To err is human, but botching your insurance agency start-up can be a personal, professional and financial disaster. When starting a new business, success is never guaranteed and many start-ups fail. So, how does a savvy independent agent avoid disaster?
Before I answer that question, I must emphasize that I’m assuming that the start-up agency has established access to insurance companies to write premium — without that, nothing else really matters.
Now the answer: Learn from the mistakes of others. Here, the five common mistakes many agency start-ups make.
See also: 10 tips for new insurance agents
1. Ignoring infrastructure
When you first set out on your own, typically you have few, if any, clients. Consequently, it’s easy to fall into the trap of putting off until tomorrow what you should really invest in today. Most commonly, this list of to-be-deferred infrastructure includes vital agency technology, including: agency management systems, responsively designed websites, mobile applications, social media and ongoing IT support.
In reality, much of this infrastructure is needed upfront to support anticipated growth. You don’t have to get the best and most expensive services and equipment, but a basic agency management system is crucial. You will want to ensure these initial investments offer scalability over the foreseeable future of your business.
2. Lack of due diligence
Is that vendor right for your business? How much money will you really need in the first six to eight months while you ramp up? Does that agency management system work the way you need it to? Before you invest in equipment, cash management plans and vendor relationships, do your homework. Interview vendors. Be clear about your expectations. Talk to other independent agencies about their first year in business. Ask lots of questions and make sure you get what you need that fits your budget and your working style.