- 9,744
No problem. I'm sure you care about your family (5 kids - you must be a busy woman!).
Best of luck to you.
Best of luck to you.
Buying an existing agency
- Thread starter itsagreatday
- Start date
When I was 40 years old with three teenage children and a wife with a minimum wage job I quit the highest paying job I had ever had to start my own business. I had an old beat up desk, beat up army filing cabinet, an old XT clone computer, and a telephone and $15,000 in savings. I was terrified of cold calling but more terrified of starvation. My first day I was up at 5 a.m. pacing the floor waiting for it to be late enough in the morning to start calling prospective businesses. By 7:00 a.m. I was on the phone. My first full year my business grossed $1,000,000 and I made $150,000 when I had never made more than $40K before.
What I am saying is it can be done but when you have no cushion under you it makes you work harder. Failure for me was not an option. Now this was not an insurance business but the priciples are all the same. That your husband has you and his father's support is very good. Of what I am hearing the weakness is depending upon a retail location to drive business. A prime retail location will drive up costs (higher overhead). May I also add that NEVER once in my life did I wander into an insurance office because of where it was located. This part of the plan sounds like avoidance of prospecting and selling.
What I am saying is it can be done but when you have no cushion under you it makes you work harder. Failure for me was not an option. Now this was not an insurance business but the priciples are all the same. That your husband has you and his father's support is very good. Of what I am hearing the weakness is depending upon a retail location to drive business. A prime retail location will drive up costs (higher overhead). May I also add that NEVER once in my life did I wander into an insurance office because of where it was located. This part of the plan sounds like avoidance of prospecting and selling.
- 9,744
In the real world.... this actually works, but not for everyone.
I'd look at going captive. Starting up a P&C agency from scratch is a pain in the @#$#@, especially with no background, no experience, and no sales skills already developed.
If you look at State Farm, Farmers, Allstate, they all have methods to help you financially at first, while you get settled into your new lifestyle. The help isn't enough with 5 kids, but it is a big help. They also provide you with a lot of resources that you don't realize you need, such as being able to pull MVR's for drivers, clue reports for insureds, accord forms, etc.
I'd skip the shopping center idea, until you are comfortable with the expense. This concept ties you to the office, you have to be there, and the quality of business tends to be lower (high value customers tend not to drop into an office at random, people with 'issues' do). You can get extra business this way, but you have to have a book with residuals to help cover the expenses.
Rule of thumb...
Figure out what you need to make monthly.
Divide it by 10, thats the number of policies you need on the books.
Divide the number of policies by 2.5, thats the number of households you'll need.
If that number doesn't scare you, you are in good shape.
For example, I want to make $10,000 a month.
I'll need a 1000 policies (avg commission on an average P&C policy is somewhere around $100 a year, or $10 a month, and yes, I know that isn't the same amount, but close enough).
1000 policies at an average of 2.5 policies per household means I have to know 400 families.
You are in good shape if you add in some commercial policies, life policies, umbrellas, etc.
It can be done. Go to work. Unless you are in California, than it doesn't work, go away, move to another state, and have fun!
Dan
I'd look at going captive. Starting up a P&C agency from scratch is a pain in the @#$#@, especially with no background, no experience, and no sales skills already developed.
If you look at State Farm, Farmers, Allstate, they all have methods to help you financially at first, while you get settled into your new lifestyle. The help isn't enough with 5 kids, but it is a big help. They also provide you with a lot of resources that you don't realize you need, such as being able to pull MVR's for drivers, clue reports for insureds, accord forms, etc.
I'd skip the shopping center idea, until you are comfortable with the expense. This concept ties you to the office, you have to be there, and the quality of business tends to be lower (high value customers tend not to drop into an office at random, people with 'issues' do). You can get extra business this way, but you have to have a book with residuals to help cover the expenses.
Rule of thumb...
Figure out what you need to make monthly.
Divide it by 10, thats the number of policies you need on the books.
Divide the number of policies by 2.5, thats the number of households you'll need.
If that number doesn't scare you, you are in good shape.
For example, I want to make $10,000 a month.
I'll need a 1000 policies (avg commission on an average P&C policy is somewhere around $100 a year, or $10 a month, and yes, I know that isn't the same amount, but close enough).
1000 policies at an average of 2.5 policies per household means I have to know 400 families.
You are in good shape if you add in some commercial policies, life policies, umbrellas, etc.
It can be done. Go to work. Unless you are in California, than it doesn't work, go away, move to another state, and have fun!
