For almost any business owner, there inevitably comes a time when they want to move on. This could just mean taking a step back from being heavily involved in the business, or it could go as far as completely selling up and moving out of the business and any involvement in it. However, the process of exiting any business doesn’t happen overnight. It’s something that requires a great deal of thought and preparation if you want it to go well and keep the business going without you. So, how can you exit your creative agency? In the creative industry, many business owners delay exiting their agency as they can’t possibly see a way it could operate without them. And, this isn’t just them being egotistical. Lots of creative agency owners are so deeply ingrained into the business that it would genuinely be hard for it to operate without them if preparations weren’t started beforehand. So, in today’s blog post, we’ll be discussing some of the things you need to know about and do if you want to exit your creative agency some time in the fairly near future.
So, how can you exit your creative agency (and make it a success)?
Stability is crucial
It’s in the nature of agency work that different clients will be involved with different people within the business. Often, just one or two people may have sole responsibility for looking after a major client. However, it’s vital to ensure that not too many clients are placed solely in the hands of one person. This is especially true if these clients are in the hands of the creative agency owner that wants to exit. Think about it this way: if someone is responsible for lots of key clients, what would happen if they left the business? If it would mean bad news for your agency, it’s probably a good idea to think about introducing more stability to your business model before you think about exiting it.
Overall, this simply means making sure that more than one person could take over the management of all key client relationships, if needed. This secures the smooth running of client relationships and operations, even if someone within the agency was to leave. Agency owners who are looking to exit their businesses should try and avoid becoming too involved with new clients that are brought on before they leave, and look to delegate their existing responsibilities onto other members of the team.
Profitability in creative agencies is a very common problem. Many agency owners aren’t too focussed on profit. Instead, their main focus is on delivering excellent work and building up a great reputation. But, how can you exit your creative agency if it’s not making any money? You’ll struggle to find a buyer who wants to put in the work to turn things around, so it’s unlikely that you will be able to sell the agency for what you truly think it’s worth. Because of this, it’s vital to think about client profitability before you make your moves to exit. How are you currently making your money? Which clients are profitable, and which ones aren’t? Taking a good look into the ins and outs of your profitability is a very important thing to do before you exit your agency. From there, you can consider increasing what you charge or cutting back on clients that aren’t making you any money, in order to increase your profitability and make your company a more attractive option for anybody looking to acquire an already-functioning creative agency.
Avoid client over-reliance
On the other hand, it’s also not a good idea to be over reliant on just one or two clients for your work and income. This is a precarious situation to be in. What would happen if these clients decided to leave you? You would then be scrambling to get more, and it would certainly set back your plans to exit the agency. So, if you are thinking about making an exit in the near future, I would advise to look at strategies to avoid over relying on just a couple of clients, including restructuring the way you operate or looking to expand your client base.
You must be strong on your staff
Your staff should be your most important asset. This is true for any business. How can you exit your creative agency if you don’t have a key team to keep things running smoothly? The fundamental thing to do here is to ensure that your key players are happy. This means that they should be properly incentivised to do their best work. Ideally, around 20% of an agency’s equity should be in the hands of the key players who will drive it forwards, before the agency owner makes their exit. This not only offers a strong incentive to these employees. It’s also an attractive option to any potential acquirer. They don’t want to see all of the equity in the hands of a founder, with a set of people below them who have no incentivisation. With this, the acquirer will have to incentivise these staff themselves, effectively paying twice.
Don’t be too reactive
If you’re thinking about exiting your agency, you must think carefully about it first. Why do you want to exit? What are you hoping to achieve by doing so? Many agency owners make the mistake of thinking that the grass is greener on the other side, only for them to make the jump and discover that everything is not quite as it seems. By then, it’s too late, their original business is in someone else’s hands, and their ultimate goal in exiting their agency hasn’t been achieved. So, before you actually leave, make sure that your next venture is carefully structured and actually a viable alternative for you. As a part of this, you should also consider any current threats to market in your specific industry that could affect your decision to exit or the sale of your agency. It could be that the market conditions aren’t quite right for you, and it would be a better idea to wait until things are more favourable. While this may be frustrating, it’s probably better to weather the storm with your agency, rather than jump ship too early and not be in the best position.
This is also applicable if you’re looking to sell your agency to fund your retirement. In order to get the best price for your sale, sell it for what it's worth, and therefore maximise your retirement funds, it’s a good idea to look at the current market. Is now the right time? Or, could you wait a few months or years in order to recoup more of your investment? This will also give you more time to prepare for your exit, so your agency can run smoothly without you there in the future.
So, how can you exit your creative agency in the near future? It’s fair to say that it involves quite a lot of preparation, especially if you want to ensure the future success of your agency without you at the helm. But, whether you want to exit completely or just take a step back, there are certainly things you can do to ensure a smooth transition. Furthermore, even if you don’t actually want to make your exit soon, I would recommend looking into implementing some of the above points anyway, as they’re a good way to generally improve your agency and make it more efficient.
If you’re looking to exit your agency and aren’t sure about how to make it a reality, I can help with my coaching and consultancy services, specialising in creative agencies. To find out more about what I do and how I can help you, please click here to visit my website or here to get in touch today.