you’re gonna market the agencies, the disciplines. You’re gonna focus on serving clients with your new business processes. One big thing is that a lot of these holding companies right now, at least, have bought all agencies. They want that, that do general type things, things. So now they’re buying specialists. and so that’s, that’s an opportunity for higher valuations to specialize for example, it also means that you can imagine 30 agencies who are, who can do the same things and don’t have a specific focus. . and how deep they can get into the market and, serve clients. it’s probably gonna be really, really confusing and jumbled up.


And there’s just you, you’re not gonna be able to market your campaigns directly to the verticals you wanna serve. There are a lot of opportunities that you miss out on because you do not have that focus. So, I would agree with you. You know, when we’re, all I can say is that when we are taking our group forward, we are having enough focus on specializations. So when we do sell, we’re, we can have that positioningposition with authority. We can behave with authority instead of being more generalized. So that’s, that’s how we’re gonna be taking it.


Okay. Well, I mean, of course, I’m biased because of the authority pieces near and dear to our hearts. But it makes sense. And really, I think the proof is in the pudding when you said they’re buying specialists now, right? Like, there’s a market for specialists. So, let’s go now, we’ll go all the way back to the beginning. One of the things that you mentioned was that it comes down to one being able to plan it out, but then specifically what an agency owner wants for themselves. And then, and I thought this was really insightful when you said this and for their clients. So help us talk us through the duality of that planning process, that it’s not just what the agency owner wants for themselves, but that that planning process should also consider what that agency owner wants for their clients. So, help us better understand why you said it that way.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Aligning Personal Goals with Client Success


So, an agency owner should think about what they want, personally for themselves but also for their clients. And I think it’s, it’s good to define what the agency owner wants themselves first, just what I would think personally because it helps when they set that, then they can know how far they need to take their company, and that that can lead how they need to shape it, to hit that valuation or hit that exit, structure however they want. But also for the clients. You know, when a company buys your company, you want to make sure that your clients are well supported, too. So you want nothing more than success for your clients. You want them to stay on, you want them to be on for a long time. You wanna make sure your team has better opportunities to bring to your clients.


And those are the things that you should look at and say, well, what more could I bring to my clients? What could help them, our services be more? And how can we keep them on longer? How should an owner, an agency owner, look at what a buyer can provide in a transaction, and how can they add value to the clients? And, when we look at it, it’s typically not a, it’s typically not discussed that much with an agency owner, which is interesting. It’s not something that the adv really brings up; I haven’t had it really in the last two deals I did, I mean, nor with the agency. So, it’s an important thing that you don’t want to ignore. But interestingly, it’s not covered too often.


Okay. So, who’s not covering it? So, because the way that I’m, the way that I’m understanding what you just shared right there is that part of your planning processes unite is to help agency owners think that through not just the type of agency, excuse me, then, the value that they want to, get out of the transaction, but then also how it’s going to benefit the clients. And I think if I’m understanding you correctly, that oftentimes people step into the planning process, or in those conversations, thinking about them, and then through the process with you and the team, they can then see how that strategic transaction actually benefits their clients too. And you help them through that process. Am I tracking with you?


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: A Key Factor in Agency Transactions


Yeah, they typically don’t think about it beforehand when we, when we talk to ’em, it’s, it’s a small point that is talked about, but it’s not usually talked about that much, even when we talk engage ’em. And there’s certainly an opportunity for improvement in our process, when buyers look at things, they just want to know that the clients are secure and stable, and then they kind of deal with it after the closing. Okay. And so I, there’s certain emphasis that buyers look at and focus on to get a deal done, and then they’re kind of like, well, we’re gonna do with all deal with all these other things after closing. I mean, you don’t want to get into a scenario where you haven’t checked at all how they could help your clients, and it’s just gonna be a complete bus after closing.


So you do want to do some initial checks, but I think that not only there’s an opportunity for ourselves to improve, but also for the agency owner to think about, well, how, maybe to give some more thought to how can they help impact clients better? What that could do is that could orient them towards finding a specific group a specific buyer, or somebody that can really help their clients versus a random message from me and trying to buy their company. They could be more, more directed. And even if we engage them, they could say, oh, okay, well, unite has these capabilities, and these could really fit with our clients.


