Do you have trusted referral partners? Every considered merging with an agency partner? A merger can be a good way to expand your service offering, but surviving a merger is a whole other thing. The right partner gives you access to highly skilled professionals, more creative ideas, and proven methods to maximize success. Today's guest found a great, longtime partnership. However, when it came time to merge their agencies, both opted to maintain ownership of their individual entities. He explains the thought process behind this decision and the road that led to his eventual acquisition.

Gus Wagner is the president and owner of The Rocket Group, a full-service agency based in Missouri. In its long history, the agency has worked in all sorts of different sectors with businesses, organizations, and nonprofits; focusing on government communications and politics. Established as a virtual organization since its beginnings, the agency has always worked with independent contractors to help build and perform their client marketing tools and activities. For this episode, he recalls his agency journey and how he and his partner decided to set up a separate agency to work together and not lose control of their individual businesses.

In this interview, we’ll discuss:

• Protecting agency ownership when collaborating with a partner.
• Should you sell your agency to a competitor?
• When and how to announce an agency acquisition.

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Sponsors and Resources

Verblio: Today's episode of the Smart Agency Masterclass is sponsored by Verblio. Check out Verblio.com/smartagency and get 50% off your first month of content creation. Our team loves using Verblio because of the ease of their process and their large pool of crowd-sourced writers.

In 2001, Gus, a sales and marketing manager for different manufacturing companies, quit his job and decided to start his own agency. After 21 years of working with The Rocket Group, he had completed numerous opportunities and projects, specializing in tools to help his clients communicate online and in the real world with their customers and prospects. Gus is also a certified social media strategist and enjoys training interested parties in these ever-changing modern communication platforms. Over the years, he has made valuable strategic partnerships, with some colleagues working with his agency for more than 5 years. On a daily basis, his agency works with 19 state associations, 200 individual member public utilities, and one national organization.

Protecting Agency Ownership While Collaborating with an Agency Partner

However, there was a time when Gus decided to set up a separate agency to protect ownership of his original business. This happened when he officially formed an agency partnership to maximize his success. Instead of merging their agencies, they created a third entity owned by both of businesses. Whether because of different industry niches or partners who didn’t want to get too involved in the entire agency’s operation.

Many agency owners are always networking and passing business back and forth but keep their businesses separate. In fact, clients are often aware of this. For Gus and his partner, it was a case of simplifying things for the clients. This way, they would have to deal with one entity instead of two.

It seemed like the best way to go about these partnerships since Gus also didn’t want to sell a piece of his agency. This is because many businesses don't want to give up ownership of their organization, especially to someone they don't trust. When it comes to selling your agency, there are many things to consider, such as your employees, clients, and the value of the agency itself.

Should You Sell Your Agency to a Competitor?

If you decide to sell, it's important to make sure that the buyer is someone you trust and that the process is done right. In Gus's case, he was approached by a competitor who wanted to acquire his organization. They accepted and closed the deal in March 2020. The buyer was a known competitor who had been working with the same pool of clients for some time. It was a smaller agency trying to win social and digital campaigns for public utilities. They were trying to do it differently and weren't being very successful with that client base. They were put in touch by a client who had worked with both and they got to compare strengths and weaknesses. The conversation grew from there.

At that time, Gus’s agency was growing more than he and his partner were comfortable with. Hence, it was attractive for them to form a larger structure to take over that growth. It took about six months from the initial conversation to signing the paperwork and making the announcement.

How and When to Announce an Agency Acquisition

Announcing an agency sale can be challenging as clients may assume the services will quickly lower in quality. However, if you wait until they have positive comments about the service to announce the sale, they’ll see there was nothing to worry about. In Gus’ case, the buyer was excited about the purchase and the new capabilities it brought for their agency, so they made the announcement right away.

Gus has been in this industry for over 21 years with The Rocket Group and about 15 years before that. He advises keeping things simple, keeping your eyes on the prize, and keep moving forward and upward. He also emphasizes the importance of protecting ownership of your agency, which he did by setting up a separate agency and forming agency partnerships. This way, you can maximize your success without giving up control of your original business.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Are you running your agency, or is your agency running you? Are you lacking the freedom you thought you'd have in your agency? Many owners start growing their agency, getting more clients, and hiring more people and quickly find they’ve built a prison for themselves. Today’s guest went through this and came up with a method to regain freedom and buy back your time. He now helps clients set up systems to identify their buyback rates and delegate tasks so they can maximize time and revenue.