Dan
lookin4abetterwayinpa
Expert
My .02
Spousal support, or lack there of can be the biggest deal breaker of all. From past experience, be very honest with yourself when you say that you support him.
Not to be rude, but if you are not 100%, as soon as things take a slight dip it will be WWIII.
Like X, I have taken that dive before, leap of faith if you will, and it worked, about to do it again too. First time she said she was 100%, first time money got tight, I was the biggest(insert vulgar name here). Money fights are the worst.
All I am saying is if you really are 100%, you would not have posted to try and find someone to talk him out of it. I wish you the best of luck, and I do sincerely mean that.
Spousal support, or lack there of can be the biggest deal breaker of all. From past experience, be very honest with yourself when you say that you support him.
Not to be rude, but if you are not 100%, as soon as things take a slight dip it will be WWIII.
Like X, I have taken that dive before, leap of faith if you will, and it worked, about to do it again too. First time she said she was 100%, first time money got tight, I was the biggest(insert vulgar name here). Money fights are the worst.
All I am saying is if you really are 100%, you would not have posted to try and find someone to talk him out of it. I wish you the best of luck, and I do sincerely mean that.
- Thread starter
- #16
itsagreatday
New Member
- 4
Thank you all for your blunt honesty. I sincerely appreciate it. You have given me some great insight and support. I truly hate it when people try to give you a candy coated answer, some people are too nice (does that make sense?, I'm not trying to be negative).
I will support him if he chooses to do this, I think he just could've uses the help of some experience beforehand.
Let me also tell you we opened a party store last year that absolutely failed. We lost a whole lotta money that in hindsight could've been put into this. We are still hurting from that. Money is a constant subject around our house, but we do not fight about it. I won't get into too many specifics, we worked our butts off, built up a clientele, but then a big box store opened across from me just 6 months after we opened and decimated us. There was another nepotism factor behind that as well, but I will not get into it to offend anyone. I supported him in opening that business, so I've been there.
I don't think my hubby is going into this to make up for that. He has always hated working for someone when he could work for himself. I think this is a good way to do that.
Thanks Dan for your calculations. And no, we are not in CA anymore. Thank the Lord for that (no offense to those there now, just not for us anymore).
xrac, your avatar is too cute. My dh is leaving a good good good paying job to do this as well. Thank you for sharing your story with me.
Summer break is here and the kids and I are painting arounnd the house.
Thanks again everyone, you are great people, you really care about helping people, as can be seen all over this forum.
I will support him if he chooses to do this, I think he just could've uses the help of some experience beforehand.
Let me also tell you we opened a party store last year that absolutely failed. We lost a whole lotta money that in hindsight could've been put into this. We are still hurting from that. Money is a constant subject around our house, but we do not fight about it. I won't get into too many specifics, we worked our butts off, built up a clientele, but then a big box store opened across from me just 6 months after we opened and decimated us. There was another nepotism factor behind that as well, but I will not get into it to offend anyone. I supported him in opening that business, so I've been there.
I don't think my hubby is going into this to make up for that. He has always hated working for someone when he could work for himself. I think this is a good way to do that.
Thanks Dan for your calculations. And no, we are not in CA anymore. Thank the Lord for that (no offense to those there now, just not for us anymore).
xrac, your avatar is too cute. My dh is leaving a good good good paying job to do this as well. Thank you for sharing your story with me.
Summer break is here and the kids and I are painting arounnd the house.
Thanks again everyone, you are great people, you really care about helping people, as can be seen all over this forum.
- 3,863
To be blunt you don't have the money to buy anything, unless you failed to mention the other $2mil in reserves or under the mattress.
I assume there is a reason you do not work (like 5 kids). He needs some steady income - don't gamble your small nest egg, you can not afford the risk, especially buying a book of Insurance business which takes a LONG time to recover your initial investment let alone make a profit.
- 135
If you buy a book of business, don't forget in your calculations that you'll lose 20% of it in the first year. P&C agencies typically hit around 90% for persistency, but that agent buying the book is sure to lose another 10%. A green agent even more than that... A good transition plan with the seller can help, but not much.
- 105
Takes guts to do this with 5 kids. The financial backing is really important. Figure out the carriers who will give you a contract ahead of time, obviously. Figure out the marketing plan, contacting existing clients (an introduction if nothing else) and know your budget to a T.
It is my youngest granddaughter with a silly expression I thought it was cute and different.
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