Last month, we teamed up with a group of producers to give you the inside scoop on professional life from their perspective. This month, we partnered with a group of agency owners to ask them a series of similar questions. If you’re thinking about starting your own agency, we hope that these responses provide some helpful insight as to what it’s like owning and running your own business.
Q: What was the hardest part for you when learning the insurance business?
Agency Owner A: Carving time out of the day to actually learn new things.
Agency Owner B: Staffing, without much of a bankroll.
Agency Owner C: Learning how to effectively obtain & keep consistent referral sources. I would think I had someone and kind of forget about them and then all of the sudden they had been stolen out from under me.
Agency Owner D: Learning how to build sales pipelines was and continues to be the hardest part of the business. A very close second would be structuring a business model that realizes a healthy profit in a reasonable amount of time.
Q: What do you think a realistic new business written premium goal is every month for your producers?
Agency Owner A: It used to be a minimum of $85,000-$100,000 when we were running full steam, but starting a new IA during this crazy time has us lowering it to $60,000 until we build back up again.
Agency Owner B: $40,000
Agency Owner C: I think it varies by where you live. Big city, small town, rural area? $25,000 per month is the NB premium requirement for my agents.
Agency Owner D: When the pipeline is primed, I expect a producer to sell $30,000 in premium per month. We budget for $25,000 per producer per month and expect financial performance to outperform budget. We’re focused on personal lines right now.
Q: What has been your most successful avenue for creating new business opportunities for your agency?
Agency Owner A: Approaching our former clients and great referrals from clients and mortgage companies, etc.
Agency Owner B: Reputation, encouraging referrals, commercial telemarketing.
Agency Owner C: Mortgage Companies and Real Estate Agents by far.
Agency Owner D: We have a program built for Loan Officers and Real Estate agents. Their referral business is where the bulk of our sales are coming from. We’ve stayed away from internet lead purchases with the intent to have more profitability in our book in the long run. We expect this strategy to minimize service expenses in the long run, too.
Q: How would you describe your agency's work environment?
Agency Owner A: We can be very professional when we have to be, but we like to laugh and keep things fun.
Agency Owner B: Quiet, calm, dressed-down professionalism.
Agency Owner C: Relaxed with a family-like atmosphere. Instead of creating an inner office competitive environment, we have one where we all do our job and help one another as needed. We still keep goals, rewards and bonuses, but nothing cutthroat.
Agency Owner D: Focused. As we scale, we expect to work with people that understand their role and are relentless at achieving their objectives. We also like to work with people we enjoy being around. We find compatible personalities build trust which allows for efficient communication. I find when everyone is comfortable knowing we’re on the same page, we can get right down to the business of building a healthy insurance agency.
Q: If you asked one of your producers, what do you think they would say is the most difficult aspect of owning an insurance agency?
Agency Owner A: Starting out, it's making enough money to pay all of the overhead.
Agency Owner B: Capitalization to start the agency.
Agency Owner C: I think they would say managing the agents and keeping up with production for each. Finding new carriers, keeping up with commissions.
Agency Owner D: Being personally financially responsible for the end result of the business.
Q: What is the most important skill in becoming a successful producer?
Agency Owner A: Being able to multi-task.
Agency Owner B: Work ethic.
Agency Owner C: SELF DRIVEN & good listener! We have to be able to get up every day and hit it hard without someone standing over us making sure it's getting done. We have to be able to hear what our clients' needs are as well as our referral sources' needs.
Agency Owner D: Developing a trusted routine that transcends circumstantial headwinds. Effective follow-up calls have to be made consistently whether we feel like it or don’t.
Q: What is the one thing that you know now, that you wish you knew in your first year as an agency owner?
Agency Owner A: The importance of being a presence in the community.
Agency Owner B: The old producer staffing model only works if you have a bankroll. Find a new way.
Agency Owner C: Never be satisfied with a certain number of referral sources because they come and go. Get them all and be confident in yourself and your product.
Agency Owner D: There is no substitute for a primed sales pipeline. Nothing else happens until policies are binding.
Q: What motivates you to succeed as a business owner?
Agency Owner A: We won't let ourselves fail. We're passionate and driven. We want to be able to make enough to assure our family will be taken care of.
Agency Owner B: My exit date. Everyone has a date, I know mine.
Agency Owner C: I have always had a fear of losing....so that is a huge motivation. And when I look at my kids every day, knowing that I am providing them a good life & they getting to do what they love to do it drives me to do more! Plus I want to be able to kick back and coast one day. LOL
Agency Owner D: My kids. When it comes time for them to join the workforce I hope our business can usher them into their professional careers holding to the same values and principles we’ve taught them from the beginning. Along the way, I hope we can bless lives.
Q: What is the biggest hurdle when hiring new staff members?
Agency Owner A: Convincing them the end result will be worth it. Instilling confidence in those who are hesitant.
Agency Owner B: Budget, relaying the money-making possibility to those outside the industry.
Agency Owner C: Finding a self-motivated person that is not afraid to go and get it! So many people think they know what it takes and have thick enough skin for this business, but few actually do. It sucks spending time, money, and resources training someone who interviewed great to find out they just don't have it.
Agency Owner D: Personality compatibility. Google “Forming, Storming, Norming and Performing”. It helped me understand how to respect the natural process of team building.
Q: When starting from scratch, how large can your book become (in premium $) before you should hire a customer service representative (CSR)?
Agency Owner A: I would say $500,000. It's difficult to grow beyond that if it's only one person. Too many things are apt to get overlooked, missed, or done wrong, which opens you up to E&O issues.
Agency Owner B: ASAP, so you can focus on a growth plan, marketing, strategy. Critical at $1M.
Agency Owner C: I hired mine right away because I suck at details and paperwork and I know it. But I feel like somewhere between $750k and $1m would be reasonable.
Agency Owner D: Given our objectives to reduce service work by avoiding troubled business we hope to make it to $750K before hiring a CSR. Even then we plan to use that person for other duties, too. We don’t expect them to be fully committed to service work until $1.5m.
Q: What is the hardest aspect of being an agency owner?
Agency Owner A: The pressure of finding good employees, and the pressure of making enough money to cover all expenses.
Agency Owner B: Building that operational nest egg.
Agency Owner C: Holding it all together while your agency grows....mentally, financially, etc. It's a hard business to start from scratch and there are definitely some challenging days/months where you want to throw in the towel. Once it's going, handling problems that arise with customers and STAFF.....I have some of my biggest problems refereeing and babysitting some of the people that work for me. Luckily we have weeded out the bad and have things in a good place now. Also finding the best workflow for your office, it's a constant thing. Not being afraid to make changes when something isn't working.
Agency Owner D: Knowing where to invest resources. We’re trying to move slowly as we build out our processes. We’re quick to cut things out that don’t show the promise of a healthy return. When something is working, we test it as frequently as possible to ensure it’s a reliable tactic. If there’s empirical evidence that it works, we’re allocating the time and money.
It’s no secret that starting, owning, and running your own business is a challenging process. However, it can also be an extremely rewarding and profitable investment. We hope that this information has given you a realistic glimpse into the life of an independent agency owner and that these responses serve as a helpful resource when deciding if this route is best for you and your future. For more info on why owning an independent agency is a smart choice, check out this article.