OSTRICH PUBLISHERS
Aug 22, 202014 min
Updated 12:43 PM ET, Thu August 20, 2020
Sure, you can build tremendous wealth by going into business for yourself, having your own company.
This article is an excerpt from our new ( soon to be available) book: "An Entrepreneurial Approach to Starting Your Very Own Insurance Agency"
One of my all-time favorite sayings in business is the one that talks about not being in business by yourself. I think it goes something like: “You should be in business for yourself, but no by yourself”, or something like that. It is an oldie but a goodie.
There is so much to understand about this simple mantra. Sure, you can build tremendous wealth by going into business for yourself, having your own company. This is true. I will say though that I am yet to meet a successful businessperson who did "it" all by themselves.
There is no such thing. All great companies are run and were started by a group of determined, skilled, visionary individuals. If you find a single successful entrepreneur who was able to build their firm, acquire wealth, without the help of another soul, you do your best to let me know.
I don't think there is such a story out there. It cannot be done. In fact, I strongly believe that your ability (or lack thereof) to bring like-minded people together to build your Insurance Agency will be the single biggest defining factor in whether you go on to build a multi-million dollar enterprise or burn-out in a few months, or a year. I have come across many would-be agency owners who are no longer in the business, at all. This is a common trajectory in this line of work.
This is important! You should be, if you haven't already, be on the lookout for others who also wish to go into business for themselves to join you on your quest. There are various structures out there that will allow you to leverage the resources of your partners to scale your business relatively quickly. I shall share one such arrangement we used in our early days.
That being said, one of the unique things about the insurance business is that whether you plan to hire agents and provide them with some kind of stipend or base salary to help transition them into a 100% commission situation, you plan to bring on broker-agents, or some kind of hybrid model, you will essentially be looking for the same kind of person. Even your partners and I hope you have partners, must share the same type of basic qualities in order for this experiment to be successful.
The folks you bring on should be:
Self-starters
I am certain you have heard this before. There are, to the untrained eye, subtle differences in the way "working folks" operate that is vastly different from the behavior of entrepreneurs. I am by no means saying that you should only hire, or partner with entrepreneurial-minded folks.
Nope! I am saying, however, that all folks you bring on at the agent, or agent/partner level should be self-motivated folks, and entrepreneurs usually are. These are the kind of folks to who working and building things is not just a way to earn a paycheck but rather a way of life.
If you give this kind of person a $10,000 bonus check, their next goal is to work even harder to make sure that their next one is for $20,000. These folks do not need alarm clocks. She is up by 5 AM, going hard in the gym, getting ready to go into the office.
Team players
If you want your firm to be successful, please, do your best to stay clear of the lone wolf character. You know that type. These are the folks who struggle to work well with others. With them, every collaboration ends in conflict.
They are constantly in competition mode, even when it comes to their own teammates. Seeing others on their own team win to them is a bad thing. While folks like you and I cheer on the winners in our organization, this type of person harbors acrimony and somehow finds it depressing that others (in their own organization) are doing well.
This person will do nothing to add any value to your organization. So, how do you know when you are sitting across the table (in the interview room) from a lone wolf? Well, typically, these types of folks use a lot of "ME's" when they speak.
The conversation or event always revolves around them and their feelings. Even as they proceed to tell you about themselves, you will notice that they do not reference or heap praise on any other soul but themselves.
They do not make meaningful, long-term connections with others. They rather idolize famous people they have never met before or met once briefly. They will go on and on about that one time they met that famous actor but give you one brief sentence about their former colleague.
As I said, do your best to bring on only folks who see themselves and like to be part of something bigger than themselves.
Look out for folks who have some kind of demonstrable experience working on a team. Some kind of military experience, ROTC, sports team, and so on. This is super important.
Thinkers, not feelers
Feelings and emotions are great and serve as well in many aspects of our lives. We must be able to “feel” things to be able to enjoy life. The feeling you get when you spend time with your loved ones.
The overwhelming joy you experience watching your child walk for the first time. The sense of fear and nervousness you experience when you have to drop off your kid at school for the first time. And so on.
These are all times when our feelings let us know we are alive, and that we are human. Business, however, requires fewer emotional manifestations than you might think. So let me explain what I mean by that.
While passion and a love for what we do are essential to us being able to enjoy our work and do it well, it takes one who can think their way through things and not let their emotions lead the way to be successful in commerce.
As you put together your inaugural team. I cannot stress enough about the importance of recruiting folks who are less feely and more strategic and thought-oriented. These types of folks will play an integral part in navigating the various obstacles you will encounter and be able to maintain a sense of calm and steadfastness when the seas get rough, and the going gets tough. These are the kind of guys and gals you want in your corner.
Relentlessly resilient
Much like in life, as a general rule/inevitability, the entrepreneurial route is not without setbacks, obstacles, and difficulty. Difficulties with gaining traction, interpersonal issues, funding issues, and so on.
The early days of your insurance agency’s founding will be filled with uncertainty, angst, and many problems. Problems that with any luck, hard work and an honest willingness to succeed can be overcome.
