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I N S U R A N C E I N D U S T R Y K N O W L E D G E F R O M O A K S T R E E T F U N D I N GÂŽ

a first financial bank company

Spring 2018

Transformation: Is it time to update your brand? Page 6

Expansion: Debt as a tool for growth Page 12


FEATURES

4 Looking inward can help your agency transform in 2018

Insurance Edition

Spring 2018

Publisher Oak Street Funding Editorial Director Stefanie Neer Contributing Editor Sharon Robbins Art Director/Designer Aidreen S. Hart Graphic Contributor Beth Winchell

6 Transformation: Time for a brand update? Keep your brand fresh to engage clients.

12

Expansion: Debt as a tool for growth Push beyond organic growth with an infusion of capital.

14 Agency Attractivity Are potential partners or buyers interested in your agency?

Share Your Thoughts If you have any questions, comments or ideas for The Bridge®, let us know. Email us at marketing.box@oakstreetfunding.com or visit us on social media. Oak Street Funding does not make any representation as to the accuracy or suitability of any of the information contained in these advertisements or sites and does not accept any responsibility or liability for the conduct or content of those advertisements and sites and the offerings made by the third parties. Third party advertisements and links to other sites where goods or services are advertised are not endorsements or recommendations by Oak Street Funding of the third party sites, goods or services. Oak Street Funding assumes no responsibility for the content of the ads, promises made, or the quality/reliability of the products, services, or positions offered in all advertisements.

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The Bridge is a newsletter produced by: Oak Street Funding 8888 Keystone Crossing, Suite 1700 Indianapolis, Indiana 46240 844-395-8242 Loans and lines of credit subject to approval. Potential borrowers are responsible for their own due diligence on acquisitions. California residents: Loans made pursuant to a Department of Corporations California Finance Lenders License (#6039829). The materials in this paper are for informational purposes only. They are not offered as and do not constitute an offer for a loan, professional or legal advice or legal opinion and should not be used as a substitute for obtaining professional or legal advice. The use of this paper, including sending an email, voice mail or any other communication to Oak Street, does not create a relationship of any kind between you and Oak Street.

© 2018 by Oak Street Funding LLC. All rights reserved. Any duplication without prior written permission is strictly prohibited.

www.oakstreetfunding.com


LETTER FROM THE FOUNDER/CEO

Destination: EVOLUTION

Whether your agency has experienced no, average or exponential growth in the last few years, it can become easy to get stuck on autopilot. Doing things as you have always done them can jeopardize future growth, as stagnation can make it harder to implement the required changes for sustained success. This edition of The Bridge is all about looking inward to determine which elements of your business need a push to evolve. Is your current branding doing an effective job at communicating who your agency is, how you are different and what you offer? If you are considering selling, are your operations sophisticated enough to make your agency appealing to a potential buyer? Should you finally implement those strategic growth initiatives? You are in the driver’s seat. In which areas will your business better itself this year? Strategically evolving may require an investment. Oak Street Funding provides insurance agencies with debt capital for growth, acquisitions, successions and more. Whether you are maturing, expanding, or planning

Free Webinars on Demand Our resources are packed with expert advice and best practices. Watch now! oakstreetfunding.com/webinars-ia

to exit your business, evolution should be a constant theme. We’ll get you there.

Rick Dennen, Founder, President & CEO

Oak Street Funding® Vision Statement To be the market leader in client experience for commercial financing by delivering unique and diverse product offerings through cutting edge technology and exceptional employee and client service. 844- 395- 8242 • w w w. o a k s t re e t f u ndi n g.c o m | 3


How looking inward can help your agency transform in 2018 The measure of success in any agency usually involves some measurement of customer or revenue growth. Whether your agency has experienced average or exponential growth, it can become easy to get stuck on autopilot. Doing things as you have always done them can jeopardize future growth, as stagnation can make it harder to implement the required changes for sustained success. Whether your success hinges on customer service, sales or operational excellence, it becomes important to evaluate the entire business operation and adapt to meet the agency’s and market’s changing needs. Looking inward can help agencies improve their internal processes, sell more effectively and provide a better customer

experience – all of which can encourage transformative growth.

