Scaling and succession planning with Pietro Ranieri

Welcome to the latest episode of the Agency Accelerator Podcast. In this week's episode, I am really excited to interview a very, very, very old colleague of mine, Pietro Ragnieri, who runs the Ragnieri Agency. Now, Pietro was actually my very, very first employee when I ran my agency, and after being with us for nine years, he left to set up his own business. And in this episode, we're going to talk about that journey from going from a freelancer to running an agency. We're going to talk about some of the pitfalls of growing your age and we're also going to talk about selling an agency because Pietro's actually sold his agency, bought it back, and he's also acquired a number of other agencies. So today he runs a multinational PR agency with offices across the world. So without further ado, let's get on with today's show.

Accelerate your agency's profitable growth with tools, tips and value added interviews with your host agency owner and coach, Rob DaCosta.

So, welcome to the latest episode of the Agency Accelerator Podcast. I'm really excited to have Pietro Ranieri from Ranieri Communications. Now, Pietro and I go back a way, way, way long time and in fact, Pietro was my very first employee when I ran my PR agency. So I think we've probably known each other from since about 1994. And since then, Pietro has set up his own agency which has gone great guns, has grown, has opened offices multinationally, has won a number of awards. So I'm really excited to have Pietro on board today to talk about how it feels to scale an agency, some of the challenges that he's faced and just generally share some great experiences with you. So hopefully that's a decent intro, Pietro, but do you want to fill in any gaps? Yeah, well.

Hi, Rob, nice to catch up again. Yeah, so I'm Pietro. It's actually Ranieri Agency now. We've recently rebranded. That's okay. But, yeah, no, we. We've been running for around 17 years now, but in that time I sold the agency to a plc, grew it within a plc, bought some agencies to add to it, bought it all back and we're now in sort of UK, France, two offices in Germany that we're a consumer electronics B2B tech and gaming digital marketing agency. So, yeah, we've come a long way in that since you very kindly gave me my shot and took me on, however many years ago it was now.

Yeah. Wow. So, God, you've been through the kind of full range of things that could happen in an agency. So I think my first question to you really is, so Pietro worked with me for, I think about nine years before, before he left to set up his own agency. So what when, if you can cast your mind back 17 years, Pietro, what were the goals that you had when you first started the agency?

Well, people often asked me this story and I think, I have to be honest. And when I very first started the agency, actually, I wasn't leaving you, Rob, to start an agency. I actually went to go freelance because back at the time, 17 years ago, the sort of freelance life was, you know, it was quite lucrative. You could sort to start to become your own sort of boss and sort of look at, you know, change the sort of lifestyle that, you know, at the time, I'd kind of met a girl who's now my wife, and basically she lived in London, I lived outside of London. And what I was finding is sort of going backwards and forwards to see her then go to, you know, come back to the office of Milton Keynes. It was proving quite, you know, quite tiring. And I guess at that time I was. I don't know how I was still in my 20s then, you know, I probably. My life was prioritized, you know, by her and not work. And I just sort of changed my life to sort of suit that, that lifestyle. So when I, you know, when I first left, it was because I ended up getting a freelance job for another agency that, funnily enough, we competed against quite a lot of the time and they paid me. It was more than my existing salary for doing seven or eight days work a month. So I ended up kind of getting more salary, leaving and having quite a lot of free time, you know, and that's kind of how I got into it. So it wasn't really any sort of, you know, master plan to kind of start an agency. It was more me just sort of thinking, right, I just want to change my lifestyle and, you know, spend more time with this person. But actually, because of the environment at the time, there was a real opportunity to do it and not sort of suffer in terms of, you know, income, but also, you know, at that time, you know, I was a single guy. You know, I had a house which my parents had very fortunately helped me with. So I didn't have any children or any kind of, you know, any sort of dependence or anything like that that would kind of potentially stop me doing it. I mean, at the time, the worst that could happen was that I'd just have to get another job.

That story will resonate with a lot of people because I think a lot of people start out with the intention of freelancing and then something happens, which I'm interested to hear from you, that leads you to make that switch from having this mindset of being a freelancer to having a mindset of actually, I want to grow my agency now, even if you're still just one man band to start with. So what was that for you that led you to go from freelancing lifestyle to actually want to grow an agency?