Agreed. Okay. So we’re gonna, we’re gonna take a quick break here, and when we come back, Shane, I would really love to get your perspective on three words. Actually, I guess you shared four words. Just a minute ago, you mentioned secure and stable clients. So when we come back, I would love to get your perspective on what represents stable and secure clients because I think that would be a really helpful milestone for agency owners who are thinking, yep, I need to create a plan. Oh, the prospective buyer wants to see that my clients are stable and secure. What does that really mean? So, I would love to get your perspective on what stable and secure clients mean. We’ll do that when we come back from our break. Okay. We’re back. And just before the break, I mentioned that I was gonna ask Shane to take that stable and secure. I said it backward, secure, and stable. Clients take that piece a bit deeper to share his insights and perspective on what his team at Unite and how they define that. So Shane, walk us through that. In your mind, what does that mean to you and your team when you say secure and stable clients?


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Ensuring Client Stability


So I look at it in terms of buying a company, I look at it in two areas. One is the paper. I would call it the paperwork, basically. And then the other thing is the intangibles, which are the soft things like conversations, with the client. Okay. Talking to the one that writes the checks and saying, what did, how stable is this relationship upon a transition? What would need to happen to make sure it’s stable? So we would want to know what the client thinks. And even if the agency owner beforehand addresses those things with the client and says, Heywe have this opportunity, I just wanna talk to you about it. How does this impact us? I really want to make it the best for yourself and for us. Or, even if it’s in planning when they can talk to them and say, Hey, we are building a company, and things are going well.


We are looking for opportunities. How would we handle this scenario with you to make sure we can have a successful transition to make sure you’re better served? So I think that’s the, the, the soft side because we’re gonna, I mean, in our due diligence phase, we’re gonna go through that, talk to a few of the key clients. We want to know that they’re gonna stay on. Yep. maybe this is a partnership. We need to be able to work together and know that they’re transitioning. So those conversations are gonna happen. It’s better to do it to help prepare your client beforehand. Okay. It’s, doesn’t need to be a big deal, but justhave the conversation and see what to do. The other part is, from a contract standpoint, we want to make sure that they have, I mean, everybody loves recurring contracts, but we know that that’s not always the case.


Most agency owners have a monthly or annual, and with that, there’s even there’s always, there’s typically even with, especially big clients, there are 30-day out clauses. I mean, nothing’s a hundred percent secure, but what’s mo most important is that, we can see a consistent revenue year over year from those clients. They’ve had ’em for a long, if they’ve had them for a long time, for example, okay. That’s helpful for us. And, and then to make them more, more secure, they’re gonna, we just want to know that they’re gonna continue on, basically. And then that can be between, if the contracts aren’t gonna hold it, then it’s gonna be the relationships. And then you get into the question of, well, where does it lie within the company on the agency side, who has that relationship? We need to talk to them.


Learn more about Business Scaling Strategy by tuning in to our “Seed & Open Loops” Framework


Business Scaling Strategy: Balancing Contracts and Relationships


And not to interrogate ’em, but to really understand what’s the dynamic between the relationship? Is it specifically with the owner? Is it with their VPs or their account executives? And then what does the client think of that relationship? And, and there’s, it, it goes a lot of it because it’s all relationships, it’s all people with agencies and, and clients. All, a lot of it does go down to who’s passed the contracts. It goes down to who’s, who owns what relationships. So, the successful companies, what I call success is having security in long to long-term contracts, having confidence in those people that maintain those contracts and know that they’re gonna, those relationships are gonna transition with the company. And I don’t, honestly, I don’t really care if the owner isn’t even involved anymore. I just wanna know that I just wanna know that the agency, somebody on the team, can continue that and have that relationship.


Makes sense. and, and, and probably you caring or not caring has a lot to do with, again, making an assumption. So tell me, if I’m tracking with you, it has a lot to do with if the agency owner is the one who has those relationships, like your ability to essentially pluck the owner out so the owner can move on to whatever the owner wants to do, has a lot to do with, like, if, if they’re the ones who are servicing the 10 largest clients and the 10 clients that are generating all the GI, and that relationship is critical, then it probably becomes a little bit more of a sticky wicket, right?


