The Ryan Hanley Show - The Myth of the Multiple with Legacy Advisors

Episode Date: October 5, 2023

Became a Master of the Close: https://masteroftheclose.comPrepare to have the veil lifted on the world of selling insurance agencies as we chat with industry experts Mike Almberg and Max Olson from Legacy Advisors. Together, we unravel the complexities of the selling process, dismantle common misconceptions, and stress the importance of partnerships that align with your agency's culture. We promise you a candid discussion that delves into the nitty-gritty of maximizing your agency's value when it’s time for sale.Embrace an enlightening debate on the contrasting mindsets between a business owner and an agency owner when preparing to sell. Learn the value of early valuations and setting a growth curve that captures potential buyers’ attention. Journey with us as we traverse the tricky terrains of effective leadership roles, handling growth and employees, and the influences of different paths on your business and industry.In our conversation, we uncover everything from kick-starting and optimizing an insurance agency to successfully managing growth and employees. Discover the criticality of assessing your team, rolling out necessary training, and conducting performance reviews to boost your business value. Hear about the necessity of initiating the selling process as soon as possible. Be sure to subscribe to the Finding Peak newsletter to feed your curiosity with more exclusive content on leadership, life, and business. This is a conversation you won't want to miss!Legacy Advisors: https://www.legacyadvisors.partners/Finding Peak Newsletter: https://www.findingpeak.comLearn more about your ad choices. Visit megaphone.fm/adchoices

In a crude laboratory in the basement of his home. Hello everyone and welcome back to the show. Today we have an absolutely tremendous conversation for you. If you have ever thought about selling your business, specifically an insurance agency, then this is the conversation that you want to dial in for and listen to because we have two of the absolute best in the business, Max Olson and Mike Ahlberg from Legacy Advisors. Legacy is a sell-side advisory firm that helps insurance agency owners sell their business for the maximum value to the right cultural partner. Both have experience in the industry. Both have acquired and or sold agencies.

Both have operated in a private equity environment. They're young. They're hungry. And I'll tell you guys, these two and legacy advisors in general are starting to take over the sell side market and their advice is practical. It's based in kind of real terms from real sales and we get into a deep and we really hit it hard. I mean, if you've ever thought about selling your insurance agency, this is the episode for you. This is something you want to take in. You want to digest the concepts. We don't kind of stay on the fluffy surface here. We really get down into it. And Mike and Max are absolute pros. I really enjoy these guys. And it was a pleasure to have

them on the show. Before we get there, guys, I have a new newsletter. The newsletter is specific and unique to newsletter subscribers. You have to go to findingpeak.com. That's www.findingpeak.com. No longer publishing some of the articles, thoughts, et cetera, online. It just doesn't make sense to do that. But you got to be a subscriber to the newsletter. So the newsletter is going to have all kinds of great stuff, specifically focused on leadership, on life, on business, on finding peak performance, and all the pieces that go into becoming the best versions of ourselves. This is a journey that I've been on since 2017, and at 42 years old, I'm in the best shape of my life.

I run a company of 20 plus people. I've sold that business. I've done 350 keynotes in my life. You know, I've had this long and kind of winding career at still a relatively young age. And I've done that through a series of disciplines, mindsets, activities, habits, etc. that allow me to stay focused, even when things don't go my way. And I want to share those with you. To me, it brings great joy. It brings a great sense of pride, of satisfaction in my work to share these things with you guys and help you because I know you're not alone. Like I struggle with these things every day. It's why

I've had to set these practices, mindsets, disciplines up in my life. I mean, it's not that I wake up and I'm just have this dialed in. I wake up with all the same fears, anxieties, insecurities that everyone else does. But then I have these things that I've built into my life, which keep me on track, keep me going. And regardless of what setbacks happen, continuing to push forward and just never giving up, right? And it's this idea of never break promises to yourself. Guys, Finding Peak is a project that I have kind of flailed around with a little bit in terms of dialing in exactly what I wanted it to be and how I wanted it to be delivered to you guys. The newsletter is going to be the way and to get that newsletter,

you have to go to www.findingpeak.com. Enter your email. It's free. I promise you won't be disappointed. All right. I love you for listening to this podcast. Guys, let's get on to Mike and Max. Dudes, I'm so glad to have you on the show. It's been like a month or so in the making getting you scheduled and getting you on. But ever since we had our first conversation, I think it was two months ago over the summer, I've been excited to share what you guys are doing and your kind of unique approach with the audience. So I appreciate you coming on. Thanks for having us, Ryan. Yeah.

It's been a lot of fun. Yeah, so what is it like being one of the most sought after and fast-growing sell-side boutique brokerages in the insurance industry? It's been a lot of fun, and thank you for the kind words. It's been great working with Max and the rest of the team, and it's been rewarding. We can get into our backgrounds later, but this is definitely a change of pace for me. And it's fun working with clients and seeing them happy. Yeah, this is the most fun I've had basically in my entire working career. So it's good.

