One of the really great things about owning an independent insurance agency is that you are Independent! You can and do make choices every day that affect your agency’s performance and success, both in the short-term and long-term. In other words, you have options and you’re exercising them, some more purposefully than others.

As we look forward to 2015, now’s a great time to examine some of the options you have concerning the future of your agency.

Option Six: Internal Perpetuation

If you’ve been building the next generation of leaders and they’ve been purposefully putting money away for the transaction, that’s great! You’ve helped perpetuate the entire system!

Again in this scenario, you are likely to be the bank, but do you have the faith that they can make it work and will pay you? If so, then this is a feasible option. As long as you have been developing the next generation of leaders in your agency, they should be established enough to...

One of the really great things about owning an independent insurance agency is that you are Independent! You can and do make choices every day that affect your agency’s performance and success, both in the short-term and long-term. In other words, you have options and you’re exercising them, some more purposefully than others. As we look forward to 2015, now’s a great time to examine some of the options you have concerning the future of your agency.

Option Five: Sell To or Merge With a Local Competitor

In most cases, this is not the optimal choice. Not always, but usually. You might create some economies of scale, but you won’t necessarily create a great agency.

The local competitor who wants to acquire your agency may not have the financial strength to finance or cash out the transaction, making it likely that you’ll become “The Bank.” At the local level, cash buyers are rare, so if you agree to finance the sale, it’s always possible...

One of the really great things about owning an independent insurance agency is that you are Independent! You can and do make choices every day that affect your agency’s performance and success, both in the short-term and long-term. In other words, you have options and you’re exercising them, some more purposefully than others.

As we look forward to 2015, now’s a great time to examine some of the options you have concerning the future of your agency.

Option Four: Prepare to Perpetuate

Something we absolutely know is that everybody eventually leaves their business. Hey, I just did and it took me a long time to do so! But I chose to perpetuate part of my business, which requires meticulous planning.

Step 1: Get the boat ready to sell! You may recall the story about the time my son, Patrick, and I wanted to sell our 16-foot flats boat and get a slightly larger one. Together, we worked really hard to clean it up so that we could sell it quickly. Once we were finished,...

Operating Profitability Issues

How does an agency possibly make a 40% Operating Profit? Answer: By spending only 60%! Ta-Da! In the average agency, if the top 5% = 50% of the income, that means the bottom 95% of accounts are the other 50% of the income. Where are the expenses being generated? Can you say “Profit Center Analysis?” When we look at it, the bottom 50% of customers in the average agency = less than 10% of the revenue and the bottom 25% = less than 5% of the revenue. So again, this is a profitability issue.

Contingency/Profit-Sharing Income

How would you like to have a year without any contingency/profit-sharing income? All agency owners are great managers in March and April! That’s because when we look at our P&L, we’re looking at our total profit, not our operating profit. So while it may appear that we are doing phenomenally well, it may not accurately reflect our true profitability.

Financial Model

Do you have a financial model that you...