One thing that has remained true through the test of time… we all want to be the best. Whether that be in insurance, sports, law, or even in daily life, it is in our human nature to strive to be the best. Well, in order to be the best, you need to discover what the best are doing. While this may ring true in other professions, it takes on a different tone in the independent insurance agency system. It would be more appropriate to say in order to be the best, you need to think, strategize, develop, operate, analyze, and prepare like the best agencies. When we emulate the best in our profession, it does not automatically bring about being number one, but it does guide us to being the best versions of ourselves and thus, our agencies.
When it comes to the independent agency plant, some might be wondering, “What are the top agencies doing? What are they focusing on and emphasizing to be best-in-class?” In this article, we will examine what these top agencies are focusing their attention and efforts on to help them be successful.
According to the Reagan 2022 Best Practices study, the above graph shows the ten key elements to help an independent agency prosper. From people to growth strategy, to capital structure, and more. Clearly, it takes multiple factors to build a successful and prosperous agency, but by focusing on just a few of these elements, you can make an enormous difference. Here are the top three elements that Best Practice agencies focus on for their success:
- People – In an industry based on relationships, it is relatively easy to recognize that people are the most important facet of an agency. The Best Practices agencies have strong teams of high-quality individuals, who in turn embrace the rest of the key elements of a prosperous agency. In the IA system, people are the most valuable asset. It must be a priority in any agency to recruit excellent candidates that will bring value to a team. It doesn’t stop there, as agencies must also have the systems in place to train, develop, and retain these individuals. Investing in the success of your team and personnel will help them expand their skill sets and create new opportunities for growth. People should always be at the forefront of all strategic decisions in an agency. In fact, based on a Reagan Best Practices study, 93% of agency owners believe that with unlimited capital and the right people in place, you can be successful.
- Culture – The Best Practices agencies have a positive workplace culture that is built upon organizational values, open and constant communication, and employees who feel like they do meaningful work. These top organizations satisfy these three characteristics of culture, and as a result, they retain their employees. A positive workplace culture can also be a driving factor behind increased productivity and better decision-making. The most significant thing agency owners can do is foster and encourage a positive culture because it is such a critical element to the success of an independent agency.
- Leadership – Leadership is the third element which ties and incorporates both people and culture. The Best Practice agencies have effective leaders that influence and impact their employees to buy in. Employees buy in to the vision, the goals, and the culture. This employee buy in enabling the agency to reach and surpass goals.
As you can see from the first graph above, there are still seven other factors for your agency to consider, but we advise you to focus on two or three of these elements to help your agency grow and prosper in 2023 and beyond. As you consider these factors and are ready to evaluate the health of your agency, reach out to Luke Hippler at Luke@iavaluations.com if you’re interested in learning more about a valuation or our other services.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 200 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or firstname.lastname@example.org.
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By: Luke Hippler, MBA