Start-Up / New Agency Questions

[LittleBuddha]

Hello All...

I'm currently a licensed health/life agent in Pennsylvania and I work for an independent broker.

I'm bogged down on a daily basis with the adminstrative/service work, (for several years now). I'm not meeting my potential, but believe me, I've gotten very good, and very efficient at the service end; which is a plus.

There are other boring details, but the main thing is that I'm itching to get SELLING! I'm considering parting ways and doing this on my own. I just don't see it turning into a reality with my current employer.

I know that I'd have to get my own E&O coverage. I can probably work out of my home to start out, so it would eliminate the need to pay for an office. I know I'd have to register an agency name, etc. Aside of that, I'm not sure what else I need to do.

For instance, some of the questions I'm researching:
1 - What is an approximate start-up cost for an independent agent/agency?
2 - What is a realistic sales volume goal for the first few years, etc.?
3 - I have some potential, private backers for funding the venture. How much of a financial "cushion" would I need to give myself?

I know there are other things, but it's the end of the day/week, and I'm rushing because I don't have internet at home currently.

As you can see, I'm rather naive about the start-up of a business. However, I have motivation, a good network, and creative marketing plans. I cannot/will not try to take any of my employer's clients away from him. So I'd be starting this agency without a current book of business, which is a little scary. But that's why I want to research everything thoroughly.

Any suggestions, help, ideas would be greatly appreciated. Thank you in advance for your time!

Regards,
LB

 

[Mark]

Welcome to the forum. We are glad to have you on here.

 

[insuranceexec]

Hello All...

I'm currently a licensed health/life agent in Pennsylvania and I work for an independent broker.

I'm bogged down on a daily basis with the adminstrative/service work, (for several years now). I'm not meeting my potential, but believe me, I've gotten very good, and very efficient at the service end; which is a plus.

There are other boring details, but the main thing is that I'm itching to get SELLING! I'm considering parting ways and doing this on my own. I just don't see it turning into a reality with my current employer.

I know that I'd have to get my own E&O coverage. I can probably work out of my home to start out, so it would eliminate the need to pay for an office. I know I'd have to register an agency name, etc. Aside of that, I'm not sure what else I need to do.

For instance, some of the questions I'm researching:
1 - What is an approximate start-up cost for an independent agent/agency?
2 - What is a realistic sales volume goal for the first few years, etc.?
3 - I have some potential, private backers for funding the venture. How much of a financial "cushion" would I need to give myself?

I know there are other things, but it's the end of the day/week, and I'm rushing because I don't have internet at home currently.

As you can see, I'm rather naive about the start-up of a business. However, I have motivation, a good network, and creative marketing plans. I cannot/will not try to take any of my employer's clients away from him. So I'd be starting this agency without a current book of business, which is a little scary. But that's why I want to research everything thoroughly.

Any suggestions, help, ideas would be greatly appreciated. Thank you in advance for your time!

Regards,
LB

There some many different things to consider. Like how much money do you have saved to fund your venture. If the answer is none, then you are probrably not in a real good place to make that jump. The reason being that in alot of cases you have underwriting that takes 4-6 weeks.

So quick scenario: On day one you find a piece of business and write it and get it submitted to the carrier. This in itself is a chore for alot of agents.....LOL. They then have to get it into their system which would take a day or two, depending on your marketing firm,. Then the company requests an APS, and lets just say that your are VERY proactive and decide to go get this for yourself. It will take you at least a week or two to get these from the doctors directly. Now remember this is just an example. I don't want to see posts on here On how " I got my APS in 3 days" that is not the normal, and yes there are exceptions.

Once you get eveything submitted to the carriers you have another week or two before they make a decision. Once they made a decision, assuming it was issued as applied for, you have to wait for the contract to be sent to you, in most cases, before you are paid on it.

I am currently receiving compensation from LIFE business that was submitted in October. Just some food for thought. But I am glad to see that you are excited, this is a very cool business and, in my very hiumble opinion, a good time to get involved. We need more people who are excited about learing as opposed to those who think they already know everything. Keep up the great work and great question!!!!!

 

[wfs]

If you were just selling on your own, then there is no need to register an agency name if you wanted to keep your expenses low. You are 100% legal to market and do business as Joe Agent. Yes, if you want to be Joe Agent Insurance Services, then you would incur the additional costs of an agency license. That in itself is not a big deal, but you may want to keep your costs to a minimum as you first start out.

I am returning to the insurance industry after a 9 year hiatus. When I was independent, I did not get paid with advances, I was on an as-earned basis. I actually liked it, because it gave me a stream of income when sales weren't coming in as fast as I would have liked.

Since my plan is to go full-time, I will most likely seek commission advances so that I can provide a high revenue stream to cover my current income. With that said, as William said, figure at least 6-8 weeks from application before you get paid.

Originally when I was an agent, I pretty much worked my warm market and referrals. While that works, very well for some, I am going to actively market using paid internet leads, online advertising and other marketing initiatives.

I'm still trying to determine my exact budget, but I am thinking about $1000 per month (give or take), including E&O. And let me tell you, that's a HECK of a lot less than what you would need to open up a State Farm office, which I considered... I have a friend that spends $4000-$5000 per month on marketing alone. Plus the $25,000 furniture, staff, expenses.... Ughhhh...

That's another topic...

As far as expected sales, I would guess that it will depend on what your marketing budget is. I mean if $1000 could buy 50 exclusive term leads, resulting in 12 sales and 8 issues, at a $425 commissionable premium, at a 90% commission, that would give you $3060 in revenue or a $2060 profit. I don't know how close these assumptions are (veterans - you can chime in here) but I would say that this is a reasonable estimate. Double the budget - double the revenue.

I would definitely start at home - run it lean - until you start to get your cashflow... and build a cushion.

