How to Open a Business
How to Open an Insurance Agency
Here's some helpful information that is written for aspiring entrepreneurs who plan on opening an insurance agency. Read this before you start!
Wondering how to start an insurance agency? We take you step-by-step from start to success.
Before You Launch a New Agency
An insurance agency provides a great entry vehicle for financial professionals interested in small business ownership. The road to insurance agency ownership is relatively straightforward and it culminates in a residual income stream that increases the rewards the longer you are in business.
But before you set out to launch an insurance agency, you'll need to gain insurance industry experience and licensing. In order to sell insurance, you'll need to pass a state licensing exam. Additionally, it's recommended that prospective agency owners work as an agent for at least five years before striking out to start their own agency.
Laying the Foundations for a Successful Insurance Agency
After you have the required licensing and experience, you'll need to decide the scope of services your agency will provide. Assuming you plan on representing the same insurance company as you do now, you'll need to evaluate available insurances and financial products before you settle on your agency's direction.
The best insurers provide their agencies with sales and marketing support, dramatically streamlining the amount of effort you'll need to expend in order to acquire and retain clients. As you might expect, the more recognizable brands have a greater ability to draw clients to an agency startup.
Insuring Your Insurance Agency
It may sound a bit funny, but startup insurance agencies need to be adequately insured to protect their owners' personal interests and private assets.
The first insurance you'll need is called E&O (Errors & Omissions) insurance. Insurance and financial products require tons of paperwork and attention to detail. Sooner or later, it's conceivable that an oversight on your part could have devastating consequences for a client. E&O insurance protects your agency from litigation that could arise in connection with negligence or wrongful conduct.
The other kind of insurance you'll need is general liability insurance. General liability insurance insulates your business from a range of threats including property damage, personal damage and other contingencies that are common in small businesses.
Business Plan Mechanics for Insurance Agencies
If you haven't written a business plan for your new insurance agency, it's time to get started.
In many cases, the best approach is to keep your business plan simple. Ultimately, your business plan is intended to be a resource for you, the business owner.
As your company matures, you can circle back to your business plan to make revisions and adjustments.
Be Part of Your Local Community
This type of business is usually dependent on local customers for most of the company's revenues. To capture local favor, you'll need to craft a business identity that incorporates a commitment to the local community. As such, you must strive to create a personal and emotional bond with the local community at every possible opportunity.
Evaluate Competitors
Before you open an insurance agency in your area, it's essential to determine how you will fit in the competitive landscape. Use the link below to find competitors in your city. Simply enter your city, state and zip code to get a list of insurance agencies in your town.
Is the local market large enough to support another insurance agency? If not, you had better be sure that you are doing things much better than the competition.
Talk to People Who Are Already in the Business
After you've evaluated your local competitors, be sure to learn as much as you can from somebody who is already in the business. If you think owners of nearby insurance agencies will give you advice, think again. What's in it for them?
However, a fellow entrepreneur who has started an insurance agency in another town may be willing to share their entrepreneurial wisdom with you, provided that you won't be directly competing with them. Many business owners are happy to give advice to new entrepreneurs If you are persistent, you can find a business mentor who is willing to help you out.
Where can you find somebody who runs an insurance agency in another community?
We can help. Follow the link below, try a few city/state combos or zipcodes, and then start calling!
Why You Should Buy (Instead of Start) an Insurance Agency
We know . . . From the time you were a kid you dreamed about starting a business from scratch and growing it to a position of market dominance.
But from a business and financial perspective, it may make more sense to leverage an existing insurance agency as your vehicle for world domination.
Existing insurance agencies are proven operations with dependable revenue streams. And that's not to mention the fact that a purchase let's you avoid the trial-and-error mistakes that are common in startups.
Don't Rule Out Franchising
Startup small business owners are under enormous pressure to achieve profitability quickly.
Small business franchises simplify startup routines and can be the shortest path to both profitability and long-term success.
Our insurance franchise directory is full of an insurance agency startup opportunities. Just clink on the link below to get started.
Entrepreneur Interviews
These interviews should be of interest to you.
More Startup Articles
These additional resources regarding getting started as an entrepreneur may be of interest to you.
Share this article
Additional Resources for Entrepreneurs