Dan Martell is the CEO of SaaS Academy, the largest coaching company for software CEOs. He has owned and sold several agencies and continues to invest and buy companies through his company, High-Speed Ventures.

As a troubled teenager, Dan discovered his obsession with computer programming while serving time in a detention home. Many years later, he started and sold several companies. He has two venture companies and has been an angel investor in about 50 companies. He is currently CEO of SaaS Academy and is further developing his personal brand as an author. Today, he talks about his new book, Buy Back Your Time, where he details the method he created to help business owners regain their freedom.

In this interview, we’ll discuss:

• How to calculate buyback rate and conduct an audit of your time.
• 3 mistakes entrepreneurs make when they reach the pain line.
• 5 key hires to help you delegate and reclaim your time.

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

How to Calculate Your Buyback Rate

The “buyback rate” is a concept that many entrepreneurs are embracing to avoid the “pain line.” This is the point where they can no longer balance their personal and business life. Dan's book explores the buyback rate in-depth and discusses how it can help you build a successful business while enjoying your personal life.

Dan, the author of Buy Back Your Time, teaches entrepreneurs to calculate their hourly revenue value to determine their buyback rate. To do this, divide your annual income by the number of hours you work per year, then divide that amount by four. The result is your buyback rate.

Calendar Audits to Identify Tasks You Can Delegate

Once you have your buyback rate, it's time to audit your calendar. Dan advises clients to audit their calendars for two weeks, highlighting tasks they enjoy in green and tasks that drain their energy in red. Each red task should be rated on a scale of one to ten based on the cost to outsource it. Tasks rated as one will cost ten dollars to outsource, tasks rated as two will cost twenty-five dollars, and so on.

After classifying tasks, Dan suggests that you work through the $1 tasks, the ones that will cost the least to outsource. While this might not free up a lot of your time at first, it's important to build the muscle of delegating.

Dan warns that buying back your time isn't about going to relax. It's about using that time to generate more revenue for your agency. It's important to avoid the "pain line," the point where people start making rushed decisions.

The "pain line" can cause entrepreneurs to stall, sabotage themselves, or sell their business, even if it's thriving. Dan has developed a replacement ladder with five levels to help you buy back your time gradually. The levels are Executive Assistant, Delivery, Marketing, Sales, and Leadership.

The Five Steps in the Replacement Ladder

Dan suggests starting with an Executive Assistant, who can help with scheduling and administrative tasks. Next, hire for Delivery, so you can delegate client work. Marketing and Sales come next, where you delegate lead generation, conversion, and follow-up. Finally, when you have a team in place, you can focus on Leadership.

Dan emphasizes that buying back your time isn't a one-time event. Instead, it's a loop that you should continually refine. It's essential to solicit feedback from your team to prevent stagnation.

In conclusion, the buyback rate is a useful concept for entrepreneurs who want to balance their personal and business life. By identifying the tasks they can delegate, entrepreneurs can focus on generating revenue and avoid the "pain line" that often causes them to stall, sabotage themselves, or sell their businesses. The buyback rate allows entrepreneurs to buy back their time gradually, building a team that can take over their day-to-day tasks, and create a successful business while enjoying their personal life.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

What are you doing to keep your team happy? Do you have an amazing culture? Is your team passionate about the agency's vision? Do they understand their growth plan beyond their current role? Your employees are your most valuable asset. That's why one agency owner shares his strategy for maximizing employee happiness and how that's led to massive productivity for his e-commerce media agency.

Samir Balwani is the founder and CEO of QRY, a media buying agency for e-commerce and direct-to-consumer brands. Their media methodology and testing framework called the QRY Paid Media Process has enabled e-commerce brands to reach new customers and accelerate growth.

In this interview, we’ll discuss:

• The importance of people management for team happiness and productivity.
• Favoring process-driven thinking and management layers.
• Thoughts on DTC moving to an in-store product line.