You will, however, want everyone you bring on at least during the startup phase to be able to muster up the constitution to endure these difficulties.
This determination will be evident on many fronts. From your prospective partner's experience, finances, and overall track record of being able to persevere in the face of adversity.
The initial team
In keeping with the general (team) message, my overall message when it comes to starting your insurance agency, we will want to look at the first few folks you will want to bring on and the crucial roles these individuals must play.
The idea is to assemble a group of folks who all as a team will be able to attract new clients, provide support for your clients, ensure that Life and health cases are managed properly, and be able to run your office effectively. At times, “running your office” might mean hiring and training new agents, making sure all bills are paid, and so on.
There are many roles you can play yourself. That is if you are strapped for cash at this point. It is never a bad idea to be able to save money when starting any type of business. I will advise that you do not take on too much as your main job will be to bring on new (paying) clients. So, if you have it in your budget to fill some of these spots at the outset, I think you should consider doing so.
That being said, in my experience, these are the basic functions/positions you want to have folks for when you open your new insurance sales office, whether a physical office or a virtual one.
Agency manager
If you are just starting out and thus are looking to launch your firm with a small staff, you might have to play the role of the Agency manager, also known as the Principal Agent. You will need to get used to the idea of playing various roles. The most important one being the recruiting and training of your staff. As your organization grows, you might want to have a few more managers. For now, you will be, or should I say, you will have to assume the responsibilities of hiring new agents, seeing to the day-to-day operations of your organization including managing your own clients.
These responsibilities can add up and new agency owners often find themselves overwhelmed and stressed.
This can lead to the neglect of your clients and that we all know is never a good thing. My advice is that you a) organize your day to help foster productivity, b) be sure to bring on only folks who understand your mission, share your values and can function autonomously in the work environment, and c) always put your clients first.
At our firm, the Client is the most important person in the room. We prioritize activities based on how each action directly impacts our clients. So, for example, in your daily schedule, you will want to make room, no matter what, to get those coveted one-on-ones with your clients.
Office manager
Typically, the office manager does not do any selling. Although, I have seen some who do. But for the most part, this person will be in charge of some of the more repetitive tasks associated with opening and closing the office on a day-to-day basis.
Attending to the effective execution of any personnel issues, payroll, some aspects of training, general customer service, case management, and so on. Most office managers I have seen, the ones who have been the most effective are folks who are detail-oriented, great with people - including agents and clients - and punctual.
Your office manager will come to be your right hand and will help you ensure that your agency runs smoothly. I must say, I have also seen a few office managers who go beyond what is needed to run their agency's day-to-day stuff and take on the COO role.
For larger agencies, some office managers help in the running of the overall businesses, including raising funds for the agency, working with various consultants to meet any legal and tax obligations the agency as a company may have.
Some office managers are solely responsible for seeking out new talent and engaging with any prospective agents to help bring them into their agency.
These types of office managers will often conduct interviews, prepare contracts, and help the new agent meet all the contractual obligations needed to offer insurance products on behalf of her firm and carrier-partners.
These types of managers are great as their involvement helps provide more time and resources for the agency owner/manager, you, to focus on the stuff that actually brings in money to the agency.
The sales agent
The sales agent's job is quite straightforward: Sell insurance products to new and existing clients. Often, these men and women engage in prospecting/marketing and will help explain the various options available to them and help them ( the customer) enroll in various appropriate solutions.
The agent, at all times, acts as a fiduciary. This means one must always do things that are in the best interest of the client. Each agent manages her own client list. This often involves providing customer service and being a resource whenever the client has a question about their insurance policies, and so on.
Sure, at times, the folks at the customer service desk may talk to your agency's clients, but for the most part, that will be each individual agent's job.
What differs from agent-to-agent will be their relationship with your firm and how you compensate them for the business they bring in.
To me, compensation is just one small piece of a complex pie. So instead of talking about commission rates and stipends, let's rather describe the various types of agents you want to consider and how you, with your budget, can build a firm that attracts and retains the best talent around.
Just like you
The type of Agent you will often encounter is the entrepreneurial guy or gal. They have had their licenses for a while, have probably worked for another firm, and built up some experience.
They are at the point in their career where they feel like it is time to go out on their own and build their own agency. They may not have any solid plans in place to do so just yet but have been considering this move for some time. Or at least, they are open to the possibility.
This calculus will be based on the fact that they have amassed a book of business consisting of 500 - 1000 clients, they worked as an independent agent for the first 3 to 5 years of their career and as a result, have no legal encumbrances as it relates to their client relationships and would like to be able to partner with others to build a firm that she owns a piece of.
This type of agent might lack some of the other skills needed to start and operate a fully-integrated organization. But knows it and sees value in bringing her skills to the table in conjunction with others who possess what she lacks to help scale something of value.
This type of agent is just like you, my friend. With this type of agent, you will want to build some type of revenue/equity- sharing arrangement, where her responsibilities aside from selling are laid out very clearly in writing.
