Start Up Agency?...Need Opinions Please.

[johnnyg]

Hi,
I have a friend who hooked up with an independent insurance company who have a number of agencies in a large market.

This company wanted to start an agency in a smaller town and asked him to "run it". He agreed based on their proposal that they would spend money on advertising to get the word out and would support him in many other ways.

The reality is they are stating they "don't believe in advertising" and have refused to spend any money on it. They say they can't justify spending money when there is such little production.

This company has absolutely no name recognition. None of u have ever heard of it. On the sign outside the office you see the agency name on plain blue lettering and right underneath it IN BIG BOLD LETTERS it says 'BUILDING FOR SALE'...everyone says the BUILDING FOR SALE sign is the main thing they see. People say they wondered if office was closed, or in process of closing.

I am curious of your opinion(s). Is this a recipe for failure? No advertising...(they don't believe in it) and the main sign outside building stating BUILDING FOR SALE. And this is brand new agency with ZERO NAME RECOGNITION.

Here's the kicker...they are demanding 5 policies a week TO START and can't understand why the agent is not selling anything.

There is absolutely NO TRAFFIC coming into the agency either. My friend feels as though it is becuz of the large 'BUILDING FOR SALE sign (which is the prominent feature everyone notices) as well as the "We don't believe in advertising" stance.

Is this place just setting him up for failure?

He wants to make this a success but he feels he is dealing with people who have absolutely NO CLUE.

Is my friend missing something here?

 

[NCAgent]

Hi,
I have a friend who hooked up with an independent insurance company who have a number of agencies in a large market.

This company wanted to start an agency in a smaller town and asked him to "run it". He agreed based on their proposal that they would spend money on advertising to get the word out and would support him in many other ways.

The reality is they are stating they "don't believe in advertising" and have refused to spend any money on it. They say they can't justify spending money when there is such little production.

This company has absolutely no name recognition. None of u have ever heard of it. On the sign outside the office you see the agency name on plain blue lettering and right underneath it IN BIG BOLD LETTERS it says 'BUILDING FOR SALE'...everyone says the BUILDING FOR SALE sign is the main thing they see. People say they wondered if office was closed, or in process of closing.

I am curious of your opinion(s). Is this a recipe for failure? No advertising...(they don't believe in it) and the main sign outside building stating BUILDING FOR SALE. And this is brand new agency with ZERO NAME RECOGNITION.

Here's the kicker...they are demanding 5 policies a week TO START and can't understand why the agent is not selling anything.

There is absolutely NO TRAFFIC coming into the agency either. My friend feels as though it is becuz of the large 'BUILDING FOR SALE sign (which is the prominent feature everyone notices) as well as the "We don't believe in advertising" stance.

Is this place just setting him up for failure?

He wants to make this a success but he feels he is dealing with people who have absolutely NO CLUE.

Is my friend missing something here?

I think he isn't ready to run an agency yet. I agree the large BUILDING FOR SALE sign can be annoying but other than that the circumstances are the same (if not better, depending on how the rent and utilities are being paid) as most other start-up agencies.

I do NO real "marketing" at all as an agency principal. I call people, I go out to meet them, I get and give business cards, and do referrals. My agency isn't even advertised with a sign on the side of the road, it is actually inside of another building altogether, so no one knows it is there unless they go looking for it. We have a SHITTY, if ANY online presence at this time (though we are working on it.) That website is really the extent of any money for marketing.

Many people don't go into an insurance agency looking for business unless there is something bad happening. They go in if they are current clients or signing paperwork because they don't have a fax.

Many agents, like RBA, actually work from their home after a while. Many P&C carriers *like* a building but that really is it for some people. If you friend is all alone in the agency, he actually might not be in there a lot. He should either be in the back room cold calling or going d2d or b2b or networking with people.

Name recognition? PSSSH, what, are you going to be sponsoring Animal Kingdom? Who the hell recognizes an agency name except for other agents?

I think even if the building is lacking that annoying sign you won't get a lot of foot traffic to start. If you friend is relying on that then the agency is going to fail. There can be a lot of foot traffic in some well-established agencies but that is really more of an exception than the norm.

5 policies a week may or may not be a lot depending on your friend's prospecting and past production. It MIGHT be tricky the first 1-3 months but after that is should be doable no problem. It makes me wonder why they decided for him to run it, period, if he doesn't know how to prospect and what to expect with a new agency?

New agency- treat it like it is its own building, not a branch of a larger agency. If you have zero money to work with, why are you going to go into the negative when there are a lot CHEAPER and MORE EFFECTIVE ways to generate business?

 

[Bertolinoins]

You will never build an agency on walk in business and advertising/branding does not make the phone ring. He needs to get out of the office to get some business. LeTip/BNI/Chamber of commerce/golf club/etc... you have to get in front of people. If you cannot generate your own business by shaking hands, you will never get a new scratch office off the ground. I am not saying they are supporting him well... but advertising and expecting the phone to ring is a recipe for failure.

 

[johnnyg]

Those responses make sense, but u have to acknowledge there is a reason co's like AllState, State Farm, Farmers and Geico, Progressive advertise...IT WORKS. They spend millions and millions each yr. How can a company say "they don't believe in advertising?"

I can accept "We don't have the money to advertise", but to not believe in it...period? C'mon.

I believe it takes hard work to build a scratch agency with no client base, but that wasn't how this gig was presented.

You guys sound like you've done the hard work...the "grunt" work to get your respective businesses started.

Thanks for the responses.
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I guess if a guy is starting a scratch agency on his own, shaking hands and kissing babies...getting outside the office and visiting businesses etc. is necessary, but I know for a fact that Allstate agents for example DO NOT do that. They may join some BNI group and a few other social things but generally they are camped out in their office..fully staffed and writing business BECAUSE OF all the money spent on advertising and branding so they don't have to.

Quick answer to that is of course "become an Allstate agent then".

 

[rudy323]

Allstate agents also pay about 30% of what would be their commission on all that advertising and "support"

 

[saieddie]

If you already know that advertising and walk in business is how to sell insurance, why did you ask?

The only thing you get, sitting on your ass waiting for the phone to ring, is a fat ass.

 

[NCAgent]

You're also making a big mistake with the captive companies. THEY are often established (though sometimes with different owners) for years. They have walk-in business from referrals, which your friend won't have.

 

[iiinycboi]

advertising isnt going to magically make all the customers go to you though.

you probably dont have enough funds to compete with the exposure of those big name captives.

most of the business is generated through the agent first then after a few years, you can work off their referrals and slow down on the going out and finding business.

i dont think their setting him up for failure, but i think they just think its unnecessary and probably want him to go find customers.

did the main office open this office for your friend or is your friend renting the office and paying for expenses himself and giving business to the main agency?

btw, no one sees my building sign lol. they dont even know its there. And the people who notices it and comes into my office is the ones that give me the weirdest request!

 

[VolAgent]

You don't need advertising dollars, you need marketing dollars.

The fact your friend didn't have this discussion before opening his doors, epic failure.

 

[NCAgent]

btw, no one sees my building sign lol. they dont even know its there. And the people who notices it and comes into my office is the ones that give me the weirdest request!

I think you just need to take your sign down...maybe you just have a magnet on you and you need to go out and look for business instead of it coming in to you.