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Sponsors and Resources

Verblio: Today's episode of the Smart Agency Masterclass is sponsored by Verblio. Check out Verblio.com/smartagency and get 50% off your first month of content creation. Our team loves using Verblio because of the ease of their process and their large pool of crowd-sourced writers.

Podcast Takeover!!

Get to know your Smart Agency Guest Host: Dr. Jeremy Weisz is the co-founder of Rise25, an agency that helps companies launch and run podcasts profitably. He followed Jason’s podcast and eventually joined the mastermind and has been a guest on the podcast before. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and bringing a new perspective to the show.

Importance of People Management for Employee Happiness and Productivity

People management is a critical factor in keeping employees happy and productive, yet it's often overlooked by many businesses. Samir, the founder of an agency that specializes in working with direct-to-consumer e-commerce brands, understands the importance of prioritizing people management. He's implemented various strategies at his agency to ensure that his team is engaged and motivated, even as the company has grown.

One of the keys to maintaining a sound work environment is to create a culture of feedback and communication. Samir has implemented 360 reviews, growth plans, and annual plans to help his team stay passionate and excited about their work. He also recognizes the importance of preventing burnout by ensuring that workers feel valued and appreciated. Allowing employees to voice their concerns and be heard is a crucial part of creating a space where they can thrive.

Favoring Process-Driven Thinking and Management Layers at his Agency

Another critical aspect of people management is fostering a process-driven approach that doesn't hinder innovation. Samir believes that layers and organizational structure are essential to allowing people to learn from those with more experience. His agency has a coordinator level, a manager and strategist level, and a director level, which has helped to empower employees while also providing them with the support they need to grow.

Being a Data-First Business and Sharing Valuable Information

As a data-driven business, Samir's agency collects a lot of valuable information about the e-commerce marketplace. They've created a benchmarks page to share high-level trends and KPIs with their clients. This helps to build trust and demonstrate their expertise.

Should Direct-to-Consumer Brands Make the Move In-Store?

Samir also believes that direct-to-consumer brands will need to reconsider their approach to brick-and-mortar stores in the coming years. These stores can provide valuable validation and brand awareness. However, they may not be the best fit for every brand. Working with wholesale partners like Target can be a more strategic way to build brand awareness. It also allows a brand to grow without cannibalizing a company's entire product portfolio.

Improve employee happiness and productivity in your agency. Take a cue from Samir and prioritize people management. By creating a positive work environment that values communication, feedback, and innovation, you can set your team up for long-term success.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Are you in the growth phase or the scale phase of your agency journey? Do you need generalists, specialists, or both? Knowing where you're at is the key to knowing who to hire to get where you're going.  Today’s guest is in the scaling phase and believes this is when an agency needs to hire specialists. Before that, it’s all about hiring generalists that can handle multiple tasks and get the business to the next stage.

Manish Dudharejia is the founder and president of E2M Solutions, a full-service, white-label digital agency. His agency works as a trusted partner to scale your agency business behind the scenes. E2M has been serving agencies for 10 years and currently works with about 130 agencies across the U.S.

Manish is a valued partner of the show and as a repeat guest, he shares his experiences solving some of the most common agency growth challenges. In this episode, he shares some of the hiring decisions that may be holding back agency's growth.

In this interview, we’ll discuss:

• When to hire a generalist or a specialist.
• The differences between the growth phase and the scale phase.
• Why automation is the next step after hiring specialists.

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A Common Hiring Mistake for Agencies in The Early Growth Phase

If you’re past the initial growth phase with your agency, what would you have done differently to scale faster? Like many agency owners, Manish didn’t know a lot about building a team back when he started his business. More than 10 years later, he has learned that when you’re starting an agency or you’re in the growth phase, you want to make sure you start off with a team of generalists.

Generalists are people who are not necessarily tied to a specific role. They are able to work in several different roles during the agency’s growth phase. After reaching certain goals and entering the scale phase is when you need to hire specialists.

After opening his agency for business, Manish started looking for specialists right away. He figured he couldn’t run the agency without them.

