Insurance Agency Business Plan

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Quaestor Services

Strategy and Implementation Summary

  • Emphasize value instead of price. Quaestor is dedicated to working closely with each client and educating them on the importance of value over price.
  • Build long term relationships. Quaestor is dedicated to establishing a successful partnership with each client, respecting their interests and goals by cultivating a long term relationship to enhance client retention.
  • Focus on increasing market share. Quaestor will focus on personal and business clients that have been identified in the targeted markets.

5.1 Competitive Edge

Quaestor’s competitive edge is our positioning as strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they need it.

5.2 Marketing Strategy

The marketing strategy is the core of Quaestor’s main strategy:

  • Emphasize, and educate the client on, the importance of value over price
  • Build a relationship business that fosters client retention
  • Develop specific programs for each target market segment

5.3 Sales Strategy

Quaestor’s sales strategy will be based on systematic person-to-person contacts through referrals, direct mail, telemarketing and the Internet. A list of potential prospects has already been compiled and will serve as a launching pad for marketing the products and services.

5.3.1 Sales Forecast

The important elements of the sales forecasts are summarized on three line items, Accounting Services, Insurance Sales, and Miscellaneous Revenue. The summary of the initial sales forecast indicates a first year revenue of $39,500 increasing to over $108,310 by the end of the second year, then $122,110 by the end of the third year. It should be noted that although sales triple in the second year, all revenue has been forecasted very conservatively for the three year forecast. Forecasted sales increases are overstated by the Whelnoan Insurance subsidies or Miscellaneous sales. Actual sales growth for the second year is 160% due to adding a producer for continued sales growth and exponential growth of insurance renewals. The third year of sales reflects an actual growth of 76% due mostly to the increase in insurance renewals. Each element will be discussed separately and in its entirety below: 

Accounting Services – it has been determined in order to be conservative for this forecast, that the average accounting client requires services at approximately $500 a month, or 25 hours (x) $20 hour. Obviously this can vary depending on the needs of the client, but for forecasting purposes this is the standard used in determining the monthly revenue. In addition, it is assumed that once our services are sold to the accounting client, they will continue to generate a monthly revenue until replaced. Income tax preparation which will yield a substantial increase in revenue as a future service, but is not considered in this forecast. The illustration below, shows two clients are forecasted for the second year and three clients are forecasted for the third year. Accounting clients can sometimes require substantial time at first, until the clients’ needs are defined and set up. Limited clients are being forecasted due to the time required growing the client base for insurance.

Month FY2005 FY2006 FY2007
Jan 1,000 1,500
Feb 1,000 1,500
Mar 500 1,000 1,500
Apr 500 1,000 1,500
May 500 1,000 1,500
Jun 500 1,000 1,500
Jul 1,000 1,000 1,500
Aug 1,000 1,000 1,500
Sep 1,000 1,000 1,500
Oct 1,000 1,000 1,500
Nov 1,000 1,000 1,500
Dec 1,000 1,000 1,500
Sales Increase 50% 50%
TOTAL $8,000 $12,000 $18,000

Insurance Sales – are comprised of two categories, 1) insurance-new sales and 2) insurance-renewals. The insurance products used to forecast new sales are, auto and high risk auto (renews every six months), property structures such as homes, townhouses, condominiums, renters and landlord insurance, commercial, life and all other types of recreation vehicle insurance, (renews annually).  It should be noted that in order to be conservative, not all insurance products that are offered were forecast, such as health, retirement products and plans. Whelnoan Insurance Company District Office supplied the necessary documentation needed for the formulation of the insurance sales and renewals. Sales are based on actual results (averaged) created for the first three years of a new Whelnoan Insurance agency. All numbers have been reviewed and approved by them before the forecast was entered into this business plan.  

What makes insurance sales different from other sales are the renewals. In most cases, without an increase in monthly production, the monthly income will almost double due to renewals. It has been determined by Whelnoan Insurance that customer loyalty in the first year is 87%, second year is 85% and third year is 89%. Other than auto, which renews every six months, all other insurance products renew on an annual basis. Because of renewals, it is possible to double sales revenue without increasing production costs. The following is the monthly forecast:

NEW INSURANCE SALES INSURANCE RENEWALS TOTAL
Month FY2005 FY2006 FY2007 FY2005 FY2006 FY2007 FY2005 FY2006 FY2007
Jan 290 2,132 3,961 593 2,504 290 2,725 6,465
Feb 1,255 2,868 3,960 927 3,370 1,255 3,795 7,330
Mar 1,290 2,901 3,961 954 3,424 1,290 3,855 7,385
Apr 1,325 3,107 4,129 1,008 3,706 1,325 4,115 7,835
May 1,355 3,104 4,129 1,026 3,641 1,355 4,130 7,770
Jun 1,415 3,239 4,130 1,246 3,955 1,415 4,485 8,085
Jul 1,490 3,405 4,466 60 1,255 4,084 1,550 4,660 8,550
Aug 1,490 3,408 4,468 270 1,632 4,462 1,760 5,040 8,930
Sep 1,490 3,407 4,468 300 1,813 4,462 1,790 5,220 9,110
Oct 1,525 3,609 4,803 330 1,821 4,852 1,855 5,430 9,655
Nov 1,525 3,504 4,299 330 1,821 4,771 1,855 5,325 9,070
Dec 1,525 3,955 4,300 360 1,875 4,825 1,885 5,830 9,125
Sales Increase 142% 32% 868% 202% 210% 82%
TOTAL $15,975 $38,639 $51,074 $1,650 $15,971 $48,236 $17,625 $54,610 $99,310

Miscellaneous – the amounts forecasted in Miscellaneous are Whelnoan Insurance subsidies offered at pivotal times throughout the first two years to financially support the insurance agency during the development stage. The subsidies are broken down into four categories, and require that milestone production levels be achieved before the subsidy is made available, 1) commissions on new sales 2) marketing leads, 3) office space, and 4) staff. At the end of two full years of operations as a career agent, subsidies are no longer available. The total subsidies forecasted in the first year is $13,875, in the second year $41,700, and $4,800 in third year, for a total of $60,375. 

