Aaron Sims, Co-CEO
So you want to start your own agency, huh? Do you have what it takes? Do ya? Well of course you do. Starting an agency is challenging, no doubt, but with some tried and true strategies in place you can overcome those early obstacles and create a viable agency.
Before we get into the details… well as much detail as a blog will allow (TLDR, you need to sign with MEAA for in-depth coaching)… there are a few things we need to clear up, starting with you!
A business owner doesn’t have to be a literal genius to create and run a very successful business… As a kid working on the family farm, I was told more times than I could count, “Boy, you could tear up an anvil with a rubber mallet.” Trust me, if I can start and run businesses, anyone can do it. It does, however, require some solid discipline both mentally and physically. On the mental side of things, some important traits I hold above all else, self-reflection, and resilience, in that order.
We’ve all heard the countless adages speaking to learning from your mistakes, but there is a reason there are “countless” of them. The lesson they teach is important… real important, and you ignore those lessons at your own peril. The very first thing I would tell anyone looking to strike out on their own is to make sure that you truly embrace self-reflection. Things WILL go wrong, and they often are not your fault. But fault isn’t something to run from, fault is something to search for and learn from.
It’s easy to find our faults when they are staring us in the face. When in hindsight, a mistake was so painfully obvious we want to pull our hair out. Those mistakes are easy to learn from, assuming we are open to it of course. But when things go wrong, despite it being totally out of your control, and you begin reassuring yourself that you were mistake-free… That’s when you need to take a minute, and search it out. You will likely find something, somewhere, you could have done better. Never waste a good mistake and have the fortitude, the resilience, to carry on.
Resiliency is second in my long list of traits but If I could have two number one traits, it would be number one. Mistakes will come, markets will harden. Abstract “seasons,” literal storms, betrayal, blood, sweat, tears, early mornings, sleepless nights, long days, and broken hearts… That’s your future in business. All agency owners will experience at least some (most) of those things, but those old adages rear their heads again… you know them… the “get back up” ones. Well, those are as important as the “learn your lesson” ones.
That single quote by that, at-the-time infamous man, so perfectly sums up those two important traits that I almost need not say more. You are going to get punched in the mouth. Learn why, and how to avoid it in the future. Then, get back up and use that lesson to punch the other guy in the mouth. Self-Reflection, then, Resiliency… Beautiful.
Ok so that is two of a bunch of traits that are important, but if you master those two, you will do just fine. So let’s talk about how to actually take flight with your new agency.
Use a sniper rifle, not a shotgun. Being very targeted in your sales efforts will mean the difference between prolonged stagnation and possible failure, or explosive growth with sustainable results.
Starting an independent agency can be a totally foreign concept if you are coming from the exclusive channel. If you are coming from an independent background, such as a former producer or marketing rep, you will at least have the knowledge of how the independent landscape works. For now, independent folks, take a break. Go stretch and grab a drink, we’ll see you in five.
For my former captive agents out there (let me hear you say “HEYYYY”….kidding) you are walking into a whole new world. The coverages are the same but the process is different. In the independent world, the insurance companies (or carriers as we call them) actually have two clients. Their first client is you, the agent. Now let that sink in for a moment. Two clients and you are the first one. Why is that? Well, I’m glad you asked…
As an exclusive agent, you had one company relationship. You had one “mouth” to feed in terms of production. You had one set of products and one logo on your door. In return, you had billions of marketing dollars behind you trying to shovel leads in your door. Well, that’s all gone now, and that’s a good thing, I promise.
In the independent world, the companies know that you have a choice. A choice on what logo goes where, a choice on what relationships you foster, a choice on what products you want to sell (no more life quotas). Most importantly, they know you have a choice when it comes to what “mouth” to feed and where those leads that YOU generate go. The result? A totally different dynamic between you and the companies. They compete for you and your business.
The result is typically higher commissions, more competitive services, and an amazing amount of resiliency for your agency. What I mean by that last part is, if your former exclusive relationship was suddenly found to be uncompetitive in your market area, well… too bad, right? We’ve all seen it, the company raises rates and your growth flatlines, or worse, your retention goes down and you shrink. What can you do? Nothin’, you’re stuck. You wait until the carrier becomes more competitive and you weather the storm until then. In the independent world, if one carrier is not competitive, no big deal, you have options… choice.
Welcome back, independent folks. So now we all understand we have choices in partner companies. So the next obvious question is how to choose what partner and when? Well, there is a lot of nuance in this question but this is where that sniper-like approach comes in.
Each company is different (obviously) they all have niche markets that they chase. On the personal lines side, home values and driving records can mean vast differences in prices and appetite for the companies. You may think that they all like the same sandbox but that’s not the case. There can be massive variations in prices for the same $300k home quote.
On the commercial side, many companies will write the same common risks but there is again, massive variation in the niche markets that the companies target. For example, one company may be very competitive with restaurants while another is going to very good with contractors.
A lot drives these variations and understanding what company fits where is part of the learning curve to being an independent agency. A good place to start is choosing what niche markets you want to pursue – remember, you are the first client.
Let’s say, for example, you want to chase restaurants. Then identifying a carrier that is competitive on price and product for restaurants in your area is most important. Learn that carrier inside and out, and learn their restaurant products backward and forwards. Use that knowledge to then target all of the restaurants that you can which fit the mold. Now, of course, I’m oversimplifying, but this is the roadmap. Joining MEAA brings you the benefit of a navigator riding along with you and teaching you these things, step by step, day by day.
There is a lot left to learn. A lot more nuts and bolts to fasten together. Marketing, underwriting, servicing, hiring, technology, general best practices… I could go on. But hopefully, this blog (albeit long) offered at least a little jumping-off point for you.
We at MEAA would love the opportunity to help you realize your goal of starting your own agency. We have helped many professionals, just like you, start successful agencies. We sincerely hope you will give us a call and let us tell you all about how we can help.