The Importance of Hiring Generalists in the Early Growth Phase

When starting an agency or in the growth phase, it is essential to hire individuals who can be flexible and perform multiple roles. These individuals, known as generalists, can provide much-needed support in various areas, allowing the agency to save costs and reduce the number of people to manage. Hiring generalists during this stage also enables the agency to avoid having idle employees and ensures that the quality of work does not compromise.

3 Advantages of Hiring Generalists

In the early growth phase, it is common for agency owners to approach growth-related problems by hiring more people. However, this approach can be both costly and time-consuming, especially if the right employees are not found. On the other hand, hiring generalists provides several advantages, including:

1. Reduced Costs: By hiring generalists, the agency can combine multiple roles into one, saving on costs and reducing the number of people to manage.
2. Increased Resourcefulness: Generalists are known for their resourcefulness, which is an essential trait in the early growth phase. These individuals are versatile and can perform multiple tasks, providing the agency with much-needed support.
3. Improved Quality of Worhttps://jasonswenk.com/amazing-agency-talent: Hiring generalists ensures that the quality of work does not compromise, as these individuals can perform multiple roles and provide support in areas where it is needed.

The Right Time to Hire Specialists

As the agency moves from the growth phase to the scale phase, it is time to start thinking about hiring specialists. Specialists bring unique skills and expertise that generalists may not possess, and they play an essential role in scaling the agency. Once the agency has reached a certain level of profitability and established a talent pipeline, it is the right time to start thinking about hiring specialists in each department.

Hiring generalists in the early growth phase is crucial for the success of an agency. These individuals provide versatility and resourcefulness, saving the agency costs and improving the quality of work. As the agency moves from the growth phase to the scale phase, it is the right time to start thinking about hiring specialists who bring unique skills and expertise to the business.

Want the Support of Amazing Digital Agency Owners?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to the Digital Agency Elite to learn all about our exclusive mastermind.

Do you want your eventual exit to benefit many instead of a few? Want to motivate and empower the team by making them personally invested in the agency’s success? Have you thought about employee shares or stock options? Learn what you should do and what to avoid in this situation from the CEO of an employee-owned agency. It was an unconventional exit strategy by its owner. However, it the new ownership structure offers many benefits for all involved and is a very interesting way to positively ensure that everyone at the agency has skin in the game.

Leeann Leahy is the CEO of VIA, a full-service advertising and marketing agency based in Portland, Maine. They are an award-winning team and one of the largest independent agencies in the business. How did they do it? Many years after its creation, the last remaining original partner decided to build a very interesting ownership structure that would benefit all employees instead of a select executive team. Leeann discusses the process of putting such a structure together, the challenges, and the many benefits it creates for the business culture and overall employee commitment.

In this interview, we’ll discuss:

• How to set up an employee-owned agency and mistakes to avoid.
• Finding the right agency employee ownership option.
• Why successful ESOPs start with a foundation of good culture.

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Sponsors and Resources

Verblio: Today's episode of the Smart Agency Masterclass is sponsored by Verblio. Check out Verblio.com/smartagency and get 50% off your first month of content creation. Our team loves using Verblio because of the ease of their process and their large pool of crowd-sourced writers.

Create Something Larger than Yourself with an Employee-Owned Structure

In a sense, Leeann grew up in the agency world. She was a child actor in several commercials, so she grew up around the business of advertising. At one point in her life, she swore off that world. However, she fell right back into it with account planning. Since then she has had a successful career working at both large and small agencies. Ten years ago she moved to Portland, Maine and became the CEO of a very interesting employee-run project.

When the agency was created, its three owners had a vision of creating something larger than themselves. This is why they named it VIA (Vision, Instinct, and Action) instead of something tied to the founders. Over the years, two of the partners left and, as the last one prepared to step away from his active role, the agency got a lot of acquisition offers. With Fortune 500 clients and awards for best culture, the agency was a valuable asset for any buyer. Instead, the remaining partner had something very different planned for his exit strategy. He set up an agreement whereby he would give the agency to the employees.

