The Power of Knowing Your Agency’s Value NOW

Carey Wallace’s consulting company, Agency Focus, reviews your agency’s needs and provides you with advice and resources focused on business planning, agency operations, compensation strategy, and more! Thanks to a brand new partnership, IIANC members receive a FREE 30 minute consultation with Carey – make sure to schedule yours today!

It is no secret in the insurance industry that we face a significant transition of ownership in the next 5-10 years as over half of the agency owners are nearing retirement. Historically, there has been a belief that agency owners do not need to know their value until they are ready to make that transition. In addition, many agency owners have assumed a value of 1.5x-2x revenue for their agencies without actually knowing their fair market value. This type of thinking is dangerous.  

I want to change those beliefs and provide agency owners with practical examples of how knowing your value can lead to opportunities for growth, increased profitability, and an increase in your agency’s overall value in a relatively short period of time. When you marry knowledge, time, and action, the impact on you, your agency, and the future agency owner are significant. 

1. Use the gift of time. Knowing your value and what drives your value is powerful. The earlier you gain this understanding the more time you have to increase your agency value. If you wait to learn your agency’s fair market value just before you want to transition ownership or sell, it will just be a number that you have no ability to change. If you know your value well in advance of any transition, you give yourself options as well as the ability to take the right steps to increase your value and best position your agency for the future.  

2. Take action. Use what you learn about your agency, your situation, risk factors that are impacting your value, and the allocation of resources that currently exist inside your agency. These are all possible areas of opportunity. Once you see those opportunities you have the power to act. While every situation is different, you will be able to see how doing things like reallocating resources and investing in your agency can significantly improve your agency’s value over time. It is much like the time value of money when investing in stocks.  The earlier you invest, the greater the potential return. There are several key areas where you can make investments in your agency to drive your value up, and I love to help agencies find those opportunities. 

· Allocate resources to invest in growth 

· Reduce and mitigate your risk factors

· Document and implement a buy-sell agreement and perpetuation plan 

· Understand the tax implications of your current corporate structure 

3. Have a plan. Your agency is most likely your biggest asset and may even represent your life’s work. It needs to be protected, and the best way to do that is to have a thoughtful plan for the future.  Just like your job is to help your clients understand their risks and take the steps necessary to protect themselves, their family, and their businesses, I am focused on helping you do the same with your agency. Understanding that the plan for every agency is not the same, I am able to walk you through the process, provide you with the areas of focus and help you define the plan that is right for your agency.

About the author

Carey has worked in the insurance industry for the last 12 years and with entrepreneurial small businesses throughout her entire career. During that time, Carey has develop key business consulting services to ensure that agencies have the information and support needed to plan for their agency and successfully perpetuate to the next generation. She has worked with over 150 agencies to help them understand their agency's value and plan for their future. Carey is a nationally recognized speaker on both the impact of leveraging data in your agency & valuation and perpetuation planning. She has presented on these topics in over 20 states, several national conferences, carrier events, been interviewed on various industry podcasts and has published several articles on these subjects. Carey possesses extensive experience, knowledge, and passion in assisting independent insurance agents in making the best decisions based on data and insights specific to their agency.

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