You know, I mean, that's what makes doing work special is when you can show up every day and know and feel very good about what you're doing. I mean, that's what it's all about. And I think, you know, what I love about what you guys are doing is, you know, I've always been an enormous proponent of the independent insurance agency owner of our system, of what it means. And for so many of the men and women who, you know, blood, sweat, and tears for 10, 20, 30, 40 plus years into these agencies and building them and growing them and ups and downs and goods and bads. You know, the moment when they decide to sell is one of the most defining moments of their career. I mean, it sets up the remainder of their life.

And, you know, I think I was excited to have you on because it feels to me, and we were talking a little bit before, just so everyone knows, I had to cut Mike off because he was giving us all this awesome stuff. And I was like, stop talking. We have to record this. You know, it feels to me like there are a tremendous number of misconceptions, right? Mike, you even said it. You talk to your buddy down the street, and he kind of sucks at running his agency, yet he gets this multiple, and now I'm getting offered this one.

I don't understand. So where I would love to start, and we're going to at running his agency, yet he gets this multiple, and now I'm getting offered this one, and I don't understand. So where I would love to start, and we're going to bounce around a little bit, but I just want to kind of not bury the lead here. You know, when someone is, before we get to how someone finds you and how you pick who to work with, and I want to talk about all that stuff,

like what's the first like huge misconception that you have to kind of dispel? Like what's the most common misconception you have to be like, okay, let's do a little level setting on that before we engage in this project together. Like what's, what's one of the biggest ones that you see and most common? Mike, I'll let you take it. Sure. Yeah. So one of the big things for me,

and my background is in venture capital, so I was always used to the process of raising money, build your business, and you sell it, and that's a success. I think a lot of business owners and you and your audience know the demographic of insurance agency owners. A lot of them hear that someone sold and they view it as a wavenly white flag that you failed or you couldn't do it anymore and you needed it now. And that's really not the case.

There's a lot of reasons to sell your business. Our job and what we try to do the best that we can is to educate business owners and just know your options. Maybe you don't want to sell right now. Maybe you want to pass to your kids or find a successor that already works at your agency that you love. That'll do a great job taking care of your clients. But you should know what the options are. And I think a lot of people were just super closed-minded prior to our conversations with them about even selling because they view it as a failure. And it's not.

It's definitely not. So it's probably the biggest one for me. Yeah. Yeah. Yeah, I'm with you on that. Overall, we have a lot of clients that are in their 30s and 40s and they have thriving agencies and it still makes sense for them to go through

and then do it. So yeah, good point, Mike. Yeah, I really hope that's not the case because I sold my agency at 40 after two years. So if it's considered a failure to sell, then I'm in big trouble. So I love that. I love that because so much of our business

and so much of being an agency owner is about ego, right? And I don't necessarily mean that in a bad way. Like to be driven, to fight through the challenges in our space, you have to have an ego. You have to take pride in what you do. There has to be an intrinsic level to the work. And it does become like a child, you know, or, you know, something incredibly meaningful. Maybe even it becomes your spouse. I don't know. And, you know, the idea of selling, I think, yeah, maybe there's a little bit of machismo in it, a little bit of, ah, you know, I got the best number or whatever.

But there's also a sense of what do I do next? So I think it's a wonderful way of putting it that it could be – it doesn't mean your journey is over, right? It could be a stepping stone to the next big project that you want to do. And a lot of it is, is you helping them maybe finance that next project, um, by helping them, you know, get the best deal they can with what they've built. Yeah, totally agree. The other, the other piece to that too, is it's not just finding the next project. It could be staying in the same thing, keep running your agency, but spending more time doing what you're good at and what you like doing so like what we found and this kind of comes full circle to what we were just talking about so max is a younger guy uh he grew his agency really fast and and he sold it and a lot of people

reached out and they were like hey man like why'd you do it what are you doing and you know once once some of these owners realize that if you partner with another firm, you don't have to do it or payroll or accounting or that type of thing anymore. And you can focus on selling if that's what you're good at or training and working with people. Um, people get re-energized. Yeah. Yeah. There's, there is a, um, there, there is an aspect to it's a, it's a, it's an age old kind of adage and, but I just don't think most people follow it working on your business versus in your business. And when you're in it every day, it becomes overwhelming. It becomes stressful. You know, you, you, it, it really becomes almost like a burden and when you finally get to a point and this was a large

part of of of me selling was that I knew I'm not I'm not an in the business guy I'm just not it's just not who I'm not wired that way um there are certain skill sets which I would put myself against the best in the industry and and all the other skill sets I'm like in the bottom 10% on. So for me, in large part, and there were other factors, it was I wanted to work on the thing, and this was the best way to do it. And that's a huge part of it. And I would love to know, do you see this? It feels like maybe it's 45 and under, maybe it's 50 and under. Let's say the numbers are tough

