From Disaster to Success: How Scott Alexander Pivoted His Marketing Agency During COVID-19

Scott Alexander's journey as an entrepreneur is a testament to resilience and adaptability in the face of adversity. In 2019, Scott purchased a marketing agency serving chiropractors and dentists, only to see 80% of revenue evaporate when COVID-19 hit just one year later. Rather than give up, Scott pivoted the business to focus on B2B healthcare marketing, transforming it into a thriving agency that now generates mid-seven figures in annual revenue.

The Initial Acquisition

After a successful career in healthcare innovation and entrepreneurship at large medical organizations, Scott decided to pursue his long-held dream of owning a business. With support from his wife Jody, he began searching for acquisition opportunities in late 2018.

Using an aggregator service called X5, Scott quickly identified a promising marketing agency in Denver:

• $750,000 in seller's discretionary earnings (SDE)
• Asking price of $2.4 million (about 3x SDE)
• 20 employees in an office setting
• Established since 2008
• Focused on lead generation for chiropractors and dentists

The business checked all of Scott's criteria boxes:

• SDE between $750k-$1.5M
• Located in one of his target geographies
• Healthcare-related services

Scott conducted extensive due diligence, including:

• Reviewing financials
• Interviewing employees
• Speaking with clients
• Doing a consulting project with the company

Everything seemed to check out, though there were a few small red flags in hindsight:

• The bookkeeper made some negative comments about the owner
• One key employee was planning to quit before the acquisition was announced

Overall though, Scott felt comfortable moving forward. He negotiated the price down to $2.1 million after seeing a sharper revenue decline in Q4 2018. The deal closed in February 2019.

Early Challenges Surface

Scott's first day in the office was March 4, 2019 - his 40th birthday. Almost immediately, major issues began to surface:

• Clients started dropping "like flies"
• The former owner berated and cursed out their largest client on a call
• The seller ghosted Scott for a month to go "journaling" during the transition
• Scott uncovered that invoices had been deleted to mask the true extent of client churn
• The company culture was far more toxic than realized

Scott found himself questioning his judgment and abilities as the situation deteriorated rapidly. However, he remained determined to turn things around.

COVID-19 Hits

Just as Scott was starting to make progress on improving the culture and stabilizing the business, COVID-19 arrived in March 2020. Within two weeks, the company lost 80% of its revenue as clients panicked and cancelled services.

Faced with this existential threat, Scott knew he needed to make a radical pivot. His wife Jody encouraged him to pursue his vision of B2B healthcare marketing - an area where Scott had deep expertise from his corporate career.

Key steps in the pivot:

1. Moved the family back to their house in St. Louis to reduce expenses
2. Rebranded the company as Gyrus Marketing
3. Shifted focus to B2B marketing for medical device and healthcare technology companies
4. Leveraged Scott's industry knowledge and relationships to quickly land initial clients
5. Worked 13-day stretches to drum up new business

The Gyrus Marketing Model

Scott's new business model centered on providing full-service marketing capabilities to B2B healthcare and medical device companies:

• Targeting highly specific audiences (e.g. the 30,000 cardiologists in the US)
• Using digital marketing and social media to reach healthcare professionals
• Driving leads and demos for medical technology products
• Managing the full funnel from awareness to closed deals
• Measuring ROI based on actual revenue generated for clients

This approach filled a major need for medical device companies struggling to reach doctors during COVID when in-person sales were restricted. Scott was able to quickly demonstrate results and build case studies.

Rapid Growth and Success

The pivot to B2B healthcare marketing proved to be transformational:

• First client signed in May 2020
• Steady growth in clients through 2020 and 2021
• Now at 30 employees
• Generating mid-seven figures in annual revenue
• Profitable and growing rapidly

Key factors in the turnaround:

• Scott's deep healthcare industry expertise and relationships
• A clearly differentiated value proposition
• Ability to demonstrate measurable ROI
• Building a strong culture and team
• Focusing on an industry Scott is passionate about

Lessons Learned

Scott shared several key lessons from his journey:

1. Culture is critical - make sure you're aligned with the existing team or be prepared to make changes
2. Do extensive due diligence, but recognize you may still miss things
3. Be ready to pivot if needed, even if it means completely changing the business model
4. Surround yourself with advisors and a support network
5. Choose an industry you're passionate about and customers you enjoy working with
6. Focus on building great processes and people - the results will follow

Advice on Marketing Agency Acquisitions

For searchers considering marketing agency acquisitions, Scott offered this guidance:

• Look for agencies with a defensible niche or specialization
• Understand the revenue mix (recurring vs. project-based)
• Analyze the cost structure, especially the mix of W2 vs. 1099 employees
• Target agencies at or near breakeven where you can drive topline growth
• Be prepared to invest in sales and new business development
• Choose an industry vertical you understand and are excited about

While Scott's first acquisition didn't go as planned, his ability to pivot and leverage his healthcare expertise allowed him to build an even more successful business. His story demonstrates the importance of resilience, industry knowledge, and willingness to make bold changes when needed.

For searchers and entrepreneurs, Scott's journey offers valuable lessons on navigating challenges and building a thriving business aligned with your skills and passions. By focusing on solving meaningful problems for customers you care about, it's possible to create both financial success and personal fulfillment.

Article created from: https://www.youtube.com/watch?v=TP0lvdwDxdM