Changes come with challenges, and when you're trying to purchase or sell an insurance agency, that is a large change indeed. Whether you're buying an insurance agency or trying to find someone who can continue your insurance agency's history of success when you retire, how can you overcome some of the hurdles of perpetuation planning?
1. Obtain Thorough Information About the Seller, the Buyer, and the Agency
Whether you're selling or buying an agency, be very clear as to what is actually for sale. Is the lease on the building and the assets of the agency all that's for sale, or will the buyer be purchasing the book of business? Have all of the information ready so that buyers know the details of the sale. This includes information about the finances, book of business, and the day-to-day operations of the business. The buyer should also have financial information at the ready. Create a feeling of trust by having key information at the ready.
2. Ensure Financial Security
Financial security is key when you are taking over a business, even if you're maintaining and growing an existing base of clients. When you're buying a business, make sure that you have the means not only to purchase the business but to sustain it. Agency Brokerage recommends having up to 25% of a potential purchase to cover the money down and operating capital. Also, buyers should go into transactions with their financing plan in place. "[M]any buyers miss great opportunities because they have to hunt down financing while others have already done so and move forward expeditiously with an offer."
3. Get Professional Support
Business transactions can be fraught with complexity, even if the buyer is a family member, friend, or an employee of your business. In fact, when you have a personal relationship with the person who is buying an insurance agency, it's even more important to go over the books well and to get all of your transitional paperwork done right. Set yourself up for success by finding the professionals you need to back you up. A firm that specializes in working with buyers and sellers can ensure that your business transition and your relationship with the buyer run smoothly.
4. Know What Makes the Business Great
Those who come into a business will change a business, sometimes successfully and sometimes unsuccessfully. They need to make their own mistakes and find their own wins. However, whether you're buying or selling the business, it's important to provide the new business owner with a deep understanding of what makes the business excel.
Is it your reputation for quick customer service?
Is it your ability to get referrals easily?
Is it your outstanding physical location?
Is it your reputation for being a community-minded business?
Give those who buy your business an understanding of why you're successful and they can help build on that success in the future. Likewise, learn why the business you want to buy is successful.
Get ready to move into a new phase of your life as an insurance agent. Whether you need support to find a buyer for your insurance business or to assist with your perpetuation planning, American Agents Alliance gives you the insurance network that you need. Contact us today.