This was not a typical employee-ownership program. It was completely bespoke, with lawyers and accountants advising against it. However, they started a program measuring the agency’s performance each year and if they reached certain metrics, the owner would gift a portion of his ownership in the form of options.

The program, which they called VEEP (VIA's Employee Equity Program) was meant to last for ten years. Fortunately, they were actually able to do it all by year seven.

Finding the Right Agency Employee Ownership Structure

Seven years after starting VEEP, employees could convert their earned "options" into shares. This is when they realized the lawyers and accountants were right.

The original agreement had the best intentions; however, it didn’t take tax implications into consideration. The problem was that the conversion from options to shares was prohibitively expensive because of the agency's growth over the years. As a result, they were forced to reevaluate their situation.

They looked at many different types of structures that didn’t involve giving up their independence. In the end, they landed on an ESOP (Employee Stock Ownership Program), a program overseen by the government. It has huge tax exceptions, so there are benefits for both the employer and employees. It is basically set up as a qualified retirement plan.

Now everyone at the agency is given more shares every year at no cost to themselves. That grows over time and, by the time they leave the agency, they’ll have something they can roll over into an IRA or cash out. This way, they’re actually earning as the agency grows and everyone is invested in the agency’s success.

3 ESOP Models Depending on the Owner’s Future Role in the Agency

Does the owner get paid out in an ESOP structure? The short answer is yes. Of course, they had to find a way to make it work both for him and the employees.

In VIA's case, the owner was paid out in two segments with a down payment and the rest over time. Technically, it was all done through a trust. They set up a trust that "bought" the agency and allocated shares to the employees. This way, the Board of Directors would still govern operationally while a Trustee Committee oversees the Board.

It was a complicated feat to pay out the owner and recognize the value he had gifted employees over the years. It involved a lot of legal math and the collaboration of many lawyers and accountants. Depending on how you structure it and what the owner wants their future role to be, they can still have residuals or be completely out.

The owner payout in an ESOP can work in 1 of 3 ways:

1. The owner receives 100% of the buyout through a note with an interest rate or participation in the ESOP.
2. It could be through a down payment to the owner and a note for the remainder.
3. Funding can be sourced from an outside, third-party.

Pros and Cons of an Agency ESOP

To take a similar route with your agency and have successful results, the first key is having the desire for everyone to benefit, as opposed to just the founder and a small executive team. This doesn’t mean they’ll all benefit equally but rather in an equally fair manner based on their contribution and compensation.

People get nervous around ESOPs because it generally involves taking on debt to buy out the founder. This debt gets paid first, even before the owner’s note, so the government knows you’re repaying it. Furthermore, you have to hold a certain amount of cash in reserves for when people redeem shares.

At Leeann’s agency, they set up the ESOP so only employees can hold shares, but this also means the agency needs to be ready to buy people out when they leave.

There are some ties to it for the employees, like paying a penalty if you decide to take out the shares before reaching a certain age. Nonetheless, the big benefit for the business is the ability to operate as a tax-free organization.

Investing in Good Culture and Commitment to the Agency’s Success

Being in a creative industry, it’s important to provide a work environment where employees feel motivated and inspired. The key to achieving this is keeping them happy. This agency invests in its happiness factor by providing its team the opportunity to work for themselves. It’s an interesting approach to the problem of employee engagement by offering benefits linking the overall agency’s performance to the team's personal gain.

Of course, this structure is not without risks. It’s built in a way in which, if you maintain a good culture and an engaged employee base, they’ll be invested in the agency’s success. If people are not engaged and it’s just a job to them, then it all falls apart. On the contrary, if they understand the agency’s success is their success, then odds are it won’t fall apart.

To ensure they give a space where employees can voice their concerns, VIA introduced VN Voices. It’s a new figure apart from the Board of Directors and the Trustee committee called the Associates’ Panel. They’re a group of seven volunteers who represent the employees. They raise issues affecting the team and bring them to the Board and Trustees.

A Successful ESOP Starts with a Foundation of Good Culture 

If you’re interested in creating something similar to the model Leeann’s agency came up with, she recommends having a well-established culture. “It’s just not something you can create on top of it,” she says. VIA already had a culture of investing in happiness, people, and fun. They invest a ton in mental health and creating an equitable environment to introduce diversity. Investing in your culture is a good way to invest in your agency’s future. “No matter where you land, you’ll be passing on something more complete if you invest in the culture,” Leeann assures.

