Who and What to Include in Your Agency Succession Planning

passing the torchPlanning for your exit from the independent insurance agency you helped build, whether passing it on to family or not, is rarely an easy task. However, succession planning is a necessary part of running a successful business, and it’s important to start the process sooner rather than later.

Two major factors to consider when succession planning are who will be involved and what components need to be included in your plan.

Who to include:

  • Business attorney
  • Tax professional
  • Successor(s) (internal or external)
  • Spouse and/or other family members involved in agency operations

Your list may expand beyond these key people, such as partners or advisors, but be careful not to include too many ideas and opinions. Although it is helpful to solicit the advice of others, ultimately you are the decision maker for your agency.

What to include:

  • Total cost of your agency: this should be revised regularly, including any outstanding debt.
  • Impact on employees: are there staff that will be leaving when you do? Staff you want to stay? You may want to “bonus out” the first group and provide a “stay bonus” (i.e. 50% more than a usual bonus) for the second.
  • Client care plan: Think about how to inform clients of your departure. This should include a transition plan for introducing clients to your successor. It’s important to have little to no interruption in client care.
  • Mentorship for successor(s): It’s best to have two successors for each principal owner. Look for younger agents so they have a longer potential tenure at your agency. Be intentional about mentoring these successors, including bridging the relationships you’ve built over the years and passing them on.
  • Your goals: These will differ by owner and, with multiple owners, may involve some compromise. Be clear about what you want whether it be a certain amount of cash intake, continued involvement in agency decision making, or a distinct perpetuation of agency culture.

When it comes time to roll out your succession plan, make sure you’re ready to retire. Although you may stay involved in your agency’s operations and/or decision making, it’s important to be prepared to spend less time focused on your agency. Invest in other interests, setting yourself up for success in other ventures.

Moving on from your agency can be difficult, especially because of the relationships you’ve built with your employees, partners, and clients. We at SIS value such relationships, which is why we provide pieces such as this for our clients and partners. We realize your agency is more than just a business, and treat it as such with our dedicated staff and individualized client care. To find out more about the SIS community, visit our website or contact us at sales@sisware.com.

When to Start and Where to Go with Succession Planning

are you readyAs we delve into our second post focused on succession planning, we look towards addressing when to start planning and where to go given the multiple tracks for exiting your independent insurance agency.

When to Start Planning

As with most big decisions, it is never too early to start planning. According to a recent Property 360 article, it’s best to start considering your exit plan in your 30s. However, most owners make the mistake of waiting too long, not starting the process until their late 50s or 60s.

The reason it’s suggested to start planning early is so you can avoid having too many individuals leave at one time. You want to ensure there is a steady flow of retirees, leaving time for new, young agents and other employees to be trained. Similarly, your plan needs to be continually updated as employees come and go, and as your agency’s market value changes.

Where to Go

As mentioned in our last post, there are multiple exit options for you and your agency. Each has its own benefits and drawbacks, and it’s important for you to explore which is best for you.

Transfer to Family Member

+ Keeps agency in the family                               – May continue to be financially tied to agency

+ Perpetuates mission and values                                     – Little to no cash gained

+/- Able to stay involved in agency operations              – Cannot guarantee advice will be heard/heeded


Sell to Family Member or Employee

+ Keep up agency culture                                                    – Cash gain may be low

+ In competent, experienced hands                                  – May continue to be financially involved

+ Some cash gain


Selling to Outside Party

+ Largest cash benefit                                                          – Loss of company culture

+/- Exit from involvement                                                   – May be damaging to employees


Retain Ownership and Move to Passive Role

+ Keep up agency culture                                                    – No cash gain

+/- Able to stay involved in decision making                   – Financial risk still attached

Take into account you and your agency’s specific needs and goals when making your decision. There are many options to face, but it is most important that you choose the option that is right for you.

SIS knows your agency’s unique needs, which is why we offer personalized service and customizable options with our Partner XE. Help us get to know your agency today – contact us today at sales@sisware.com.

Succession Planning: The Why and How

Planning for the next generation of leadership at an agency can be a combination of excitement, uncertainty and lots of critical conversations. In our next series of blogs, we’ll look at the who, what, where, when, why and how of succession planning. We start off with a question many have yet to ask—why?

Why Start Succession Planning

The main reasons to create a succession plan are: relationships, money, and your business legacy.

Relationships are a big part of your agency’s success, and planning for your departure will make it easier to maintain these connections. Whether it be family, employees, or clients, making a plan means everyone will be ready for what happens next. This sense of readiness can establish clear expectations and address the emotions that are part of every agency transition.

Money is, of course, a huge portion of succession planning. There are certain tax implications attached to the different ways to transfer ownership of your agency. Plus, some ways will leave you with more cash than others. Your financial goals may differ depending on whether you’re selling to a family member, employee, or to someone not associated with your agency.  It’s important to take your time researching the different options so you gain the most from your agency’s transfer or sale.

Legacy brings a sentimental piece to the table. You have invested a lot of time and energy in your agency, and you want it to continue for years to come. By planning ahead you can ensure your wishes are instilled in the future of your agency.