but it does feel more like our I know I think both you guys are a little younger than me but say my generation your generation it feels like there's less more people are willing to have that mentality of saying I don't need to own the whole thing my name doesn't have to be on the box I'm seeing more and more agencies with with names like a rogue risk like a name that isn't just the last name versus the more traditional way which is, this is Hanley Insurance Services of Troy, New York. It just feels

like we're starting to shift as an industry. Are you seeing that? I think so. If you look at consumers, they don't really care about someone's last name. It is one thing if it's around 105 years and stuff like that. Realistically, if you look at consumers, they don't really care about someone's last name for the most part. It is one thing if it's around 105 years and stuff like that. But realistically, if you start in the last 10 years and you're customer-centric, which I think the best agencies are, there's a lot less focus on you as the owner, which is better for everybody. Yes.

Is it true that if I read – I was reading a leadership book the other day and it was talking about, actually, no, it wasn't. It was, I don't know if you guys are familiar with Cody Sanchez. She's a thought leader. I've loved her for a bunch of reasons. But her whole philosophy is buying small businesses, buying boring businesses. And she was talking about how one of her key checklist items is actually businesses in which the owner is replaceable. If the owner is a linchpin of the business, that's actually a negative. Do you see that with insurance agencies as well? I think if the entire business is completely dependent on the owner,

there's way more risk for a buyer. So if they've gone through and then built up a solid team, created a great culture, created processes, they're a lot more marketable 100 i think if the majority of the client list is there because the principal and the principal wants to step away that that's that's obvious risk to the buyer, right? The best case scenario is that principal sticks around and transitions that book and continues to grow their employees and make them better and stronger. And the clients are happy, your employees are happy, and the business stays around. That's the win. Yeah.

Yeah, I think that – I think something that – I don't know if you guys are familiar with the name Jason Cass, but he's been a friend of mine for a while. And 10 years ago, 12 years ago, when we first started podcasting and sharing our thoughts on the industry, one of the very first things that I noticed about our industry that I thought was bananas is that people think of themselves as insurance agency owners and not business owners. And that is a very odd thing about our, it's a very unique mentality to our space that I'm an agency owner. And you're like, no, you want a business. It just happens to sell retail insurance is the product that you sell. And, and when you, we would get lamb basted

for that mentality. We'd be like, you have to think like a business owner, business owners. And really where this came from is we were looking at the best practices report for the big I. And it was like two point one percent of budget is spent on marketing. Right. So we were like in marketing was the thing that we talked about. So we're like a business owner looks at that and goes, I need to grow. Maybe I need to increase that number. And each owner's like, no, no, no, that, you know, that money goes in my, that's how I pay for my wife's seven series or whatever, you know? And, um, I think that, uh, I, it, it does feel like that shift is starting to happen. There are a lot of really good conversations around that. Um, if you have, is that, are those

different, are those, do you approach those types of customers different? Customers that come in that have a business owner mentality versus customers that come in with like a agency owner mentality? Is that, do you have to kind of work them differently, talk through things differently with them? Well, I think on the buyer side, so like, we're not growing. And all you're going to do is use your agency as an ATM. You ultimately aren't going to get the same sales price

as somebody that's focused on growth. They don't have to be spending 20% of their, 20% of their budget on marketing, but they should be spending some. And ultimately, you may save a little bit of money over like the years bit of years, but when you get to the higher to sell, then it doesn't help. Yeah, Ryan, I think it's completely different.

We've had former clients that worked at a captive and, you know, got really good training and learned the sales skills and, you know, have a really good understanding of what to say and, you know, how really good training and learned the sales skills and have a really good understanding what to say and how to bang the phones. And they saw the economics that they were giving up and they said, hey, I want to start an agency. And they're really good at selling. But at the end of the day, they didn't really want to be business owners or that's not where they want to spend their time. And that's why they fell into a really good scenario that they built something cool. And that's a completely different profile a really good scenario that they built something cool. And that's a completely different profile than the clients that we have that are really good at training and hiring and producing producers.

And there's different buyers for each one of those profiles too. So I don't know if we treat them differently per se, but it's definitely a different conversation that we're having with them. And it's sometimes a different buyer pool too. We've already been exploring. Yeah. Yeah. That's really interesting. Just kind of changing slightly off that topic a little bit.