Start from Within

One of the best places an agency should turn to when beginning the adaptation process is to its own team members. A simple way to ascertain how employees are feeling is through an anonymous employee survey or questionnaire. This process helps uncover valuable insights that team members might not be willing to share out in the open. If your agency is too small for a survey, consider having a sit-down meeting over lunch or dinner to discuss team members’ thoughts and opinions. This can be done in a oneon-one or group setting. Creating an

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atmosphere which allows for an open dialogue between agency owners/ managers and team members will make employees feel comfortable enough to share their thoughts and feelings. When employees feel comfortable, they will also feel valued and capable of making a difference in the organization. Some of the topics you should consider for your employee survey/conversation include:

Employee Satisfaction

As you likely are aware, one unhappy team member can sink a business and reduce overall employee morale. This effect can trickle down into your processes, your sales and even your customer satisfaction numbers.


Questions to Ask

• Are employees in your organization truly happy at work? • Do they enjoy their roles and feel fulfilled? • Do they feel adequately compensated and/or praised for their efforts? • Are they getting along with other team members? • Do they feel frustrated about any of their current job responsibilities or processes? • What is their vision for their future career track?

Potential Solutions

• Review and evaluate employees at least quarterly to understand their needs, praise their efforts and evaluate current performance. • Ensure employee compensation is in line with industry averages to reduce turnover. • Foster employee engagement through team-building exercises and routine, agency-wide social gatherings. • Find ways to incentivize and reward star performers in your business. • Give employees opportunities for growth within the organization when possible.

Employee Education

Making sure your employees thrive in their roles involves more than just making sure they understand their day-to-day responsibilities. Your team members represent your agency’s brand, and they should be living out the mission and values your agency holds dear. In addition, every team member interacts with customers on some level, and it’s important that everyone maintains a consistency of service across the board. Here are some ways you can find out if employees have been properly prepared to serve in their current roles:

Questions to Ask

• Do employees know your company’s mission and vision? • Are they aware of the company’s current goals and expectations? • How well do they know your products and services and how are they articulating this information to customers? • Are they being given the tools and training necessary to complete their jobs effectively? • In what areas of the agency do they need to or desire to learn more?

Potential Solutions

• Make sure your employee on-boarding process includes training on information about the company’s history, mission, vision and values. • Help employees understand the current targeted customer, his/her main needs and concerns, and how your products and services fill that need. • Start a training program or increase educational funding to improve employees’ knowledge of a specific product or service line. • Set up a mentoring program to allow new customer service or sales agents to train or shadow seasoned staff members.

Agency Operations

Streamlining an agency’s operations can add tremendous value in all areas of the business. While agency owners can analyze spreadsheets, the heart of improving the operation lies in evaluating and making changes within the people, processes and technologies. Solicit employee feedback to find out how your agency can improve efficiencies:

Questions to Ask

• Does every member of your team follow the same automated process? • What inefficiencies, manual processes or overlap do employees encounter in their daily work? • What industry solutions do employees recommend for automating these inefficiencies? • Does your agency need to adjust employee count in certain departments to continue with the current growth trajectory or meet revenue goals?

Potential Solutions

• Standardize and document current processes and procedures so that all team members (including new hires) are following the same methods. • Reduce manual processes and eliminate paper trails through use of electronic filing and organization. • Re-align staff and hire if necessary to better optimize processes and meet the needs of the organization as it grows. • Invest in technology such as customer relationship management (CRM) software to help your sales and customer service staff perform their jobs better.

Information is Power

Once you have gleaned information from your employees at all levels, consider implementing some of these solutions in your organization to correct any issues and improve overall processes. Some of the benefits of a new culture of continuous improvement, aside from new cost efficiencies, include improved sales and retention rates and increased customer satisfaction scores. Investing in new technologies will not only streamline the operation but give powerful information to the sales and customer service teams. This in turn will help to improve the overall organization and encourage future growth. Beyond implementing these new changes, creating an employee feedback loop will empower your team members to continue identifying inefficiencies and improving processes throughout the organization. With a satisfied team of employees at the helm, your agency will be able to adapt to changes in the marketplace with ease, fostering growth while achieving enhanced customer satisfaction.