It absolutely does. Yeah. We wanna make sure they stay on board and can transition that relationship over time. but really what, what, at least what we try to do is help the owner with their transition and chart it out. You know, how do they want to make their transition? What do they want to achieve? Let’s set a timeline to help them execute that. Okay. If they’re looking to retire, set a timeline. And, and if we, if you transition things sooner, cool. I mean, you, you can exit sooner if you wanna stay on board and continue to work as a team member, and growing more clients and, ultimately, transitioning clients over to other people, that’s fine. You know, so it’s ultimately just talking together and seeing how we can make it work. But it’s, it is super critical. If that person leaves within a few months after closing and they hold the relationship, why do we even buy this company? You know, all the money we put down, there’s certainly legal language and terms that you’ll have in place with consulting agreements or employment agreements for the owner. It could tie into his or her earnings. If there’s a portion of that, it could tie into part of the first price, there’s a lot of creative things that, that could be, can help make sure that the relationship is maintained with the agency that could provide the owner incentive to do so.


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Business Scaling Strategy: Specialized Agencies Joining Forces


I think that is great, or those are some great guardrails that you’ve just shared because, again, as I mentioned in the introduction, it’s one thing to say, yep, I totally wanna sell my agency. Then, there should not be a systemized shop, a great leadership team, or a team of experts who are taking care of clients and creating happy Clients Day-to-Day so that the agency owner can do what Drew McClellan talks about. Danielle said during the Money Matters workshop that 50% of an agency owner’s time needs to be focused on leading the agency, in particular in biz Dev. And if they’re in client work, that candidly makes them maybe a less than desirable or less desirable acquisition target because they’re so involved in the day-to-day of client service.


So, and I, and I love what you said about when you were talking about the intangibles, you were talking about evaluating the relationships with clients what they think, and then you said that part of this deal is, is so that they can be better served. And I think that is so smart, right? That, that if you are, if you are leading a shop that is specialized and you’re joining a group like Unite that has other specialized agencies, then if I’m tracking with you again, correct me if I’m wrong, is that if you’re joining a family of other specialized shops, then theoretically the clients from one shop could be better served because then they’re getting a team, sort of like this group of Ninja Specialists as part of Unite. Am I tracking with you?


Yeah, absolutely. I mean, it’s the same thing when you have an agency and try to bring in an employee with a specialty. That’s so you can now offer a new service line, and it’s just that with another agency you can utilize, you can go deeper and handle bigger clients with it and handle more. So there’s a lot of opportunity with that.


Awesome.  I know that we’re quickly running out of time, and we need to come in for a landing, so, but there’s still so much that I wanna ask about. We need another three hours.


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Business Scaling Strategy: A Roadmap to Success


No joke. because this is a very important topic for our audience. So, if I can ask you to maybe just give us three, in each of these categories, the two categories and one category will be milestones that you think that they need to work toward to make their agency desirable, it sounds so bad to say an acquisition target, but to make their agency, to put themselves in the best possible position to sell their shop. So milestones, your top three. And then conversely, what are the top three pitfalls that you think owners really need to be mindful of? Call ’em pitfalls, landmines, whatever you wanna call, the things they need to sidestep along the way based on your experience. So what would be your top three milestones, your top three pitfalls that owners should be thinking about?


Okay, so I have the milestones kind of broken up into three categories. Okay. And one is things you can do without, without doing anything to increase your valuation, which is kind of weird to say that


You know, let’s say you wanna sell your company tomorrow, for example. You don’t make any changes. You talk to the sell to the buyer and say, look, I want to get the max value for this. I am willing to structure it how you want so you can pay me more. To simplify it, it could mean that you’re not getting a check at closing, but it could mean they’re willing to value it a lot higher because their payments are spread out for a certain number of years, and they have a balloon. And so you seller finance it and get, get paid more in the balloon. Of course, there’s trust that has to go on, as well as legal protections. But, there you can do, you can still have a higher valuation ultimately even without that.


