One of the first questions we’ll ask when we meet an agency owner is what the ultimate goal for the business is. Some are looking to sell in X amount of years and have a valuation in mind.
Some are aiming for a particular turnover figure and others simply don’t know.
The key to achieving any goal is to look to break this down into stages. Only by breaking it down can you truly see what needs to change for the goal to become a reality.
We’ve defined these stages as follows…
#1 The Ultimate Goal
Once you have your ultimate goal you need to look into how the numbers break down at this point in time. Let’s say your goal is to sell your agency for £2m in 5 years time. The first number to work out from this would be the annual profits you’d need to be making to justify this valuation. If we assume a multiple of earnings of 5, this would mean your annual profits would need to be £400k (as £400k x 5 = £2m). If we then assume you are making a profit (also known as EBIT) of 20%, this means that your annual turnover would need to be £2m (as 20% of £2m is £400k).
You may also need to look at how much cash you’d need to have accumulated in the business – particularly if you’re looking at ‘selling’ the business to existing shareholders via a company buyback scheme (where the company literally buys back your shares in return for some instant cash and future payments).
Finally, you need to analyse the services you believe you’d need to be providing at the date of your ultimate goal and who is providing them. What would your ideal client mix look like? What services might you need to be providing these clients that you don’t already do? Who do you want to be providing these services as part of your team?
#2 The 3 Year Goal
You’ve now got your ultimate goal defined so chunk this back into the next 3 years. If you need to be achieving £400k profits in 5 years time, how much profit do you need to be hitting in 3 years to be well on your way to the £400k target? How does this growth look year on year when you analyse it against what you’re currently doing and have done historically? Is it realistic?
You also need to look at your client base. Who are your ideal clients and why are they ideal for you? How can you find more of them so that in 3 years time your portfolio is made up of ideal clients?
#3 The 1 Year Goal
Now let’s look at the next 12 months. What does your 3-year goal say you need to be achieving in 1 year? Is this realistic and if not why not? What are the steps we need to take to make it realistic?
#4 The 90 Day Goal
Now you need to bring the focus completely back to the present day. You know what you need to achieve ultimately, you know where you want to be in 3 years and what your 1 year target it. Now let’s focus on the next 90 days.
What can you do in the next 90 days that will give you a great head-start in achieving your 1-year goal? How are you going to do this?
Not sure where to start?
Give us a call on 0161 711 0810 or book a discovery call here to arrange a Mapping session with our team.