How to Create a Business Plan for Your Independent Insurance Agency

July 25, 2017 Becky Schroeder

Starting your own independent insurance agency, like any business, is a challenge. Don’t start the journey going in the wrong direction.

Before you do anything else, you need to create a business plan.


Why You Need a Business Plan

The most common reason to create a business plan is to secure funding for your new agency. But, there are more reasons and uses for a business plan.

It serves as the roadmap to guide you in your first years in operation. It’s your benchmark for monitoring your progress. It holds you accountable to your goals and objectives.

If you’re looking to get investors, a business plan acts as a sales tool. It can be a recruiting tool for attracting employees.

When you’re looking for appointments, carriers will want to see your business plan. So will E&O insurance providers.

This is why it’s critical to not skip the business plan. Take the time to research and create the document. It will help your new agency succeed.

One thing to keep in mind: your business plan should be dynamic. Even after you’re done, you shouldn’t consider it finished. You will need to adjust it as things in the industry changes. Or, as you get more information. Plus, you’ll need to refer to it regularly after you start your agency to see how you’re doing.

So how do you create a business plan?


What Makes Up a Business Plan

There are seven essential sections.

  1. Executive Summary

This is the most critical section of your plan as many people will judge the viability of your agency on it. Though it is the first section of your plan, it’s better to save it for last to write.

Because this section summarizes the fundamentals, it’s better to first write the rest of the plan. It will make it easier to write the executive summary.

There is one thing you must include. What it is you want. State what it is you’re looking for so the readers of your business plan don’t have to hunt through the document to find that information.

  1. Agency description

Describe your business, its purpose and your vision.

What do you want your agency to look like in the future? What are your values? What’s important to you? This doesn’t need to be lengthy. You can sum it up in a purpose or vision statement.

List your goals and objectives. Goals are what you hope to accomplish in the long term. These can be in terms of profitability, market share, etc. Objectives are more short-term and specific. They describe the actions you will take to reach your goals.

For example, your goal might be to become one of the top 10 agencies in your city. Your objectives could include to quote 150 policies a month and close 30 percent of them. Another objective could be to retain 85 percent of your customers a year. One more might be to cross sell one line of business to clients and close 40 percent of them. These objectives would help you toward your goal to be a top 10 agency.

Detail your strengths and core competencies. What is going to help you achieve those goals and objectives?

  1. Market analysis

This section should show off your industry knowledge, research and conclusions. You should do a SWOT analysis evaluating the strengths, weaknesses, opportunities and threats for your agency.

Describe the industry and what factors are affecting it. What are the current trends in growth and customer behavior and preference? What are the opportunities and potential threats in the industry?

Identify your target market. It is possible you’ll have more than one customer group. Build outlines or buyer personas for your most important groups. If you’re selling to consumers, use factors like age, gender, location, income level, social class, occupation, and education level. For businesses, use industry, location, size, quality, coverage, and price sensitivity.

You’ll also need to include a competitive analysis. Who are your competitors? Do they compete with you for certain customers or products? Or will they compete with you on all products and all customer groups? What is their market share? What are their strengths and weaknesses? How do you compare? What is your competitive advantage? What makes you unique? Don’t say service.

Explain the barriers of entry you face. This can include, but is not limited to, high costs in capital, labor and/or marketing. It also can include brand recognition, training and skills, and technology. How will you overcome these barriers?

  1. Management and operations

What is the legal structure of your agency? C or S corporation? LLC? General or limited partnership? (More on the different structure types.)

Who are the owners and what is their percentage ownership? What is the extent of each owner’s involvement with the agency?

Also, include profiles of your management team. What is their background, qualifications, expertise?

Will you have an advisory board you meet with once a quarter? Who is on the board? What is their background, etc?

If you plan to have employees, you should detail the roles and responsibilities. How many employees? How will you recruit and train your employees? Include an organizational chart to show who does what.

What location do you have in mind? What are your physical requirements? Is location important for attracting customers? Is it near competition? What does it cost, including rent, utilities, maintenance, and insurance? This information will also go in your budget in the finance section.

Don’t forget about your agency technology. You’ll want to start with good habits so your agency is efficient and productive from the beginning. Include information on your comparative rater and/or agency management system and how it will contribute to your operations.

  1. Products and services

Describe the products and services you will offer your customers. What lines of business are you going to sell? What about add-ons like roadside assistance? Will you offer other services in addition to insurance?

Explain what you will do after the sale. Will you offer customers annual policy reviews? 24/7 help with a call center?

While you don’t set the price of the insurance policies you sell, you do need to describe your commission or fee structure.

Outside of this business plan, how do you plan on onboarding carriers to your agency? Detail your plans for getting appointments.

  1. Marketing and sales

Now comes the section where you talk about how you’re going to get customers and grow.

Describe the growth potential and opportunity for an agency similar to yours. What is your growth strategy? How are you planning to grow your agency? Organically or through acquisitions?

How are you going to reach potential customers and market your agency? What’s in your agency marketing plan? Advertising? Community involvement? Online marketing? Buy leads? Partner with potential referral sources?

What about your agency’s visual brand? This could include your logo, insurance agency website, business cards, signage, marketing materials. Are you going to be using technology like email marketing or marketing automation?

How much are you going to spend on marketing and when (startup or ongoing)? If it is before you start, put it in your startup budget. If it’s an ongoing expense, add it to your operating plan budget.

Who is going to be selling for your agency? How will you recruit and train producers? How will you compensate them?

Include a sales forecast based on your sales experience, marketing strategies, research and industry data. You might consider doing two forecasts. Your best guess of what you expect and a worst case scenario that you’re confident you could meet no matter what.

Set a goal for your commission in the first year. Then you can figure out about how many policies you need to write a month. Which then helps you know how many quotes you need to be doing a month.

  1. Financial projections

Potential creditors or investors want to know what they can expect from you over the first few years.

You will need to create forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. (More on financial projections.)

Detail the retention rates you expect to maintain. What about commission agreements? You need to show you understand the insurance industry.

Projections should match what you’re requesting in funding. Discrepancies is a red flag to creditors. Summarize any assumptions you’ve made in your projections. You don’t want to leave people guessing.


More Business Plan Tips

Some final advice for writing a business plan: Keep it simple. It’s going to be a long document. But you don’t need to make it long just for the sake of it. You want it to be easy to read.

Use short sentences and simple words. Avoid buzzwords and jargon. Don’t assume everyone will know what an acronym stands for. Use charts and graphs to highlight numbers. And, bullet points are great for lists.


If you’re feeling overwhelmed with all the items to include in your business plan, don’t worry. There are many resources available to you. You can use this blog post as an outline.

You can contact your local or state association. They may have a guide or template you can use. You can also search the internet for business plan templates.

And remember, your business plan is a dynamic document. It’s not something to do once and forget about it. You will need to review it at least once a quarter in the beginning to check your progress.


The Modern Agency monthly blog series discusses various topics related to the success and growth of independent insurance agencies in the modern market.

About the Author

Becky Schroeder

As vice president of marketing, Becky Schroeder oversees ITC’s growth through marketing and drives the overall marketing strategy for the company and its products. Her specialties include advertising, social media, email marketing, content marketing and public relations. Becky has a master’s degree in integrated marketing communication from Emerson College in Boston and a bachelor’s degree in journalism from Texas A&M University. Becky is a big Texas A&M football fan and enjoys cooking, reading and spending time with her husband and their two daughters.

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