I have a good buddy and he had a partner and they owned one of the largest and fastest growing homeowners and personal lines agencies in Massachusetts, GNN Insurance. And one of the things that they told me that I thought was genius, that I had never thought about, for those listening at home, it's Zach and Matt, Matt and Molly. They told me, because I did a lot of interviewing with them when they were going through a lot of their sale, just because it was so interesting, because they were doing a lot of talk they were speaking

a lot about that process for them and one of the things that they had said that I thought was genius that again just going I hadn't thought about this was that they were told very early to start getting valuations done years before right Like start thinking about the sale, not just, okay, I'm ready to sell. Let's start thinking about this. But even before you're actually ready to start thinking, okay, if I ever needed to sell or if a great deal ever came. What's up guys. Sorry to take you away from the episode, but as you know, we do not run ads on this show. And in exchange for that, I need your help. If you're loving this episode, if you enjoy this podcast, whether you're watching on YouTube

or you're listening on your favorite podcast platform, I would love for you to subscribe, share, comment if you're on YouTube, leave a rating review if you're on Spotify or Apple iTunes, et cetera. This helps the show grow. It helps me bring more guests in. We have a tremendous lineup of people coming in, men and women who've done incredible things, sharing their stories around peak performance, leadership, growth, sales, the things that are going to help you grow as a person and grow your business. But they all check out comments, ratings, reviews.

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Let's get back to the episode. Man, they started setting their business up to be sold before they were even ready to sell, if that makes sense. Talk me through that process because other than them, I've really never heard anybody talk about it. And to me, it seems like something that should just be a best practice, but I know it's not. Starting with the end in mind is a really big deal. So even with my own agency prior to selling, I've gone through, done evaluation. It was probably two years before I sold. It wasn't the right time for me to go through in that cell what I would but what I learned from that valuation what I learned two years ago because I did that valuation because I would turn those strengths a lot more sell for a lot more money than it would have if it didn't do it. A lot more money.

Yeah, I think that's one scenario. The other one is a lot of people have a number in their head and they realize that they're already there. They do evaluation. So that's another kind of welcome surprise sometimes that we see. Yeah, and I remember one time I was talking to, I was talking, I can't remember if I was talking to Zach or Mac about this specifically, which one it was, but they said one of the things they realized in, in starting to do those annual valuations a few years before they were ready to sell is that they're how much more of a valuation they could actually get by increasing their growth growth trajectory. Like essentially gave them kind of, Max, like what you said,

it all of a sudden gave them a target, right? Not just like, let's grow. It was like, okay, we have to get from X to Y. And at Y, man, now we're in a whole new multiple level, and it opens up all these additional doors and additional buyers that maybe wouldn't have been interested with us at this target. So to me, it feels like if you're five years out maybe if you're in 10 years out potentially mentally start i mean how much can an annual evaluation uh valuation cost it can't

cost a thousand bucks right i mean it can't be that much yeah so like if you just bake that in and make that an annual process you you you get a level set every year on where you're at and you can kind of feel the market out too because the markets are constantly changing, right? It's not just realizing how much you grow and how much sale price would be impacted, but how you grow. So what layers are you putting on expenses that maybe you couldn't change later on? Are you adding a lot of different offices that maybe you wouldn't want to have once you go through and then sell? So it's just a bunch of factors that you become a lot more aware of and you can just grow a lot more efficiently.

Yeah, I'll tell you, you know, going from being even an executive in companies to being the actual business owner, you learn very different the fixed versus variable expenses. You know what I mean? The ones that you can just, I don't want this anymore. I'm going to get rid of it versus you're screwed. You're locked in for a long time for that. Yeah, you know, those are a lot of times things sound like a great idea until you realize, until, you know, again, and that's why I'm kind of pushing this topic so hard is, you know, one of the things we talk about in my agency, one of the things I talk about with any, at any speaking engagement or when I do sales trainings or any of the stuff that I do, it's, you know, a big life thing for me is preparation, right? We don't want to have the thing happen and then start preparing, right?

You prepare before the event. So I'm trying to really hammer on this point because to me, if this is your big, if this is how you pay yourself off for decades of toil, right, let's just say that's the case, right? Let's say you're a 20-year-old agency, and this is the moment where you get back so much of that blood, sweat, and tears. You don't just want to get to that 20-year point, be burnt out, be frustrated, you know, just want to bail and pull the ripcord

because now you're in a position of weakness. If you can take a little bit of foresight, partner with maybe a company like legacy and, and do some prep work two, three, five years beforehand. Now you're in the driver's seat. Right. And that's where I would like, you know, I mean, I love our industry. You know, I've said this a million times. I, I, I came from a town of 900 people where people referred my house as the crack house. We said, we said the criminal, you can leave your doors open in my town because the criminals live there. They didn't steal from there. Right. So, so like, you know, this industry has given me a life I could have never asked for.

And I think that's the case for a lot of agency owners. And it's like, I, I'm so happy for this conversation because I, I want them to start to understand how to get their business ready for that moment, whether it's five years from now, 10 years from now, whatever, you know, I think these conversations are so important because there's so much misunderstanding about this particular topic. Just on the timing of it. So a lot of times people think, hey, I'm going to go through with and sell the day before I want to retire. And ultimately, if they do that, they're usually leaving a lot of money on the table, especially

if they've grown their agency to size. We've had several clients that have been in their early 60s, late 50s. They don't want to hang up the boots. They're not ready to go through and then retire. They know this is the best, most marketable time for their business to get the highest price. And they're still going to have upside on the back end as well. When it is time to go through and then retire, they can go through with the drop zone curve. So the timing is huge.

