An industry report on mergers and acquisitions activity landed on my desk recently. One sentence
caught my eye: “Since agency buyers evaluate deals and set pricing based on projections of growth and profitability, valuations and deal activity suffer when agency performance is weak.” Translated: Agency health creates the climate for M&A. Hard economies and soft markets notwithstanding, agencies can boost their financial performances by optimizing their internal performances. This means fine-tuning everything that influences top-line growth, from how clearly leaders define and articulate their visions to how employees work together. That's not to say producers should be overlooked. Producers who counsel their clients, providing answers and applying ingenuity, will close more business and build trust and confidence. If “optimize” means to make something as good as it can be, agencies should:

Pinpoint areas within the agency that either help or hinder sales. New business stems from vision, values, communication, collaboration, and many variables. You have to know what's fueling success–and what's holding you back–before you can do something about it.

Invest time and energy into execution. It's not enough to identify obstacles to growth. Agency leaders need actionable ideas so they can make the adjustments for optimization. These ideas can take the form of a strategic plan or something less formal, but they must have structure. And people across the agency must own them if there's any hope for successful execution. Be obsessive about follow through. The best athletes have follow through in their biomechanics; the same is true for agencies. At the core of follow through is accountability; without it, optimization will crumble. Here's a secret about accountability: It need not be purely punitive. Motivate your people, celebrate their triumphs, and you'll see accountability soar. While these methods optimize the agency for top-line growth, they also increase bottom-line growth. When you identify and act on all that could be improved within your agency, you are sure to uncover ways to operate more profitably.

A very good thing, according to the publishers of the industry report referenced earlier. After all, “projections of growth and profitability” are the twin determinants of an agency's health and value.

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