The most important part of starting your own insurance agency is setting up a business plan. Many insurance agents face a lot of uncertainties when starting up their company, hence there is a need for a clearer picture. This is where a business plan comes in.
Meanwhile, before we go further, let’s get a proper definition of a business plan.
According to Bplans.com, who gave a simple definition of a business plan as a guide and a roadmap for your business that outlines goals and details on how you plan to achieve those goals.
Basically, see a business plan as a document and business blueprint. By doing so, you will assign every detail of your agency, its objectives, and experience to your target market and financial projections.
In fact, the quality of your business plan can determine whether your small agency is starting.
For this reason, this article will show you what a typical insurance agency business plan looks like. And we will go further to teach you how to write a business plan for an insurance agency with our simple steps.
Who Needs An Insurance Agency Business Plan?
If you’re only considering just being self-employed to supplement your income, just ignore creating a business plan for your business. But, if you are going to a larger business that can consume a lot of time, money, and resources, you practically need a business plan.
If you are serious about business, planning your agency seriously is essential to your success.
Unfortunately, many people think of business plans just to start a new business or apply for business loans when setting up an insurance agency. But business plans for insurance agencies are also essential to running a business – strategic planning – whether you need new loans or new investments. Existing companies should have business plans that they maintain and update as market conditions change and new opportunities emerge.
Every business has long- and short-term goals, sales goals, and spending budgets. A typical business plan covers all of these things and is just as useful for a company trying to raise funds as it is for a 10-year-old company looking to grow.
Start-up Insurance Agencies
The most classic business plan for an insurance agency scenario is for a startup. This plan helps founders break down uncertainty into meaningful things, such as sales projections, expense budgets, milestones, and tasks.
The need becomes apparent as soon as you acknowledge that you don’t know how much money you need and when you need it, without setting sales, costs, expenses, and payment schedules. And it’s for all startups, whether they need to convince investors, banks, or friends and family to separate themselves from their money and finance the new business.
Here, the business plan focuses on explaining what the new business is going to do, how it is going to achieve its goals, and why the founders are the right people to do the job. A business start-up plan also details the amount of money needed to start the business and through the early stages of growth that (hopefully) will lead to profitability.
If you are in this category, it will be helpful if you go through these Easy Steps to Starting Your Own Business Fast. It’s practically all you need.
Existing Insurance Companies
Not all business plans are geared toward startups that launch the next big thing. Existing insurance companies also use business plans to strategically manage and direct the business, not just to cope with changes in their markets and take advantage of new opportunities.
They use a plan to strengthen the strategy, set benchmarks, manage responsibilities and goals, track results, and manage and plan resources, including critical cash flows. And, of course, they use a plan to set the schedule for regular reviews and reviews.
Business plans can be an essential growth engine for existing companies. Did you know that companies that write plans and use them to run their businesses grow 30% faster than companies that don’t take this approach?
A study by Professor Andrew Burke, founding director of the Bettany Center for Business Performance and Economics at the Cranfield School of Management, found just that.
For existing companies, a sound business planning process can be a competitive advantage that results in faster growth and more innovation.
Rather than a static document, business plans in existing insurance agencies become dynamic tools that are used to track growth and detect potential problems before derailing the business.
How to Write a Business Plan for an Insurance Agency
Insurance agencies sell insurance policies that protect individuals and businesses against financial losses from car accidents, fires, thefts, storms, and other events that can damage property. This is one reason many people have become so inclined to be sure that they will not dare to do without it.
Therefore, this is one area where having an insurance agency is helpful.
An executive summary acts as an overview and highlights upcoming information that readers are about to digest, says trade authority, Susan Ward. You can think of it as an introduction where it organizes things and serves as a reference point.
He adds that an executive summary includes:
- The business opportunity.
- How do you plan to take advantage of the opportunity?
- Your target market.
- Who is your competition?
- Owners and staff.
In a quick note, it is a snapshot of your agency. Also, the summary briefly explains the market opportunity and how your agency plans to treat it. It also includes general financial information for your agency, such as your current investors.
An established agency can include its mission statement and highlights of its growth, while a startup can focus on its experience and motivation to start an insurance agency.
Most times, the executive summary is the first impression investors have of your business, so be sure to capture their attention.
The business description helps investors understand what sets their agency apart from the competition. In this section, explain how your agency brings value to the market.
According to our agency, this could be your experience, your location, your options, or your product lines.
