Mastering Financial Literacy to Set Up a Successful Exit with Brian Rodriguez | Ep #753

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What is the one key thing that is holding you back from know your agency’s value? For many it’s having the financial literacy necessary to build an agency worth buying. Today’s featured guest learned that financial literacy can make or break an exit strategy. Despite his early start in business and formal education, it was the guidance of an outsourced CFO that truly transformed his understanding of business finances. This knowledge proved invaluable years later during acquisition negotiations and his successful exit.

From his teenage ventures in website development to building a thriving digital agency, and ultimately, to negotiating a successful exit on his own terms, join us as we explore the beginnings his agency and essential lessons on the importance of financial literacy, knowing your worth, and preparing for life after the sale.

Brian Rodriguez is the founder of Gatorworks, a digital marketing partner that helps clients reach their goals and keep them informed. He recounts how he stumbled into agency ownership while in high school in 2001, a time when many businesses lacked an online presence. Brian discusses balancing his agency while pursuing his business degree, how hiring an outsourced CFO completely transformed his understanding of how to run a business, and how knowing his agency’s value helped him negotiate a favorable exit deal.

In this episode, we’ll discuss:

• Boosting confidence and clarity by understanding the numbers.

• Negotiating a successful strategic exit by knowing your agency’s value.

• Why knowing when to let go is important in a successful exit.

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Boosting Confidence and Clarity by Understanding the Numbers

Brian started his agency as a high school student back in 2001, when he was just a kid experimenting with new technologies.

Though he soon found clients and started to charge $200 for building a website, he quickly realized his strengths lay not in design or development, but in the business aspects of the work. Hence, he started recruiting freelancers to handle the technical work while he focused on client acquisition.

Throughout college, Brian continued running his fledgling agency, applying his business studies to strengthen its foundation. After graduation, with youth on his side and nothing to lose, he decided to dedicate himself fully to growing the business. Yet success didn't come overnight – it took five years before he started seeing meaningful momentum.

The early years proved challenging, marked by financial struggles and an evolving business model. This changed in 2011 when he hired an outsourced CFO, a decision that marked a turning point in his understanding of the financial dimensions of his business.

During their first four-hour session together, Brian gained crucial insights into his agency's financial workings that transformed his perspective as a business owner. This newfound financial clarity not only boosted his confidence but also provided him with a clearer vision for his agency's future direction.

Pivoting to Stability by Changing Projects to Predictable Revenue

Brian's monthly meetings with his CFO became a cornerstone of his professional development, transforming his approach to business management. Through these sessions, he developed a deep understanding of crucial KPIs: top-line revenue, cost of goods sold, gross profit, overhead expenses, and net income. This knowledge enabled him to set concrete financial targets, including a 50% gross margin and 15% net margin, shifting his focus from simple revenue growth to sustainable profitability.

During this period of financial enlightenment, Brian also recognized a fundamental challenge in his business model: the instability of project-based work. This realization prompted a strategic pivot to SEO and Google Ads services that would provide the predictable revenue streams necessary for stable, long-term growth. This way, slowly evolved to an entire suite of digital marketing services that ended up being a game changer for his agency.

How Financial Literacy Led to a Successful Strategic Exit

By 2016, Brian had built his agency into a thriving business generating nearly $1 million in revenue. With stable profits and predictable growth, he wasn't actively seeking to sell, after years of receiving offers that simply weren’t the right fit. This changed once a respected local media company, owner of five radio stations and boasting a century-long legacy, made an unexpected approach.

Brian approached the situation with cautious optimism. Despite the allure of a potential deal, he remained grounded, taking meetings with the mindset of learning rather than selling and viewing the process as an opportunity for growth rather than merely a transactional exchange.

The company's representatives consistently aligned with his vision, supporting his desire to maintain his brand identity, retain his team, and preserve his autonomy in steering the agency's future. However, when negotiations began in earnest, their initial offers failed to meet his expectations.

After eight months of back-and-forth, the breakthrough came when they asked Brian to specify his desired price range. Though initially hesitant about meeting his terms, they returned within two days ready to negotiate. The subsequent discussions led to a proposal that matched Brian's valuation.

Brian's experience underscores the importance of financial literacy for entrepreneurs, whether you seek it through formal channels or mentorship. Had he not taken the time to understand his business's financials and what he deemed a fair valuation, he might have accepted an offer that did not reflect his hard work and dedication.

Knowing When to Let Go is Just as Important as Knowing Your Value

Seven years after selling his agency, Brian remains with the acquiring company – a rare outcome that extends well beyond his initial four-year employment contract.

The acquisition process itself, while intense, proved surprisingly accommodating. During the 90-day due diligence period, the buyers demonstrated flexibility by considering not just financial metrics but also intangible assets like goodwill, ultimately strengthening the deal's value.

After that, it took him a while to realize it was time to let go. For some time after the sale, he operated exactly as he would while still being the owner. It was only once the pandemic started that he realized there were things he could let go now that his role has changed post-sale.

His experience offers valuable lessons for agency owners contemplating a sale. While having a clear valuation number is crucial for effective negotiations, equally important is defining your desired post-sale lifestyle. Whether you envision staying on as an employee-shareholder or pursuing an entirely new path, the key lies not just in securing a favorable deal, but in being prepared to adapt to your new role once the papers are signed.

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