The agency thing probably happened, I would say, about two or three years later when you could start to say, well, it was becoming a little agency where I had an office and a couple of employees to kind of work with me. But what really happened was again, I'd sort of been working at home in my bedroom for, you know, quite a period of time. Probably, you know, about a year and a half at this point. And even back then, I mean, I started off with a couple of clients that, you know, one was an agency, one was a web design agency that I'd got to know. I think there was a couple of others. But even then I was starting to get sort of international clients mainly because, you know, the environment that you'd put me into know in your agency, you know, that was my kind of contact base. So I was just naturally sort of gravitating towards that. So what I was finding that, you know, I'd be getting up late in the daytime because all my clients were coming online later on because they were us based. And I was just finding that I was starting to become quite detached from the world because, you know, I'd be getting up late, I just sort of wander over to my second bedroom where my office was. I'd get to the end of the day and I'd realized I'd still hadn't really got washed or any of the kind of normal things that you should do do. You know, people were coming home from work in the sort of houses around me, and I'm still sort of, you know, in my pajamas. I mean, I remember one sort of specific day where I think I'd, you know, I got up late. I think I'd watch Dr. Phil like back to back episodes for about three episodes or something. And then I watched this real sort of trashy film in the afternoon and I just thought, what the hell am I doing with my life? I can't, you know, this can't carry on. So I just decided to get myself a little office which was still in the local area, just so I could get up in the morning and go to work and have, you know, and have. Start to have that sort of separation between, you know, my, my home space and my workspace. You know, the irony is I'm, you know, here we are sort of 18 years later or whatever the time frame is, and I'm sort of sat at home again because of the lockdown and I'm just. All these memories are coming out.

Bigger house now though?

Yes, it's slightly bigger, but it's a bit more crowded these days. Bit noisier with the young kids running around. But it's. Yeah, it's kind of. I'm starting to get those same sort of frustrations, I think, you know, because I'm naturally a social person. I mean, you know, working pr, I mean, that was originally what I was doing. You know, I get very frustrated. I need that sort of interaction of people in the office and kind of, you know, going out and meeting people and just sort of that general sort of contact with other humans.

So once you got the office, what was the next bit of the journey to hiring the first member of staff? Because that is a huge hurdle that a lot of growing agencies have to leap over when they take that first person on.

Well, on in the early days, I mean, I very much ran my, you know, my own sort of income as thinking that, you know, because the first contract I had with the other agency was like a six month contract, then I won a couple of other little bits and pieces and I just kind of. And probably again just sort of good mindset that you guys instilled in me was that eventually you always lose those clients or you think you should sort of plan for the fact that you're probably going to lose those clients at some point. So even back then in my sort of early days, I was always looking for new business. But what actually happened in the first sort of couple of years I did keep sort of winning business. Don't forget it was a kind of sort of boom time back then. Not, I wouldn't boom time. It's not. It certainly wasn't a recession. But, you know, all the business I was winning, expecting, you know, some of the earlier accounts to drop off. Eventually they didn't drop off. And I got to the point where, you know, I just had too much work on and I'd had the office and then, you know, I just thought, well, okay, well let me hire somebody and just sort of see if we can pick up some of the work so I can carry on winning work. But just always anticipating that, you know, when I Look at the figures. If one drops off, are we still going to be able to maintain that person? Because like I say, that first person is really where you're probably most exposed in terms of revenue and stuff, because you have enough revenue for yourself. But when you hire somebody, you know, suddenly you have to make sure you prioritize their salary. And if you don't, you know, if you haven't, if the money doesn't come in, you still have to pay that salary. So.

Exactly. You become the back of the back of the queue for being fed, don't you?

Yeah, I have been ever since.

Now, one thing that you did really well, and I always say that when we ran cit, we did many things badly, but the one thing we did well and you've done well as well, is had a clear niche from day one. So I guess I know why you have that niche, but it's probably good for the listeners to understand that from the beginning you had a niche. And was that a conscious decision to say that's where we're going to focus?

