5 Ways to Stand Out When Selling an Insurance Agency

March 21, 2023 Oak Street Funding

Selling an Insurance Agency

In this age of consolidation and agency acquisition, many insurance businesses are keeping their options open for a future partnership or selling an insurance agency. If you are a business owner interested in selling an insurance agency, do you know whether your business operations are truly sophisticated enough to be appealing to a potential partner or buyer? If not, it may be time to step up your game. With many successful, growing insurance businesses in the marketplace, it’s important to understand what the buyers are looking for, as well as how you can make your company stand out among others selling an insurance agency.

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1. Your Financial Health

Insurance businesses with solid, organized financial records will look more appealing to potential partners or agency acquisitions. Here are some things to gather or have in place to stand out and improve your chances of selling an insurance agency to make the transition smoother:

  • Compare financials with industry norms: When analyzing your budget, profitability and other financial numbers, research and compare your figures with those in the industry. Look for areas that seem out of the ordinary for a company of your size and adjust accordingly. You can track and compare common expenses such as rent, acquisition costs, overhead and more to make sure you are in line with industry averages.
  • Invest strategically: When making working capital investments for the growth of your business, keep them in line with your goals and mission. For instance, prioritize spending and investing in things such as marketing, new technologies and people that will result in a greater return for your business.
  • Keep your operations streamlined: Reduce manual procedures and invest in new technologies to automate your sales and processes. This includes customer relationship management (CRM), proposals and financial documentation. Make sure all of your employees are following the same processes, and document these processes in order to create a more streamlined operation and reduce overall costs.

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2. Your People

One of the greatest assets in your insurance business is your human capital, otherwise known as your employees. To position yourself for selling an insurance agency, make a note of the value that your people bring to the equation, how they stand out. Some ways that you can tout your team as an asset include:

  • Experience and Longevity: Do you have owners, producers or team members with decades of experience in the insurance industry? Have any staff members stayed with the company for many years? Highlight their extensive knowledge on your website’s company overview page and in your promotional materials.
  • Specialized Training: Tell the story of how your leaders or support team have undergone extensive training or complete regular continuing education to make your business more appealing to a buyer or partner.
  • Company Culture: Keep in mind that an acquired business will need to merge staff and leadership with the new company. Clearly define, communicate and execute a consistent and unique company culture (your values, work ethic, techniques and goals) so that they mesh well with a buyer’s ideals. This includes the positive traits of the owner, producers and employees, along with the management style of the business.

3. Diversifying Revenue Streams

Diversifying your revenue streams means having multiple sources of income, rather than relying on just one. This can be a good way to reduce financial risk, as it means that if one source of income is lost or reduced, you have other sources to fall back on. If you are selling an insurance agency, this could be very appealing to an agency acquisition partner. There are several ways that insurance agencies can diversify their revenue streams:

  • Offer a wider range of insurance products: Insurance agencies can consider offering a variety of insurance products, such as life insurance, health insurance, and pet insurance, in addition to traditional property and casualty insurance.
  • Sell non-insurance products: Insurance agencies can also consider selling non-insurance products, such as roadside assistance or identity theft protection.
  • Offer financial planning services: Insurance agencies can also consider offering financial planning services, such as retirement planning or estate planning, to their clients.
  • Sell insurance to businesses: Insurance agencies can target business owners as potential clients and offer them a range of insurance products, such as liability insurance and workers' compensation insurance.
  • Offer insurance in multiple states: Insurance agencies can consider expanding their operations to multiple states, which can help to diversify their revenue streams.

4. Your Marketing Plan to Selling an Insurance Agency

When selling an insurance agency, buyers are looking for a turnkey operation. This includes marketing your business to stand out. Having a written strategy for who you are, who you reach, how you retain and how you find your clients is necessary. Think about and answer the following questions:

    1. How do you nurture your existing clients to ensure they continue working with you?
    2. How do you currently communicate your business to prospective customers?
    3. Have you clearly identified and fleshed out who your ideal clients is and how you can find more of them?
    4. Do you have a marketing plan for how to reach your target audience?
    5. Does your business have a professional website that can be easily found via search methods?
    6. Are you currently tracking your return (ROI) on your marketing investments?

Companies who have a clear picture of who they are, who they are targeting, and how they are reaching their current client base will automatically become more appealing to a potential buyer or partner and help when is comes time to selling an insurance agency.


5. Plan Ahead with Succession

Succession planning is the process of planning for the transfer of ownership and control of a business from one owner to another. It is important for business owners to have a succession plan in place in case of unexpected events, such as the death or disability of the owner, and also if you are interested in selling an insurance agency. There are several key elements to consider when creating a business succession plan:

  • Identify potential successors: This might include family members, key employees, or outside buyers.
  • Determine the value of the business: This is important for determining how much the business is worth and how it will be divided among owners or passed on to successors.
  • Establish a plan for transferring ownership: This might include a buy-sell agreement, a transfer of ownership to family members or key employees, or a sale to an outside buyer.
  • Develop a plan for transferring control: This might include training and development of potential successors, as well as establishing a timeline for the transition of control.
  • Review and update the plan regularly: Businesses change over time, and it is important to review and update the succession plan as needed to ensure that it reflects the current state of the business.

It is important to work with a financial advisor, attorney, and other professionals when developing a business succession plan to ensure that it is thorough and effective.


Effort Can Pay Off When Selling an Insurance Agency

The bottom line is that your business must become the best version it can be to make your company more appealing to a buyer or partner. Look to other successful insurance businesses as examples to guide your analysis and strategy for selling an insurance agency. Be sure to align your internal staff and hiring process to fit your new growth and business goals. Continue to organize and streamline your operations, processes and marketing approach for maximum effectiveness and future growth potential.

Finally, ensure that your vision, mission and culture are clearly defined and ready to integrate with another potential company. With a plan in place to make your company more marketable from a financial and personnel standpoint, you’ll be in a better position to make that happen when the time is right for selling an insurance agency.

Oak Street Funding has helped businesses stand out from the competition by providing working capital loans. Contact us to learn more and how we can help you.

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Disclaimer: Please note, Oak Street Funding does not provide legal or tax advice. This blog is for informational purposes only. It is not a statement of fact or recommendation, does not constitute an offer for a loan, professional or legal or tax advice or legal opinion and should not be used as a substitute for obtaining valuation services or professional, legal or tax advice.

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