Buying an insurance agency can be extremely rewarding. However, this only applies to those who know what they’re getting themselves into before they decide to jump right in. The process of purchasing an insurance business isn’t something that should be taken lightly, and those who pursue it unprepared find themselves in sticky situations.
What You Shouldn’t Do When You’re Purchasing an Insurance Agency
Delving Deeper into the Process Without Knowing the Seller’s Motivation
Insurance agency owners have their own reasons for selling their business. For this reason, it’s always best to find out what motivates them to sell before you decide to purchase their agency. In cases where they’ve decided to sell their thriving business because they’re nearing retirement or they’re moving out of state, you may just be setting yourself up for success.
However, if they’re selling because their business has been losing money for years, you may want to think twice before buying it. While you may have what it takes to turn this in-the-red business around, you may also run the risk of wasting your energy, time, and money on it.
Failing to Evaluate the True Value of the Agency
Did you know that not all of an agency’s assets can be recorded in their profit and loss statements? To properly evaluate the true value of the agency you’re planning to buy, you have to look into the quality of its existing employees, its physical assets, profitability, history of sales, risk management strategies, and financial status. Unless you get a clear snapshot of the big picture, you won’t really know if this deal is the right one for you.
Not Knowing What Kind of Insurance the Agency Specializes In
You have to find out whether your prospective agency offers boutique services for specific areas or is more of a one-size-fits-all type. Otherwise, you won’t be able to reconcile your own goals and skills against what the agency has already established. For instance, you wouldn’t want to purchase an insurance business in Kansas if your passion happens to be boating insurance.
Are You Thinking About Buying an Insurance Agency?
At Energia Consulting Partners LLC, we offer you a well-established approach to the agency sales process. Schedule an appointment with us today.