Agency

In The Personal MBA an agency focuses on marketing and selling an asset you don’t own. An agency can earn a commission by establishing a new relationship between a source and a buyer. It is one of the Twelve standard Forms of Value (Form of Value #7 of 12). Sellers can generate value through an agency which otherwise would not happen. Buyers can benefit from an agency; good agents can find cheap and good assets. The key challenges to make an agency successful are:

• Commission should be high enough to justify the effort
• Focus should be on closing the transaction as fast as possible

(my own additions not from the book) The dangers of an agency are:

• Who owns the end customer and can appropriate the value?

Key Points:

• The agency focuses on marketing and selling an asset you don’t own. By establishing a new relationship between a source and a buyer, you earn a commission.
• The keys to success in this form of value are:
  • Find a seller with a valuable asset.
  • Establish contact and trust with potential buyers of that asset.
  • Negotiate the terms of sale until an agreement is reached.
  • Collect the agreed-upon commission from the seller.
• The benefit for sellers is generating sales that without an agency might not happen.
• Buyers benefit by finding assets to buy that the agent, whom they trust, filters for them.
• It’s critical to keep a high enough commission to make the effort worth it.

Questions for Consideration:

• Does delivering value via acting as an agent or affiliate make sense for your business idea?
• If so, what do you need to plan for to make it successful?

Source: http://book.personalmba.com/agency/