Want the Support of Amazing Digital Agency Owners?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to the Digital Agency Elite to learn all about our exclusive mastermind.

Do you want to grow your agency through an acquisition? What it would look like to merge with an agency offering complementary services? What if you could expand your team by acquiring another agency's talent?  An acquisition might feel impossible, but done right can be an amazing growth strategy. Today’s guest never thought he would acquire not one but two agencies. He saw acquisitions as an impossible growth strategy that required enormous amounts of cash. In the end, it was just about finding the right partners. He is on the show to share his experiences buying out his partners and eventually making two acquisitions.

Todd Nienkerk is the co-founder of Four Kitchens, a digital agency that makes websites for organizations that educate, advocate, and reform. Their team builds digital content platforms, design systems, and apps for ambitious organizations. After nearly selling his agency and then growing back stronger and expanding his team and offering through acquisitions, he shares some of the changes he made to get to this point, as well as some of the unexpected challenges of the acquisition process.

In this interview, we’ll discuss:

• Taking a big risk to rebuild after a failed acquisition.
• 3 big structural changes to grow your agency.
• Why acquisitions aren't an impossible strategy.

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

Podcast Takeover!!

Get to know your Smart Agency Guest Host: Darby Copenhaver is the Agency Scale Specialist at the Agency Mastery 360, which provides agency owners with the coaching, community, and tools needed to scale and find their freedom. He helps agency owners scale through a proven framework for growing their agencies faster and connecting with other amazing agency owners. Today, he’s helping Jason bring something new to the Smart Agency podcast audience by interviewing a special guest and bringing a new perspective to the show.

Taking a Big Risk to Rebuild the Agency After a Failed Acquisition

Todd started the agency with several partners he met working for a student publication. With over 16 years in the business, they worked with large media companies and small non-profits, education reform groups, and universities. Over the years, however, his other partners wanted out of the agency.

At the start of the pandemic, he still had one partner left. They were coming out of a rough year and Covid affected the agency much earlier than other organizations in the US and Canada. The agency kicked off 2020 with a massive gap to fill with clients, with things only getting worse later that March. Luckily, they didn’t have to adjust to remote work, since they’d made that transition years before. However, they weren’t at all sure about their chances of pulling through.

They started looking for a way out and reached out to an agency that could acquire their business. The acquisition didn’t work out and with PPE loans starting to take shape, it suddenly seemed there was a way out. Todd took a risk and made his business partner the same acquisition offer in order to assume 100% ownership. It was a bold move at such an uncertain time but he is thankful he took the risk.

It took a lot of readjusting, rethinking the way they did business, and making pretty significant changes in early 2020. However, he got his investment back by the end of the year and went on to have a very successful 2021. Not only did Todd and the team manage to get the agency profitable again, but in 2022 they acquired several other agencies to expand the business. He is the sole owner of the agency which is the largest it has ever been.

3 Necessary Structural Changes to Grow the Agency

When it came to the agency’s second chance, Todd didn’t have a magic formula. In fact, much of what he did were necessary steps for growth (niching down, building a leadership team, etc). However, it took hitting bottom and almost selling the agency for him to be ready to face the hard truths.

For starters, Todd focused on the key people in leadership positions. He knew the ultimate outcome for the agency would largely depend on the mindset of the people at the top. It’s not even about what they do, but their approach and attitude can change the tide and really influence people’s commitment to the work and overall enthusiasm.

Taking the risk to assume full ownership of the agency and commit to its success reinvigorated Todd. It motivated him to put in the extra effort to make the agency as successful as it could be. With this in mind, he dared to address 3 fundamental issues he’d avoided:

1. Leadership changes. Some people in the leadership team weren’t in the right role. They had gotten the agency to where they were, but weren’t the right person for the next stage of its growth.
2. Marketing. The agency’s marketing strategies just weren’t working. Fortunately, they kicked off a marketing engagement with an outside agency in 2019. It was a big investment Todd had avoided but it started to show results in mid-2020.
3. Niching down. It was very important to be really specific about where they spent their time. This meant focusing on what they did best. In order to do this, they deprioritized leads that did not fit their expertise.

