Executive Chronicles | Your Guide to Opening Up An Independent Insurance Agency | According to the Bureau of Labor Statistics, there were over 400,000 insurance agents in the US in 2020. Considering the stiff competition in the market, have you thought about striking out on your own?
If you have an entrepreneurial mind and always wanted to become a business owner, opening up an independent insurance agency is the best shot.
Independent insurance agents strive to offer fast and better customer services. They employ the latest technology to reach new customers and increase their life-cycle value.
Why Start an Independent Insurance Agency
The idea of starting your firm comes with a range of benefits, including and not limited to:
- Freedom to choose the insurance companies you wish to work with
- Chance to select the insurance products you wish to offer
- A chance to build a strong brand
Ideally, opening up an insurance agency is a chance to become a boss and earn more.
How Do You Start an Independent Insurance Agency
Starting and running an insurance agency is no easy task. But with focus, you can quickly turn your dream into reality. You can start and build your agency with these tips.
Lay the Groundwork
The groundwork provides the right conditions for running a business.
The most critical aspect of this step is to set a timeline. Keep in mind that starting an independent agency takes time, and you, therefore, should set a realistic timeline for it. Don’t rush things as that could harm your objective.
It may take you up to six months to plan finances and two weeks to get insurance. Such are the essential considerations when setting a realistic timeline.
Laying the groundwork also involves getting legal advice. Seek the help of a qualified legal expert to take you through legal requirements and expectations for your business. Let them explain the contractual agreements involved in setting up an insurance agency.
It will help if you research to understand the requirements of starting an insurance agency in your state. This ensures that your business is compliant.
Develop a Business Plan
A business plan is your roadmap and guide for everything you need to build an outstanding insurance agency. It provides clarity on all aspects of your agency, from finances, marketing, and how to be better than your competitors.
Furthermore, a good business plan provides you with funding ideas and offers you a structure that defines your objectives.
Outline a plan that puts your agency on the right track. The document should demonstrate your commitment to your employees, investors, and insurance carriers.
Start by setting goals, identifying risks, and coming up with tricks to help you avoid possible roadblocks. Ideally, your business plan should introduce everyone involved in the startup and executing the plan. Outline how you intend to get customers and the insurance products you will be providing.
Explain your target market and competitors. Identify your suppliers and describe what differentiates you from competitors. Analyze possible risks and, most importantly, include the initial budget with estimates of the startup costs.
Select a Legal Business Structure
How you structure your agency will dictate the amount of personal liability to take on. It determines how much risk you will face and handle in your organization.
The standard legal structures include sole proprietorship, corporation, partnership, and limited liability company. It would be best if you took your time to understand the benefits and risks of each structure.
For instance, a sole proprietorship is less complex. But you must be willing to take all the risks. You will be liable for raising finances. And in cases of losses and lawsuits, you take that in alone.
On the other hand, corporations are complex and expensive. The upside is that they offer protection for your personal assets. This means that if you are sued or suffer a loss, there is a limit on the number of personal assets pulled into the mess.
Selecting the right structure for your insurance agency protects your company and helps you limit risks.
The chances are that you are already a licensed agent. Nonetheless, that does not exempt you from needing a general business license.
You are about to start an independent company where you will employ more brokers and acquire insurance carriers. You must prove that your business is approved to offer these services. Otherwise, you will have a hard time convincing clients to trust you.
You may apply for licensing under your name or come up with a business name. If you choose the latter, you must register the business name first and acquire a Tax ID Number to help you file your business taxes.
Again, the legal structure you choose for your insurance agency will dictate your license application process.
Suppose you start a sole proprietorship. You will be issued Property and Casualty licenses individually. Contrarily, if you open up a partnership or corporation, you must apply for a separate license.
Market Your Business
Your insurance agency is not complete without customers. You must invest in effective marketing to spread the word about your new organization.
Reach as many people as possible and ensure your marketing approach is good enough to give you results.
Thanks to the internet and technological advancements, you can market your insurance agency on social media platforms like Facebook, Twitter, and Youtube. Create a website and optimize it for SEO to increase discoverability and brand awareness.
If your budget allows, hire marketing experts to handle your business advertisement as you focus on other areas to speed up your startup process.
Meet With Insurance Carriers
You cannot sell insurance products without suppliers. Therefore, you should look for reliable insurance companies for long-term and profitable relationships.
Before setting an appointment with the insurance carriers, ensure you have a solid business plan and proof that you have experience in insurance. The insurer may also ask for a track record of marketing and selling insurance.
It will help if you have a geographical location at a desirable place where potential customers can meet you for one-on-one inquiries.
Obtain Career Freedom by Opening up an Independent Insurance Agency
Besides learning more and increasing your earnings, starting an insurance agency gives you career flexibility. Moreover, you can offer personalized services, and you get the chance to build your own brand and work on its reputation.
Follow the above guide to ease your startup process and actualize your dream of becoming an independent insurance agency owner.
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