There's a restaurant in the Crossroads in Kansas City called Mildred's. I love the place for a lot of reasons. I met the owner, Debbie Ashby, and her sons Evan and Clayton, long before it became what it is today. They started in the suburbs, then found their way to the Crossroads and became a genuine hometown favorite. And I'm not going to lie: their breakfast sandwich, the Standard, is the best in the city.
I didn’t even know Mildred’s had a breakfast sandwich until the autumn of 2015, when Jeff King, the CEO of Barkley, invited me to join him there for coffee. Jeff and I had known each other for years. We served together on the Kansas City 4As Board of Governors, traveled coast to coast visiting agencies and companies, and sat on the 4As Midwest Board together. An invitation from Jeff for coffee was nothing unusual. The conversation, however, was. And I wasn’t prepared for it.
I got there a few minutes early, and when Jeff walked in, he had an iced tea and the Standard Sandwich in hand. It’s scrambled eggs, bacon, Swiss, mayo, and some very tasty whole wheat toast. Ask anyone who orders it why it’s so good and you’ll get the same answer every time: “It must be the bacon.” I’m telling you all this partly so you’ll try one someday, and partly because now, every time I order one, I think about the conversation I had with Jeff. Funny how memory works.
After a couple of bites and the usual pleasantries, Jeff asked a direct question, which is his way. “Would you ever consider selling Meers to Barkley?”
Every entrepreneurial conversation I’ve ever sat through has hammered on the importance of an exit strategy. Business schools teach you to have one the day you start your company. I never did. I’d bootstrapped Meers and propped it up financially more than once. I’d thought plenty about an internal sale, handing it off to the people who’d helped build it. An external sale felt like a someday opportunity, not a right-now one.
A couple of years earlier, we’d narrowed our focus to insurance and financial services. The decision cost us clients who didn’t fit the new lane, and it cost us people who didn’t want to specialize. It also worked. Business was booming. We were hiring, growing, and posting margins we’d never seen before. Candidly, a number of strategies probably would have gotten us there. We could have become a media shop, a direct marketing shop, a healthcare agency focusing on Millennials. The specific lane mattered less than the fact that we picked one and stopped hedging on it. Narrowing is what brought the success. The success is what put me across the table from Jeff.
Whether you’re aiming for an acquisition, an internal sale to your key leaders, private equity, or an ESOP, that success, and the profit behind it, is the currency that makes any of it possible.
I told Jeff “no” that day. Two years later, that changed, and Meers became part of Barkley, but that’s a story for another post. What stayed with me from that first conversation wasn’t the timing. It was the question underneath it.
During my years at Barkley, agency owners would occasionally ask me, unofficially, whether Barkley might be interested in buying them. Out of respect, I’d always say I’d run it past Jeff, even though I already knew the question he was going to ask me.
“What’s their niche?”
If they didn’t have an answer, the conversation was over before it started. No harm done, but no deal either.
It’s really the same test as Mildred’s Standard Sandwich. It wasn’t actually the bacon. It was the eggs, the Swiss cheese, the mayo, that particular toast, and the bacon, together, in that particular order, made the same way every single time. Pull out any one piece and it’s just a sandwich. Too many agencies talk about their services and never get to the value they actually bring their clients. That's where a niche matters. They end up sounding like every other agency, known for nothing anyone could repeat back. That's not an answer. That's a list of ingredients.
So here’s what I’d ask you. What’s the first thing your prospects think of when they see your agency’s name, or meet one of your people? What do your clients tell their business friends about you? Are you easy to remember? And if someone like Jeff sat down across from you and asked, “What’s your niche?”, could you answer him in one sentence, no warning, no notes?
Mildred’s has an answer. It’s their Standard Sandwich, which turns out isn’t standard at all.
Most agencies are fairly “standard” themselves. They’ve got a list of ingredients, not an answer. Better to know which one you’ve got before someone like Jeff asks.