It wasn't early on, but it did become a conscious decision later on. And there's a. Well, let me explain. So basically when I. When I left you, I went into sort of technology pr, which is kind of what we were doing at the time, because obviously that's what I knew. But very quickly after I went on my own. Apple launched the ipod. And back then some kind of accessories started to appear. So you had things like silicon cases for the ipod. Then there were sort of headphones, little kind of speakers that would sort of plug into the ipod, that kind of early sort of mass consumer electronics, that sort of. Apple really sort of pioneered with the launch of the ipod. But kind of as that market started to develop, a lot of the early accessory brands came from the Mac market because obviously the ipod was a Mac product. Our background, Rob, was sort of more Mac market oriented. So kind of the early accessory brand brands were coming from the Mac market because it was, you know, products that fit, fit around the ipod. And obviously because we were in the Mac market, I would start. I was starting to get a lot of inquiries from people I knew in the industry or journalists were referring, you know, good Mac people, Mac PR people to these brands when they were asking, you know, who can help me, you know, promote these brands. So very early on, as soon as the ipod launched, we were just starting to pick up this kind of early wave of consumer electronics accessory products. And that's kind of sort of how we ended up going, going down that road. But when we made a conscious decision was so kind of a few years into that. So if you kind of roll on, you know, I don't know, five or six years, we had quite a lot of consumer accessories brands that were very predominantly sort of Mac based, but we also had some other sort of miscellaneous products. I mean, I remember one of the accounts that I was working was actually an illegal logging tracking system. So basically it would. It was able to track piece of timber all the way through the supply train. So from kind of tree stump in the Congo where it was chopped down to chair legging B and Q. So they could mon. Process all the way through. But when you're sort of predominantly doing consumer electronics in your agency and then you win a client and then try and introduce that into the same set of staff, they would do it obviously. But what they. It was a really big learning curve. So, you know, you suddenly had all these sort of brands that they were comfortable with and they were talking to at the time, consumer electronics friendly magazines. And then you threw in like illegal logging and suddenly they had to learn about illegal logging and they had to learn about all the kind of journalists, all the kind of the subjects in that sort of area. So kind of taking on brands like that, which were completely different to what we were, you know, effectively good at, suddenly put a massive ball and chain around the agency because it just really distracted from where we made our money. You know, you ended up having one account which took 50% of everybody's time and that was the account that we weren't actually making that much money on.

Anyway, can I just interrupt you because I just want to unpick a couple of those things before we move on. Some really important lessons that I think we can all learn. And they're things that I am always sort of shouting out from my gospel, which is you want to be as niche as you possibly can, especially in the early days. And if you listen to Pietro's story, you'll see that he was, I think he was a niche within a niche within a niche within a niche. So he was a tech, started out with tech, focused that tech in the consumer space, focused that into the Mac space and focused that into the accessory space. And so it becomes very easy to show up as an expert and a real authority when you have that clarity on your niche. That's one thing I just wanted to pick up. And then the second thing I wanted to say is that the example of the logging tech client that you took on is a really good example of what happens when we take on our less than ideal clients and how much harder they are to manage because we don't understand them so well. So we have to work extra hard to do a decent job. And I don't know how that story ended, but you can tell us. But a lot of what happens with people is they end up losing those clients because they can't build the same kind of relationship that they can with a client that is right in the core niche that they are specialists in.

Yeah, just picking up on that, Rob. I mean, I think the lesson I learned very quickly was yes, you can add to your revenue by picking up that client, but that client, which kind of sits as a little sort of outpost to the rest of your core business, it does draw all the resources from the rest of your team, but it also kind of potentially upsets the team as well because nobody really wants to work on it. Nobody really wants to sort of spend the time learning it. It's not really even worth investing in that client because it's not like you're going to pick up another brand in that space. Just it's, you know, you'll end up losing the client. But what you're not actually losing is that just that revenue, it's all the kind of, you know, the secondary time and revenue and, you know, emotion that goes with that account on the rest of the agency. Yeah, it's just, I think when you're early and you're, you're sort of a younger, smaller business, you obviously you're trying to build the revenue as quickly as you can, but, you know, sort of staying focused on what you're good at in the long term will kind of benefit you a lot more.

