When it comes to businesses that stand the test of time, insurance agencies top the list. After all, insurance is something people will always need, and therefore the industry is largely untouched by recessions and other economic shifts.
Prompted by the desire to own a small business of his own, Westmark said the idea of becoming a risk advisor to help people plan for the unexpected also drew him into the insurance business.
The path to ownership
As with any business, there is more than a single path to ownership — there are independent agencies and franchises. Franchises have more market share overall. For example, Allstate is the second-largest insurance company brand in the United States with a market share of 5.13
Still, many people choose to open their own, independent agencies as well. As of 2012, there were more than 38,000 independently owned agencies across the U.S.
“Whether or not it’s a franchise, I would suggest that buying an existing business is the best way to go versus starting one from scratch,” Westmark said. “Coming on board that way offers programs, guaranteed pay, a base of clients — it jumpstarts things for you.”
Westmark first became involved with Allstate when he was hired by his father-in-law’s Allstate agency in 1990. He acted as an agent for the company until 2000, when his father-in-law retired and he purchased the business.
Having been both an employee and owner, Westmark said he prefers ownership.
“What I like about being my own boss is the direct challenge of building a customer base and building a business,” he said. “From running the office to marketing and taking care of customers, it’s nice to have control over the growth of your own business.”
Specifically, when business is slow, Westmark said he still picks up the phone to generate business.
The importance of a ‘mission mindset’
That ability — and willingness — to pick up the phone speaks to the temperament required to find success in the insurance business. Being an insurance agent means plenty of client interaction required, and it goes beyond simply selling policies. It also requires building relationships with clients.
“I have always approached it like a mission — not just as a salesperson looking to hit a certain number,” Westmark said. “You also have to like people and be able to communicate, obviously.”
That communication includes asking hard questions to clients in order to make sure they are properly preparing for risk, and that they understand their coverage, he added.
While, generally speaking, insurance is about selling, it’s important to remember that your mission is to act as a risk advisor for your customers.
“We all know sad stories of a parent dying or losing their child, or someone getting hurt and not being able to work,” Westmark said. “It makes a bad situation much worse when those scenarios aren’t planned for, so helping people prepare for these risks that they don’t understand or explaining to them what coverage they have or don’t have is essential.”
It’s a mission Westmark likens to “tough love,” in that you have to force your customers to stop and consider these unpleasant scenarios.
“If you have the drive to do that, you will do a good job for your customer,” he said. “and the rest will come. You’ll develop a good reputation for having a mission to help and protect people.”
Having that mission mindset also means being persistent. As with any business, Westmark said the insurance industry is a competitive one.
“There are going to be more no’s than yesses from customers,” he added. “You have to be consistent and persistent in doing those things that matter.”
Overcoming the price perception
One of the biggest challenges of the insurance business is overcoming the perception among customers that price is all that matters.
“The cheapest insurance isn’t the best from a coverage point of view, so part of your mission must always be to educate the customer on why a certain amount of coverage is necessary,” Westmark explained.
To that end, Westmark advised that an entrepreneurial mindset is also a plus. This includes understanding that there will be some long hours required, making sure you’re up to the
“You can certainly maintain a work/life balance, but the lines blur and there can be long hours even after you’ve gotten your agency up and running,” he explained, citing the months after Hurricane Ivan in Pensacola, Florida as an example.
“Ivan impacted lots of people so we just went into claims mode, literally for months,” he said. “Your customers are your community — your
On being the boss
Although there is always a time commitment associated with owning an insurance agency, there are plenty of benefits to being your own boss. It’s critical to hire the right people to help support your business, Westmark said.
“I can’t do everything for everyone all the time, but I do have a great team of people around me,” he added. “It’s a good life, you have control of customer growth, your revenues, and it’s very rewarding to help people. You really are able to have a great impact on people’s lives.”
When asked what has been the biggest challenge, Westmark cited that it’s been the business side of the insurance industry. He didn’t come into the venture with a business background and that’s something
“At one point I wanted to be an award-winning journalist,” he recalled. “Knowing the basics of budgets and managing cash flow is essential and I had to learn all of that.”
In Westmark’s case, he was fortunate to have the help of a mentor early on in his insurance career.
“He advised me to ‘think like a big corporation,’ meaning to have reserves for tough months and to always be prepared,” Westmark said. “That has proven to be invaluable advice.”
It’s also important to hone the skill of finding and hiring the right people. It’s critical to understand that the industry is competitive and to develop a solid business and marketing plan to set yourself up for success. That includes having a plan to manage cash flow and having a credit line and reserves to keep the agency running if business slows down.
“You have to be adaptive, and learn to control what you can,” Westmark said.
Beyond that, customer service is king. That means getting your hands dirty in the claims process. Thankfully, he said, there are plenty of great software programs available to make all of these processes more efficient.
“In addition to working in the business, you have to work on the business to succeed,” he said.
Why it’s worthwhile
With all of its challenges, Westmark says the benefits of running an insurance business make it all worthwhile.
“When things are going well and the business is humming along, it’s fun,” he said. “It’s great to sit down and talk to people and find out what’s important in their world. People have great stories and interesting lives and it’s very rewarding getting to know them. They become more like friends than customers.”
At the end of the day, he said, you have to remember that customers are people, not policy numbers.
“It seems basic, but applying that consistently over time makes a difference,” Westmark said.
We appreciated the opportunity to talk with Scott Westmark, owner of Scott Westmark & Associates in Pensacola, Florida. If you’re interested in more insights on buying, selling, or running an insurance agency, check out our industry articles here. And, if you’re curious about opportunities to own an insurance agency in your area, check out our latest listings here.