Yeah. Yeah. And Max, just to add to that, that's done with a much smoother transition for your clients and your employees too. Obviously with your experience, a lot of your employees were left with great opportunities within that organization once you stepped aside. I feel great about that.

I feel great about that. And several of them have options. They probably shouldn't have gone to it. Yeah. I think that the level of commitment in particular that agency owners have for their people is another very unique aspect of our industry. You know, when you when you talk, you know, I unfortunately just had to do a few layoffs at our agency. And it was like, it was like gut wrenching. It was it was like you you feel like such a disappointment, you feel like you're failing, you know, you're there to protect these people, and they've committed to you and help you grown this thing. And then, you know, unfortunately, you know, life happens and sometimes you have to make really hard decisions, which is what we had to do. But, you know, I think our industry in particular has a strong commitment of ownership to people, even if even if they're

not always treated exactly the way, you know, I think we would love, there is a level of commitment and caring and compassion that is particular. And, you know, that's a really good point, Max. I think that's a really, really good point is that doing this the right way helps set your people up for their, in their career, not just your exit and next thing or whatever you want to do with your life. It also gives them a chance to maximize their career, not just your exit and next thing or whatever you want to do with your life. It also gives them a chance to maximize their career as well. I don't know.

I don't think there's been a single agency owner that we have talked to that somewhere in the conversation hasn't asked what will happen to my staff. They care about us. Yeah. Of all the staff, it's really who builds the business along with the agency owners. So we should care. Yeah.

Yeah, that's great. So, okay. So let's get to the fun stuff. So everyone's just dealt with 21 minutes of us talking through this stuff. How do you maximize the value of your agency? That's why everyone is listening. Whenever, whenever you money guys get on, get on calls like this, everyone just wants, what do I got to do? But you know, and you can answer, you can start wherever you want. I'm

going to give you free reign and you can take this wherever you want. But I think, you know, and again, what I, what I've loved about just getting to know the two of you through the few calls that we've had off the air and everything and knowing some similar people is that you're very real. You're very honest. You're very straightforward. You have a very pragmatic approach to this process. I think it's why you guys are so successful, why you're one of the most referred sell-side brokers in the business. You know, where would you start this conversation and how do agency owners start to frame this in their mind? Let's assume you have someone who's a few years out

who believes that we need to start prepping, right, that we need to be prepared for this. They're doing things the right way. They come to you and they say, hey, I want to do everything the right way. I want to maximize this and I want to do it the right way. Where do you guys start? What do you start looking at? What do you have them start working on? Sure. And just a disclaimer to your listeners, there's no magic tricks or anything like that that we can pull out. You know, the buyers in the private equity firms that back these buyers, they're very

sharp. There's, you know, there's no like financial engineering where you're going to kind of pull the wool over their eyes. And we don't want to do that because obviously our reputation and our clients are going to be partners with them at the end of the day when they partner with them. So there's no, you don't want to create any kind of optics up front. What's going to happen is those buyers, they're really smart. They're going to pay more for good businesses.

And our job is to highlight what's exceptional about our clients and why they should be part of the organization at the end of the day. Yeah, I think a lot more. Max, do you want to anything? Yeah, I think before, right? You're like, you're an agency owner, you know, you probably wanna go to the hotel and call a guy for 10 years. I think first step is you wanna build a great agency,

which sounds simple and obvious, but a lot of people don't really focus on that. Sounds simple and obvious, but- You want to establish processes, better to do it earlier rather than later, because they'll actually be implemented. establish processes better to do it earlier rather than later because they'll actually be implemented you want to make sure that you have growth consistently above average the larger the growth is generally the higher your multiple largest you want to make sure that you're operating lean or at least you're giving yourself the ability

to operate lean or at least you're doing your job ability to operate leaner. At least you're giving yourself the ability to operate leaner. So again, you're not going through having seven leases for a million-dollar revenue shop. You want to establish a solid culture. You want to be able to go through and highlight your team and how great they are, how educated they are in insurance. And if there's items that are between you and having that great agency that you don't have the initial skill set to go through and take care of, hire consultants. That person will then help you. On my end, when I opened the agency, there were certain things that I couldn't figure out on my own how to do them the way that I wanted to do them. And hiring consultants was a huge reason for our growth and ultimately where we ended up. So you just said a bunch of stuff in there. Let's start with processes.