Yeah, and you're great. Testament to that because over the, what it was 17, 18 years, you pretty much stayed true to the sector that you started. And yes, you've broadened out a bit into things like gaming and stuff that probably wasn't really around much in the early days, but you've pretty much stayed true to that. So I guess the thing is, if you find a niche that is big enough, then there's no reason why you'd need to take on a logging kind of client, is there really?

I mean, I didn't sort of start Ranieri Agency thinking, right, I'm going to go after this market and you know, that's because I'm good at this space. It's just, you know, we started off that way with, you know, the ipod and the accessories guys, but, you know, the industry Itself has just continued to kind of expand. I mean, it's now developed into, you know, like, say we've got a gaming division. If you look at consumer electronics, you know, it's now kind of split into sort of fitness, you know, smart, home health, audio. I mean, anything that's got that sort of technology, DNA. I mean, that's what we sort of do. So we were lucky to kind of be at the very beginning of a space which grew massively. But there are equally, you know, other areas out there. Like if you're in. I don't know, if you're in fashion, then you'd probably want to be concentrated in certain parts of fashion. It could be clothing or it could be cosmetics, or it could be, you know, so it's just kind of doing what you're good at, really. Or more importantly, you know, if you want to kind of build an agency, it's focusing on what your team are good at as well, because it's not about you at the end of the day.

Well, that leads me really nicely, sort of segues on to the next question that I've got for you. So if some of our listeners are running a small agency, they may have one or two staff and they aspire to grow beyond that. What advice would you give them about that journey?

Yeah, well, I've got a really good partnership with an agency in North America called Max Borges, amongst many other partnerships. But that one in particular, I've known him for a long time and he sort of stressed to me early on the real definition of a PR agency is, you know, are you a PR guy with loads of assistance or do you have a PR agency? And the difference is, you know, if you. If like, for example, I can walk out of my agency now and has no effect on client work because I don't work on any clients. And that isn't me being lazy. That's a kind of conscious decision to let other people run the client. So I can kind of focus on, you know, looking at the bigger agency and how we grow it. But if you pull me out and suddenly all the clients start screaming, then you don't have a PR agency because basically you're. You're a PR person with assistance. And there's a sort of lesson in that way. You know, you vet as quickly as possible. You have to make sure that your team is the client contact and the team is delivering the service. Now that doesn't mean you just suddenly sit back and don't do anything and just let them get on with it. Over time, you need to understand how to either train the people up that you've got in place to run those accounts or you hire in the right people even further. Before that, you have to make sure that the client interaction that you have with you as a. As a, you know, an agency person, the interaction you have with those clients, the initial interaction kind of sets the scene for how you move forward with that client. So, for example, if a lead comes into Ranieri and it might come through, I don't know, the website or a referral from someone in the industry, I will. The first thing I will do is I'll say, yep, oh, you know, great. Great to meet you. Let's set a meeting up to kind of talk about your requirements. You know, have you got an rfp? All that kind of stuff. Because I want to pass that to my team to look at so that they can start to come back to you with a proposal. And so the language that I'm using straight away, immediately on their first engagement with me is my team are going to start looking at this. So it's kind of little things like that. So even though I might work on the proposal with the team, you know, I don't want to be the person that leads that proposal because if we then win the work, that client will then expect me to be part of that journey with them moving forward, and I don't want to be part of that journey. And the reason is, you know, it's not that I. I'd love to work on an account, but every day I work on an account is taking me away from what I should be doing, which is running the agency.

What you've just said I need to put in really big neon letters because I think I have clients. And I know other companies suffer from this same thing where the agency owner is this really strong entrepreneurial figurehead that clients love and the clients want them to work on the account, and perhaps they have more junior staff. So there's a big gap between them and the rest of the team, and therefore they don't want to lose control. They don't trust their teams enough to delegate effectively. And we're stuck in this vicious circle of the agency owner being the reason why the agency has grown to a certain size and. And also then being the reason why the agency can't grow beyond that size because they can't get out of their own way.

