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.

People: Your Successor

The first thing most owners think about when it comes to passing on their agency is: who’s going to take over? This is, indeed, one of the most important choices you’ll make in your succession planning.

No matter what decision you make, have a backup. Succession planning should start years ahead (most suggest at least 5 to 10 years out) and a lot can change between now and when you retire. The family member or employee you chose may not be able to take on your agency anymore, or the agency you have your eye on to acquire your business may not be able to afford you. Choose multiple persons or companies, giving yourself a plan A, B, and C when it comes time to hand things over.

People: Your Team

A change in ownership has a significant impact on your staff. No matter what you say or how you try to convince, some of your staff will leave with you. Make a plan for this by hiring young talent early. Veteran producers and CSRs may decide it’s time for them to retire with you and you don’t want to leave your successor with multiple holes to fill. Watch your staff and get a read on where people are in their careers. Use that information to create a pipeline of younger talent coming in behind seasoned experts on your team.

Confused about how to choose a successor? Read our post on Who’s Taking Over

People: Your Customers

Similarly, customers may want to leave with you. This can be easier to fight as they, unlike some of your ready-to-retire team leaving the workforce, cannot simply go on without insurance coverage. Combat an exodus by preparing customers for your departure. Let them know the date is coming, introduce them to your successor, and assure them your agency’s culture and values are not tied to you and will continue after you’ve retired.

If you plan to stay on in an advisory capacity, let your customers know. And, give them opportunities to express their thanks whether it be emails, social posting, or even an in-person gathering to celebrate all the ways you’ve helped them over your career.

Profit: Tracking Your Value

Money in and out of your agency should be recorded and continuously reconciled. This may seem obvious, but too often agencies are lax with accounting and find themselves in trouble when succession time comes. There should be no surprises on your balance sheet when you hand your agency over! Part of keeping your finances tight is establishing processes to track funds and holding financial information in one place.

Get our comprehensive list of Agency Perpetuation Resources here

Profit: Determining Your Value

Tracking your value is one thing, but determining it is quite another. As an agency owner, you’re well aware there is much more to an agency’s value than what is on the balance sheet. However, your closeness to your agency may skew your opinion on how much your agency is worth. To get an accurate valuation, have a third-party evaluate your agency and give you their professional opinion on your worth.

In addition to a value assessment, ask your evaluator for advice on how you can improve over the years. The hardest part may be putting their advice into action. They may tell you to do things like eliminate certain producers or other actions you might not agree with taking. If you have your doubts, check in with a trusted colleague or mentor to get a second opinion. Be conscious that your emotions may be clouding your judgment in this area.

Process: Making a Plan

You may have planned agency succession in your head, but if it’s not in print, you don’t have a plan. Meet with your team, including your successor if you have one identified, and make a framework for the coming transition. Start with an end date in mind and work backward. Break succession planning down into actionable, attainable steps. Once you have something in place, revisit and revise each year.

Start your planning with these 5 Questions to Ask When Preparing for Perpetuation

Process: Passing on Information

A critical part of your plan is how to pass on information. There is so much stored up in your experience it’s impossible to pass everything on, but that doesn’t mean you shouldn’t try. Your agency management system is an essential tool in your transition as it holds all the information you need to move from one generation to the next. Ensure you’re using it to track finances, customer data, and prospecting interactions so you can easily pass this on.

With so much riding on your management system’s performance, it’s important to find one that fits your agency’s needs for today and tomorrow. That’s why our Partner XE agency management system is designed with room to grow. The all-in-one system integrates essential agency information, like accounting and prospect management, in one place and leaves space for new technology to be added.

We’ve been around long enough to know there’s so much we don’t know coming, and we’re ready to make Partner XE better with each new discovery. Find out more about what Partner XE has to offer your agency – get in touch with us and schedule a demo today.

Sarah Deak

Sarah Deak has been contributing to the SIS team since 2013, covering topics like agency perpetuation, workflow improvements, data security, and marketing. She has a background in small business, working with organizations to improve their online presence and client engagement. Sarah also writes for the SIS newsletters and website, and counts herself lucky to hear from our many passionate, hard-working clients for our client stories. Her favorite part about working for SIS are the dedicated, service-minded people.