I have a very good buddy, Mick Hunt. He is absolutely one of the best. He's literally the go of processes. Quick shout out to him just because he's the best. Guys, Patty, agencydevelopment.com. It is the LinkedIn for insurance professionals. If you're looking for process or at least a starting point for process, that's the place to go in my opinion. Game changer for Rogue really the last like three or four months. But why are processes so important? Like, if I'm just crushing it and growth is good, but maybe I don't have everything documented or our processes aren't great, I'm just a rainmaker or whatever,

if I'm growing, why should I care about having processes in the agency? The more efficient you are running your agency, the higher your profit generally will be. Also, your growth is going to be better as well so like oftentimes we'll go through and then we'll have meetings with agents two agencies two days that have the same exact revenue even maybe in the same geography even if you look at what their payroll expenses are one can literally be double with the other payroll expenses and that's usually because,

it's not because their people are getting overpaid, it's usually because their people aren't as efficient as the other group. So if you actually establish the processes in place, you can operate more legally, which allows you to get a higher sales price. And before you're selling, when you're having those processes,

it allows you also to have all the advice. Yeah, and Ryan, I would say your listeners are a lot more kind of growth-oriented and they're trying to learn. That's why they're listening to you in the first place. And they leverage technology more than the average agency owner. But there's some phenomenal solutions out there today that can really help you grow and just be more efficient

that don't cost that much money. So obviously leverage tech as much as you can, but there's definitely a gray area where it's overkill. But be thoughtful about that. I completely agree with that. And I'll tell you, one of the simple non-tech things that really helped us run more efficient is we run like a like a version of um the eos system track you know the book traction eos we run like a modified version of that specific to our agency and just simply putting that product which literally run

off a google sheet like i mean we don't have the app we don't it literally run off a Google sheet. Like, I mean, we don't have the app. We don't, it's run off a Google sheet and that's simple. Just simply knowing what our goal is for the next week. The one thing we're going to get done, our rocks, et cetera. Like, and everyone kind of knowing what each person is working on that simple process, which has nothing to do with technology, greatly improve the efficiency and project management of our, of our agency. And it's like, that's, you read a book or you hire a consultant for a couple of weeks and you now have something that will completely change the game for you.

And people just don't want to do these kinds of things when, you know, they're, to me, it's like, it was like a no brainer. Again, because I hate, some of it comes natural because I hate working in the business so much. That like, it's like, oh, this can help me work on the business more. I can just do more BD and stuff like that.

Like, OK, great. No brainer. I think for for some of the individuals and for those of you listening who really love like the nerdy shit that goes on in our space, like I think it's harder for them because they they they almost don't want to extract themselves. Like they love being in there. And I've actually seen a few agency owners, really, really forward thinking and progressive agency owners who've hired COOs to actually operate the business so that they can stay, you know,

kind of a little more boots on the ground because that's where they do, you know, they're rainmakers. That's where they, that's where they do their work. And that's a really smart play. I've seen that done the other way. It takes a lot of, you have to have a lot of humility, right?

Because what it says is I'm, it could be perceived by those with a large ego, I can't run my business, which is not what it's saying. It's I understand where my most value is. So I'm, you know, trying to hand off these other things. But yeah, that's really good. Okay. If you look at my old weekly organizer, it probably looked a lot like yours we also ran off the modified eos system and i couldn't give that enough praises uh it's it's huge yeah yeah i mean you know it's funny i i always wondered why like i my like if left to my own devices, I get like pages and pages of like to do's and, um,

and then I have to like, what that system does is it like draws me back in because my ADHD will just be like, Oh, I can do this. And, and I want to do this and Oh, and all, okay, I'll do this. You know? And what it does is it forces me to say, no dummy, you have two tasks between now and next Tuesday, get those two tasks done. then you can follow all the rabbit holes you want. But you got to get those two things done first. Yeah, so we got to have a system. All right, so I want to come back to growth a little more and talk a little bit more. But before we get there, I want to talk about running a lean business.

I think this is a really important concept to spend just a little bit of time on. When you talk about a lean business, what does that mean and why is it impactful to not only maybe the success of day-to-day operation, but ultimately to kind of maximizing the potential value? I think if you go through and then start with the impact first. So let's say you have like a $2 million revenue agency and you're able to shave off $80,000 of expenses, which is really not that big of an amount. The difference when you actually exit or the difference when you sell and then stay on is going to be somewhere in the area of $600,000 to $800,000. So small efficiencies make a very big deal based on the small tools that exist in the area of 600 800 000. so like small efficiencies make a very big deal based on all the multiples that exist in our insurance um and i think operating lead what that means is like

looking at your expenses and realizing what's the return on those expenses and looking at all of your expenses um so whether that's your tech stack and those items that basically you have, but you're not using, if those are leases where you realize that you could go from two offices down to one, if it's your people and then realizing certain people could have it all, it all factors in and can make any small change make a large impact on the sales price. Any small change. a large impact on the sales price. He's qualitatively smart. Yeah, and again, I want to focus everyone kind of away from when you hear like trimming the fat before a sale. This is not cutting employees, right? We already talked about the demographics of insurance.