Adaptation Leads to Transformation

While your insurance agency need not evolve overnight, you must constantly be adjusting to changes in the marketplace, as well as staying in tune with the needs of your employees and customers. If your goal is growth, remaining nimble and adopting a model of continuous improvement will ensure that you stay on the path upward. With new technologies, a streamlined operation, and a team that’s on-board with the changes, you’ll enjoy enhanced profitability and844improved customer satisfaction. 395- 8242 • w w w.retention o a k s t re eand t f u ndi n g.c o m | 5


When you think about your agency’s brand, what comes to mind? Are you fully aware of how your customers perceive your business? When is the last time you asked yourself: Is our current brand doing an effective job in communicating who our company is and what we offer? If you are a captive agency, your brand has likely been defined for you somewhat by the national agency, but if you are an independent agency, you have an opportunity to set yourself apart from the rest of the agencies in your geographic region. To get started, let’s review exactly what a brand is and what that means to your agency. Your brand includes a comprehensive blend of several things, including the following: • C  ompany Mission/Vision: What does your company stand for? For example, Steve Jobs’ original mission for Apple® was “To make a contribution to the world by making tools for the mind that advance humankind.”1 •P  romise: This is typically an extension of your company mission. What is the tangible benefit you give to customers when they purchase your product or service? •P  ersonality or Voice: If your company was a person, what would be its personality? Funny? Cheerful? Serious? Sophisticated? This brand personality or voice can come across in your marketing and communication. • Logo (visual representation of your business): This is what most people imagine when they hear the word “branding.” The logo is the company’s symbol that represents the brand visually, using graphicallydesigned symbols and/or words. You can even seek to trademark your logo.

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• Tagline (catchphrase or slogan): When referring to branding, the tagline can be used alongside the company name and logo to represent or identify with your product, service or company. • Marketing messaging: The language you use in marketing materials should also correlate with your overall brand strategy. This could include the personality or tone of the content in an advertisement, your website content and printed marketing materials.

Successful Brands Start with a Plan.

One way you can create a successful brand is to have a formal marketing and communication plan. A marketing plan can help guide you toward creating a memorable brand because it involves steps like analyzing your competitive landscape, identifying your ideal customer, and developing your unique selling proposition (USP). From there, you can determine your mission and vision, along with the best logo, tagline and marketing messages to use in your marketing and sales campaigns. Let’s dive in further on how you can identify your unique brand through an exercise:

Uncovering Your Unique Selling Proposition (USP)

The acronym USP, is a marketing term which stands for your unique selling proposition, answers the question, “What is it that my company offers that our competitors do not?” In other words, “What makes us so unique that our customers prefer to buy from us over anyone else?” If you are not using your USP in your branding and marketing activities, you are failing to differentiate your business from your competitors. Even among captive agencies, you have an opportunity here to differentiate yourself from other agencies and create a unique brand that helps customers see why they should choose your agency over another similar one (even with the same name and offering).


First, you need to have completed some analysis on your ideal customer, so you can understand their top pain points, beliefs and values, as well as research on how you can find other similar customers. Second, think about the one benefit that makes you stand out from the rest. Make sure that your competitor cannot claim the same thing, or it’s not a unique differentiator. What problem do you solve for your customer? Here are some common ways you can create a USP for your business: •P  rice (higher or lower): Be sure to explain why your company positions itself as a high-or low-cost provider and make this your differentiating factor. In a commodity market such as insurance, it’s easy to be tempted to lower your price in your marketing strategy to get the customer. But if you truly want to step away from becoming a commodity product or service, the key is to make your company stand out so much from the crowd that people are willing to pay a little extra to get the added benefit from your differentiator.

Your USP Statement:

• Convenience (location, ordering, etc.): Do you offer a special way for customers to purchase or interact with you? Examples might ___________________________________________________________ be online quotes or claim processing, after-hours appointments, (my company) or similar benefits. Again, think of your ideal customer and their offers ____________________________________________________________ reasons for choosing you. (target audience) • Product features or benefits (exclusive, popular or innovative): Don’t spend your time here describing what your policies ______________________________________________________________ include. Think of something extra that you offer that your competitors (your unique offering) don’t offer, which is also appealing to your customer. This could be a so that they can _______________________________ new, innovative claim benefit for homeowners’ insurance, or an app which (benefit gained) makes your customers’ lives easier. As you begin to think about your company’s brand, consider writing your own USP statement using the exercise above. If it’s not unique enough, ask your customers why they choose you. Sometimes this process will reveal a hidden USP that you didn’t consider. This might become the ticket toward a successful new brand! Once you have written your USP statement, it’s time to create or update your new brand. Enlist the help of a professional marketer or design firm to create your new brand, which will include a mission/ vision, promise, voice, tagline, logo and color scheme. In addition, you should establish a brand guideline sheet which outlines your brand details and how to use it. Your brand needs to be everywhere, including your website, business cards, email signature, customer invoices, social media, advertisements, direct mail campaigns, office signage, and more. Try to establish a cohesiveness across all mediums to reinforce your mission for your prospects and customers. Stay true to your brand and strive to be distinct. Train your employees to live and breathe the new brand, and it will continue to serve you well. 1 https://www.investopedia.com/ask/answers/042315/what-apples-current-mission-statement-and-how-does-it-differ-steve-jobs-original-ideals.asp

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:industry news

Ouch! How severe was P/C insurers’ underwriting loss in 2017?

Calling all producers: Make social media a friend, not foe Amidst following up on leads, generating new business,

The U.S. property/casualty industry recorded a

and meeting with clients, many insurance producers are

net underwriting loss of $23.5 billion for year-end

ignoring the power of the web. A lackluster online

2017, according to preliminary results from A.M.

presence can cut agents and brokers off from a wide sea

Best. The 2017 underwriting loss was mainly due

of potential customers. “These are people that have lots

to an estimated $52.9 billion paid out for

of experience and knowledge to share, and they don’t

catastrophes, more than double what P/C insurers

do a very good job of getting that out into the world for

handled the previous year, according to the A.M.

others to see,” said David Estrada, industry veteran.

Best analysts.

Watch out! Tech giants’ data expertise could challenge insurers The vast amount of data held by tech behemoths, and the insight that such data can offer into consumer habits, may well give them an edge over insurers still struggling to get to grips with technology. “It wouldn’t take much for a big tech giant to start offering insurance, given what they know about people already,” Sanjay Parekh, CEO of Cocoon, told Insurance Business. 8 | w w w.oakstree tf un di ng.com • 8 4 4 - 3 9 5 - 8 2 4 2


Lesson: What did the cyber insurance industry learn from 2017 hacks story

13 creative ways to get the word out about your new job opening

The NotPetya, WannaCry and Equifax® hacks of last year were evidence that the U.S. insurance industry has

Struggling to capture the attention of qualified

been ill-prepared to handle a large cyber-attack. As a

candidates? 13 entrepreneurs from Young

consequence of the attacks in 2017, the industry and its

Entrepreneur Council (YEC) came up with several

customers may be at a tipping point in favor of better

innovative and non-traditional ideas, such as

cyber readiness and coverage, according to panelists at

rewarding your existing employees when they

the 2018 AIR Casualty-Cyber Seminar. Although the risks

talent scout, using Instagram stories or holding

are broad and the industry should recognize it can’t protect

an open house to allow candidates to get a feel for

against everything from every perpetrator, it needs to be

your company culture.

working to minimize risk as much as possible.

®

New research claims US officials have wildly underestimated flood risk A new research paper suggests that Americans are at far greater risk from flooding than official flood estimates suggest. Led by Oliver Wing, a PhD student at the University of Bristol in the UK, the paper’s researchers sought to create a high resolution, national-level assessment of flood risk in America. FEMA most recently estimated that about 13 million people are at risk. However, the paper’s researchers said that closer to 40.8 million people (13.3% of the US population) are currently exposed to a one-in-100 year flood.

https://www.insurancebusinessmag.com/us/news/breaking-news/how-producers-can-make-social-media-a-friend-not-foe-95230.aspx https://www.insurancejournal.com/news/national/2018/03/20/483870.htm https://smallbiztrends.com/2017/09/top-social-media-sites-for-marketing-small-business.html https://smallbiztrends.com/2018/03/creative-ways-to-share-new-job-openings.html https://www.insurancejournal.com/news/national/2018/03/13/482919.htm https://www.insurancejournal.com/news/national/2018/03/14/483196.htm

