In our first webinar “Creating a business with value” we heard from Julian Davies from Redfin, a business growth consultancy group with specialist expertise in our sector, on how to build your business to command the best sale value.
Aside from the insight into just how a business’s value is quantified (a remarkably accessible mathematical formula), we learned about the six pillars of an agency that must be strong in order to command the best price from your buyer:
- Positioning and profile
- Client acquisition
- Client retention
- Process and delivery
- People management
- Commercial management
It struck me how much the role of new business impacts directly on these pillars. Excluding ‘people management’, perhaps, new business and marketing directly affects the strength or weakness of the remaining pillars:
Positioning and profile: communicating a distinctive positioning with a relevant benefit to clients, along with increasing the profile of your management team is always a priority on the to-do list of a New Business Director.
Client acquisition: the heart of our role. Having a buoyant pipeline and high conversion rate is the ultimate goal of any new business professional and reduces any perceived risk in the eyes of a potential buyer.
Client retention: One of the most effective ways to retain clients is to grow them. In fact, client growth is an indicator of the quality of a client relationship. The NBD can share their business winning tools and skills to help client teams win more new business from existing clients.
Process and delivery: being able to demonstrate that staff are utilised on billable work and are not busy over-servicing is a key part of making your business ready for sale. When negotiating fee and terms at the end of a successful pitch (or at the point of commercial submission), this is a big consideration for any New Business Director involved – can we deliver this work within the hours we’ve allocated?
Commercial management: Ensuring no one client is more than 20% of your business removes perceived risk in the business. Again, this is a consideration of a NBD when building the pipeline and generating opportunities. In addition, an agency that can demonstrate certainty of income, for example by working on retained business, is also once closer to a premium sale price. When thinking about who to target and the ideal briefs, this should be a serious consideration.
Perhaps all New Business Directors should be approaching their role by thinking about how their work can positively impact on each of these pillars, regardless of whether the agency will ever be sold?
The next JFDI webinar, on organic growth, will be streamed on 19th June.
If you are interested in booking a place then please email: helen@jfdi.uk.com.
Lastly, if JFDI or Redfin can assist you in getting your business ready for sale, do get in touch.
Gemma Batterby, May 2014