Producer's EdgeBy Shane Tatum, CEO at Integra
The transition from being an insurance salesperson to owning your own agency is an exciting and rewarding career move. It offers the opportunity to build your own brand, control your income, and create a lasting legacy. However, it also comes with challenges that require planning, dedication, and a shift in mindset. The mindset shift is probably the biggest challenge for most salespeople. You are the rainmaker! That’s why you are successful. Transitioning to agency ownership requires some adjustments to that pure rainmaking mindset.
Are You Ready?
Before making the leap, assess whether you’re prepared for the responsibilities of agency ownership. Sometimes “Superstar Rainmakers” are better off continuing to make it rain! Owning an agency means managing not just sales but also operations, compliance, marketing, and team development.
• Experience Matters: Ensure you have solid experience in the insurance industry. Familiarity with different products, carriers, and client needs will be invaluable. Maybe the answer is yes, make the leap, but not yet.
• Financial Stability: You’ll need capital for startup costs, which may include office space, technology, licensing, marketing, and hiring staff.
• Entrepreneurial Spirit: Shifting from salesperson to owner requires a growth mindset, problem-solving skills, and resilience. CEO means more than just ringing the bell.
Start from scratch or buy a book? This is a bigger question than you may think, and I encourage you to think long and hard on this one. A scratch agency has no revenue, and you will need some patience and start up capital to sustain you through what I call the first 24-month dark period. Buying an agency or book of business can provide some relief during those dry months. However, the big question surrounds the book of business itself. When you start from scratch, you get to decide who your customer will be and what your book will look like. When you buy, you get what you get. Both options can take you to the same end goal.
What’s Your Plan?
A plan is essential to outline your vision, goals, and strategy. It serves as a roadmap for your agency’s growth and can be crucial for securing financing if needed. If you don’t know where you’re going, how will you ever get there?
• Generalist or Niche: Decide where you will focus. Personal Lines. Commercial Lines. High Net Worth. It is difficult to “dabble” in several things. The Jack of all trades becomes the master of none. Creating a focused path and becoming the best at something will always lead to improved long-term results.
• Set Goals: Establish short-term and long-term objectives for revenue, client acquisition, and agency growth. Play the infinite game with your agency. The insurance business is a long tail business cycle. There are no true get-rich-quick schemes. Slow (well not too slow) and steady wins the race.
• Identify Your Target Market: Understand the demographics and needs of the clients you want to serve. Will your agency be metro based? Suburban? Small town/rural? Understanding who you are will help you understand where you can be successful.
Legal, Licensing, and Carrier Appointments
As an agency owner, you’ll need the right business structure, proper licenses, and carrier appointments to sell a variety of insurance products.
• State Licenses: Ensure you comply with your state’s licensing requirements for your business. If you set up a business entity (LLC, Corporation), you will need to have your entity licensed in addition to you and your team’s individual licenses.
• Carrier Relationships: Partner with reputable insurance carriers to offer competitive products and build credibility. There are several options on which direction to go here. Seek direct carrier appointments or work with an agency network or group for carrier access.
• What type of business entity is right for you: Most newly formed agencies today choose the Limited Liability Company (LLC) business structure. Hiring a CPA and Attorney are good ideas to help guide you here. It is not required, but you need good legal and tax advice as you grow—so why not start out the right way?
• Insurance: That’s right, as an owner, you are not just selling insurance, you are now a buyer of insurance. E&O, Cyber, and General Liability are often needed to comply with licensing and most carrier agreements. Other needs may exist. Make sure you don’t skimp on this and turn yourself into the insurance version of the old saying that the “the plumber’s pipes are always leaking.”
Build a Team
Growing from a solo salesperson to a business owner often requires building a team. I always encourage new agency owners to start by building an Org Chart. Create all the future potential roles that you foresee once you have reached scale. Don’t use names, use functions or positions. You will initially be in every box. However, this will provide you with a clear understanding of where to start hiring. Hire your weakness first and make those pain points go away.
• Sales Agents: Hire agents who can expand your client base. Make sure and have clear sales requirements, goals and expectations. Evaluating salespeople should be easy. Are you selling or not?
• Support Staff: Invest in administrative and customer service roles to handle back-office tasks and client inquiries.
