Creating Agency Side of Business

[onlinemoniez]

I manage paid search for a 150 person company that offers education within a very niche vertical.

I recently pitched the CEO on creating an agency side of his business where we do ppc/seo/social for clients in this particular space. He loves the idea and asked me to put together material on what to offer, at what cost, and an idea of my compensation, etc.

I would be building the entire department and would act as the director.

I obviously do not want to help someone else build up their business without being fairly compensated. I want some sort of equity.

My question is this: What's reasonable? I have a lot of agency experience,and am confident in my ability to build up a book of business, but I have never negotiated a deal like this.

Any insight would be greatly appreciated.

 

[cheshire]

Good luck. That CEO isn't just going to give up a piece of his pie because you think you can do whatever it is you think you can do. If you want equity start your own firm, build the customer/client base then sell it to him for a percentage of equity equal to the value of your business.

If one of my employees told me he wanted a piece of my company for doing his job I'd laugh and tell him to get back to work.

Job = Paycheck
Entrepreneur = Equity

 

[JulianTrueFlynn]

Good luck. That CEO isn't just going to give up a piece of his pie because you think you can do whatever it is you think you can do. If you want equity start your own firm, build the customer/client base then sell it to him for a percentage of equity equal to the value of your business.

If one of my employees told me he wanted a piece of my company for doing his job I'd laugh and tell him to get back to work.

Job = Paycheck
Entrepreneur = Equity

Personally never did it myself but saw it enough where this was typically the case.

 

[onlinemoniez]

Good luck. That CEO isn't just going to give up a piece of his pie because you think you can do whatever it is you think you can do. If you want equity start your own firm, build the customer/client base then sell it to him for a percentage of equity equal to the value of your business.

If one of my employees told me he wanted a piece of my company for doing his job I'd laugh and tell him to get back to work.

Job = Paycheck
Entrepreneur = Equity

Thanks for the response. This was my thought too. I do currently have my own firm, but thought I might be able to work something out with him, as we'd be able to scale something very quickly with his industry contacts.

 

[cheshire]

Thanks for the response. This was my thought too. I do currently have my own firm, but thought I might be able to work something out with him, as we'd be able to scale something very quickly with his industry contacts.

So explain to me why he needs you at all? I mean he has the money, the contacts, the business resources and you have what exactly? A plan? An idea? There are a million people with plans/ideas, executing them without losing your ass is the hard part and your boss man knows that.

He could fire you tomorrow, hire another guy and execute this plan while his secretary cleans out your desk.

 

[onlinemoniez]

So explain to me why he needs you at all? I mean he has the money, the contacts, the business resources and you have what exactly? A plan? An idea? There are a million people with plans/ideas, executing them without losing your ass is the hard part and your boss man knows that.

He could fire you tomorrow, hire another guy and execute this plan while his secretary cleans out your desk.

You're right. He could fire me tomorrow. That's the case anywhere.

He was very clear that he was open to profit sharing - that is something I didn't clearly articulate.

In any event, thanks for the response.

 

[Kiopa_Matt]

Ok, first thing's first. What the fuck went through his mind to think branching from a 150 person education company into SEO services is a good idea?

The two have absolutely nothing to do with each other. It's like me waking up one day, and deciding starting up a merchanic's shop would be a good plan. It's beyond stupid.

 

[DonegalDanny]

Set up a separate limited company that is 75% owned by your employers company and 25% owned by you. The majority owner invests the capital, you provide all the services and don't take a paycheck. You make use of the majority owners contacts and when a profit is declared you get 25% of it.

The capital outlay should be fairly low, and the parent company is fairly shielded from risk. Also they retain the option to pull the plug (financing) at any time.

 

[jsphfcll]

Set up a separate limited company that is 75% owned by your employers company and 25% owned by you. The majority owner invests the capital, you provide all the services and don't take a paycheck. You make use of the majority owners contacts and when a profit is declared you get 25% of it.

The capital outlay should be fairly low, and the parent company is fairly shielded from risk. Also they retain the option to pull the plug (financing) at any time.

So like... why not hire an employee and keep 100%?

