Insurance agencies face a number of obstacles. Many obstacles are the same from year to year; however, current economic conditions make growth even more contentious. In addition, uncertainty with our government and economy can give new business owners heartburn. We are a Texas-based M&A Acquisition and Advisory practice focused on the Independent P&C Insurance Market. Whether you are looking to retire, seeking perpetuation planning or simply exploring options, let’s talk.
There are a few common issues we have found that face every agency and we wanted to share these with you.
- Cash flow; never forget cash is king- If capital expenditures or expenses are draining your cash, you won’t be in business long. Make sure you store as much cash as possible and be adequately capitalized. Look to professionals for help whenever you can. Your team should include a good attorney, accountant, and insurance agent.
- Agency Transition – The last few years have been a frenzy in the Independent Insurance Agency M&A Market. The industry has seen a record number of transactions, mostly fueled by larger established agencies purchasing niche and local independent agencies. While the appetite for acquisitions will likely maintain its current course, there are steps that agency owners can take to set themselves apart from others. Having the proper systems and structure in place when you eventually do decide to sell can make a big difference in the premium buyers are willing to pay.
- Failure to outsource- Many business owners think they can do it all. The reality is you should focus on what you do best, generate revenue, handle client relationships, and manage operations. Outsourcing services like payroll, accounting, and HR should be considered.
- Skilled and professional workers- It really doesn’t matter what business you’re in, finding the right people is the most important and difficult job for a new business.
- Poor marketing plan- One of the most important elements of a successful business plan is a well-researched marketing plan. A clear marketing strategy is a necessity for any business. Marketing informs prospective clients what products you sell and how you sell them. Word of mouth is great, but it doesn’t constitute a marketing plan. Your marketing plan will help create your brand. A yellow page listing is not considered marketing in 2013.
- Technology- There isn’t any question that technology can help you grow and manage your new business. From client management to social media, technology needs to be a central part of every business.
Things are never easy for a small-business owner. No matter how hard you try, there are always problems to solve and fires to put out. At least you can take comfort in knowing you’re not alone. Now get out there and win the day!