Okay. So again, without making any adjustments, the immediate fixes you can do to increase. So the second category is immediate fixes to get financials in order. your add-backs, the things that you would expense through the company. I know everybody does it, so things you expense through your company, you put that in a little Excel list and say, these aren’t gonna be recurring expenses, and we’re just gonna add that back to net income. There are certain things that are acceptable to be added back since there are certain things that aren’t. And Sal’s salary typically is a pretty justifiable add-back. There are a lot of things that are harder to determine, especially validate when you have financiers and long-term, again, immediate fixes, financials I’ve missed, a few contracts, and short worker contracts. And also get some m and a count counsel, not a lawyer that is, like does other stuff. Get a specialist. And so you can, somebody that’s experienced in doing business acquisitions and sales, so you can really be guided properly. And the next thing is long-term. In the third category, long-term, you can continue to diversify your client concentration. A lot of small agencies do have big clients, and to continue to diversify will help them, not help make sure your valuation is not reduced. ’cause sometimes there are discounts in your valuation because of that.


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Business Scaling Strategy:  Strategies for Agency Valuation Growth


Ah, okay, so hang on just one second. I wanna, I wanna clarify that piece to again, make sure that, that I’m understanding properly. So let’s say that you come, that you and your team come across an agency that’s doing really, really well, profitable, all that kind of stuff. It’s meeting all of sort of the criteria that you have on your initial checklist before you do your very extensive due diligence. Then you step into due diligence, and you find out, oh, holy bananas, wait a minute. Like, they have three clients that represent 30% of their GI each. So essentially, 90% of their GI is from these three gorillas. And 10% of their GI is spread over, let’s say, 15 other clients if I understand you correctly. That might be a cause for concern if there’s not a plan, and they’re well down that plan or working on that plan for diversifying their revenue. Am I tracking with you?


There needs to be a plan to diversify revenue. I mean, the question is, how fast can you do it? And that’s a challenge most agency owners face. However, the bigger thing is to understand what the relationship between those clients is. Is it one decision-maker? Is it multiple divisions that you’ve grown from small projects? We encounter that a lot. And it doesn’t mean that we don’t wanna do the deal. It doesn’t mean that we’ll have to discount it, but it, what it does mean is that sometimes we, we do have to do that because when we involve financiers, they don’t like that, they want to get their loan paid off and they wanna make sure we pay it off. So if something happens to the client, then, then, there won’t be enough money to pay that down.


You still need the revenue. So that’s why we say, look to, make this deal happen; we probably gotta cut the price down a little bit to make sure to, to pay, to be able to have the ability to pay these debts. Debts, or look, we can’t provide as much cash at closing. we gotta have a big seller’s note on this because of these client concentrations. We just gotta work together on it. But also, we have to hedge our risk. So those are, so that’s client concentration. Okay. new and the long-term sign for your cat, your category, how to increase your valuation is, new business system. Have a new business system in place. Most are word of mouth. If you don’t have one, like, yeah, I don’t think it’ll necessarily reduce your valuation.


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Business Scaling Strategy: Key Milestones for Agency Growth and Attractiveness


Um, but if I look at another company that has a business system in place that, has continuous growth year over year from that, yeah. And it’s easier to make a decision, and you’re probably willing to be a little more flexible in the valuation. Of course, again, the person buying your company is typically one or a few people and makes the decision. So, if I’m making the decision on whether to buy that company and put my money on the line and personally guarantee things, I’m willing to be flexible, but I need to be sold on this. And it’s not like you’re submitting this to the system where you can’t have flexibility. You have an unknown system with unknown decision-makers. You know, you are dealing with people, and so there are people that are willing to make deals with you, but you know, you have, it is good to short your, your weaknesses up, have leadership, this the, in that category.


Lastly, have the leadership that is ready to take over your roles upon your transition and prepare them beforehand. That’s another thing. And then, and the last thing, there are so many things I could add to this, but the last thing is that a track record of at least two years of sustainable EBITDA is good. It’s a, it’s, it’ll hurt. Your valuation won’t necessarily be as strong if you’re just trying to value your company off of one year’s EBITDA and you have about half the amount for the prior years. Yeah. It’s just really tough to do that. Otherwise, they’re gonna, there’s gonna be a lot of performance metrics that can go into pitfalls.


Yeah. So, before we get to pitfalls, and, again, I know we need to be, we need to be quick, but when you mentioned two years of EBITDA leadership to them be able to take over your role, all of that becomes easier. Going back to, again, I recognize my bias is in biz dev, I get that, but when you said have a, have a new biz, new business system in place and not just relying on word of mouth, it’s awesome that there’s a steady stream of referrals may be flowing into the shop, but being able to have essentially predictable client acquisition system in place that you can see that the agency is working and there’s some predictability to it, just makes them much more attractive and is likely contributing to the two years of EBITDA, right?


Yeah, you’re absolutely right. Getting that in place is really important. And you, you can survive on word of mouth for a long time. It’s just you can’t grow that fast with it.


It’s tough to scale, right?


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Business Scaling Strategy: Traps to Dodge When Selling Your Agency


I mean, it’s tough. It’s tough. I mean, it’s not like you can’t, but it, yeah, it is tough moving into pitfalls. Pitfalls, yep. I, I move, I move, I look at it as what can you do to save money and time in the process? And, it all starts with defining what you want in an opportunity, like in your exit, and then what you don’t want, who you may not want to work with, what kind of deal you don’t want. And by doing that, any opportunity, any person that reaches out, reaches out, reaches out to you, such as myself, and, and we get, we have an initial call, and I talk about how we structure things. You can immediately say, yeah, I want to talk more. Or that doesn’t really fit because I know I need to hit this valuation.


, and the financials just don’t, don’t work right now to make that happen. And, some agency owners have that in mind. Some agencies don’t have a plan out, but having that will save you a lot of time. And the next thing is, again, I said it before, but having the right counsel, and not just a lawyer, but a transaction lawyer, and also make sure your accountants are on standby. Somebody that, maybe, isn’t just one person, at least you can go, you have, maybe you have your primary person as the accounting person does your local things, but you have an actual accounting firm that no matter the time of year if you need to pull the trigger on getting financials together to send to a buyer, you don’t have to wait weeks or months on end.


And that they should send them financials so they can even say what they’re willing to do. And, so that, that can bea time delay. Another big thing is having your taxes finished. And, I get there’s a reason why there are people delaying taxes, but when a bank looks at helping finance a deal, they also want to see the most recent year’s tax returns. Yeah. And if they have to look at the year prior, it just means that, like, they can’t, they can’t validate putting this cash into a deal to help you as the owner take away and put your bank, without those official tax returns. And there are things like quality earnings and bigger audits that are not audits. It’s quality earnings. We’re a big accounting firm that reviews financials, which could help qualify it, but those can be costly and are typically for larger deals. So I would encourage owners to have the tax returns a avail, done as well.


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Business Scaling Strategy: Insights from Behind the Curtain


Brilliant. Such great advice and insight, really from in the trenches, you’re, you’re like coming from behind the curtain that most agency owners that have this goal would like to peer behind and, and really see sort of like the mechanics of the deal. And, you broke down all of that, excuse me, not the mechanics of the deal, but you broke down what makes a deal really attractive from your perspective, which I’m grateful for. Um, before we go, before we close out and say goodbye, please share the best way to connect with you with our audience, Shane.


Yeah, a simple email is the best. Just [email protected], that’s U-N-I-T-E-D-I-G-I-T-A-L. And if they, if any of your listeners, want me to look at what their company is worth, I can happily do a quick valuation review. I mean, it’s just pretty informal. I would probably set up a call, but if they want to, just email me valuation and then say, Hey, I heard from the Sell with Authority podcast I’m happy to do that. Just shoot an email on anything else.


Awesome. That is great, Shane; thanks very much for your generosity, and okay, everyone, no matter how many notes you took or how often you go back and re-listen to Shane’s words of wisdom, which I sure hope that you do. The key is you have to take the milestones, you have to take the pitfalls, you have to take this planning process. You have to take these sorts of deal attributes, if you will, into account in the characteristics of how the agency is structured. To go more narrow, to specialize, to increase your valuation. By doing so, you have to take all of these points that he so generously shared with you, take them, and put them into practice. When you do, you will make your agency much more valuable if you decide to sell at some point. And Shane, I am very grateful for your time. We all have the same 86,400 seconds in a day. Thank you for saying yes, to come onto the show, to be our mentor, to be our guide, to help us move our businesses onward to that next level. Thank you so much, Shane. Thank You, Stephen.

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Sell with Authority Podcast

The Sell with Authority Podcast is for agency owners, business coaches, and strategic consultants who are looking to grow a thriving, profitable business that can weather the constant change that seems to be our world’s reality.

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