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Get to Know SCOTT STARS

Scott Stars is a Senior Sales Manager at Oak Street Funding®. If you need capital to support your insurance agency goals, we encourage you to talk to Scott. Below are some questions that he frequently receives from his borrowers that may help you as well. What is the biggest struggle you are currently seeing insurance agencies face while striving to grow? First, many agency owners are struggling to find qualified candidates to join their staff. Moreover, they are struggling to afford to hire those top of the line candidates who would truly make an impact on their business. Finding individuals in the insurance industry that have the appropriate experience and drive can be difficult. From an acquisition perspective, finding the right agency to purchase is not easy right now. It’s a seller’s market. Finally, it’s a challenge for agency owners to find the right financing option that allows them to implement the strategic changes they need to make in order to grow.

How does Oak Street Funding decide how much I can borrow? We take several factors into consideration when determining how much we can lend. Those factors include experience, credit, carrier ratings, and product type. While those are not the only factors, they are the big four. To get started, we will ask you questions such as “how long have you been in sales?”, “how long have you been in insurance?” 10 | w ww.o akstree tf un di ng.com • 8 4 4 - 3 9 5 - 8 2 4 2

and “how long have you been an owner?” It is very important for us to learn about you and the history of your business. We aim to fully understand you because we’re not a “one and done” shop; our goal is to be your partner throughout your business life cycle.

My bank doesn’t fully understand my insurance agency. What makes Oak Street Funding different and what is the process like? Oak Street Funding isn’t just another lender reviewing cash flow and lending money. We understand insurance agents and what they go through on a daily basis. We understand how a loan can benefit their agency. We have been lending to the insurance industry since 2003 so we know what the trends are and what works. We allow you to take advantage of your intangible asset, which is the renewable income stream, so you don’t have to tap into personal assets to secure a loan. Long story short, we understand you and that is what leads to a prosperous relationship.

Are you ready to learn more from Scott? You can reach him at scott.stars@oakstreetfunding.com or 317-428-3841.


THE FASTEST GROWING AGENCY NETWORK FOR A REASON.

FIND OUT WHY www.smartchoiceagents.com 888.264.3388

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Debt

“Neither a borrower nor a lender be,” cautioned Polonius in “Hamlet.” William Shakespeare’s advice has gone on to form an attitude about debt that has survived countless generations. Most insurance professionals are financially conservative by nature, and their attitudes toward borrowing often spill over into their businesses. They avoid debt in their personal lives and do their best to steer clear of it in their professional life as well. There is unquestionably some wisdom in avoiding debt, particularly for individuals. One of the first financial lessons most people learn is to live within their means. Taking on more debt than we can afford to repay can easily push us into a situation that spirals out of control.

Different for businesses

But debt plays different roles for individuals and businesses. In fact, when it comes to business borrowing, “debt” isn’t the most accurate term. A better choice is “leverage,” because that describes the role borrowing can play in your insurance agency. Essentially, when your agency borrows, you’re leveraging other people’s money to achieve a purpose that will increase your wealth and/or the value of the business.1 In fact, the idea of borrowing is so negative to many business owners, that they make a big mistake in an effort to avoid it. When they need extra capital, instead of taking on temporary debt, they permanently give up part of their equity by assuming partners or equity investors. 12 | w ww.o akstree tf un di ng.com • 8 4 4 - 3 9 5 - 8 2 4 2


When you sell equity, you’re giving someone else the opportunity to profit from the hard work you’ve already put into the business, and you’re taking on what Kevin O’Leary describes as “a permanent partner that will bother you for the rest of your business’ life.” 2 Some business owners believe a more sensible approach to business is a reliance on organic growth that doesn’t involve borrowing. On the surface, that may seem like a better solution, but pursuing organic growth forces you to reinvest profits that you would otherwise be taking out of the business as income. It takes more time to achieve, and it essentially forces you to accept a smaller return on your personal investment in exchange for the eventual growth of the business. Careful borrowing, on the other hand, gives you the opportunity to simultaneously increase your business’s profits and your overall return. 3

Debt can be healthy

When you use debt instead of granting equity, you don’t lose any control of your agency. As long as you repay the loan on time, you know exactly what your borrowing costs will be, and once you make the final payment, the loan disappears for good. You’re left to run your agency the way you want 4 In addition, you may be able to deduct both the interest and the principal on the loan from your business taxes, making debt even more affordable. However, be sure to verify deductibility with your CPA or other tax preparer before you borrow. 5

When does it make sense?

