Starting a State Farm Agency.

[OneInchPunch]

I'm going through the recruiting process at State Farm to open an agency. I am told I would be an independent contractor. Can appreciate anyone's advice on going this route, especially from SF agents.

1. I'm told I need 50k accessible. I have that accessible in credit and savings but it's my understanding you are using this to invest in your own business, not as a lump sum payment to SF. The recruiter told me if my spouse can pay our household expenses, then I can reinvest money business income and using credit lines may not be needed depending on business success.
Does this sound right to you?

2. Also, does an independent contractor have the ability to adjust rates? In other words, could a new agent, charge the cheapest rates (within reason) to attract rate shoppers?

3. Do independent contractors still work within SF quotas? I keep hearing that you're an independent contractor and you operate your business independently the way you see fit, but I gotta figure you have to meet quotas?

4. The recruiter told me there are several agencies in my region where the agent is retiring or quitting and I could take over their book. One agent has been in business for 40 years. However, it was explained that I wouldn't get the whole book right off the bat, and that is delivered partially over a few years. Who services clients of the book before they are given to a new agent?

5. Are there any pitfalls I should be aware of opening a SF agency. Not talking about long hours, cold calling, training, etc as a "pitfall." I mean pitfalls in the "context" of State Farm using new agents to open the doors, committing their own resources, and then canning them, etc.

Thanks in advance for your help and advice. This is a big life changing decision and I'm trying to get as much information as possible.

 

[RicFlairII]

The pitfalls to me would be that you do not own the book of business, yet
they want you to have lines of credit, etc.- which translates to they want you
to have all the risk and even if you succeed you have no ownership.

You are basically a contractor except when they say you are captive- which is
often.

Towards the end of my Allstate career, I got a call every week or two from a
different new SF agent who wasnt meeting his quotas and was being forced
out. Since they were leaving SF, the logical next step (to them) seemed to
be to try and buy an Allstate agency.

Problem was in every instance, they were broke and their finances were in
bad shape from the SF experiment. There was no way they could buy any
agency.

I would try to steer clear from this whole deal if you can. Another bad thing
is SF has no retirement program to speak of that I know of. The agents around
here work until they are so old they cannot work any more.

 

[xrac]

It is not an opportunity that I would choose to pursue. Do a through search and read all that has been written on this subject. The biggest mistake I see with people evaluating "opportunity" is they often have selective hearing and only listen to the voices that confirm the way they are leaning.

 

[TomCat1971]

AFter just completing the first year, I can tell you what is written above is absolutely true.... You have ALL the skin in the game, all the risk and have to manage "your" office to please your sales leader rather than grow your lucrative P&C book.... They want it all and if you don't hit Chairmans Circle the first year, polish up your resume. SF was disengenius at best, in the this opportunity while blowing plenty of smoke at all the new intern/TICA's.... I've seen enough after 11 months.....

 

[Markthebroker]

I helped build an SF agency. I could go into all the details, but bottom line, don't do it. The office was successful, and the owner went heavily in debt. But, since we didn't hit the life insurance quota, they cancelled our contract.

if you are just getting into insurance, I would suggest starting out as a captive employee, not agency owner. Try that for a year, then see what you think of the industry. You'll probably go Indy, as most successful agency and owners have.