• Train and Mentor: Develop a training program to onboard employees and support their professional growth.
Establish a Brand
As an agency owner, your brand is your identity in the marketplace. In the beginning you are the brand but be careful about creating “You Co”. Most new agency owners get stuck here, but don’t panic and don’t over think this issue. It is perfectly okay to start out as a personal or individual brand and then grow that brand into something else over time. Sales and revenue in the early days are still going to reign king!
• Create a Memorable Name: Choose a name that reflects your values and resonates with your target audience. This is the area where many agents get stumped. Don’t overthink this, it’s okay if your name and brand isn’t the next Amazon or Google. Be authentic and make it your own.
• Develop Marketing Strategies: Use a mix of digital marketing, community involvement, and referrals to grow your agency’s presence. I personally love networking and community involvement. Referrals take a little longer to nurture but long term, they are always the best source of customers.
• Leverage Technology: Invest in a professional website, social media presence, and customer relationship management (CRM) tools to streamline operations and enhance cl ient interactions. A single system is less stressful than multiple systems patched together. You are an insurance professional, not a technology professional. Keep the main thing the main thing.
Should you Join an Agency Network or Agency Group?
Agency Networks can solve a lot of start up growth issues in one fell swoop. Carrier Access, systems suggestions or offerings, guidance, and mentorship on making the ownership leap, along with much more. In addition, those networks that offer profit sharing participation can add additional revenue to your agency on a much faster basis than direct contracts.
• Carrier Access: This is the core offering of most Agency Networks. When you’re starting out, it’s hard to feed carrier direct contracts, and the rise and prevalence of Agency Networks have solved a big need here.
• Systems/Technology: Some networks will be Agency Management System specific, while others will offer discounts to various systems. Both options work, just be sure and understand what value is brought to the table when reviewing.
• Mentorship/Tools/Education: This is the unsung hero of the modern Agency Network. Carrier access is a given. Finding a culture that fosters peer to peer learning, mentorship, and supports you through your entire agency life cycle creates huge value for you as an agency owner.
Adopt a Leadership Mindset
One of the biggest shifts in moving from salesperson to owner is adopting a leadership mindset. Maybe not day one, but at some point, it’s not just about you and the sale. You need support. You need a team.
• Delegate: Empower your team to take on responsibilities so you can focus on strategy and growth. Delegating points back to how you build your team. If you hire your weaknesses correctly, you will be amazed at how much faster and further you can go.
• Communicate Effectively: Be transparent with your team and clients about your vision and expectations. Creating the right expectations will create clear communications. Remember, we can’t read your mind, so cast your vision well. Remember the KISS method, Keep It Simple, Stupid.
• Stay Adaptable: Be ready to pivot and evolve your business strategy as market conditions change. When we started our organization, we tripped and fell (and skinned our knees) multiple times. We started over three different times before we got it right. A pivot doesn’t mean you failed. My sister loves the phrase “fail forward,” and I love the phrase “we don’t lose we learn.” Keep these things in mind as you go.
Monitor and Adjust
Owning an agency is a dynamic process. Regularly review your performance and make adjustments as needed.
• Track Key Performance Indicators (KPIs): Monitor sales, client retention, and operational efficiency. One of my favorite KPIs for personal insurance agents is the Policy Per Customer ratio or PPC. The more policies your agency has for a client, the more “sticky” that client is to your agency. Your revenue per client will grow and your retention will create a higher valuation when you decide to sell your agency.
• Seek Feedback: Listen to your team and clients to identify areas for improvement. I also believe everyone needs a mentor or two. Not 10, just one or two. Too many voices can work against you, but a couple of trusted mentors are priceless.
• Invest in Growth: Reinvest profits into expanding your agency’s reach and capabilities.
Celebrate Milestones (Even the Small Ones)
Small wins matter! Playing the infinite game with your agency also means winning some finite games along the way. You are in fact still a salesperson at heart and winning matters! Success in agency ownership doesn’t happen overnight. Celebrate achievements along the way to stay motivated and recognize the hard work that brought you there. Play the long game.
By planning strategically and maintaining a strong commitment to your goals, transitioning from a salesperson to an agency owner can lead to a fulfilling and prosperous career. As you build your agency, remember that every challenge is an opportunity to grow and leave a lasting impact on the industry.
