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What Is 'Agency'?

Agency is a business model that 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 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.

Josh Kaufman Explains 'Agency'

Agency involves the marketing and sale of an asset you don’t own.

Instead of producing value by yourself, you team up with someone else who has value to offer, then work to find a purchaser. In exchange for establishing a new relationship between your source and a buyer, you earn a commission or fee.

In order to provide value via Agency, you must:

1. Find a seller who has a valuable asset.
2. Establish contact and trust with potential buyers of that asset.
3. Negotiate until an agreement is reached on the terms of sale.
4. Collect the agreed-upon fee or commission from the seller.

Sellers benefit from an Agency relationship because it generates sales that might not otherwise happen.

Literary agents are a classic example: potential authors may have an idea for a book, but may not know anyone in publishing. By working with an agent who has preexisting connections in the publishing industry, it’s far more likely the author will land a publishing contract. In exchange for finding a publisher and negotiating the deal, the agent gets a percentage of the book’s advance and royalties.

Buyers also benefit from an Agency relationship—good agents can help them find great assets to purchase. Agents often act as a filter for buyers, who trust that the agent will bring their attention to assets worth purchasing and keep them away from bad deals. Residential real estate is a great example: working with an experienced buyer’s agent who knows the area often makes purchasing a home in a new town much easier.

The key to Agency is to ensure that your fee or commission is high enough to make the effort worth it. Since most agency relationships are dependent upon closing a sale, spend your time on activities that will result in a completed transaction, and ensure that the commission or fee from that transaction compensates you for the time and effort you put into closing the deal.

Questions About 'Agency'

• 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?

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"I wish to be cremated. One tenth of my ashes shall be given to my [agent](/agency/), as written in our contract."

Groucho Marx, comedian

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https://personalmba.com/agency/

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