Whether it’s year or decades off, you can be doing something right now to impact your agency’s perpetuation. Each day is an opportunity to increase your value, all you need is the right insurance agency support tools and methods.
Essential Tools to Elevate Your Agency’s Worth
- Customizable agency management system: Notice we didn’t just say “agency management system” – that “customizable” piece is what makes the difference. Invest in a system that adapts to your agency’s specific needs, with room to grow. You want a system you’ll instinctively use every day, tracking and analyzing data that’s critical to assess your value.
- Integrated accounting: Accounting integration is an essential piece in your management system. With integrated accounting, your policy, client, and financial data is stored in one place, so you get a clear picture of where your agency stands.
- Customer relationship management tool: Also known as a CRM, a customer relationship management tool helps producers better manage their sales pipelines. With an integrated CRM, agents can turn even more prospects into lasting clients, adding to your overall agency value.
Find out how to leverage your management system to track agency progress
- Stellar customer support elements: The top three customer support tools to have are: an intuitive and informative website, agency customer portal, and customer agency app. Each of these three is part of a trifecta of reliable customer support, leading to higher retention rates and attractive growth potential.
- Secure cloud hosting: Safe data means a safe future, and a secure future means higher value. Ensure your agency’s data is protected on cloud servers with redundant back-ups and multi-character encryption for increased security.
Steps for Perpetuation Prep
- Pay attention to cash flow
Current and projected cash flow make buyers take notice. That means your accounting needs to be accurate and your growth needs to be steady. Invest in quality marketing and customer service to maintain a steady influx of new customers and base of lifetime clients.
- Focus on cost reduction
Your income will look even better when next to lowering expenses. Pay attention to ways you can reduce waste or streamline processes, knocking down your superfluous output. Tech advances like paperless processing, e-signing, and streamlined document management are game-changers here.
See what our partner agencies had to say about perpetuation in the SIS Perpetuation Survey
- Hire right, and get them to stay
Investing in tech is one of the ways to create value for your agency. Another is hiring the right people. The knowledge and experience possessed by your staff are invaluable assets. Knowing your team’s value, build in funds to offer stay bonuses to keep them around after you retire. You want to pass on an agency with the team that helped build it.
- Identify a successor
Part of hiring right is hiring with your departure in mind. Identify potential successors early on and put time into mentoring them. Regardless of whether they’ll be buying, you need to have someone in place to take over the reins when it comes time to retire.
Look for someone who possesses superior leadership skills, is willing to learn, and wants the job. Too often, agency owners want to pass on their business to their children, but the next generation has no interest. Be sure your selected successor is in it for the long haul.
Should you pass on your agency or sell? Get tips on how to decide here
- Know (and commit to keep to) your role
Now is the time to decide how you’ll be involved after passing on your agency. Don’t wait till the moment comes to make a decision! Chances are you will have more emotional attachment that you expect and may not make the right choice. Be specific in your succession plan how you’ll stay connected (or not) once retirement rolls around.
Ask yourself these 5 questions when preparing your agency for perpetuation
Prepping for the Future, Now
What you do today has a significant influence on your agency’s (and your) future. You need the right tools to help you do business well today and improve it for tomorrow.
Partner Platform and SIS are here to help. With integrated accounting, a Producer Results CRM, and other agency valuation and business tools, along with a dedicated SIS team and Partner Community, you have all you need to thrive today and for years to come.
Set up your agency up for success – contact us at email@example.com today.
Agency succession is coming. You have two choices: make it happen or let it happen to you.
As an independent agency owner, you know the first option is the best. Taking control of your succession planning means you’re ready when the time comes. To prepare, you need to do things like choose a successor, determine your agency’s worth and have the right insurance agency support procedures in place. In short, you need to think about three areas: People, Profit, and Process.
It’s been said, “when you know, you know.” This is true for all major moments in life: getting married, having kids, buying a house, and even when you’ll retire. But, when it comes to insurance agency perpetuation, you need to think ahead for that “the time is now” moment.
When it comes to agency perpetuation planning, you’re likely somewhere between square one and planning your retirement party. Let’s hope, unlike some of 2016 Future One Agency Universe Study respondents, you’re closer to a beach house and a cold drink. The study found 23% of agencies with one principal over age 66 said perpetuation was more than five years out. Age may bring wisdom, but it should also bring retirement before 70!
Are you looking for the secret to a successful agency perpetuation? We’ve got it in three simple steps:
- Plan ahead
- Plan ahead
- Did we say plan ahead? As in…NOW!
Whether you’re handing off or taking over an insurance agency, it’s never too soon to start thinking about and planning the transition. A large part of that planning is deciding who will be taking over.
Many decide to perpetuate internally, thinking it’ll be easiest to pass on operations to a family member or long-time employee. But, as any owner knows, running an agency requires more than logging hours. It’s what you do with those hours that counts. Here are three real steps you can take towards a successful transition with your successor.
