Agency Start-Up or Not

[TCG Inc.]

Goal: I am looking for advice to help with the decision if the timing makes sense to start my own agency.

Background: I have over 8 years of experience writing commercial/group/life and have been on the independent side for 3 years working for an agency with top tier carriers. I average 80-100k of revenue production per year.

I have always had the goal of owning an agency and came to my current agency on the promise of future ownership, but I will be a minority shareholder for at least 20 years.

I have the ability to get an appointment from Erie, but will need to spend more time on personal lines than I have in the past. I also will sell benefits.

Problem: I'm having trouble forecasting expenses. Is there a good rule of thumb for a percentage of revenue? Also. I have no idea on what to forecast for potential contingencies in future years. Lastly, I know my revenue numbers will take a hit as I will be wearing more hats. I will be walking away from six figures guaranteed. Any help is appreciated.

 

[thomasm]

Here's a good place to start.

Agency Management - How To Start An Independent Agency

 

[Warrior]

thomasm has a good reply but also to add to that, you need to do a demographic survey. Meaning that you need to find the location of your office. These are the key factors that you will need to consider:
1. How much rent will cost. Will it have a triple net cost to it?
2. How much will phone and internet cost per month?
3. Desks cost
4. Computer costs - You will need a computer tech to handle any problems that may arise
5. Fax machine
6. Signage
7. Advertising
8. Electricity and water
9. BOP Insurance
10. E&O insurance

Set a budget of what you can afford every month if you don't sell well in colder seasons. Most people I know are paying $2500 - $8000 per month to keep the lights on. Forecasting is researching on costs of things and creating an estimate of you sales for the past 3-5 years to support the payables.

If you never sold P&C, you really need to get appointed with a broker who has the companies opened to you and begin selling through him to begin to build your book of business. NO major company will sign you on unless you have a track record of P&C annual premiums of $4 million or more. That takes about 3-4 years of solid selling P&C to acquire that. Making $80-$100k a year will not net you enough to make profit to afford monthly expenses. Look at small towns to open up shop. The rents are more affordable.

 

[BADTROUT]

I am in Colorado, I have started several, no strings attached please let me give you some advice. My email is (it won't let me post it) so reply to this thread if you are interested and I will get you my contact info....

I would be happy to give you all the doom and gloom, how to avoid many landmines, the wolves in sheep clothing. But also the good, and great... There is much to know, that you can never get from any one person, but asking in a forum like this shows your serious. Why would I help no strings attached? Because the industry has blessed me, and I would love to pay it forward with what ive learned over the last 17 years. Trout Kirch

 

[cgibbs13]

BADTROUT- I’m reading over several posts old and new. I’m looking to open a P&C Shop in a rural area of Middle Tennessee. I have to agents that are currently at a crossroads with Farmers Insurance. They want out and I’m wanting the three of us to go together and open up shop. I have the life knowledge and retirement planning side experience. We have excellent rapport with the community. Any and all help from a honest professional much appreciated. God Bless! Contact info: [email protected]