Yeah, it's funny. It's like when you work in an agency and you're employed. Like, you know, when I was working for you, you know, everything is about you being the person. So you've got the contacts, you want the client to kind of, you know, have that relationship with you. You want to have that sort of not self importance, but you, you know, you make yourself value valuable by kind of having the contacts and having the relationships. When you become an agency owner, it's the opposite. You want, you know, you as the owner need to make your employees the people with the value and the, you know, the contacts and the client relationships because that's how you'll grow. Because if it's. Everything's related to you all the time sometimes, you know, within. I've met a lot of people that PR people particularly that they do, they do like to have this kind of control on who's got the most relationships in the room. But actually that's the thing that will stop them growing when they actually start on their own. It's a great thing to have when you start, but as soon as you start getting employees, you need to nurture them and mentor them to kind of be better than you because that's how you'll grow the agency.

So what advice would you give to that agency owner that may, that's maybe got four or five staff, but they are still completely entrenched in doing client works because the clients want them on the accounts and because the owner of the agency doesn't trust their staff to do as good a job as they would and therefore they don't delegate as well as they could.

Yeah, well, there's two things there. I mean, you know, the first thing is I think you really need to understand the sort of capability of your staff. Because one thing I'm, you know, I'm certainly not saying, you know, just give all the work to your staff, you know, let them get on with it and see how they go. You know, you need to understand those staff and make sure that, you know, that there will be certain people in there that will be maybe better at social media, some will be better at kind of client relationships, some will be better at copywriting all those kind of, you know, understanding those skills because, you know, what you can actually do is work with those employees to actually give them a career plan to say, look, I want to step back a bit, I want to kind of make sure we grow the business so I can focus on bd, all that kind of stuff. What do you want from this agency? You know, do you want to be an account director? Do you want to be the MD one day? Do you want to, you know, and start to plan that out. Because the quicker you engage those employees, the quicker they will kind of feel, you know, like they're part of the journey as well. So everybody's kind of. Because running an agency, what you've got to imagine the most important part of the agency is staff. You know, staff are what kind of make that thing. Without staff, there's nothing there at all. There's no skills, there's no nothing. And the quicker you can motivate those staff the right way in all, in the right direction, you know, all understanding kind of what their role is, where their kind of career path is, all of that kind of stuff, then everything starts to work better because. And also you'll. You'll retain staff a lot longer if you kind of give them what they want as well. And giving them what they want doesn't mean more money, you know, some. That's one thing again, another lesson I learned on the way was because I'm quite shallow and motivated by money. I was in the early days, I just assumed that everyone else is like me and if I paid them more, they work harder towards a target of money. But I probably found that, you know, over 50% of people aren't that way. They're not motivated that way. You know, actually they're motivated by, you know, status or they're motivated by job satisfaction in the kind of things that they do, or they want to work in a particular area or, you know, just things that everyone's motivated in a different way.

And it's, it's also generational thing, isn't it? Because you're probably an X gen and a lot of your staff will be Y gens or millennials and they're motivated by different things.

I mean, I'm like, you know, I went through this period of a few years ago where now you start employing those younger guys and they're like, you know, oh, well, you know, I need to work from home more and I need to do this more. It's like, you might. You sort of offer them a pay rise and they almost like don't acknowledge it. And I'm like, what? What the hell's going on here? I don't understand this. And yet if you give them an extra day's holiday, it's like, you know, I've doubled their salary just so I never.

But yeah, so true.

Yeah. So it's kind of getting a real handle on that. Because I think what you need to sort of identify is have you got the right staff? But, you know, and who are your stars? You Know, because of very early on, you can sort of very quickly see, you know, the people you could imagine in front of clients as more senior or the kind of more sort of, you know, it might be that there's a, I don't know, a head of social media division that you could give them. Because don't forget it's, it's pr, right? So even if it's a small agency, you can still give people status and you can still make people earn that status as well. So they don't. Because the worst thing, again, you can do is just start giving people things what they want, you know, because it almost becomes a, you know, they have to earn those things, but when they do earn them and they are good enough, they should be rewarded as well. So everyone's on that kind of motivational thing. The other thing as well is, and equally as important, if not more, is, like I was saying before, this kind of interaction you have with brands as the agency owner, you need to kind of distance yourself from the first bit of contact. So like I was saying before, if you want that brand to be happy with another team member, you know, the very first bit of communication that you have with them is like, you know, they might call you, you might say, yeah, it's great, I love your product. You know, you go through the whole pitch process, but you kind of say, right, I'm going to give this to my team to review. I'm going to let them have a look at it, they'll come back to you with a proposal and you can still be in the pitch, you can still keep an eye on it. But your language is all about, let's say, your, I don't know, your brand is, you know, an audio product. The exec that you have in that pitch, you know, you make sure that they can go through like a, I don't know, like a reviews program or something. And they kind of show real knowledge of those, you know, those contacts and examples that they've done in the past. So what you're doing is you're building some trust and some credibility within those people. Right from the early days, you know, you as the agency owner, you know, it doesn't matter who you know, it doesn't matter what you've done because at the end of the day, the client can see through that. You almost need to create the pitch around making your staff look great and they've got the contact. So you're, you're positioning your agency as this place which has loads of talented people and you can't wait for them to work on that brand. It's not you doing the work.