Building a Culture of Trust with Over Communication and Transparency 

The start of the pandemic was not an ideal time to make serious changes in any business. However, for Four Kitchens, it was necessary. The team needed reassurance Todd would empower the right people and make necessary changes.  Most importantly they needed to understand the vision of what success looks like.

Of course, at this point, everyone was paying close attention to these changes. To address the team’s concerns, he committed to communicating next steps, pipeline, and what else is on the table at least once a week. Ultimately he gives his team credit for rallying around the agency and showing enthusiasm about the new things they were trying. Not everything worked; some of the people they hired for leadership positions weren't the right fit, for instance. In one case, they had 100% turnover in one team and had to rebuild. However, the commitment to over-communicate with the team established a culture of trust.

The degree of transparency they had at the time about the agency’s finances is not necessary now. They have scaled back on these open-book meetings. If they get to a similar situation in the future, the team knows Todd will be forthcoming with information.

Why Mergers and Acquisitions Are Not Impossible with the Right Partner

Todd used to look at acquisitions as an impossible strategy for his agency. He had always assumed it required an enormous amount of cash on hand to even consider an acquisition. From a business standpoint, it is a great growth strategy. However, it seems overwhelmingly complex, and expensive.

This changed in early 2021, when a friend and fellow agency owner decided to retire, and reached out to let him know she was looking for the right partner to take over. Fortunately, they structured a deal that worked financially for both parties. The two agencies complemented each other as partners should, so they ended up forming a true merger.

This success gave Todd the courage to approach an agency in Costa Rica less than a year later in order to acquire their team.

A merger that helped reduce turnover. The Costa Rica team was part of his vision for international expansion but it also ended up being a good investment to reduce employee turnover.

Like many agency owners, Todd had regularly lost developers to tech companies offering up to 50% salary increases. How to fight this? A friend recommended hiring developer teams overseas and really investing in their compensation. Most people who hire international teams are just hiring cheap labor to feed bottom-line growth. However, if you really invest in those employees, you’ll end up with the same level of talent while also creating loyalty with a competitive salary.

How Different Acquisitions Present Different and Unique Challenges

After going through two acquisitions, one of the things that surprised him the most was how they differed from each other. With the first acquisition, it was a very small but very efficient and integrated team. The merger's influence on his agency’s structure was unexpected.

Todd's existing agency had much better ways to do things like technical strategy. In this sense, it was truly two equal organizations coming together to form a much better agency. The challenge was making sure they didn’t change anything the smaller agency was doing really well. Their processes were so efficient they heavily influenced how his agency would work from then on.

On the other hand, the second acquisition posed different challenges, mainly because it was an international organization. They had to create a separate entity to acquire that agency. Todd found doing business abroad is very different. Even simple things like opening a bank account proved to be very difficult and the process took several months. Thankfully, they had proper guidance and everything worked out.

Don’t Let an Acquisition Deal Take a Life of its Own

For those considering an acquisition as a means to grow, Todd advises not letting the deal take on a life of its own. Don’t lose sight of the fact that you’re not just trying to make the deal work. Ultimately, you’re trying to improve your existing agency. It’s very easy to slip into a mindset where you just think about the transaction as the thing you’re chasing. It should never be like this. The main focus should always be the outcome of the transaction.

That outcome won’t be immediate, it may take a year or two and you should prepare for this. An acquisition will fundamentally change your organization and you have to be prepared for this. Work with both your existing team and your incoming team because they will be the key pieces of that transition.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.

Do you have the confidence to charge what you're worth? Do your clients understand your agency's value? Understanding your value is an important part of growing your agency. It requires strategy and attracting the right clients. Most of all it requires a lot of confidence. If you truly believe in yourself and your pricing, the right clients won't think twice about paying it. Today’s guest specializes in taking her clients to the very highest levels in the market. She believes agency owners need to stop charging mainstream prices and start charging luxury prices in order to scale faster.