This section describes the essential details and key aspects of your business, such as what you do, where your business is located, and what makes it unique,” says Entrepreneur Insight. Keep the language simple so that the scope of your business idea is easily understood.
You should start by highlighting the structure of your business (for example, sole proprietorship, general partnership, or limited partnership).
Then describe a brief history of your business and the demand it will satisfy. This is likely to be limited if you are new, but include as much relevant information as possible.
This part details your agency’s current and future offers, how you will acquire and manage them, and the benefits they provide to your clients.
Your investors can find a description of how independent insurance agents secure their offers, especially if they don’t know how difficult it is to get a direct quote. (Related reading: “How to set up a business plan for an insurance agency.”
This section is fairly simple: List the types of insurance you offer (home insurance, renter’s insurance, liability insurance, etc.), as well as the expected costs and income. The goal here is to succinctly describe the coverage that customers can buy and the value that is delivered.
Be clear about the full range of insurance that will be offered and describe the basic principles of each so that the uninitiated can understand. Don’t be too complex or talkative about it.
“Please note that highly detailed or technical descriptions are unnecessary and certainly not recommended,” writes Jeff Haden, publisher of Inc. “Use simple terms and avoid buzzwords so that your readers can easily understand them.”
Market analysis shows your understanding of the market and your agency’s demand. Include a description of your industry, details of your target market, and an assessment of your competitors. Investors may also want to see the market share they hope to gain and an explanation of these figures.
Basically, this is where you identify the shape and size of your industry to show that there is enough demand to justify starting your insurance agency. The Business Plan Shop says this is to show that your business will be profitable and sustainable. It also shows potential investors that you have researched and really understand the market.
In specific terms, you will want to highlight your major customer segments, their purchasing behavior, the current competitive climate, and the strengths and weaknesses of your competitors. You will also want to provide details on the industry outlook and relevant statistics that show where you are going. Visuals like charts and graphs can be useful here.
Marketing Strategy and Implementation
Goal setting is great, but you should also have detail on how you will communicate the value of your agency through branding, advertising, and special events. In this section, you can also describe your sales strategy and forecast.
Starting and managing an insurance agency requires aggressive marketing, so you always have sellers and insurers on your side to market / sell insurance coverage, especially if you live in the United States of America.
Therefore, to stay afloat in the insurance industry, you must be prepared to spend a lot of money on marketing, advertising, and promoting your insurance products. Your marketing and advertising departments must regularly propose new innovations and products that can attract the attention of your potential customers.
So when we wrote our marketing ideas and sales strategies for our insurance agency, we created an interesting personal and corporate profile that included the profile of our board of directors and our management team.
The truth is if you have honest, and successful professionals, clients can easily trust you with their hard-earned money. In some countries, confidence is one of the key factors hampering the growth of the insurance industry.
Georgia McIntyre, a small business finance writer, says her marketing and sales strategy boils down to asking two key questions: How do you plan to reach your customers? And what is your strategy to sell them insurance?
How to Implement
Marketing is falling under a massive umbrella these days, and companies have many options. This part of your business plan allows you to clarify the specific methods you will use to generate leads and keep them until they are ready to buy.
Accurately identify the channels you plan to used to reach your target audience. This can be primarily digital (email, social media, and content marketing), traditional offline (networking, participation, and participation in local events) or a combination of both.
Once you’ve learned how to implement marketing in your insurance agency, here are Easy to Start Online Business Ideas for Aspiring Entrepreneurs
Organization and Management
Investors should trust you before financing your agency. To establish the credibility of the agency, show the qualifications of your management team. You can also create an organization chart to illustrate your business infrastructure and operations.
This is where you talk about the people behind your business. For example, who owns the business, their background, who makes critical decisions, and the specific skills they bring.
It’s important to include a section on the organizational structure because it lets readers know exactly who is involved and what their qualifications are, writes the team of small business loan provider Acción. Even if it is just you as the sole owner, you will need to include this information.
When seeking financing, startups need to identify initial costs and provide five years of prospective financial data, including balance sheets, income statements, cash flow statements, and capital expenditure budgets. You can also add a brief financial analysis, which identifies industry trends that justify your demand.
Accounting and financial expert Trevor Betenson notes that, if applicable, this should include your profit-and-loss account, cash flow statement, balance sheet, and sales forecast. You can also add business relationships and balance analysis for more details.