All of these buyers in these larger agencies, they need good people. They'll pay recruiting fees to hire good people. So if you already have good people, keep them. Our job is to basically show a picture of the business today, how it's operated on its own, and then how it would operate as part of a larger model. So if you have to reallocate some people that are in account management or customer success into another division in that in that in that agency a lot of times you can get credit for that um on the pro forma but you have to know how to ask um and again they have to they have to be good employees yeah yeah i think that i think that is a part employee management and i don't mean necessarily the actual managing of the employees.

I mean, taking stock in who your A, B, C, and D players are, being able to properly, who can you train up, who needs to be trained up, who's, you know, performing at a high level, and who just is never going to cut it. You know, the number of times that I've sat at a table with a glass of bourbon listening to someone complain about someone who's been with the company for 20 years and is terrible and is drinking, but they won't let them go because, you know, for some reason, and it's like, I think, again, this is where I go back to being an agency owner versus a business owner, and while I try and believe in being loyal to your employees at a certain point, if you're not properly managing your people, meaning, meaning giving them quarterly performance, or we do trimester, trimesters, I guess, whatever, three,

three times a year, we do performance reviews. And with set criteria and feedback loops and all this kind of stuff where so people know where they're at and what's going on. At a certain point, there is a reality to this individual is a drag to the business. There is an expense, a fixed expense to them. And is their attitude, their effort, their efficiency impacting the business? And I think a lot of owners get caught in, well, he or she has been here for X number of years, so I don't know how I could let them go. What would they do next? Well, there are actually a lot of options and there are services that you can hire to help off-board people, help them find other positions. You could call a few of your friends or others and say, hey, I have this individual. They're

not a great fit for us. Here's what he or she is good at. Could they be a good fit? So there are ways of making sure your employees are taken care of, but just not at your business. And I think a lot of agency owners miss on that. I think a lot of times what's happening is you spend so much time focusing on that employee that isn't bringing the culture up instead of bringing it down. And that makes it so you're not actually focusing on all the other people in your organization that are bringing the culture up and doing the right things.

And ultimately that ends up impacting the retention for your best employees and all the other people in your organization that are bringing the culture up and doing the right things. And hopefully that ends up impacting the retention for your best employees if you keep somebody on it that just doesn't improve the culture for your group. Yeah, I found myself the other day. I called one of my team members who's a rock star. And I said, hey, man, I'm sorry I haven't members who's a rock star, and I said, I said, hey, man, I'm sorry I haven't checked in in a few days. I haven't checked in because you're doing good, right? I've been addressing the squeaky wheels.

And, like, at the time, that just, like, rolled off my tongue, and it felt very natural, and he was like, yeah, yeah, no, I get it, whatever. And the truth is he's a self-starter. He solves problems. I don't have to worry about him necessarily. And then, like, a couple days later, I was thinking about that comment. I don't know why it hit me, but I was like, oh, my God. I'm spending all my time and attention on the people that drive me nuts

versus the people who are killers and rock stars that I should be, that I could get even more out of if I didn't spend a little time and a little training and whatever, like I could take them to another level. And I'm spending all my time with the people who drive me crazy. Like what is wrong with me? Um, I won't say I took any positive action on that, but the, the thought, it kind of depressed me a little bit that, that that's what, and I'm trying to change it, but I mean, it was like, oh my gosh, why am I spending my time on the people who are problems and not on the people who can probably do three times the work if I just give them a little more attention. Yeah, that's everyone's evil. Yeah.

Yeah, and then not just with employees and management of people. It's the whole business. Yeah. So let's spin back to people. It's the whole business. Yeah. So let's spin back to growth. So everybody wants growth. What I've found is in our industry, if you post something about growth, everyone will like it and comment on it. And I'll be honest with you, I think most of it is lip service. I think that what I've found is most agency owners love to talk about growth, but don't actually want to do any of the things that will actually grow their agency.

They just want to flip the lights on and wait for referrals to come in. And then when they don't grow, they bitch about it, but will pound the table that they're a referral-based agency. So it's like this odd dynamic of lying to yourself and being lazy, but then loving to talk about growth. So when you were talking, you said a couple of things that, you know, growth is one of the key drivers to increasing multiples, valuation, et cetera, that you want to be above average growth and larger growth. And maybe there's some implied here. So, so correct me where I'm wrong. I'm just taking that larger growth actually has a larger impact than standard growth so if you're at a

certain level that may even go geometric or whatever in terms of in terms of multiple potential um so so let's start breaking down this idea of growth because i think this is something that everybody focuses on and and let's start to kind of of lay this bag of snakes out not so for example they may not They're great at commercial lines. They can do that backwards and forwards. They've got lots of different departments there. Just no one is able to go through and then knock out solar for a line. If you have an organization that's growing at 30% every single year,

you're going to be worth a lot more to them than a normal scenario because you can fix the problem on top of the revenue that you're bringing. You're bringing a lot more value. So in that scenario, does it make sense for agencies? Are agencies who have a niche focus that then you can align with a specific buyer need, they're going to do better, you know, in air quotes,

