When an independent agency becomes profitable, it’s easy to start thinking about expansion. After all, expanding to another area, state, or country is a sign of success. However, not all expansion is good, so before you throw your money at a second agency, take a minute to assess your situation and ask yourself:
Can you replicate your success in a new location?
Your success is largely tied to your ability to target a niche market. Your connection to your community and the industries in your area is why you were able to be successful and profitable. However, there’s no guaranteeing that you will be able to replicate your success.
Check out the competition
You may be known as an industry leader in a certain niche of the P&C industry, but just because you have cornered your target market in your area doesn’t mean that you can swoop in and take over that market in another county or a neighboring state. Before you expand your business and open up the second agency, be sure to do your research to make sure there isn’t another agent in that area who has a firm grasp on your target market.
Supply and demand
You can find people that fit into your niche areas just about anywhere, but before you expand, make sure that there is enough demand for the product you are selling. If the demand isn’t great enough, then expansion isn’t worth your time or money. The demand needs to be there already. Do not expand and then hope to create demand.
Before you consider expansion, take a look closer to home and see if there aren’t ways for you to expand your service to your existing clients. Your clients aren’t living stagnant lives; they are constantly evolving, and hopefully succeeding in their endeavors. As your clients develop, grow, and change with the times, you will have many opportunities to fine-tune your products and services to always meet client needs and demands.
Open an independent agency in Colorado, Arizona, and Utah
Affordable American Insurance provides a turnkey business model for a captive insurance agency to transition to the independent world, or for an existing independent agency, a platform to increased carrier representation and revenue while removing carrier production requirements.