Insurance agency business plan, strategy and implementation summary chart image

Insurance agency business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Accounting Services $8,000 $12,000 $18,000
Insurance Sales $17,625 $54,610 $99,310
Miscellaneous $13,875 $41,700 $4,800
Total Sales $39,500 $108,310 $122,110
Direct Cost of Sales Year 1 Year 2 Year 3
Direct Cost of Sales (owner/agent salary) $27,900 $58,500 $65,500
Other Cost of Sales $0 $4,500 $5,400
Subtotal Direct Cost of Sales $27,900 $63,000 $70,900

5.4 Milestones

The table below lists important program milestones, with dates and managers in charge. The milestone schedule indicates Quaestor’s emphasis on planning for implementation and the measurement of these activities. In addition, each milestone is important to achieving the financial forecast used in this business plan. The following is a brief description of each milestone:

  • 12/01/04-01/31/05-Business Financing – obtain the very important start-up financing necessary for the first year of operation.
  • 01/01/05-03/31/05-Career Agent – the Whelnoan Career Agent Program starts when a new agent has completed their training, received the required insurance licenses and in the last 90 days sold 30 policies including three life insurance policies. 
  • 01/01/05-02/28/05-Accounting Services (1st Client) – obtain the first monthly client for accounting services.
  • 03/01/05-06/30/05-Accounting Services (2nd Client) – obtain the second monthly client for accounting services.
  • 04/01/05-09/30/05-Career Agent (6 months) – the first milestone in the Whelnoan Career Agent Program. A Career Agent receives $1,500/monthly for the first six months. At the end of six months, a Career Agent’s production is checked for the number of policies issued-and-paid to determine subsidy level. Required level per financial forecast is 80 property and casualty policies and eight life policies which allows a subsidy match of commission dollar for dollar on new business commissions up to $2,000/month and a lead subsidy of $100/month.
  • 05/01/05-06/30/05-Business Financing – obtain additional financing to ensure business operations, marketing and stability during the first year of operation.
  • 11/01/05-12/31/05-Hire Agent – hire and train new agent for a start date of 1/01/06.
  • 04/01/05-03/31/06-Career Agent (12 months) – the second milestone in the Whelnoan Career Agent Program. At the end of twelve months, a Career Agent’s production is checked for the number of policies issued-and-paid to determine a new subsidy level. Required level per financial forecast is 180 property and casualty policies and 18 life policies which allows an additional subsidy for staff at $1,500/month and office space of $750/month.

Whelnoan Insurance Subsidies are available for 24 months only or 4/1/05-03/31/07

  • 04/01/05-03/31/07-Run to Daylight (24 months) – the third milestone in the Whelnoan Career Agent Program. At the end of twenty-four months, a Career Agent’s production is checked for the number of policies in force to determine waiver of one third of the subsidies paid to the agent. In order to be eligible, an agent must have 400 property and casualty policies and 40 life policies in force.
  • 04/01/05-03/31/08-Run to Daylight (36 months) – the fourth milestone in the Whelnoan Career Agent Program. At the end of thirty-six months, a Career Agent’s production is checked for the number of policies in force to determine waiver of second third of the subsidies paid to the agent. In order to be eligible, an agent must have 540 property and casualty policies and 54 life policies in force.
  • 04/01/05-03/31/09-Run to Daylight (48 months) – the fifth milestone in the Whelnoan Career Agent Program. At the end of forty-eight months, a Career Agent’s production is checked for the number of policies in force to determine waiver of last third of the subsidies paid to the agent. In order to be eligible, an agent must have 660 property and casualty policies and 66 life policies in force.
Insurance agency business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Business Financing 12/1/2004 1/31/2005 $0 Owner Finance
Career Agent 1/1/2005 3/31/2005 $0 Owner Marketing
Accounting Serv-(1st Client) 1/1/2005 2/28/2005 $0 Owner Marketing
Accounting Serv-(2nd Client) 3/1/2005 6/30/2005 $0 Owner Marketing
Career Agent (6 mos) 4/1/2005 9/30/2005 $0 Owner Marketing
Business Financing 5/1/2005 6/30/2005 $0 Owner Finance
Hire Agent 11/1/2005 12/31/2005 $0 Owner Administrative
Career Agent (12 mos) 4/1/2005 3/31/2006 $0 Owner Marketing
Run to Daylight (24 mos) 4/1/2005 3/31/2007 $0 Owner Marketing
Run to Daylight (36 mos) 4/1/2005 3/31/2008 $0 Owner Marketing
Run to Daylight (48 mos) 4/1/2005 3/31/2009 $0 Owner Marketing
Totals $0

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