It's the difference between the brand being you or the brand being an agency, isn't it? And I think that's something people get wrong. They do actually employ a few staff, but fundamentally the business is still them. It's like the way you described it is brilliant. It's like you've got, you're a freelancer with a bunch of assistants. I wanted to ask you one other question which is to do with succession planning and selling. Because when I meet a lot of clients and I ask them what their bigger picture goal is, they'll tell me that they want to exit their agency. Agency, they probably want to sell it and they've got this dream of selling it for millions and sadly that is very rarely realized. So we might talk about succession planning being delegating down and giving them more flexibility or something else. But given that you've sold your agency and then bought it back and you've bought a few agencies as well, what's your experience? What would you say the pros and cons of thinking like that are?

I probably had done quite a lot of M and A now, so the first experience I had of it and was selling my own agency which in hindsight didn't go that well, which is kind of why I ended up going through a process and buying it all back out. But you know, I kind of see it as a. I learned a lot through that process because when, because I made a lot of mistakes in my own sale and most of it was because I just didn't know what I didn't know and that, you know, and I think anyone would have made that mistake. What you don't know is what you don't know. So when I was selling my business for the first time, you know, I sold it on good faith and there was lots of things that I didn't realized what was happening, but kind of what it ended up giving me was a real sort of knowledge base of what not to do, but also what to look for in agencies when I'm buying them now and what the value is in businesses as well. So I've kind of then went through, I've successfully bought three agencies under the, the PLC that I was working with. And the, the thing I learned as well is, you know, most agencies, you know that with kind of consultancy based businesses like PR businesses or you know, social media businesses, they are quite, you know, there's quite a formula to kind of buying and selling them. They all sort of inherently have the same sort of issues. They're all reliant on certain clients. They're all reliant on certain staff. And I think, you know, this kind of perception that they're worth millions and millions is sort of wrong. You generally won't make millions. And what will actually happen is you'll be on some kind of earnout period as well. So. Because when people buy an agency, you know, they're not stupid. They realize that the most important thing in that agency is the clients that it has, the staff that it has, they'll buy it over a period of time. So they want to make sure, you know, when the owner finally does kind of step away, which is obviously the whole point of that owner doing it, whatever they tell you they want to be left with a business and a business that then they can kind of earn that money back as well that they've kind of put in. So if you think, right, well, I'm going to buy this business for 5 million quid, right, how's that owner going to get that 5 million quid back? With interest? Because don't forget, they're usually investors or bigger agencies. If you're going to spend that kind of money, then at some point they're going to want to make money. So you have to be able to sort of show that. So, yeah, it's, it's kind of, you know, I've been through a lot of potential agency acquisitions as well that haven't completed. And usually the thing that kind of breaks down the whole process is the expectations of the owner. Just because I think a lot of them, if they're doing it first time, they just have no idea. Because usually what will happen is a broker will get involved and that, that would be the person that gives them the idea to kind of, you know, start selling and they'll say, oh, you know, your agency's worth this much. But, you know, they're trying to get you, you know, they're trying to hook you so that you kind of think, yeah, actually go, yeah, my agency is worth this much and if I use him and pay him five grand a month, then he'll get my agency ready for sale and blah, blah, blah. But actually, you know, just like any other business, they're just trying to get you on retainer and they sell something at the end of it, great. But they can string that out for a couple of years. So, yeah, there's all sorts of stuff to look out for.

