Apr 25, 2022
Today’s episode is one of several episodes about how to get started in the insurance business. I’m not talking about becoming an agent, I’m talking to those of you that are thinking about starting an agency, an insurance company, or an an insuretech business. There’s a lot more to hanging a shingle that says you are open. As part of the planning process for starting a business there are some concepts to consider, these are about yourself.
As exciting as it is to start a business, there’s a lot to consider. It’s not all glamor and glory!
Most business owners would agree it’s a lot of hard work, a lot more than they expected. It’s long days, weekends and holidays. Many business owners lose their marriages over their business. As I mentioned in the last business, 90% of business fail in the first year.
The circumstances around why they fail vary, but often it’s with the concepts I’m discussing today.
In the last episode we talked about why business fail:
- Lack of a marketing plan
- Missed market shifts
- Ignoring the customer
- Lack of financial understanding
- Poor management
- Location
- Motivation
- Life’s distractions
- Lack of planning
INTRO FOR PART 2 - RECAP THE ABOVE AND THINKING BIGGER AND W HY YOU WANT TO START A BUSINESS
The first thing I want to talk about is
Thinking Bigger
- As you are thinking about starting a business, don’t think about something small to just pay your bills or starting something as a hobby while you raise your family. Think in terms of building something that you can be proud of, that you can expand, most importantly, that you can sell!
- Think in terms of how you will build a team, how you’ll grow so that it isn’t just you doing all the work all the time. There are a lot of companies that encourage you to grow your business by recruiting - that’s not what I’m talking about. Build a business where you own the business and the people on your team are your employees. While the network marketing concept works, I personally don’t think that is a good business model at all. You don’t have much control and it’s not a model that you can scale and sell! One day I’ll really talk about how I feel about network marketing and recruiting, but for this purpose, I want you to think about a team that supports you, that helps you to be more successful, that you can delegate to and have them expand your brand.
- Women who start businesses often have a smaller vision. Don’t get mad at me for saying that but after teaching this presentation for over 5 years, it’s something that I’ve witnessed firsthand. Women who start businesses often think about a business that is close to home and around their family and not something that is scalable. I can’t tell you how many women want to start a baking or food business or a party business for kids. I’m not saying that’s a bad idea but after many of them have done their market research they realized that it wasn’t a business that they could really make a profit or build to sell.
- Insurance is a little different. Since COVID, a lot of people have realized that they can run this type of a business virtually, but I’m not sure if that is sustainable long term. Good market research will help to prove that. There are so many different type of insurance businesses that you can start: i.e. an agency, a brokerage, an FMO, an insurance company, a captive, a direct writer. You can focus on life, health, personal lines, commercial, yachts, tech or international. Under the umbrella of insurance, you have a lot of choices!
- This is why you need a plan. I talk about having a plan all the time but remember fail to plan, plan to fail.
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Understand yourself better:
- Why do you want to start a business?
- This is the most important conversation you need to have. I mentioned it a little in the last episode, don’t go into business because you think you can do it better than someone else….unless you really can.
- Here’s some reasons why people go into business:
- Create a career for yourself - while there is plenty of employment opportunities today in 2022, that wasn’t always the case. Back in the 80’s a lot of people went to college and couldn’t get jobs. When we went into lockdown with COVID and a lot of people lost their jobs, and the entrepreneurial type started delivering groceries and filling grocery orders. People will find work when they need to. Starting an insurance business can be a great career - the question is, are you better as a business owner or as an employee or subcontractor to someone?
- Some people go into business because There’s a demand for what you are selling. Insurance is a product that people need, but not all people know they need insurance. Not all people want to spend the money for something they may never use. If you are connected to a few auto dealerships, it’s easy to get auto insurance from new car buyers.There’s a demand because people can’t drive their car off the lot without car insurance. If you are connected to some mortgage lenders, it is easy to sell homeowners insurance because people can’t go to closing without homeowners. I was speaking to someone recently who couldn’t understand why she had to pay money for automobile insurance all of her life and she’s never had an auto claim. Money spent for nothing is the way she looked at it. So while people need insurance, it’s not always an easy sell like a new iphone or a new tesla!
- Another reason people go into business is because you want to make a difference - wanting to make a difference can be a good reason to go into business, especially insurance, because you can really make a difference in this industry. But are you setting up your business to make a profit while making a difference? Just something to think about.
- An obvious reason why people want to go into business it to make money - when you work for someone else, they often determine your salary. If you are on a commission basis, then you will determine your salary but not all commission positions pay fairly. And not every position can be sales…..it’s a good reason to want to go into business, but it is also important to understand what it costs to get started and the ongoing business expenses of running a business. Money for marketing, taxes, general overhead can be more than you think. The expenses are ok so long as you are generating revenue, but there's a lot that goes into sales and business development!
- Travel - Many people go into business ownership to be able to work from anywhere. Since COVID, I’ve somewhat set my business up that way. In the insurance business that is possible, especially with virtual meetings today but you need to make sure you are in compliance with state laws as you do this. You must also have a strong marketing plan in place where people can find you and send you business regardless of where you work.
ABOUT THE HOST
This episode of the Business of Insurance podcast is produced and hosted by Debbie DeChambeau, CIC, AAI, CPIA - an entrepreneur, business advisor, insurance professional and content creator. Her goal is to inspire you to think differently and explore ideas that disrupt the status quo.
Debbie has an extensive business and marketing background with a focus of helping insurance professionals be more successful.
She is the co-author of Renewable Referrals and produces two other podcasts, Divorce Exposed and Seniors We Love.