If you have ever seen the show Suits on The USA Network, you will notice that although Jessica, Harvey, and Louis all have their own clients, they also have various responsibilities tied to the day-to-day running of their Law Firm as partners.
Harvey was in charge of client management, a job he was really bad at by the way, while Jessica ran the firm as a whole.
Louis, well, he was in charge of terrorizing, ahem! I mean, managing first-year associates. You should check out season one and two, you will get the gist of what I am proposing. You should recruit this type of agent with these understanding s in place.
This type of Partner-Agent will invest in the firm, a round finite figure will have a period of contributing a percentage of her residual commissions to the firm to help pay the bills and take bonuses at the end of the year, month, or quarter.
They will also be responsible for the scaling of your firm. I will get into this in the next chapter. For now, know that this agent must be recruited as an equity partner if all agree and can be one of the most impactful decisions you ever make.
The Independent broker
Most modern insurance agencies rely heavily on the Independent Agent to grow their client base. From the agency owner’s perspective, this type of agent makes a whole lot of sense since she does not require a whole lot of upfront cash investment.
She does not require a salary, benefits, or any of the associated costs of having a payroll employee. Your relationship with this type of broker will be strictly on a contract basis.
Regardless of which model of agency you choose to go with, I encourage you to build a system that allows for independent brokers to plug in and bring some business your way.
Any system you put in place has to recognize and treat these types of agents in a way that takes their often unique circumstances into serious consideration.
Let me explain: Your typical independent broker will typically be someone who is also quite entrepreneurial and wants to explore building their own book of business as well. They will often have other things going on in their lives and will not have the bandwidth or extra time to engage in all the daily activities at your office.
These types of brokers, the ones who are successful, operate autonomously. They will often set their own schedules and operate at their own pace. You must get used to that.
Do not meet this with antipathy. instead, try to build unique practices and services that are specifically meant to appeal to the independent types.
Most effective agency managers I have met who have done very well building their agencies with independent brokers understand that when working with brokers, you must meet them where they are and HELP them rather than MANAGE them.
An Exclusive relationship
The third and most basic agent-agency relationship is one as old as time itself. In these types of relationships, your agency will essentially hire someone and pay them some kind of base salary with the understanding that they will work for your firm exclusively.
This type of agent, known in the biz as a Captive Agent, will have only one job. That is to sell insurance products to new customers and manage your firm’s relationship with these customers.
As I stated earlier, depending on your agency's policies, "manage" could include doing customer service, being a resource for clients to call to ask questions about their policies, helping clients file claims, and so on.
You will have to determine the extent of your agents' involvement in the various after-sale activities that will surely come their way.
Here, you must work extremely hard to provide this type of agent with all the resources, systems, and support they need to succeed. Neglecting to do so will certainly result in failure for you and your agent.
This type of agent requires structure. You must provide them with all the systems required to a) consistently find new leads to reach out to, b) what to say to these prospective clients every step of the way, and c) how to enroll them and cross-sell other products.
You must also consider what format your firm will use when talking to prospective clients. Will folks come to your location to buy insurance products, will your agent(s) visit these folks at their homes and/or workplaces, or will you and your agents enroll folks over the phone?
As you structure your agent onboarding systems, especially when looking at the costs associated with hiring Captive agents, you must map out all the processes and expenses involved to help you, among many other things, determine salary structures and amounts, types of folks you want to bring on, and so on.
A Tough Gig
I was at the dentist recently for a routine cleaning. This wasn't my first time at this particular office but for the first time in the year or so that I have been a patient, I was going to be taken care of by someone other than Ashley - don't worry about who Ashley is.
Unraveling her character in this fable will do nothing to enrich the larger point I am so desperately trying to make here. The point is, for the first time in a while, I would have to get to know someone new and I had to introduce myself to my new hygienist.
So, at some point, she asked: " What do you do for a living?". I told her: " I am an insurance agent". her reply was " Ouch! That is a tough gig". She immediately seemed concerned for my wellbeing just based on my (stated) profession.
I of course couldn't relate to what she was so worried about. I understood it. But I could not feel what she was saying. Noticing that I didn't share her concern, or trepidation about my job, she asked: "That is a hard job, right?"
I told her it was challenging at first but I was a veteran agent. Now, why am I telling you all this? Well, there are a few things happening in this conversation: To her, having to sell for a living seems unthinkable, and she is neither wrong nor alone in her thinking.
Truth be told, most people hate selling. The average person hates having to contact strangers and try to sell them something they - the agent- often perceives as unimportant.
Most people are uneasy with the idea of reaching out to people and engaging in the types of interactions that one must engage in to produce a sale. We assume folks hate salespeople. And that makes us uncomfortable with playing that role.
As you start to think about recruiting new agents for your firm, I want you to keep two things in mind: 1) You are not looking to hire the average person. Your successful agents will not be normal people.
They will be folks who can consistently repeat a set of tasks, without any emotional investment or reactions regardless of the outcomes. This person is a pro. Through and through.
And 2) You will need to connect with this person to ascertain what they need to help them go out and drum up business for your firm. Once you know what they need, you will be best served by making available the resources they need to make it easier to do their job.