Is $36,000 first year possible?

[keysersosey]

Hello. I'm starting a new independent agency with the support of a friend with an established agency. He's paying me full commission on all lines and I own my book. I'll be under his e&o and use their management system for a small monthly fee. I'll office out of my house while using a Regis office ($80 a month) as needed. With my overhead being low is it feasible to make $36,000 my first year? I'm trying to give my wife a realistic expectation of the road ahead. Thanks for your input.

 

[Chazm]

Independent regulatory agency? Independent car agency? Independent Medicare agency? What are we talking about here?

 

[keysersosey]

P&C

 

[Web320]

Is it possible? Absolutely. However, there are too many factors and unknowns for anyone to make that determination for you

Work the numbers backwards using the average carrier commission against the average policy/package premium (your friend should have these). Determine how many policies per week it will then take to hit your mark.

 

[Markthebroker]

One thing to keep in mind too is about HOW the commissions are paid. For example; I write a policy with Hartford today. The policy starts 2/1. When it starts on 2/1, Hartford sends them a bill due within 45 days. Then, in 45 days (two months from today), Hartford gets the down payment. They will eventually issue the commissions on JUST THAT down payment when they get around to it, say, another month. Then, my agency gets that check, sends it through accounting, and I get it on my next commission check, which I get once a month, so now I am 4.5 months out to get the commission on JUST that down payment. Hartford pays commissions as they get paid, so it will take up to 16.5 months to get completely paid on that one sale. Just something to think about. And god forbid the client pays late? I am sure you can image what happens next.

I have spent the last 6 or 7 years suffering and sacrificing. Fortunately I went into this prepared. However, if my sales trajectory continues, I will be sitting pretty fat in about a year or so. The year after that? Super fat. After that, well, you ever see that little Budai? Yea, that'll be me.

Many capable, hard working p&c agents fail, probably most, because they just simply run out of money waiting for the business to ramp up.

 

[Todd King]

One thing to keep in mind too is about HOW the commissions are paid. For example; I write a policy with Hartford today. The policy starts 2/1. When it starts on 2/1, Hartford sends them a bill due within 45 days. Then, in 45 days (two months from today), Hartford gets the down payment. They will eventually issue the commissions on JUST THAT down payment when they get around to it, say, another month. Then, my agency gets that check, sends it through accounting, and I get it on my next commission check, which I get once a month, so now I am 4.5 months out to get the commission on JUST that down payment. Hartford pays commissions as they get paid, so it will take up to 16.5 months to get completely paid on that one sale. Just something to think about. And god forbid the client pays late? I am sure you can image what happens next.

I have spent the last 6 or 7 years suffering and sacrificing. Fortunately I went into this prepared. However, if my sales trajectory continues, I will be sitting pretty fat in about a year or so. The year after that? Super fat. After that, well, you ever see that little Budai? Yea, that'll be me.

Many capable, hard working p&c agents fail, probably most, because they just simply run out of money waiting for the business to ramp up.

I think most of our agents couldn't even fathom waiting that long to get paid! Heck, some of them complain if they haven't been paid in a week for that business written! Now I remember why I never wanted to have anything to do with P&C!

 

[Markthebroker]

I think most of our agents couldn't even fathom waiting that long to get paid! Heck, some of them complain if they haven't been paid in a week for that business written! Now I remember why I never wanted to have anything to do with P&C!

Yeah, well, check back with me in 18 months.

 

[thomasm]

I think most of our agents couldn't even fathom waiting that long to get paid! Heck, some of them complain if they haven't been paid in a week for that business written! Now I remember why I never wanted to have anything to do with P&C!

Yeah it sucks! But it does get you in the door to the life and health sale.

I might give it up once I have $2-4 grand a month to throw at lead cost.

 

[shawnmwalker]

Mark the Broker,

The Hartford Pays Commissions on Written not Earned. Go have a talk with your agency owner. But you do have a point. Commissions are not paid until the Down pay has been received.

Original Poster/ Original Question- $36,000 in year one! YES! Easy yes in P&C. Each household is worth lets say $350 in commission dollars. 350 x ____= 36,000. Yes.

 

[rc-soda]

I was in the very same boat as you, although I moved Indy after years of Captive experience.

As someone already stated - you need to back into your numbers....

$36,000 divided by a blended average of, let's say 12.5%, excluding bonuses, would require you to write $288,000 of premium for the year to make $36,000. That would be $24,000/month or $6,000 a week.

Your household average will very greatly by your location... in Florida, $6,000 could easily be one house. In ND/MN, that would be 2-3 households. YMMV

I think the question that everyone misses the mark on is how do you plan on getting your clients? What is your marketing plan? What is your budget? What is an acceptable client acquisition cost? How are you going to plan your day? How are you going to target clients?

These are real questions that you will want to have answered before you sink money into your business without a clear roadmap. Please don't have the business plans of friends and family and waiting for referrals... I promise you this works for .01% of Agents.

I would also say this the advantage of going Indy right away is equal to the disadvantage of going Indy right away. It's difficult starting captive learning ONE carrier's products, underwriting, exceptions, rates, etc... Depending on how many carriers you have, you will have a steep learning curve. Now, don't let that scare you, it's just something to be aware of. ​

Can you do it? Yes - but it won't be easy.

I hope that wasn't too cynical as it certainly is not my intention.