It’s important to think of debt as a strategic tool. You can use tools such as lines of credit to help you with shorter-term needs such as managing cash flow. There should be a specific purpose for your decision to obtain financing, whether that’s to buy upgraded technology, build a new office, or acquire another agency or book of business. Before deciding to borrow, create a business plan explaining your objectives and the return on investment that you anticipate receiving. Be conservative when estimating – understate expected revenues and overstate your costs – so that any surprises are pleasant ones. If the expected return on investment is significantly higher than what it will cost you to borrow, taking on debt may be strategically wise. However, you should always stress-test your plan. In other words, consider whether you’ll be able to meet your obligations if, for example, your profits don’t match your expectations. 6

pay a higher-than-normal interest rate. The more you borrow, the higher that rate is likely to go. 7 Finally, if your agency becomes heavily dependent upon debt, it might be viewed as risky at some point in the future when you’re courting a buyer or partner. 8

The financing to support your growth

Once you’ve made the decision to expand and transform your insurance agency, you’ll probably need to invest some additional capital in your business. Where should you go? Often, agency owners turn to a familiar source: a bank officer. However, most traditional banks aren’t comfortable with the financial structure of insurance agencies. Most are geared to making loans to businesses that have tangible assets such as inventory, equipment, and real estate. Another option is loans that are guaranteed by the Small Business Administration, but SBA loans typically take a long time to process, may involve an overwhelming amount of paperwork, and have relatively small lending limits. That’s why a growing number of insurance agency owners are turning to specialty lenders that are accustomed to working with the confines of the insurance industry. Such lenders understand how an agency like yours operates, and are familiar with the nature of your income streams, so they can approach the underwriting with realistic expectations and an appreciation for inherent risks.9

Are you ready to strategically take your agency to the next level?

17%

working capital

14%

hiring

How Oak Street Funding® loans were used to implement growth in 2017 marketing/leads location/office expansion

22%

acquisition

24%

pay off company debt

tech upgrades

3% shareholder buyout

Debt drawbacks

As an insurance professional, you know that every reward carries corresponding risks, and the use of debt is no exception. The advantages of using debt to grow your agency are offset to some degree by several points. The biggest is that you’ll be expected to repay what you owe, even if something happens to your agency. In some cases, you’ll be expected to back your loan with a personal guarantee, so that if the lender can’t collect from your business, it can chase your personal assets. And, if the lender requires collateral, borrowing may place some of your business assets at risk. In addition, if you file bankruptcy, the lender will get first crack at any assets that remain. Depending on the market, the lender, your agency’s financial health, and your own personal credit history, you may have to

Footnotes 1 “When Debt is Good,” Investment Advisor, July 3, 2017. 2 O’Leary, Kevin, “3 Ways to Grow Your Cash Flow With Debt,” inc.com, April 7, 2016. 3 Scott, Mark, “Debt is a cheaper way to grow your business,” sbnonline.com, January 1, 2017. 4 Allen, Scott, “Debt Financing: Pros and Cons,” thebalance.com, March 20, 2017. 5 Kunigis, Allan, “How to Finance Your Business Growth,” thehartford.com, undated. 6 Scott, ibid. 7 Allen, ibid. 8 Kunigis, ibid. 9 Date as of January 1, 2018. Individual loan results may vary and revenue growth is not guaranteed. In November of 2017, Oak Street Funding® sent an online survey via email to over 20,000 insurance agency owners throughout the United States. The results presented are from 200+ professionals who responded to the survey.

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EVOLUTION CROSSWORD 1

2

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3

4

5

7 9

6

8 10 11

12

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Across 1. Your biggest asset 3. Expansion 4. What you are striving for

Down

8. Survival of the fittest

2. Destination

9. Tool for growth

5. Becoming the best agency you can be

12. Lender who understands your unique capital needs

6. Logo and tagline

13. Buying an agency

7. To simplify processes 10. What your company stand for

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11. Communicate to prospects

ACROSS: 1. employees 3. growth 4. success 8. adaptation 9. debt 12. oakstreetfunding 13. acquire DOWN: 2. evolution 5. sophistication 6. brand 7. streamline 10. mission 11. marketing

the crossword digitally.


