To Grow or Not to Grow. That’s the Question.

If your agency has been in expansion mode – or you’ve been considering taking steps to grow your group – today’s economic climate might make you think twice about going bigger.

3 Things to Consider

Insurance premiums continue to rise.

This is an objective fact, but you can look at it subjectively as either a roadblock or an opportunity. Although consumers sometimes associate rising rates with their individual agent or agency, the reality is that rates are controlled by the carriers – clients know this, but they may feel a need to take out their frustration on you anyway. It’s similar to customers at a fast food restaurant being frustrated with the cashier because the milkshake machine is broken again.

To avoid client attrition – and to increase new client opportunities – this is the time to level up customer relationship skills throughout your agency for every interaction. No matter what role they fill, make sure that all staff members are coached on how to:

• deliver empathy (“I get it. My rates have gone up too.”)
• convey the value of long-term relationships (“I hope we’ve demonstrated that you can count on us and we will continue to be here for you.”)
• offer a solution (“Let’s look your current policies and see if there are areas where we could make some changes to reduce your overall insurance costs while still maintaining the essential coverage you need.”)
• increase client value (“If you have policies with other companies, we can take a look at those to see if there are ways we can help you save money there.”)
• ask for a referral (“We know it’s a difficult time for everyone as insurance rates continue to rise. If you have friends or family members who are feeling frustrated, we’d be happy to look at their current coverage to see if it still fits their needs and budget.”)

Leveraging Your Agency

Leveraging your agency during a time of higher interest rates can be a scary proposition. This is a legitimate concern. And while interest rates for loans are higher, that doesn’t mean that expansion is completely off the table.

If your agency is financially stable, your analytics and projections of growth are realistic, and your lender deems you to be creditworthy, this could be a good time to take a step forward. Investing into your agency when others are pulling back can give you an edge – especially if you’re able to attract prospects who are dissatisfied with increasing premiums and the customer service they’re receiving from their current agency’s staff.

Anticipate Future Growth

Anticipate future growth with a strong lender relationship. Every agency has a unique set of circumstances and each agency owner has their own risk tolerance level. Even if it doesn’t feel like it’s the right time to expand your agency – in terms of more staff, additional locations, technology upgrades or other growth-focused investments – you can still prepare for future expansion starting today.

One of the first things you’ll want to do is determine the vision for your agency’s future. In close collaboration with your partners – or key staff members if you’re the sole owner of your agency – it’s essential to articulate your short- and long-term goals.

This will include overall revenue goals, geographic footprint for your agency, the lines of insurance you’ll focus on, staffing needs including career development, acquisition(s) and ultimately, your exit plan. Your exit may be in the form of retirement at a specific age or financial milestone, selling your share of the agency to a partner or finding an outside buyer.

Even if your pursuit of these goals is three, five or ten years down the road, now is a great time to begin building a relationship with a reputable and astute lender. The actions listed below include links to supplemental content:

• Get your financial house in order. As an agency owner, you should conduct an annual assessment of your assets and liabilities, financial statements, commission summaries and other essential information regarding your agency’s fiscal strength.
• Assess and improve your credit score. Although you’re probably already aware of what impacts your personal and business credit scores, it’s smart to revisit how everyday decisions affect your long-term financial opportunities.
• Anticipate the requirements for a business loan. In addition to documentation you’ll need to gather, it’s absolutely essential that you build a relationship with a lender. Their understanding of the current lending environment and insights into anticipated industry trends is an invaluable asset.

The Bottom Line

In the insurance world, your primary job is to help your clients prepare for unexpected life events such as an accident, fire, disability, death or other difficult situation. But as an agency owner, you can prepare for future opportunities by looking forward and anticipating the rewards of a strategic agency growth plan.