Stay Independent and Control Your Own Your Destiny

March 8, 2021 by

There is nothing wrong with selling your agency at 12-13 times EBITA (earnings before interest tax and appreciation) if that’s what you want. There are nearly 700 firms annually doing precisely that — maybe more if they were all reported.

If you dig a little deeper, some of those were just flat-out necessary because they were way too top-heavy. The two or three top principals built tremendous firms by fostering extensive growth, both organically and through acquisitions. And frankly, there was no way to perpetuate it internally. So, the private equity (PE) route was the escape chute, and it came with a massive check. (Congratulations, we should all be so worthy.)

What’s not so well reported are all the smaller firms that couldn’t find a way to grow. Agency owners got old and older, and the writing was on the wall. They could keep it for another five or 10 years, and it would still be the same agency it is today. It’s not an attractive picture so they sell it, take the money and sit on a beach (assuming they have enough after paying off their debt and giving Uncle Sam his portion.) However, there is another choice if you want to control your destiny.

It still might not be attractive to most agency owners in many ways because it requires a different type of work. You could think of it as the “Nick Saban” method of agency growth.

Saban worked with a psychologist Lionel Rosen when he was at Michigan State. Saban and Rosen broke down complicated tasks like football games — and entire seasons — into smaller, more manageable pieces.

Professor Rosen emphasized, on average, a football play only lasts seven seconds. Therefore, coaches and players should concentrate only on those few seconds, take a rest between plays, then do it all over again.

Now imagine if Saban was your sales manager.

He’d ask: “How long does the first soundbite last when making a cold call? Oh, about seven seconds? OK, let’s break it down, and master it before we move on to the next play.”

You see, Saban lives by simplicity.

At This Moment

Don’t think about booking the appointment. Don’t think about winning the sale. Think about what you need to do on this drill, on this soundbite, at this moment.

That’s the process — think about what can be done today, the task at hand.

This may presume a couple of things. You have a playbook with all the winning strategies to run this season. It should have your appointment-setting plays, sales call plays and client retention plays.

Take one tactic, and master only that play before you move to the next. If you don’t, what will you end up with instead? It’s inevitable. Every producer will end up playing a drastically different game, each with their own selling playbook or maybe even no playbook at all. You’ll have no model for consistent growth because everyone is doing their own thing. And as the head coach, it’s on you to adapt to virtually everything.

It’s exhausting, and I see it happen every day to many agency owners.

This is precisely why PE firms have been able to gut the independent agency system over the past 10 years with 5,000-plus acquisitions. You can join that crowd, too. You will get to meet some really nice banker types. There is no shame in that route.

Or if you are an ambitious agency owner, you can take the bull by the horns and build your legacy. But how do you do it? Get a playbook that works.

Mandatory Rules

If you are committed to growing your agency, here are a few mandatory rules that Nick Saban laid out in his 2008 Alabama defense playbook.

‘Think about what you need to do on this drill, on this soundbite, at this moment.’

  • Coaches are here to help you perform to the best of your ability. (Saban thinks he knows what is best and can help his players get there.)
  • We will be positive, but we will confront you and demand that you do things correctly.
  • You must be responsible for doing things correctly and also be accountable for what you do.

These are considered almost heresy in a free-wheeling independent agency. Where the mindset has always been, “We’re not going to tell you what to do. You’re a professional.” Where the only thing most producers are responsible for is, “Try not to create any E&O errors.” Where there are virtually no demands other than, “Thou shall not steal, at least from me.”

Saban goes on to say that an “A TEAM must have the discipline to do its job consistently and effectively.” So, if Saban were your sales leader, he’d make it mandatory that your producers:

  • Prospect and set appointments.
  • Go on sales calls and win business.
  • Have a retention plan for their clients.

If Saban were your sales leader, would you ever consider pawning off your shop to the highest bidder? Probably not. But here’s the real problem — Saban has a good job, and if he became available, you probably couldn’t afford him at $9.5 million.

But the good news is there is light at the end of the tunnel for those of you who aspire to control your destiny. All you have to do is model what Saban is doing.

Schwantz is founder of The Wedge Group. He’s also the author of the book Agency Growth Machine, Phone: 214-446-3209. Email: