It might be time to sell your agency. But there are things to consider.
In William Shakespeare’s Hamlet, the title character famously struggles with this existential question: “to be or not to be?” However, when you’re thinking about selling your nonstandard (NSA) independent insurance agency, you must answer an even more challenging question: “to sell or not to sell?”
If you go through with it, this will be one of the most important sales of your life. But like any other major sale, there are times when you stand to make a large profit and other times when you stand to take a huge loss.
How, then, will you know when it’s time to sell your insurance agency? Keep reading to discover the answer!
Getting the Best Value
Chances are, this is the first time you are contemplating selling your NSA independent insurance agency. As with any other major sale, you may want to focus on when you can get the best value and highest profit for your agency.
For example, when you work with a mergers and acquisition specialist, they can help you determine what your agency is worth. While many factors go into valuation, you can generally expect your company to be worth somewhere between 1.5x and 3x your annualized gross commission.
In other words, if you are making more money than ever each year, then this is the best time to sell your agency for serious profit. But you need to weigh the immediate profit of the sale against how much you could make by operating the agency for another few years.
Take an Honest Look at Your Profits
What we described above is something of a “best-case scenario” where you sell your agency at its most profitable. However, one thing that may signify it’s time to sell is if your profits are actually dwindling from year to year.
Let’s say that profits are getting lower each year and you have tried making a number of changes to right the ship. If profits continue to slide, this may be a good time to sell the agency for the simple fact that it is going to be worth less each year that the profits go down.
In other words, you might want to sell the agency while it still looks relatively valuable to prospective buyers!
What is the economy doing?
The business environment is always changing. A new capital gains tax is looming on the horizon. The business environment for all businesses is changing fast. It’s hard to know what is going to happen next in this current pandemic environment. The competitive landscape is increasing both from national and direct carriers. Not only that, there is a huge increase in online competition.
Is the Passion Still There?
So far, we have focused primarily on profit. And profit is usually the driving force behind entrepreneurs wanting to sell their businesses.
Another factor that is harder to quantify is your passion for running your company. When you first started out, you likely treated each day as a new series of challenges to overcome. And there is something genuinely exciting about building a thriving business from the ground up.
But after enough years of running the business, it may feel like just another job to you. And if you feel like screaming at the prospect of attending another meeting or answering another email, it might be best to sell the agency and move on.
Have You Found a New Challenge?
As we noted before, some decide to sell their insurance agencies because they no longer find the work as exciting or challenging as they once did. Such entrepreneurs typically make the sale and then start figuring out what the next chapter of their lives will look like.
But if you’re lucky, you might have already found a new challenge to pursue part time. And if you are really enjoying trying something new, this may be a sign that you should sell the agency and focus on your new endeavor full time.
For example, maybe you recently bought a house and are renting it out. If you enjoy real estate and the passive income it brings, then selling your agency outright may give you enough money to buy more property and pursue real estate full time. And maybe you’ll even find new ways to innovate this industry.
You’ve Trained a Successor
By the time you’ve nurtured an agency to success, you probably see it as an extension of yourself. This leads to one of the reasons some entrepreneurs are hesitant to sell: They don’t want to see their agency turn to ruins in someone else’s hands.
But if you’ve been thinking about selling for a while now, you may have been training someone else to “take the wheel.” And if you think that person is ready to sit in the big chair, you can go ahead and sell your agency to them with complete peace of mind.
It really is that simple. If you are leaving the agency in good hands, then there is no reason not to sell it and begin either your retirement or your next challenge.
Time to Focus on Family
What is one thing that almost all entrepreneurs have in common? In most cases, they all wish they had more time to spend with family.
This is the paradox of building a successful business when you’re younger. On the one hand, you are doing your best to build a better future for your partner and for your children. On the other hand, the more time you spend building that business, the less time you have to spend with the family you love.
If you have built a successful agency and now long to spend time with your family, it may be the right time to make the sale so you can finally make time for the most important people in your life.
Selling Your NSA Independent Insurance Agency: Your Next Move
Now you know the signs that you should focus on selling your NSA independent insurance agency. But do you know the best firm to buy it?
Here at Confie, we live and breathe insurance. When you come to Confie, you can expect to work with our experienced due diligence team to help you navigate the sales process. We have a track record of saying what we’ll do and doing what we say, meaning you can trust us along the way. To explore all your options with one of the world’s most reliable firms, contact us today!
