Planning for your agency’s future

What's your plan note on corkboard

Many agency owners are unsure of their exit plan, and many fail to take the time to consider their options as they are busy running their day-to-day agency operations.

But, a time will come when they must decide whether they will sell externally to a third-party buyer or sell internally to family or key stakeholders.

Whether you choose to sell internally or externally, having a working plan in place will ensure that you have all options available to you when it is time to decide.

The plan should address the following areas: hiring next generation talent, developing that talent, creating ownership opportunities, and implementing a sales culture.

Hiring Next Generation Talent

If you are like most agencies, you are always searching for rising stars and often coming up short in your quest.

This is certainly a theme that is endemic to the independent agency space, and one of the biggest factors affecting an agency's ability to perpetuate internally or sell for the highest multiple.

Those that were born into or stumbled into the independent agency channel know that it is a best kept secret with potential for a high quality of life and high earning potential.

Communicating these benefits effectively will help you recruit others who might not have considered insurance previously. Additionally, many agencies find success recruiting stars from other industries and teaching them insurance, instead of looking for latent talent in other agencies.

Developing Your Talent

Agencies can do many things to develop their talent. Pairing new talent with successful agents in a job shadowing or mentoring program will help teach them what makes a successful employee.

For outgoing agency principals or producers, fostering the hand-off of key accounts in a timely manner will ensure that the agency is positioned for success without a hit to retention.

Creating Ownership Opportunities

During the recruitment process and early in the careers of your next generation employees, you should demonstrate the financial rewards that will be available to them if they meet certain performance expectations.

Set and communicate the criteria that would need to be met to be invited to own agency stock.

Create models that show how agency stock could be transferred and the W-2 impact it would make.

Lastly, draw a current and future organizational chart that shows what the agency could look like if the employees continue to perform at a high level.

Implementing a Sales Culture

Ultimately, agencies are sales organizations.

Creating a culture focused on organic growth by establishing and enforcing various metrics including requirements for minimum book size, new business written minimums, and trading down smaller accounts to the house or small business units.

By creating a plan that addresses these four key areas, agencies will put themselves in the best possible position when considering their future options.

Ready to start planning your agency's future?

For more information, or help with perpetuating your agency, contact Carey Wallace or Craig Niess or visit our Business Consulting Services web page.

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