How to Start Succession Planning

The best way to start your succession planning is to consider your “exit strategy” options. These include:

  • Transferring to family members
  • Selling to family members
  • Selling to one or more employees
  • Selling to an outside third party
  • Selling to other co-owners
  • Retaining ownership, but moving to a passive owner role

Each scenario has its own benefits and drawbacks. For example, transferring to a family member and retaining ownership mean you may continue to have influence on your agency’s operations, but you will have little cash gain. Selling certainly means a cash gain, but requires letting go of influence.

Think about what elements are most important to you, and begin putting together your own succession plan. As part of your decision, look into the marketability of your agency and the tax implications related to your options. The Center for Exit Planning offers great resources in this arena.

Get more tips on succession planning from the SIS blog or connect with colleagues via our Partner XE user community. As always, contact us to share your comments and concerns – we love to stay in conversation!

Taking Charge of the Family Agency eGuide

For many independent insurance agencies, keeping it “all in the family” is more than just an expression, it’s a way of business. As family owned businesses, these agencies have strong values and a sense of community with clients and employees. However, when it comes time for the next generation to take charge, switching hands can be tricky. Clients and employees alike may be resistant to any changes to the “family ways”, making for a challenging transition.

Our most recent eGuide addresses the issues around transitioning your family agency from one generation to the next. We look at the dos and don’ts of transitions, how to grow your agency, and evaluating your successes, all while staying true to your family values.

Access the eGuide here! And be sure to check out our other great eGuides and whitepapers, as well as our blog, on our resource page. Have topics you’d like to see us cover? Contact us today to share your thoughts!


Grow Your Agency…And Keep Your Customers

Growing Your AgencyAs we mentioned in our last post, many independent insurance agencies are family run businesses, with ownership passed from one generation to the next. When the generational pass happens, many new owners are faced with a conundrum: how to gain new customers without losing current ones. The delicate balance between the “old” and “new” ways is a difficult one to keep, but with patience and planning the two can be blended.

The first and most important step in maintaining this balance is to track your business. Find out where revenue is coming from, paying special attention to VIP clients, referrals and specific producers. If you don’t already, get to know those customers and producers bringing in business – take them out to coffee or lunch and pick their brains on best practices. By building these relationships, you will get a sense of how to connect with and solidify your current customer base.

As you gain knowledge from these individuals, begin to consider increased investments in successful areas. Are you getting a high response from direct mail? Start putting more money and brainpower in to it! You want to do more than just maintain your successful processes, you want to make them better. Also, investing in these successful means will resonate with your current customers as you show them they are valued.

On the opposite end, identify gaps and make a plan. This may be more difficult to do, so reach out to other agency owners through user groups to find out what you’re missing. Many new owners find a need to grow (or create!) an online presence. Be sure to do your research and make a plan before taking action. Also, be wary of doing too much at once – focus on one new change and do it well.

Finally, check back, assess and adjust. The process of growing and retaining your customer base is continual. Set checkpoints throughout the year to asses and be ready to make changes each time. No one gets it right on the first try, and the only way you’ll learn is to try. As you see growth, start building your infrastructure with new producers and upgraded technology. Take it one step at a time for a steady build.

As you track your business, one of your most useful tools is your agency management system. We at SIS are always available to help you and your agency maximize Partner XE and its capabilities through trainings, online and offline, personalized for your agency’s needs. Contact us today to set up training or answer your questions about any of Partner XE’s many capabilities, customized for you.

Inheriting the Family Insurance Agency : The Dos and Don’ts

family agencyMany independent insurance agencies are not just small businesses, but family businesses, passed down from one generation to the next. Eventually the time comes when the next generation is ready to take over the business. No matter how involved you are in a business, taking the reins can be challenging. How do you make a successful transition from one generation to the next?

It’s important to know what to do, and what pitfalls to avoid as you work to take over your family’s agency.

DO adhere to your agency’s succession plan. You or your family members may be tempted to make exceptions, but the reason the plan is there is to keep you on track.

DON’T neglect to create a succession plan! Push for one to be put in place now if your agency doesn’t have anything set.

DO practice patience and compassion. Transition will take time, and it may be hard for your predecessor and/or employees to adjust. Realize the pain of change, and adjust to ensure everyone involved feels heard.

DON’T allow the “old ways” to take control. Although you must be sensitive to the “way things were”, you cannot repeat the past. Be assertive and take charge, putting your own spin on things.

DO assess your assets. Find out what is working well! Once you have an idea, think about what it is that makes these elements work well and how you can bring them to the areas where your agency is lacking.

DON’T throw everything out. You want to make your mark, but it’s foolish to think a slash and burn mentality will breed success.

DO make changes. Consult with members of your agency before implementing anything, and implement changes via trainings. Changing ways can be hard enough. Doing so without some sort of training can be near impossible.

DON’T change everything at once. You may have a lot of ideas about how to better your agency, but it’s smart to implement one or two at a time. Once the new becomes the old, you can start easing in a new change.

Finally, DO track your progress. By keeping track of how you’re doing, you’ll be able to know if your changes are making an impact. Also, showing growth to employees and clients will help build trust and confidence in your leadership abilities.

As you transition in to your new role, we at SIS are here to help you see how your agency management system can play a critical role. We can set up individual and group Partner XE trainings, or simply consult with you over how to use Partner XE to track your agency’s performance. Get in touch with us today at sales@sisware.com.