I think it's. Yeah, I mean, so much of that resonates with me. We, when we sold the agency, I don't think it was a very happy marriage really and I don't know if you know this actually, but at the end of our two year earn out they offered to sell us the agency back and at which point I said no, thanks. But I think really good bit of advice there is to make sure you have realistic expectations because I think people get swept away by the, the ego of and the flattery of that I've built this baby and now someone wants to buy it and they don't. And the reality is of course that as you say, it's going to be backloaded on earn out numbers. You're going to be tied in for a number of years and there's a good chance that you may not achieve, you know, a lot of that earn out. So the number ends up looking a lot smaller than you thought. So I think when I talk to people about succession I try to encourage them to think of different things besides just exit like, like I say, building up an agency that other people can run or taking more of a non exec type of role in their agency in the end, that kind of thing.

They get these wild expectations of what their agency worth. But a typical agency is usually going to be something like three to seven times ebit. But that's after they've taken like a nominalized value for the actual owner's salary. And this is what people sort of get wrong. I think that's the big mistake. So if you're going to sell a business and let's say, I know, let's say you turn over a million quid and you make a hundred thousand profit. But is that profit clear after the MD salary? Because don't forget, if somebody buys the agency they're going to want someone to run it. I know you take your salary as dividends out of that hundred thousand, then the company who's acquiring you will nominalize that, that to be your salary. So if you're doing like an EBIT calculation to get the value then basically if you've cleared 10k after dividends, your value is 60k for that million pound agency. And that's what people, where they fall down and suddenly think, well you know, I'm worth a lot more and you're not.

Yeah, it's because they get told these, they get these people telling them that their agency's worth, you know, one times revenue or nine times profit or something like that and it's just not true, kind of. And so yeah, I completely Agree with you. That's really useful and like I said, a lot. When I meet a lot of clients and I ask them what their longer term game plan is, they'll tell me they want to sell up and I'll ask them why. Because often I think as well, people throw the golden goose out the bath. That's mixing my analogies there. But sometimes people have got something good, they just aren't running it in a way that frees them up and they sell it for something that's worth way less than the potential earnings over a number of years.

Yeah, this is one of the mistakes I made. I mean you think, okay, someone offers you money and it's quite a lot of money, you know, if you were to get that money today, it seems like quite a lot of money. But if once you've been through your sort of three year round out and like, you know, in your case they obviously absorb your brand in that three years, you know, your brand has gone, you're at the end of your journey, you've come out with it with a bit of money which is probably equivalent of two, I don't know, two or three years salary, you know, what do you do then?

Yeah, buy a house in Spain.

Yeah, you're basically down to pre agency with no brand and enough money to last you for a bit.

Well, and also being on the entrepreneurs that we are, you suddenly realize lying on a beach in the Mediterranean is something you don't want to do except for your sort of few weeks, a year's holiday and you probably can't afford to do it full time anyway. So I think that's something I learned is like, like oh my God, what am I going to do next? My whole sort of self esteem was based on my business and now I don't have that. So you know, it was actually very. I've spoken about this before but me at the end of my two year earnout was a really bad time in my life because I'd lost a sense of who I was and I had to re, re establish that as I became a coach. So that's another bit of advice I say to people is know what the hell are you going to do next before you sell?

When I sold it to this plc, my feelings of regret happened almost like the next day. It wasn't the money and all that because at that time I thought I'd done the right thing, but it was just that I suddenly felt like, you say, like I lost control and I was like, well it's not mine anymore. I can't be bothered with this. Why am I doing this? Why am I working for them? It was like almost immediate. And I think again, if you've been running a business for a while, I think you've really got to be sure that it's the right thing to do because you need to be able to sort of wake up the next day and report to somebody. You wouldn't have done that. And you certainly, you know, won't like it if, when it happens because it's just, you become, let me think, you told me this. You become like unemployable as an entrepreneur because basically, you know, you're either like a journeyman where you kind of start off in an organization, you go up in that organization and you're like, you know, on that sort of corporate ladder and you understand your place in that ladder, but when you're an entrepreneur, you are your own little corporate entity and no one's going to tell you anything.