Finally, there is the question of finances. Business Plan Hut explains that this is to show readers how profitable your insurance agency will be and the capital needed to finance it. This information allows potential investors to determine the feasibility of investment for their business and the probability that it will be profitable.
Due to the technical nature of this section, it is ideal to write it with the help of a professional accountant.
Typical Insurance Agency Business Plan Template
While there are benefits to using a business plan template, depending on your situation, it may not be the absolute best way to complete your plan. There will still be a lot of work to do, for example, you not only have to complete the financial worksheets, but you have to do the whole calculation yourself.
You will also need to know enough about the process to make sure you get all the numbers in the right places. And in general, there are limited instructions for accompanying a free template, so if you don’t know what you’re doing with the numbers yet, the process of writing your business plan won’t be much easier with a template.
Finally, merging data from Excel spreadsheets into your Word document is more difficult than it sounds. Keeping everything up-to-date is not easy when you change your numbers and incorporating the correct charts and graphs into your business plan is more difficult than it sounds.
However, if you are new to business planning and just want to get an idea of what a plan looks like and want to get the process started quickly (and cheap!), Download a free template. It is a great way to start.
Insurance Agency Business Plan Template
If this template or one of the other business plan templates we have here at World for Business doesn’t give you the flexibility and advice, you need to complete your business plan, you can check out business plan software.
Also, if you’re looking for some examples, there are a few different templates you can use to get started.
- Susan Ward offers a simple yet comprehensive one on The Balance Small Business.
- My Own Business Institute from Santa Clara University has one that’s more robust and tells you what information you should include under each section.
- PlanBuildr also has a great tool that walks you step-by-step through the process.
Business Plan Examples for an Insurance Agency (MS Word)
If you are looking for typical examples of business plan for an insurance agency, then you are in the right place.
Here is a business plan examples for an insurance agency in MS Word.
Insurance Agency Business Plan Pdf Format
Now that we understand what a business plan is and should be, there is still a question. How long should it be?
The duration of his average business plan is shorter than it was, notes business planner and angel investor Tim Berry. In most cases, be able to cover it all in 20-30 pages of text, with 10 more pages for more details. However, it certainly could be shorter depending on your needs.
His advice is to summarize the information as much as possible and keep it fairly brief. Use brief sentences, avoid industry jargon, and use bullets for lists.
How do you create an insurance agency?
1. Write a business plan.
2. Choose a legal structure.
3. Choose and register your agency’s name.
4. Apply for a tax ID number.
5. Register your business with the state.
6. Get the appropriate business licenses or permits.
7. Purchase Errors and Omissions Insurance.
Is insurance agency a good business?
Yes it is. Basically, owning an Insurance Agency can be a profitable business. Like any business it requires leadership and management to make money. Someone with a persevering entrepreneurial bent, who values relationships with clients and staff can still do very well.
How much does it cost to start an insurance agency?
Starting your own independent insurance agency requires start-up capital. The amount you will need can range from as little as $5,000 to $50,000 or more, depending factors such as where you’re located and how you plan to operate your business.
How long does it take to write a business plan?
If you write your business plan yourself, it is not unheard of that founders take months to write a valid and professional business plan. Depending on the degree of required research and level of detail demanded by the respective business plan recipient, you will be investing anywhere between 12–80+ hours.
How do insurance companies make money?
Insurance companies make money in a variety of ways, almost always at the expense of the customer. Insurance companies make money by betting on risk – the risk that you won’t die before your time and make the insurer pay out, or the risk your house won’t burn down or your SUV won’t be totaled in a crash.
How do you market an insurance agency?
Here are 7 marketing ideas for insurance agents in 2020:
1. Implement Content Marketing
2. Embrace Social Media
3. Monitor Your Online Reviews
4. Ensure Brand Consistency
5. Go Mobile
6. Don’t Wait, Clean up Your Data
7. Automate Your Marketing
How much money can you make owning an insurance agency?
Income for insurance firms will vary based on different factors. Qualifications, state, region, number of customers, and experience can help you make an estimation. On average, insurance sales agents make $59,990 per year. Owners, on the other hand, tend to make more.
Can you own an insurance agency without a license?
In most jurisdictions, you will find that unlicensed individuals (and corporations/holding companies) can have an “ownership” interest in an insurance agency. The unlicensed owner would simply be precluded from acting as an insurance agent or broker.