better than, say, just a generalist agency? I think there's always, yeah, there's always a premium for a niche, especially if you have growth in it. And if the buyer thinks that they can accelerate that growth. But the generalist can do really well as well. So it's not something that is one or the other. But, yeah, you're usually going to get a premium if there's a niche yeah yeah that's great and if you are outside of um say doing evaluation every year or whatever how how should agencies start to you know if they're just sitting at home

and they're maybe not a little nervous about reaching out just yet, although hopefully by the end of the podcast, they won't be, you know, how do they know average growth versus like, what are like, how do you determine these numbers? Because everyone says like, you know, where are the numbers in our industry where an agency owner can put their finger on it and go my size, my, my region, my, I write, you know, 60, 40 commercial lines in Northwestern Ohio. So, you know, an average growth is, you know, whatever. Like, how do they know what's a good benchmark? How do they start to benchmark themselves? Or is that what they pay, you know, you guys and valuation experts for? It's a really hard question to answer right now, Ryan, just given how much premiums are increasing year over year.

So, you know, we talk to a lot of agency owners and, you know, they're bragging about 10 percent annual growth. And when you peel it back, the policy count is shrinking and it's all just due to premium increase. At the end of the day, insurance is an incredible product. Everyone needs it. Businesses need it. Individuals need it. There's going to be a home if you're looking to sell your book. And there's going to be a premium to that if you're looking to sell your business on top of the book. But yeah, I think it's really hard to answer like what is strong growth right now? We've had clients, yeah, north of 20, 30% buyers seem to get really excited about those numbers. But if you're not growing to that extent,

again, you still have an awesome business, you have an awesome model, someone's gonna want that. I wouldn't be deterred or down on yourself if you're not there. But you can certainly strive to do better. Yeah. With professionals, whether it's somebody who can help you with evaluation or just other consultants in the industry as well. If you're hesitant to do that and you're just looking for something to check out online,

Reagan Best Practice is always a good one to look at. It'll give you metrics for different size agencies as well. I think there's a lot of stuff that could be improved there, but it's a great starting point if you don't have a conversation with someone. Yeah. So let's say somebody has been listening to this and they like you guys. They like the way they talk. Who is a good fit particularly for you?

And it's okay. I know you guys both said we don't want to be salesy I'm not sure but like someone's listening to this and this is an honest question because you guys help people and and I had you on the show for a reason right um they're sitting there and they're going you know I I would like to get out ahead of this I I I you've piqued my interest I am like who's a good fit for you guys and who and it could be everybody you know I mean you answer this however you want. Um, and who maybe is, is, is not like maybe not in your sweet spot if, if that even exists.

Sure. Uh, so you want to take a max? I think we always lead with education up front. Um, so generally speaking, if you're somebody that has an interest in design, it may not be today, but it's like five years. Um, we're happy to go through and have a conversation. Again, to your point, we're never selling. We're not trying to go through and convince you that you should sell your insurance agency.

Oftentimes we have conversations with people and we tell them this isn't the time that you should do it. You need to make these changes and if you want to go through and sell in a couple years, maybe here, we'll help you. I think it's people that would probably want to go to a sale in the next five years general where they're at

sometimes they're surprised and and and how do they reach out what's the best It's really just up to them and their needs. And how do they reach out? What's the best way to get a hold of you guys? Yeah, I mean, they can always go through and then just check out our website. It's legacyadvisors.partners. Or just send an email to Mike or myself. I'm max at legacyadvisors.partners. Mike is mike at legacyadvisors.partners. And, yeah, we love to have conversations with them. Max at LegacyAdvisors.Partners. Mike is Mike at LegacyAdvisors.Partners.

And yeah, we'd love to have conversations with him. Guys, I appreciate you taking this time with the audience. I think, you know, there's so much to our business. There's so much to our industry. And I think a lot of focus gets put on this moment. And what I hope people take away from this is that there are many different paths. I think what you guys have done a very good job of outlining that there is no like right or wrong. It's it's there's our different paths.

And that I think the key is to start thinking about this as far in front of your decision as you can or feels feasible so that you position your business in the best way possible. And I just really appreciate your time. I hope in the future you guys will be willing to come on again and talk more as the market continues to change and you get more experience and more clients in terms of just what's happening. I think this would be a great regular segment for the show. Yeah, definitely appreciate it. It's been great. We'd love that, Ryan. Thanks for having us.

Awesome, guys. All right, we're out of here. Thank you. Close twice as many deals by this time next week. Sound impossible? It's not. With the one-call-close system, you'll stop chasing leads and start closing deals. In one call. This is the exact method we used to close 1,200 clients in under three years during the pandemic. No fluff, no endless follow-ups, just results fast. Based in behavioral psychology and battle-tested, the one-call-close system eliminates excuses and gets the prospect saying yes,

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