November 23, 2015
Starting a new business is always a challenge, it doesn’t matter what type of business it is, the first few years will have many ups and downs. Many licensed insurance agents that decide to start their own insurance agency are superstar salespeople, they know how to sell insurance, they know how to build relationships and they know how to close deals. However, the skills and abilities it takes to be a successful insurance agent or salesperson doesn’t always translate into being a successful insurance agency owner. The following are 5 mistakes that many new P&C insurance agency owners make. Avoiding these will help improve the likelihood that the agency will achieve success.
1.Not investing enough in marketing or spending money on marketing programs that do not result in immediate sales. Many insurance agents will immediately invest in things like a website, business cards, newspaper/magazine ads and other programs that are more directed towards branding than immediate sales. One of the best things a new agency owner can do is invest in purchasing inbound insurance leads. These are qualified consumers who are looking to buy insurance. Inbound auto insurance leads are especially useful because they are usually someone who they can usually close quickly. For the first year, agency owners should have 100% of their available marketing budget spent on inbound insurance leads as that will result if the highest ROI and cash flow.
2. Spending too much on overhead. Many insurance agency agreements require a retail office or location prior to being able to open the agency. When setting this up, some new agency owners will get too big of an office and furnish it by spending too much money. They may also hire support staff prior to having the revenue to comfortably support those positions. During the first year of business, agency owners should keep their fixed expense or overhead to a bare minimum. In doing so, there will be more available resources to invest in things that will result in sales like inbound auto insurance leads.
3. Not selling to their personal network of friend, family and business associates. Some agency owners have the view that they don’t want to sell to people they know since it will require that they discuss the personal financial situation and would rather focus on strangers, this is a mistake. New agencies should work as hard as possible to see to everyone that they know. The sooner that they can generate cash flow and revenue, the sooner that they can invest in more inbound insurance leads and other programs to drive incremental sales.
4. Not spending enough time working on the business. When an agent becomes the owner of an agency, it sometimes requires that the owner work 50, 60 or even more hours per week. Some agents assume that they can continue to work 40 or even less hours per week. When an agent becomes an owner, they will need to work whatever hours are necessary to succeed.
5. Not understanding their commission agreement, closing cycles and payout timing. New agency owners need to know and understand their commission agreements and closing cycles like the back of their hand. They need to understand the amount of commission they will be making and the amount that they can spend on buying inbound insurance leads. Sometimes even more important is understanding when they will actually receive the commission payment, as bills will come in to be paid, irrespective of when the commission is paid.
Agent Ethan Kosmin Generated over $200,000 in premiums during first year in business thanks to Contact Concierge.
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