How to Build an Insurance Agency Business Plan

Perhaps the most important part of starting your own insurance agency is creating your business plan. Think of this document as your business blueprint. It maps every detail of your agency, from your objectives and experience to your target market and financial projections. In short, the quality of your business plan can determine whether or not your small agency gets off the ground.

Who Needs An Insurance Agency Business Plan?

Yes, business plans require a lot of work, research, writing, and careful review. But any time you start a business, you need to create a business plan. And even established businesses can benefit from having a written plan on hand. That’s because your business plan can help you secure financing and direct appointments.

In addition to giving key stakeholders peace of mind, your plan can help you…

  • Set realistic objectives
  • Allocate resources
  • Improve workflow
  • Communicate with partners and our professionals
  • Grow your business

Periodically reviewing your business plan is a valuable exercise because it clarifies your business’ goals and how to accomplish them.

What Should My Insurance Agency Business Plan Include?

Regardless of your history, a basic business plan must include the following components:

  • Executive summary. A snapshot of your agency, the executive summary briefly explains the market opportunity and how your agency plans to address it. It also includes your agency’s general financial information, such as its current investors. An established agency might include their mission statement and growth highlights, while a startup may focus on prior experience and motivation for starting an insurance agency. In many cases, the executive summary is the first impression investors have of your business, so make sure it captures their attention.
  • Company description. The company description helps investors understand what sets your agency apart from competitors. In this section, you explain how your agency brings value to the marketplace. Depending on our agency, that could be your expertise, location, options or product lines.
  • Products. This part details your agency’s current and future offerings, how you will acquire and manage them and the advantages they bring to your clients. Your investors may find the description of how independent insurance agents secure their offerings helpful, especially if they aren’t familiar with how difficult it is to obtain a direct appointment. (Related reading: "Alternatives to Direct Appointments for Independent Insurance Agents."
  • Market analysis. The market analysis shows your understanding of the market and the demand your agency addresses. Include a description of your industry, details about your target market, and an assessment of your competitors. Investors may also want to see the market share you hope to gain and an explanation for those numbers.
  • Marketing strategy and implementation. Stating goals is great, but you also need to detail how you will communicate your agency’s value through branding, advertisements, and special events.  In this section, you might also want to outline your sales strategy and forecast.
  • Organization and management. Investors need to trust you before financing your agency. To establish the agency’s credibility, show the qualifications of your executive team. You might want to create an organizational chart to illustrate your business’ infrastructure and operations, too.
  • Financial plan. When seeking funding, new businesses usually need to identify start-up costs and provide five years of prospective financial data, including balance sheets, income statements, cash-flow statements, and capital expenditure budgets.  You can also add a short financial analysis, which identifies industry trends that justify their request.
  • Funding request. An agency that’s seeking investors needs to add a funding request to its business plan. Typically, a funding request lists the amount you currently seek, potential future funding request, your plan for using the funding, and strategies for financial situations, such as a buyout or sale.

Check out the Small Business Administration for more advice on completing your business plan.