Most times, captive agents who want to break away from the pack to start their own agencies are coming from a situation they thought they could improve upon. It's easy for agents to forget that running an agency is also the same as running a full-time, full-fledged small business. This means that starting and running a successful independent insurance agency comes with a ton of responsibility and hours put in on the clock, and before jumping into the deep end, you've got to have your ducks in a row.
Here are a few of the most important things you need to be aware of that will impact on your ability to start your own, successful independent insurance agency.
Exactly how much startup capital you're going to need depends on a few things including where you live, how many products you plan to offer and how many people you're going to need to employ in order to get started. Other start up costs include but are not limited to things like rent (or even buying office space?), security deposit, first month’s rent, office equipment, agency management system, licensing and legal costs, and insurance.
On the lower end, you could be looking at anywhere between a few to $50,000 with more expensive agencies reaching into the high hundred thousands, Small business loans are always a good option if you're in good personal financial standing and you have a strong business plan.
You'll need to decide which national insurance carriers you can get access to. This isn't the easiest of hoops to jump through. This is where your strong business plan comes into play. National carriers are going to want to see your previous experience in insurance sales including your existing book of business, as well as your plan to deliver a certain volume to customers over a specific time frame.
Aggregators are also an excellent resource for independent agents. Small agencies that decide to become part of an aggregator will gain more and better access to insurance carriers.
Unfortunately the answer to these questions are never exactly easy to predict. There are a lot of moving targets that each business has to hit. This means each agency has to map out and examine it for themselves by going over things like sale projections, gross profit estimate, the cost of providing services, and other expenses like advertising and marketing.
How much an agent can make is another not-so-easy question to answer, but a bit more solid if you consider agent qualifications, state, region, number of customers, and experience. These can all help you make an estimation in terms of what an agent in your agency could make. Agency owners will typically make more.
If you're already selling insurance, you're likely to already have certifications. Depending on where you live and what areas you plan to service, you may need multiple licenses for the type of insurance you plan to sell. Those requirements will all be based on your state’s insurance licensing board. Be prepared for applicants to take potential training courses and even exams. We can't stress how important it is to do your due diligence on making sure that you and everyone in your agency has all the proper certifications before you begin selling.
Whether you plan to use your existing book of business or to buy a book of business, you're going to need to plan to find new and creative ways to reach prospects in your area. Whether you plan to network, use referral marketing or to strike up successful partnerships with other local businesses, you need to be looking closely at what you can do to always be attracting new clientele.
Make sure you have a website up and running, as well as up-to-date social media pages that you're posting to. Also be prepared to become a visible part of the community that you prepare to serve so that you can put a face to the name of your business.
These are all helpful tips for any agent considering starting their own agency. The most important part of any plan is being prepared and being realistic in your planning so that you don't quickly find yourself in over your head. With enough careful research and the right team, you're bound to do great things!