 

[Fraggler]

He could fire you tomorrow, hire another guy and execute this plan while his secretary cleans out your desk.

Talent, experience and work ethic are not universal.

Why would an experienced digital marketer go and work with a company looking to start their own agency? Why wouldn't the marketer just go and do it without them? They are the one with all the knowledge after all, the hiring company just has cash.

 

[JulianTrueFlynn]

Talent, experience and work ethic are not universal.

Why would an experienced digital marketer go and work with a company looking to start their own agency? Why wouldn't the marketer just go and do it without them? They are the one with all the knowledge after all, the hiring company just has cash.

Business will simply always dominate here. Even right now when it's completely an employee's market for areas like programming, Google and Apple still control it = Google and Apple Settle Class-Action Lawsuit Alleging Wage Fixing

What is standing between some web marketing guy and an agency is not just cash. If you're talented, good with people, good at sales, and managing, and connected, then yea you have a chance. Very few do though and as a result (including other factors) few succeed.

It's a hard pill to swallow, but many of us are replaceable.

 

[cheshire]

You're right. He could fire me tomorrow. That's the case anywhere.

He was very clear that he was open to profit sharing - that is something I didn't clearly articulate.

In any event, thanks for the response.

Profit sharing is not equity, please don't forget that. If you want profit sharing that is probably something that you could get. Put together a plan, execute plan, bring in the monies and you'll get a share of the profit. Just going to your boss with a plan/idea and asking for equity of the company he built is going to get you laughed out of the room.

Profit sharing != Equity in company

 

[cheshire]

Talent, experience and work ethic are not universal.

Why would an experienced digital marketer go and work with a company looking to start their own agency? Why wouldn't the marketer just go and do it without them? They are the one with all the knowledge after all, the hiring company just has cash.

I don't know about where you live but where I live cash is in shorter supply than talented experienced employees. I can throw a rock and hit 10 talented hard working employees. Most of the talented experienced employees I know only work for .... yep you guessed it ... cash. You can't feed your family on talent and experience.

Golden Rule #1: He who holds the gold makes the rules.

With all that said if you are talented, experienced with a good work ethic and you're sitting on truck loads of cash then yeah, you don't need the other guy.

 

[Fraggler]

My comment was in the context of this discussion. Why would an experienced digital marketer start an agency for another company when that other company has no experience or relevance to digital marketing? If they have the skills to do it for someone else - ie start it from scratch - what does the other company bring to the table?

 

[cheshire]

My comment was in the context of this discussion. Why would an experienced digital marketer start an agency for another company when that other company has no experience or relevance to digital marketing? If they have the skills to do it for someone else - ie start it from scratch - what does the other company bring to the table?

The most important thing that every business needs, Money. Not everyone is ready to risk everything and just start a business from scratch.

 

[Unarmed Gunman]

Set up a separate limited company that is 75% owned by your employers company and 25% owned by you. The majority owner invests the capital, you provide all the services and don't take a paycheck. You make use of the majority owners contacts and when a profit is declared you get 25% of it.

The capital outlay should be fairly low, and the parent company is fairly shielded from risk. Also they retain the option to pull the plug (financing) at any time.

This is what I would suggest. He's not going to give up equity in his existing business, so you want to form a separate entity with him. For those asking why he would want to do this, probably because he already has a business to run and doesn't have time to manage it. If he believes in your ability to make this happen he'll likely see it as investment.

 

[magicink]

Ok, first thing's first. What the fuck went through his mind to think branching from a 150 person education company into SEO services is a good idea?

The two have absolutely nothing to do with each other. It's like me waking up one day, and deciding starting up a merchanic's shop would be a good plan. It's beyond stupid.

You don't know anything about the company, what niche vertical they're in, the company's positioning in that niche, who their clients are, what kind of education products they sell, how those products are used, the demand among their clients for digital marketing services, how challenging seo/ppc/cro is in this vertical, how much competition there is for providing those services, how much a digital marketing upsell might potentially add to the bottom line...

But you know enough to call the plan "beyond stupid".

 

[3nyaw]

youre replaceable because your skills are a dime a dozen, not because employment is a buyers market.

it is very much not, youve just never been valuable to anyone.