In Creating a Five-Year Exit Plan: Part 2, we discussed assessing your goals against agency performance to identify areas where you need to improve to meet your goals. In Step 3, we detail how to create your exit plan.
Creating a Plan:
The next step is to create a preliminary five-year exit plan. This plan will outline what you want to accomplish and when you want to do it over the next five years. The plan should include:
1. Profitability – Set agency income and profitability goals for each of the next five years. These income goals should take the agency to a valuation that meets your sale price objective. (They must also be realistic and achievable.)
2. People – As we said earlier, it is time for you to move upstairs and build a competent team of managers, or we should say, a “great” team of managers. For those employees who you believe will be effective department heads, give them responsibility and the room they need to make decisions. Pay them well. Show them a career path.
Decide who you are going to replace and begin to plan the best way and the best time to replace them. Hire only superstars. Hold out for great people. Remember, your competition with other agencies starts here. The only way you can compete with and win against larger agencies is to hire better people than larger agencies.
3. Your Successor – Is there a possible successor currently at the agency? Someone who will do a better job than you in managing the agency? Someone who understands the agency business in general and your agency specifically—who you are, where you’re going? Someone who is respected by all the employees and is respected by your clients? Someone who has already shown glimpses of leadership? Someone who understands how businesses run and likes the concept of profitability?
If you have someone who may be your next president, give the person additional leadership responsibilities: New business committee, chair the executive committee, manage one or more departments. For example, have them manage personnel, new business, or accounting. This will give you a chance to see how they interact with these departments and if they are able to effectively get things done.
If you don’t have a potential superstar leader, begin a serious search. Develop specific “search criteria” and take your time. Once again, you are competing with all the big agencies for this exceptional leader who will come in and run your agency.
Bring the new person in as a senior department head. Give him or her responsibility and power. Don’t position the person as a new potential leader, just as a key person who is on your management team.
One of the first questions an outside buyer will ask is “who do you have who can run the agency?” (The same question is important if you are selling it to someone inside.)
4. Product – Consider how you can improve the value of your product, how you can develop a core competency which is valuable to targeted clients—a core competency which makes you a valued marketing partner (your “unique selling proposition”).
If you have a core competency, implement a plan to build it with targeted new business and new people who bring specific experience to your agency. If you don’t have a core competency, implement a plan to develop one.
5. Growth – Set new business goals in terms of:
- Number of accounts per year to meet income/profit goals
- How accounts fit with core competency
- Accounts’ long-term fit with agency growth plan
The keynote for new business planning over the next five years is to take your time and find good, solid, profitable accounts for the long-term.
For each year in your five-year exit plan, determine exactly what you want to accomplish and when. Write it down. This will become your own marketing plan. It will guide you on a day-to-day basis. This is the marketing plan you manage.