Are potential partners or buyers interested in your agency? In this age of consolidation and acquisition, many insurance agencies are keeping their options open for a future partnership or sale. If you are an agency owner interested in options, do you know whether your agency is truly sophisticated enough to be appealing to a potential partner or buyer? If not, it may be time to step up your game. With many successful, growing agencies in the marketplace, it’s important to understand what the buyers are looking for, as well as how you can make your agency stand out among the crowd of sellers.

Your Financial Health

Agencies with solid, organized financial records will look more appealing to potential partners or acquiring agencies. Here are some things to gather or have in place to improve your chances of selling and make the transition smoother: Strictly follow an annual budget: Create and stick to a yearly budget, and include important financials such as cash flow, business assets and profitability. Agencies who do this will ensure that they do not overspend in certain categories to make themselves less appealing. Be a disciplined spender, prioritizing your purchases so you can maximize your budget and remain attractive to potential buyers and partners. Compare financials with industry norms: When analyzing your budget, profitability and other financial numbers, research and compare your figures with those in the industry. Look for areas that seem out of the ordinary for a company of your size and adjust accordingly. You can track and compare common expenses such as rent, acquisition costs, overhead and more to make sure you are in line with industry averages. Invest strategically: When making working capital investments for the growth of your agency, keep them in line with your goals and mission. For instance, prioritize spending and investing in things such as marketing, new technologies and people that will result in a greater return for your business. Keep your operations streamlined: Reduce manual procedures and invest in new technologies to automate your sales and customer service processes. This includes customer relationship management (CRM), sales quotes and proposals, customer service documentation and claims processing. Make sure all of your employees are following the same processes, and document these processes in order to create a more streamlined operation and reduce overall costs.

Your People

One of the greatest assets in your insurance agency is your human capital, otherwise known as your employees. To position yourself for an acquisition, make a note of the value that your people bring to the equation. Some ways that you can tout your team as an asset include: Experience and Longevity: Do you have owners, producers or team members with decades of experience in the insurance industry? Have any staff members stayed with the agency for

many years? Highlight their extensive knowledge on your website’s company overview page and in your promotional materials. Specialized Training: Tell the story of how your agents or support team have undergone extensive training or complete regular continuing education to make your agency more appealing to a buyer. Company Culture: Keep in mind that an acquired agency will need to merge staff and leadership with the new agency. Clearly define, communicate and execute a consistent and unique company culture (your values, work ethic, techniques and goals) so that they mesh well with a buyer’s ideals. This includes the positive traits of the owner, salespeople and customer service teams, along with the management style of the agency.

Your Marketing Plan:

The final step in making your agency more attractive includes having a written strategy for who you are, who you reach, how you retain and how you find your customers. Think about and answer the following questions:

 How do you nurture your existing customers to ensure they continue working with you?

 How do you currently communicate your agency to prospective customers?

 Have you clearly identified and fleshed out who your

ideal customer is and how you can find more of them?

 Do you have a sales goal and a marketing plan for how to reach your target audience?

 Does your agency have a professional website that can be easily found via search methods?

 Are you currently tracking your return (ROI) on your marketing investments?

Agencies who have a clear picture of who they are, who they are targeting, and how they are reaching their current customer base will automatically become more appealing to a potential buyer.

The Effort Can Pay Off:

The bottom line is that your agency must become the best version it can be to make your agency more appealing to a buyer. Look to other successful agencies as examples to guide your analysis and strategy. Be sure to align your internal staff and hiring process to fit your new growth and agency goals. Continue to organize and streamline your operations, sales process and customer service approach for maximum effectiveness and future growth potential. Finally, ensure that your vision, mission and culture are clearly defined and ready to integrate with another potential agency. With a plan in place to make your agency more marketable from a financial, personnel and sales standpoint, you’ll be in a better position to make that happen when the time is right.


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Oak Street’s FREE & Confidential Agency Exchange service connects insurance agency buyers and sellers across the country. • List an agency to sell • Average of 50 listings per month • Receive email alerts for new listings

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The Bridge: Spring 2018 | Insurance Edition  

The Bridge: Spring 2018 | Insurance Edition