Bought an Agency, Need Some Advice

[indy_ga]

What we're working with:

-780k premium P+C agency, no life or commercial, very little home
-Mostly non-standard/standard
-Rural town with ~10k people, borders SC so long term going multi-state
-Progressive, American Century, Infinity, Dairy Land, Gainsco, Foremost, and 8 other smallers carriers I'm planning on consolidating.
-CSR in office, unlicensed (will fix that the first month)
-Very good relationships with local SF agents (I worked for two of them) so can get the people that don't qualify for them for 25% of the commission.
-Expenses run ~60k after paying CSR (10$/hour) and myself (1k/month, the joys of being young, single, with no car payment or kids)
-Roughly 10k to spend on marketing, 15k first year going to backup fund, so making 85k right now.

My current plan is to get in and solidify the current client base by multi-lining the home/renters insurance. I'm trying to find a good life company in GA with a good term product I can sell and convert to WL policies down the road. I'm working on getting a preferred carrier but auto-owners all but laughed at me and Cincinnatti is a no go as well for now. I've considered joining SIAA or Smart Choice but don't want to give up commission or book % just yet. I've toyed with charging a 25$ broker fee for the non-standard clients but I'm trying to make sure it's perfectly legal in GA because I'd rather not get sued. There aren't really any big non-standard agencies in town and what I bought is the go-to agency for those clients.

My question is do you have any advice on the direction I should take? How would you go about growing? I'm 24 years old and have two years to really pour all I have into this(60-70 hour weeks) before I get married and have to start paying myself more and slow down to ~50 hour weeks.

Any advice is greatly appreciated.

 

[WyomingAgent]

If you are in a rural town of 10k, why would you want to pay SF for people that don't qualify with them when you have said you have bought the go to agency for them. Won't they find you? I would start to build my book of preferred business . Go after the home, auto, cycles, RV's all of it. Try to round out the accounts you have. Network, join the Chamber of Commerce, get your name out there. Does anyone else where you are located charge a broker fee? If not you may lose all your non-standard if you do. Why pay you an extra $25 when they can go down the road and get it from someone who doesn't charge a fee.

 

[rlb28]

What happens here in Texas is you go after the non-standard auto market when you open an agency. There an agent on every corner. There are captives like State Farm and Allstate, but there's a bunch of "Discount Insurance" offices or "Maria's Insurance" here in Texas.

All these independents charge a fee to write the policy, anywhere from $10-100.

There is one lady who doesn't charge a fee, the office is in her house and she does $1 million annually with a company that gives 15% commission.

We do non-standard and standard.

It's a tough decision.

 

[indy_ga]

Good point about the % to State Farm, being the only shop in town who caters to the market, there's no reason to give them a percentage. I'm mulling over whether or not to charge a brokers fee, but my concern is they will find another outlet if I do. I think I'll just keep it without fees for now unless cancellations become an issue.

 

[shawnmwalker]

I would get a hold of Safeco, travelers, Met, Allied, and The Hartford and make the case that you will have that agency turned around in two years and the first Preferred carrier to give you an appointment will get a long lasting loyal agency.

Have plan written up so they can see how you are going to turn in around. Have a list of your Preferred Circle of influence drafted to show them.

There is nothing wrong with owning an NS book. The Difficulty is turning the agency preferred.

 

[F150]

so you bought a business and NOW your trying to figure out what to do......NICE

 

[Sales71]

What we're working with:

-780k premium P+C agency, no life or commercial, very little home
-Mostly non-standard/standard
-Rural town with ~10k people, borders SC so long term going multi-state
-Progressive, American Century, Infinity, Dairy Land, Gainsco, Foremost, and 8 other smallers carriers I'm planning on consolidating.
-CSR in office, unlicensed (will fix that the first month)
-Very good relationships with local SF agents (I worked for two of them) so can get the people that don't qualify for them for 25% of the commission.
-Expenses run ~60k after paying CSR (10$/hour) and myself (1k/month, the joys of being young, single, with no car payment or kids)
-Roughly 10k to spend on marketing, 15k first year going to backup fund, so making 85k right now.

My current plan is to get in and solidify the current client base by multi-lining the home/renters insurance. I'm trying to find a good life company in GA with a good term product I can sell and convert to WL policies down the road. I'm working on getting a preferred carrier but auto-owners all but laughed at me and Cincinnatti is a no go as well for now. I've considered joining SIAA or Smart Choice but don't want to give up commission or book % just yet. I've toyed with charging a 25$ broker fee for the non-standard clients but I'm trying to make sure it's perfectly legal in GA because I'd rather not get sued. There aren't really any big non-standard agencies in town and what I bought is the go-to agency for those clients.

My question is do you have any advice on the direction I should take? How would you go about growing? I'm 24 years old and have two years to really pour all I have into this(60-70 hour weeks) before I get married and have to start paying myself more and slow down to ~50 hour weeks.

Any advice is greatly appreciated.

What was the Sale price of this agency? Also what is the income you need to hire a Licensed CSR ASAP

 

[shawnmwalker]

That goes back to the question about what an agency is worth. From what was described above I hope it went for less that 1.0% factor.

 

[indy_ga]

70k buyout for an agency making 85k the last 3 years. Only a 9% cancellation rate because of the lack of options. No proactive marketing, only reactive (people walking through the door) to maintain the book where it is.

I think I'm I'm going to take some good advice and go for the preferred marke since no other agencies are marketing that much except State Farm. Knowing State Farm's policies well, I can point out how I can offer better coverage, probably for less $.

I'm pretty confident the current CSR will get licensed if I offer a small pay increase and 25% comission on "order taker" sales. Next up will be a producer in 4-6 months.

I really appreciate the advice, good to get ideas.