I am both excited and scared about returning to this biz. A lot has changed, but I think that it has changed for the better and I feel that I can be incredibly successful!

 

[insuranceexec]

If you were just selling on your own, then there is no need to register an agency name if you wanted to keep your expenses low. You are 100% legal to market and do business as Joe Agent. Yes, if you want to be Joe Agent Insurance Services, then you would incur the additional costs of an agency license. That in itself is not a big deal, but you may want to keep your costs to a minimum as you first start out.

I am returning to the insurance industry after a 9 year hiatus. When I was independent, I did not get paid with advances, I was on an as-earned basis. I actually liked it, because it gave me a stream of income when sales weren't coming in as fast as I would have liked.

Since my plan is to go full-time, I will most likely seek commission advances so that I can provide a high revenue stream to cover my current income. With that said, as William said, figure at least 6-8 weeks from application before you get paid.

Originally when I was an agent, I pretty much worked my warm market and referrals. While that works, very well for some, I am going to actively market using paid internet leads, online advertising and other marketing initiatives.

I'm still trying to determine my exact budget, but I am thinking about $1000 per month (give or take), including E&O. And let me tell you, that's a HECK of a lot less than what you would need to open up a State Farm office, which I considered... I have a friend that spends $4000-$5000 per month on marketing alone. Plus the $25,000 furniture, staff, expenses.... Ughhhh...

That's another topic...

As far as expected sales, I would guess that it will depend on what your marketing budget is. I mean if $1000 could buy 50 exclusive term leads, resulting in 12 sales and 8 issues, at a $425 commissionable premium, at a 90% commission, that would give you $3060 in revenue or a $2060 profit. I don't know how close these assumptions are (veterans - you can chime in here) but I would say that this is a reasonable estimate. Double the budget - double the revenue.

I would definitely start at home - run it lean - until you start to get your cashflow... and build a cushion.

I am both excited and scared about returning to this biz. A lot has changed, but I think that it has changed for the better and I feel that I can be incredibly successful!

That is some good advice. Another thing to consider when shopping for term rates is that every company; underwrites and pays differently. I would suggest you do your homework on the different companies, or write this forum back, and give us some details about the prospect, and we will give you some advice on which company to offer and what type of comp you should expect.

The best thing to do is to start off small, and do not go into debt trying to make this type of business work. You really do not need an office in the beginning: a computer, phone, printer and a fax machine should do the trick.

Another point to consider is that of referral gathering. this will cut down on your marketing expenses; and lets face it we are all looking for ways to cut costs. I personally work off of 90-95% referrals, and have so many that I have my other agents work them, in fear of them going cold.

With all of this being said just remember you have to run your business like a business and not a JOB. When a business is ran you have to commit to spend at LEAST "X" number of hours per week running this business. You will find by doing this you will be more productive, and cautious of where your time goes.

My Week usually looks something like this:

Monday: In the office by 6:30 a.m going over my appointment book, and rehearsing all my presentation's I will have for the day, which is generally 2-3. My appointments are ran @ 10, 12, and 2 generally putting me back in the office by 3:30 p.m. Check e-mails, return all calls, and generally home by 5:30 p.m

Tuesday: In the office by 6:30 a.m going over my appointment book. I do not work in the field on Tuesday, as this is my day to help my agents with case design work, and to follow up on all the referrals I got the week before. I am generally finished by 1:30 P.m, and I spend the remainder of the day cold calling, and knocking on doors. My goal for this day is to knock on 25 doors; or to meet 15 new people, which ever comes first.

Wednesday: Is exactly like Monday

Thursday: Is exactly like Monday

Friday : is exactly like Tuesday

Saturday: Twice a month until noon running appointments that I can not meet during the day; because of the prospects schedule.

I am giving you a rundown on my week so that you can see that there are several tendencies that I follow. I am generally in my office by 6:30 a.m, and I myself am not late. It is very important in running a business that even the smallest of things get the up-most priority. You may laugh at my routine, which my wife often does, but you can not argue with results. I have been in this business for close to ten years now, and lets just say that I am now at a 7 figure income, but not close enough yet, to say close to 8, but I will be...........LOL.

I look forward to helping you with your future endeavors. Happy Hunting and good luck

 

[leo999]

Another good sales helper is to know the mood most of the people you call on will be in before you go out. There are companies now starting to specialize in human behaviour forecasting, based on scientific parameters such as weather, geomagnetic activity in the air etc. One such company we've used with success is Mightyz com. We just plan our sales and marketing days based on their highs and lows. Hope this helps and good luck in your quest!

Leo

 

[wfs]

Another good sales helper is to know the mood most of the people you call on will be in before you go out. There are companies now starting to specialize in human behaviour forecasting, based on scientific parameters such as weather, geomagnetic activity in the air etc. One such company we've used with success is Mightyz com. We just plan our sales and marketing days based on their highs and lows. Hope this helps and good luck in your quest!

Leo

You're kidding, right?

 

[moonlightandmargaritas]

Another good sales helper is to know the mood most of the people you call on will be in before you go out. There are companies now starting to specialize in human behaviour forecasting, based on scientific parameters such as weather, geomagnetic activity in the air etc.

Leo, I prefer voodoo. Much more reliable.

 

[hlink20]

For instance, some of the questions I'm researching:
1 - What is an approximate start-up cost for an independent agent/agency?
2 - What is a realistic sales volume goal for the first few years, etc.?
3 - I have some potential, private backers for funding the venture. How much of a financial "cushion" would I need to give myself?

Excellent question. However, to properly answer you, I would need more specifics.
Questions: What is the population where you wish to launch your venture? Is it rural or metro? Will you focus in individual sales or group?
You mentioned potential funding... How much? Answering these questions will position me to assist you. Thanks.