How You Can Build a Sellable SEO Agency
Building up your business is exciting, but selling it can be even better. The sales will be the culmination of all the hard work you have put into your business. It’s essentially the reward at the end of the long, hard journey. The fact that you could get 20 to 40 times the monthly net profit of the business up-front, it is also a very lucrative reward.
SEO(Search Engine Optimization) agencies have amazing margins. They will often create pure profit each month when your customers start to rank to the first page of Google. This makes them great cash cows, particularly when you manage your clients correctly so you don’t spend too much time on them. The problem is that SEO agencies can be hard to sell despite being profitable.
In general, a service business will always be harder to sell for a number of reasons. However, there is some good news and that is the fact that you can fix most of the issues with the sale. When you do that and understand how your potential buyer’s mind works, you can create a sellable asset from your agency. So, what are these issues that make it so hard to sell your SEO agency?
The Major Problems With Selling SEO Agencies
There are a few problems that come about when you have an SEO agency. The fact that most agencies are one-person shows is one of the biggest. The nature of these businesses means that the owner will be doing everything from marketing to sales to customers service to the fulfillment of the services offered.
With all of this being the responsibility of the owner, a lot of buyers are not going to be interested. The majority of the buyers out there are looking for an asset they can invest in. They are not interested in a job where they need to work 40+ hours to stay profitable.
The second serious issue with SEO agencies is going to be some of your clients. Most agencies only have a few clients on their books. There is occasionally one client that makes up around 50% of the agency’s revenue. When you have one big client, it is seen as a critical point of failure. One bad day could see the agency lose half of their income when this client decides to move on and most buyers see this as a major red flag.
If your business has one major client, you need to do some serious work on client acquisition. This will help you get as far away from this problem as possible. While on the topic of clients, a lot of SEO agencies are also very broad. This means that they are not focusing on a single niche. Most SEO agencies have two niches that they divide their clients by and they are location and industry.
If you have an SEO agency that is too broad and trying to cover too many localities or industries, you could be creating problems for buyers. A lot of buyers want a business that has a laser targeted client acquisition process, which is something to think about for your landing pages. This process will make it easier for buyers to run ads to get new clients. When you have a niche business, you can target pain points for the audience. It’s also easier to rank clients on the search engines when you have one type of customer only.
When you are thinking of selling, you need to consider that most buyers are going to want a non-compete agreement. If your agency is very broad, you could run into issues when telling potential buyers that you are selling to expand your other SEO agency that has broad targeting. It is generally easier to tell them that you are selling your agency that handles plastic surgeons only to focus on the one that works only with mold remediation companies.
To fix this issue and prepare for sale, you need to try three strategies. The first is to turn the agency into a rank and rent model. The second is to use a white label method for the fulfillment of all services. The last is to scale your team.
Rank and Rent Model
This model is great because it enables you to create an asset for your agency. Instead of working on client sites, you will be working on sites that you own. You can create a website and rank it for something such as Chicago plumber. Once your website has reached number 1 on the search engine, you can rent the website out to a business that matches it in the location you have chosen.
A lot of businesses will use this solution and will be happy to pay a monthly fee to replace the information on the website with their own. The really powerful part of this model is the fact that when a client no longer wants to pay you for the site, you can call their competition and give them the same deal. In terms of selling your business, this model is very appealing to buyers who have no interest in dealing with clients.
It’s possible to turn this model business into a simple local lead generation model as well. All you need to do is sign up for a local lead generation network. These networks will pay you out in the same manner that an affiliate network will. This will create real assets in the business and minimize the client interactions needed, but also provides less fragile business models in terms of a client not wanting to continue with the agency.
All of these traits are things that buyers are going to be looking for in a business making your SEO agency more attractive to buyers. When your business is more attractive it’s going to be easier to sell and you will be able to sell it faster.
The White Label Method
One of the biggest issues with selling an SEO agency is the fact that buyers are looking for investments and generally do not want a job. If your agency requires the fulfillment of services, your buyer pool is going to be drastically limited. You will be looking for buyers who know SEO, operations, and sales as well as the system of SEO that you have been using. In a few cases, this could be a tough task.
The way around this is to use the power of white label to handle the bulk of your service fulfillment. While labeling is when you hire an SEO provider to fulfill the services that your clients are paying you for. The easy way to look at this model will be to see your agency as the retail price for the services while the provider is the wholesale dealer. Your agency will make money based on the difference between the wholesale and retail pricing.
When using this method, you shouldn’t rely on a single provider. You should look for an agency that can fulfill your service needs at scale because you will be able to adjust. White labeling is a great method of providing traditional SEO without your potential buyer ever having to fulfill the services bought by clients. There are also no employees that the buyer will need to manage. The buyer still has to manage the clients of the business and this will limit your overall buyer pool, however, you could overcome this issue by combining white labeling with scaling a team of your own.
Scaling Your Team
Scaling your team is similar to the rank and rent model in terms of creating an asset for the business. A good team will be the primary asset of any service business. The team that you have could include an account manager, an admin staff member, and a project manager who oversees the operations of the business, etc.
If you’re going to be using a white label service, your team is going to be the other side of the business. If you are not going to use a white label service, your team could be the system that operates the business and will provide service fulfillment as well.
That team will need to stay on for the buyer when you sell because if a buyer feels they are going to be facing a brain drain with your agency, they might view the business as a high-pressure job instead of an investment. You will need to tell the team that you are selling the business and ensure that they are comfortable with your arrangement. To ensure that they stay after the sale, you might want to consider giving them an appeasement from the sale after they have stayed on for 6 months at least with the new owner..
Your team is the major asset, so you also need to ensure that you have detailed SOPs (Standard Operating Procedures). These documents act as a sort of manual for the SEO agency and will help your potential buyer train any new employees they take on. This is important if your current team wants to move on or if the new owner wants to expand.
While it is important to consider how to expand your potential buyer pool, there are other points to consider. One of the most important is the mindset of the digital investor. So, what’s the anatomy and psychology of the online business buyer? When you know the answer to this question, you will be in a better position to sell your agency for the highest possible price.
Understanding the Mindset of Digital Investors
When you sell an online business, you’re required to get into the mindset of the buyer or investor. When you’re on the hunt for new clients, you will be looking for someone that has a problem that you are able to solve. For your agency, the problem is simply that the potential client is not ranking highly on search engines for their buyer keyword terms.
This is the same mindset that you need to use when it comes to getting potential buyers for your SEO service. You need to consider what their problems are, what issues they face, and how your SEO agency will be the perfect solution for them.
The potential buyer might be looking for a social network in a specific industry to upsell a product to them. They might want to buy an SEO agency that specifies on model remediation professionals to upsell their client base for Facebook ads. Some might love the rank and rent model because they have a lot of connections to businesses who rent these types of sites.
Most of the digital buyers out there are not looking to buy a job. This is why you need to look at building up the assets of your agency and ensure that they are ones that other agencies do not have. Potential buyers want investments that will grow over time and will look for real assets.
You can consider asking buyers why they are looking at the business. You should learn about their background and how they look for an online business. Once you have the psychology down, you will know how to negotiate with them.
Turn Your Agency Into an Asset to Sell it
A buyer mindset and negotiations are important parts of selling your business, the most important part is to turn your agency into an asset. This will make people want to buy the business in the first place. When you create a valuable asset which is a proven profit machine, you will be putting yourself in the best sale position when it comes to negotiations.