SELLING Your Digital Marketing Agency: 13 Steps to Take Before You Sell

[00:00:01] - Profitability and Valuation

[00:00:42] - Importance of Business Valuation

[00:01:48] - Documented Processes and Systems

[00:02:30] - Client Diversity

[00:03:23] - Long-term Contracts

[00:04:55] - Transferable Contracts

[00:05:38] - Defined Market and Niche

[00:06:10] - Sales System

[00:06:42] - Lead Generation

[00:07:23] - Team Structure

[00:07:27] - Client Retention and Relationships

[00:08:08] - Personal Readiness for Selling

[00:09:13] - Post-Exit Plan

[00:09:56] - Consulting a Professional

Are you trying to figure out how to sell your digital agency? Many agency owners envision retiring one day and reaping the rewards of their hard work. The typical plan involves selling the business they've built as an asset. However, before you're ready to sell and secure the ideal price for a life of leisure, there are essential steps to take.

Below are valuable insights on preparing to sell your agency. Whether you're considering selling soon or down the line, you’ll find this step-by-step guide to selling your digital agency is packed with useful tips to ensure you get the most out of the selling process.

These simple yet powerful words are often overlooked in our fast-paced world. In a society that values productivity and efficiency, the idea of constantly seeking out new knowledge and experiences can seem like a luxury rather than a necessity. However, the benefits of staying curious and continuing to learn throughout our lives cannot be understated.

1. Profitability: If you’re making $200K that’s good for you as a single business owner. However, it’s not that good for someone wanting to buy your agency and your valuation will go down based on this. Agencies need to focus on increasing their net profit and aiming for higher valuations to attract potential buyers. This involves understanding the financial health of the agency and working towards increasing profitability by reaching certain revenue milestones.

2. Business Valuation: Have you had an agency valuation done before? You can get a good idea of it with this formula, or get a professional valuation done to understand the true worth of the agency and avoid disappointment when negotiating with potential buyers. Having a clear understanding of the agency's value can help set realistic expectations and guide decision-making in the selling process.

3. Documented Process: Chances are that once someone buys your agency you won’t be around very long (as an owner, you’d probably be an awful employee anyway. Trust me). This is why you need those documented processes that people can follow. This ensures that the agency can continue to operate smoothly even after you exit the business. By having clear processes in place, potential buyers can see that the agency is well-organized and can easily transition into new ownership.

4. Client Diversity: This is a big one. Some agencies have a majority of their revenue concentrated in just one client. That’s a big red flag for a buyer. Do you have a big client? Great! Now keep working to get bigger clients. Having a diverse client base can provide stability and predictability for potential buyers, making the agency more attractive for acquisition.

5. Long-Term Contracts: A lot of agencies are on month-to-month retainers or have a 30-day out clause. Remember when someone wants to buy your agency they’re buying your predictability, which you can provide with long-term contracts that ensure you have those clients locked down for twelve months. Furthermore, you may be bought as an asset purchase, so make sure your contracts can be transferable.

6. Defined Market/Niche: Do you have a unique service offering? How does your agency stand out from other full-service agencies? The more specialized you are, the more your valuation will go up.

7. Sales System: Are you still handling all the sales? Then you probably don’t have a sales system. How are you qualifying your prospects? How are you converting them? How are you following up? This should all be documented.

8. Lead Generation Strategies: If you’re getting all your new business from referrals that just isn’t scalable. It’s fine when you’re just getting started, but as you scale you should develop outbound and inbound channels, as well as strategic partnerships. A potential buyer will be looking at how they can scale your business by increasing the amount of leads of doubling the sales team and this is also how you should be looking at your agency to be better prepared to sell.

9. Team Structure: If your team is constantly coming to you for answers then you’re not ready to sell. Your team needs information about the agency’s overall direction and goals to make their own informed decisions. Make sure you have the right team and empower them to make the right decisions based on the agency’s core values.

10. Client Retention and Relationships: Potential buyers will see a high turnover rate as a red flag. Look for ways to make clients want to stay longer and try to grow those existing relationships. It’s not enough to have those clients and keep them at the same rate. Work on growing those accounts.

11. Personal Readiness: Are you ready to sell? It’s normal for agency owners to feel emotionally connected to a business they spent years growing from scratch. However, that makes it harder for you to make rational decisions. Agency owners need to detach themselves emotionally from their business and have a clear vision for their future post-exit. This can help prevent feelings of loss or identity crisis after selling the agency.

12. Post-Exit Plan: What do you want to do after you sell? If you’re feeling exhausted, the idea of just doing nothing may be tempting, but it’ll get old soon than you think. If you don’t have a plan for what your life post-sale will look like, you’re probably not ready to sell.

13. Hire Professionals: A lot of agency owners going through the sale process don’t know what to expect. There are a lot of possible pitfalls and ‘gotcha’ moments' in this process, so make sure to contact someone who’s been through it.

Get a TON more resources on selling your agency by checking out our YouTube playlist here.