Agency involves the marketing and sale of an asset that you don’t own. Rather than creating value on your own, you partner with somebody else who has value to offer, then seek to find a buyer. In return for establishing a new relationship between your source of value and the purchaser, you earn a commission.
To create a successful agency, you need to:
- Find a seller who has a valuable asset to offer.
- Establish contact and build trust with potential purchasers of that asset.
- Negotiate until an agreement is reached on the terms of sale.
- Collect the agreed-upon commission from the seller.
Sellers benefit from an agency relationship because it generates sales that might not otherwise happen. Employment agencies are a great example: Job seekers may be looking for employment, but may have a difficult time finding a job on their own. By working with an agency that has established connections with multiple employers, a job seeker is more likely to find employment. In exchange for setting up the job seeker with the employer and negotiating the salary, the agency receives a fee based on the job seeker’s salary.
Buyers also benefit from an agency relationship – good agents help them find worthwhile assets to purchase. Agents act as a filter for buyers, who trust that the agent will bring their attention to assets worth purchasing. Employers provide employment agencies with a list of requirements for the position they need filled. The agency then tests a candidate’s professional skills with respect to these requirements to determine his or her level of competency. If the candidate’s skills are sufficient, the agency will move forward with the interview process. This results in a better match with the employer’s needs for the position.
Because most agency relationships are dependent upon closing the sale, focus on activities that’ll result in a completed transaction. Then make sure that the commission you receive compensates you adequately for the effort you put into closing the deal.
To learn more about agency as a form of value, check out The Personal MBA by Josh Kaufman.
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