Realistic Expectations

[jahyatt]

I am new at this. Going to be selling P&C. I am trying to come up with some sales forecasts for my first year.

I plan on making at least 100 calls per week. Get at least 20 expiration dates and get 3 appointments to give a quote.

I am forecasting getting the clients business about 20% of the time. That adds up to 31 new clients per year. (.6 per week x 52 weeks = 31.2)

Assuming average client size of account is $8,000 my first years sales would be 31 x $8,0000 or $248,000.00

Does this sound reasonable. I feel like I am missing something and probably am. While I am sure it is possible to do better, or worse, I am not sure that logic I am using makes sense.

 

[FL P&C Broker]

What kind of policies are you selling? $8,000 is the annual premium?

 

[djs]

Are you looking at doing commercial? I assume so since the premium is $8K.

Somethings to add to your assumptions:
- First 3 months, you will write 0. Okay, you might write some little policies, but for $8K in premium, it takes a bit to get rolling.
- Why only 100 calls a week? I doubt you'll get 20 xdates with 100 calls. Maybe, but I rarely run into a business owner that knows this, except they will all say either Jan 1 or March 1.
- Getting 3 appointments out of 100 calls (assuming you mean contacts, not just dials), is probably manageable.

Now, in a serious way, why would ANYONE take your offer compared to what they currently have? You will save them money? Really? You need to have a clear value proposition beyond saving them a few dollars (which they won't believe anyway) to start getting into mid size accounts. It's not hard, but remember they just talked to an agent before you and there is another one in the lobby for them to talk to after you. How do you stand out? (yes, I've had this exact situation... win a few, lose a few).

In general, you are probably better off not worrying so much about an 'average' premium, but rather tiering your clients. What I mean is focus your efforts a bit, such as:
x number of clients in the 'up to $3K in premium'
x number of clients 'between 3k and 5k in premium'
x number of clients 'between 5k and 10k in premium'
etc....

Why? You'll learn to pick industries and clients much faster. Also, the problems small businesses face are drastically different than larger businesses, even in this range. Worse when you get to the 100K and over in premium accounts.

Then, in todays economy, I would factor in an 80% retention, or 20% going out of business factor. This would vary a bit, depending on the types of accounts you are writing.

And as a last step, realize you will quickly go broke with only $250K in premium over the first year. You need to be more aggressive then this.

Dan

 

[jahyatt]

Dan:

What your saying makes sense. I ran the numbers on what I would make with a 250k book of business and your right...I wouldn't be doing very well. However, I didn't want to come up with a projection what was unrealistic. I am going to revist my numbers and revise.

Also, what you said about the first 3 months also make sense.

Question about your answer. Something you said really intrigues me. You stated the tier clients. That makes sense as the guy doing 100k worth of work has different issues than the guy doing 2million. Obviously my first instinict is to go after anyone, within my niche, that will give me an opportunity to quote them. However, needless to say, I would be fool not to want the bigger accounts as it is basically not much more work with a much larger payoff. That said, is it wise for someone like me just getting started to focus his efforts that much? I know when I was a contractor, I had many more agents looking for my business when i was doing 6 million in business a year than i did when i was doing 600k.

THanks again, Justin

 

[djs]

The reason you have to tier your clients is so you know how much effort to put into them. You'll also need to learn what works best for you.

This is one of those lesson learned things for me. You'll find yourself spending to much time on either the $1000 premium accounts, because you can close them, or to much time on the $100K in premium because of the bigger commission. Also, it helps you learn where your carriers are competitive and where they are not.

You need to set your target for somewhere between $50 - $75K for the first year in commissions. In truth, the first year is the easiest year to write a lot of business, you are not distracted with service issues and claims. You do have a learning curve in front of you.

Now, confirm that you are looking at commercial. If you are doing personal lines, we need to have a different conversation.

Dan

 

[Mark]

It is all up to you and how bad you want it.

Give it everything that you have.

 

[jahyatt]

Dan:

Thanks again, yes, I am going to be doing commerical. How do you find out what your carrier(s) are best at? Trial and error or just ask them?

Looking forward to the learning curve, the more I know the more ambitious and excited I become and the less aprehensive I am of doing something counterproductive.

Working a ton excites me, I love meeting new people and I have a few ideas on how I can differentiate myself from my competion.

 

[djs]

With commercial, you want to pick 3 or 4 industries you would like to work with. Carriers will normally provide guidance on what type of business they want (beyond underwriting guidelines, they may have 'appetite guides'), which will give you some sort of idea what they like to write, vs what they will write. Keep in mind, carriers usually want you to throw everything at them (within reason) and they will reject the ones they don't want. This is okay for the first few months, but you need to figure them out quickly.

So, the easy things in commercial are usually restaurants, small retail (non-alcohol), and office. You will have a lot of competition in any of these markets, but if you have the right carriers and a strong value add, you can do pretty well (depending on where you are).

So, you start looking at these and eliminate things that cause problems, for instance, restaurants:
- 24 hour operations are usually a HUGE red flag. Wait till year 2 to even bother approaching these.
- Alcohol sales over 30% of total receipts can be a problem. It's a different market.
- Some carriers might rate based on dining space, rather than total space. Others won't take it because they don't have the right gaylord hood, etc.
- Large franchises are usually a waste of time to pursue (some exceptions).

Just realize that in any market, there are so many factors that there never is a one size fits all carrier. Thats why if you do commercial, you really need to focus on a few markets, learn them inside out, then add another as you go. You need the expertise to walk into a place and know whether you can insure it or not with your carriers.

It comes with time.

Dan

 

[jahyatt]

Dan:

I was planning on focusing on Contractors, since that is something I know a lot about. You say 3 or 4 industries. Do you think I am too narrowly focused? There are many different types of contractors, it is a huge industry.

Thanks again,

Justin

 

[the mayor]

Contractors can be a tough deal.
A lot of them aren't doing a whole lot right now. You will see a lot of no pays...even with larger companies. And you will be amazed how many have no insurance at all.

As far as carriers...they are all going to tell you how great they are. You will quickly find out what works and where(if at all).