Why do people start their own businesses? One of the major, major reasons people want to start their own businesses because they want to be in control. If we acknowledge that, then why the hell would you want to give that control away to somebody else? Or you better have your eyes open when you make that decision. Because I remember feeling exactly the same. You know, we went from having a, a 25 man agency to suddenly being part of a 2000 man business. And I remember, you know, and very quickly saw the politics and bureaucracy and the trudging through quicksand and I kept putting my foot in it because I had opinions about everything, because I could do that when I was running my agency. And I quickly learned that I needed to keep my mouth shut and pick my battles wisely. And, you know, I'm not. I think I look at those two years and think they were an interesting experience and I learned quite a lot, but I'd never do it again. Let me ask you one final question. This is a question that I ask everybody who comes on the podcast. And if you could jump into a time machine and go back in time and give young, young whippersnapper Pietro, who was just leaving CIT and starting out on his own, some advice. What advice would you give him?

I mean, I would definitely make sure that I did it when I first started or start thinking about leaving. I was met with this kind of wall of reasons why I shouldn't. And mainly because the people that I asked were, I don't know, friends and family like my parents, you know, all of these kinds of people. It's not that they gave me the wrong advice, but it was just that they gave me advice based on their own understanding of the world. So all the people are asking had never kind of set up their own business. It always worked for somebody else. You know, the questions they were asking me, in hindsight, I know are the wrong things. So if I was going to ask someone for advice, I mean, you know, or advise myself, the first thing I'd get them to do is make sure they spoke to someone who had done it already. And just so that they. So the thing that they're trying to do, make sure they speak to that person that's already done it and succeeded or failed at it. Because I think the one that fails at something probably has got more advice to offer than the one that succeeds. Because if you've only ever kind of been successful at what you're doing, I mean, it's great. But you don't. You still in this bubble of whatever you touch works and at some point you're going to make a mistake. But I think that's just inevitable with business. So it's just like, for example, the situation we're in now, everything I've learned in the last sort of, you know, 20 years of running my own business or how long it's been, you know, it's kind of helping me every day in this situation that we're in. Because, you know, the irony is a lot of kind of businesses that have started up, you know, probably in the last couple of years are probably very anxious at the moment and because they've never sort of seen this kind of thing before. And I've been already been through a recession. I've been through starting up a business. I've been through, you know, the anxiety of what many people are sort of potentially feeling right now. And it's that kind of feeling actually, you know, it's probably going to be all right as long as you kind of got good processes in place and you stick to it. It's that kind of. You've got to make sure you just, you know, every time you get hit, get up and get on with it because that's, that's what kind of makes you successful. That's what I advise myself. Make sure you speak to someone that knows what they're doing or has done it and just keep going.

Great advice. I wrote last week, I wrote an email out to my audience which was called the Lonely Life of the Agency Owner, talking about how it's lonely at the top of an agency and how we need to create a good network of people that can advise us, whether that be a coach, a mentor, you know, other accountability partners, other agency owners. Because when we go and ask our friends or our family or our spouses their opinion, they coming from a place of love and support, but they don't understand. So you're not. So I completely kind of get that. Pietro, if people want to find out more about you and Ranieri, where would they go?

Probably the best place is LinkedIn. So we've got a Ranieri Agency LinkedIn page. Obviously, I've got my own LinkedIn. So Pietro Ranieri.

We'll put all those details into the show notes and listen, I could have spoken. We could have gone on for hours. I've tried to keep these podcasts to half an hour, but we're already at 45 minutes. I definitely need to come have you back on Pietro, so we can drill into some of the things that we didn't get to talk about today, like opening second offices and a bunch of other things that I know the audience is interested in. But I really appreciate your time today.

Yeah, no worries. It's a pleasure. And yeah, just, you know, thanks again for giving me my break, Rob.

You're welcome. So, a longer episode than usual, but I hope you'll agree that that was packed with some really actionable, useful advice, especially around growing your agency and making yourself not the front point of contact as soon as possible. And also some thoughts around succession planning, what that could mean for you, and some warnings, I guess, around setting your agency. As ever, if you enjoyed today's episode, then please consider leaving a review and also sharing with your colleagues. And other than that, I hope you have a great rest of the week and I will see you back here on the Agency Accelerator podcast next Thursday.