Is internal perpetuation right for you? Read our post on internal vs. external perpetuation to find out
1) Find the Right Person
Don’t get us wrong, long-term investment in the agency is a good indicator for a potential successor. A good successor knows your agency and its culture. Though they won’t run it the same as you, knowing the history and the spirit of the business is huge.
You’ll also want someone who is up to the challenge. Taking on an agency is a big undertaking. Look for someone who deals well with uncertainty and thrives on possibility.
Finally, leadership is essential. A great successor will be able to bring the team together and clearly communicate mission, vision, and goals. They’ll be able to motivate employees to take on the transition ahead, celebrating successes and keeping the team positive through challenges.
Are you asking these five questions as you prepare for perpetuation?
2) Get Them Involved
Once you know who will be walking the transition journey with you, get them involved in the process. Include them in strategic agency planning and get their input. The more your successor knows the better. Give them insight into why things are done a certain way, how decisions get evaluated, and their implication on the agency. Sharing these elements with your successor helps them build a broader perspective for when they take over the agency.
You should also include your successor in all perpetuation planning (you’re starting now, right?!) going forward. Again, the more they know, the smoother it’ll be to hand things over. Part of this planning includes being clear on how you want to be involved post-transition.
Read the dos and don’ts of taking on the family business
Lastly, be intentional about bringing your successor into the key relationships involved in your agency. As an owner, you’re well aware the important role each of these relationships play. Introduce your successor to industry group members, board members, carrier contacts, and your agency management system contacts among other key players.
3) Lean on Your Management System
One of the most challenging pieces of your #agency #transition is exchanging information and knowledge. Your agency management system is an asset here. Be intentional about using it to store data and create a comprehensive picture of where your agency stands. Work with your successor to create and understand financial and other reports and map out best practices for use.
Find out more on how to leverage your agency management system
It’s helpful to get a re-training from your agency management system provider. Use these sessions to introduce your successor to the ways an owner can maximize system use and get your employees on the same page about workflows and best practices.
The dedicated service team at SIS has been part of numerous agency transitions, walking with owners as they navigate the seemingly murky waters. Our team has been praised many times over for their aid during transition, and our PartnerNet portal acts as a 24/7 resource for our partner agencies.
If you’re thinking about making a change in your agency, get in touch with us. Contact the SIS team at firstname.lastname@example.org to get connected today.
Planning your insurance agency perpetuation may seem like an insurmountable task. But, when broken down into manageable pieces, it can be tackled like any major project. Throughout the years, we’ve created a number of resources to help owners map out their succession plan. When compiled, we found five simple questions can put agency transition on the road to success.
- Do I perpetuate internally or externally?
There’s a reason this is question number one. Your answer will determine what path you’ll take and how to prepare your agency for it. Weigh what you’re looking for in succession. Internal perpetuation usually means more brand consistency and control, but external generally means a higher cash gain.
- Who will take over?
Once you know if you’re looking inside or outside of your agency, think about who will be taking the reigns. If internally, it may be a family member or employee. If external, it could be a local agency, larger regional agency, or even a bank. Decide what’s best for your business. Ideally, you should start planning your perpetuation 5-10 years out so you have time to work with your successor on the next three questions.
Read more on the pros and cons of perpetuating internally and externally
- What’s my agency worth?
Determining agency value can be tricky. To help, ensure you have a financial reporting system in place early on. Most agencies use their management system to track money in and out. Use reporting features to set up recurring reports to give you a clear picture of where you stand year to year. This data will inform you on your agency’s real value. That’s a great bargaining chip when negotiating with potentials buyers.
- What’s my timeline?
If you’re asking when you should start planning, the answer is now. As mentioned, the nuts and bolts of perpetuation should be put into motion 5-10 years out, but it’s never too soon to draft a timeline. In your timeline, map out when you plan to select a successor, length of the transition period, and your expected turnover month and year. Knowing these dates ahead will help you prepare your staff, your successor, and yourself for the transition.
- What’s my post-succession role?
Everyone is different when it comes to how much they’d like to be involved post-transition. You can stay on with a more active role as an advisor or board member, or you can choose to take a more passive position jumping in here and there as needed. If full retirement is more up your alley, you can pass off your agency and hit the links. Just be sure you’re upfront with your successor on how you’d like to be involved.
Here’s what to do – and not to do – when planning succession
BONUS: What will be my biggest obstacle?
There’s a lot that goes into planning and executing your agency transition. What are you most anxious about? Whatever it may be, that’s the area where you need to spend the most time. Reach out to owners in your local professional organizations, do your research, and make sure you’re as prepared as you can be for whatever scares you most.
Find out what other agencies had to say about perpetuation in our Perpetuation Survey
For many, it’s the transition itself that is most intimidating. You can ease that fear by ensuring you have the right technology to easily transfer information. As we’ve heard from our partner agents, being able to turn over critical data with our Partner XE agency management system has been a lifesaver. With integrated accounting and email systems and an intuitive, easy to use interface, Partner XE leaves you one less thing to worry about in agency perpetuation.
To find out more about Partner XE, get in touch with an SIS team member today at email@example.com.