Kathryn Porritt is the owner of Icons Incorporated, a boutique agency that helps personal brands make the transition from mainstream pricing to luxury offers. Their clients land multi-million dollar deals in one transaction! They usually have big consulting gigs and commercial deals. Icon's job is to create connections for people for the sake of leveraging their personal brands at the very highest level.

In this interview, we’ll discuss:

• Growing your agency by starting at the top.
• Positioning yourself as the best at what you do.
• Why niching down is an important part of finding confidence.

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

What Are You Left With if You Don’t Build Your Brand?

When they start their business, agency owners tend not to put enough into growing their own brand. The thinking being it is essentially to not get too involved so the agency is more attractive for potential buyers upon the owner's eventual exit. For her part, Kathryn has gone through a similar process where she created, grew, and sold an agency. After the sale, she thought “what am I left with?” Without another business, advisory gigs, or book deal to fall back on, she had to take the lessons learned and start over.

After that experience, she advises agency owners to work on both their personal brand and the agency’s marketing in parallel. In the end, it takes time to build a personal brand into something profitable -- and now is the right moment to start. Even if you ultimately decide to sell, if you’ve protected your personal brand, you probably have a list of people who will follow you on other projects. That’s freedom. It allows you to explore other things once you sell. This way, you’ can build a profitable brand and have a legacy.

Starting at the Top and Growing Your Agency With a Luxury Pricing Model 

At some point, agency owners wanting to grow their business need to increase prices. Most of the time, they don’t even have a reason to justify their current prices. For Kathryn, part of the problem is most have experience with charging mainstream prices. Mainstream business strategies teach an ascension model, where you start from the bottom, build an audience, increase your offers, and eventually find people who will pay high ticket prices.

The core problem is most agency owners are not aware there’s a different way to get to the top. They don’t teach you the luxury strategy. The main difference between the mainstream and luxury models is that the latter will start at the top and then works its way down to still create an impact.

In essence, with the luxury model, you understand you have a true leadership position in the market. These are trendsetters and are not looking to the market for answers about what they’re building.

When you start at the top, you’re in the #1 position and work with fewer clients. For agencies, this means working really deeply with a handful of clients. Kathryn finds clients who work at this level are easier to work with.

Of course, you have to be really good at what you do. If you can provide a really specific world-class solution to a problem, then you can absolutely start at the top. The key element is having the audacity to go after a core set of clients who will invest heavily to have that world-class proximity.

How to Position Your Agency in a Luxury Model

According to Kathryn, in order to position yourself in a luxury model you must drop humility at the door. It sounds harsh, but it doesn’t mean you can’t be a good or nice person. There’s also no need to post pictures with a private jet and brag about how much money you have. In reality, it’s about showing such a level of confidence and certainty that you are magnetic. Kathryn calls it “iconic embodiment” which is the moment where you step into the most arrogant version of yourself. This is the key to positioning the luxury model.

If, as an entrepreneur, you can walk into a meeting, sales call, or pitch with that level of power and the knowledge that you’re the right person for the job, you’ll be unstoppable.

What if you don’t think you’re the best? There is a space for all experts to claim as their own and where they can with all certainty and integrity claim to be the best. You may not be the best in the world for everyone. But you can certainly be the best for the right people. It shouldn’t be about pretending but rather about really believing you’re exactly what that client needs. This is why niching down and knowing your audience is such an important part of finding your confidence.

In the end, knowing your worth is a very attractive quality. If you don’t know it, then nobody else will.

Is this the Right Time to Charge Luxury Prices?

With the economy being what it is right now, you may want to change your offering a bit and work with a handful of clients who can afford it. If you’re starting to find it quite difficult at the low end of the market, is there a strategy where you could work with clients more deeply? Think about how you could restructure your agency so that you’re providing more attention to each client and be paid at a higher level.

Do You Want to Transform Your Agency from a Liability to an Asset?

If you want to be around amazing agency owners that can see what you may not be able to see and help you grow your agency, go to Agency Mastery 360.  Our agency growth program helps you take a 360-degree view of your agency and gain mastery of the 3 pillar systems (attract, convert, scale) so you can create predictability, wealth, and freedom.