Beyond Insurance
So you want to start your own agency?
The recipe for success
By Scott Addis
On October 10, 1990, I started The Addis Group, an insurance brokerage and risk management consulting firm, in King of Prussia, Pennsylvania. No name, no revenue, no carriers, no customers, no reputation. Only a dream, a network of supportive friends and a unique process.
Although it has been more than 17 years, it seems like only yesterday that The Addis Group began. What was the “recipe for success”? In 1990, the following “ingredients” helped me answer the question, “So you want to start your own agency?”
Network. In assessing the opportunity for success, I went to my network (i.e., centers of influence and friends) to solicit their opinions. I asked each person three questions:
1. Would you stand behind me?
2. Would you refer me to potential clients?
3. Would you become a client?
The answers were all positive.
Value Proposition. I needed a unique “value proposition”—a process that was different from that of any other firm in the Philadelphia region. This was necessary to attract and retain insurance carriers, staff and clients. I also knew that my network would be able to generate referrals if I armed them with a powerful, compelling story about The Addis Group’s approach.
Marketing and Business Plan. Essential to the endeavor was the crafting of a marketing and business plan—a roadmap for the future of the firm. This document also helped secure a credit line as well as attract insurance carriers.
Insurance Carriers. Insurance carrier partners were critical to the evolution of The Addis Group. The firm could not exist without a handful of top-notch companies that embraced The Addis Group’s unique process. I was aware that attracting these carriers was going to be a significant challenge that would require premium volume commitments.
Family Support. This was a huge consideration. Before venturing out on my own, I talked with my wife, Bobbie, to confirm that I had her support. In October 1990, we had two boys (Andrew, age 9, and Jeffrey, age 7) and a third child on the way. Bobbie and I thought deeply about the potential impact on our family as a result of the time and energy it would take to get the business off the ground. We also measured the financial risk factor. Fortunately, Bobbie was a registered nurse who was willing to do what it took to help the cash flow.
Passion and Purpose. Last but not least, I had a passion and purpose to design a future-oriented agency that would attract quality clients through a unique business model. At age 34, I had energy, determination, focus and drive. I also had a heavy dose of fear. I have come to learn that fear is an incredible motivator. It was my daily gut check that got my engine running.
The first few weeks were overwhelming. So much to do with so little time: company name, logo, business cards, office space, credit line, health insurance, licensing, computer system, office equipment and so much more. Not to mention researching a top-notch team of professional advisers including legal, accounting and banking, as well as preparing marketing and business plans for the insurance carriers.
Staffing is key
I was able to attract two outstanding individuals who shared my dream and vision: Bill Rhodes, an energetic, polished 26-year-old professional who had underwriting experience, and Jean Sells, a multi-talented, dedicated, experienced individual with brokerage experience and administrative capabilities. Both loved the “recipe for success” and understood the risk issues. Hiring Bill and Jean was the most important first step in building the firm. Today, 17 years later, Bill and Jean continue to lead The Addis Group.
I had anticipated an uphill battle to attract insurance companies. Little did I know how difficult this task would be. We had meeting after meeting with Chubb, Fireman’s Fund, Royal, Kemper, Reliance and Hartford. Each carrier asked for a significant premium volume commitment and questioned our ability to build a firm.
To respond to their issues, we put together a powerful advisory board to stand behind The Addis Group. The board consisted of business leaders representing a cross-section of skills ranging from marketing to banking to legal to finance. This move gave carriers comfort that The Addis Group was going to succeed.
The spectrum of emotions that Bill, Jean and I experienced in year one went from exhilaration to disappointment. Most important, we never took our eyes off our goals. Our recipe for success was built on providing comprehensive risk management audits three to four months after each policy renewal.
Instead of starting with the traditional “bidding process,” The Addis Group focused on a four-step process to identify and measure risk. Bill, Jean and I invested countless hours with our prospects to improve their “risk profile” before negotiating the insurance transaction. If a prospective customer did not want to take the time to go through our diagnostic audit process, we simply placed the individual on our mailing list and moved on.
In year two we gained confidence. The carriers loved our approach. They were seeing outstanding hit ratios and loss ratios. They also felt that they were part of our team. That year we were brought in Peter Unger, a CPA/MBA who had experience running a family business. He was exactly what The Addis Group needed. Peter immediately took over running all operations. It allowed Bill, Jean and me to focus our attention on client service and business development. Today, Peter continues to manage The Addis Group.
Guiding principles
In year three we fined-tuned our marketing materials, prospect research and approach to developing business. We also built our mission statement and guiding principles.
Our five guiding principles were:
1. Deliver significant value so our clients view our relationship as an investment—not a cost.
2. Character and integrity are the cornerstones of business trust. They shine through—particularly in tough times.
3. Be innovative and differentiated. Bet on our vision for the future. Imitate only as a last resort.
4. Surround ourselves with people who care—a lot. Seek people with ambition, intelligence and motivation.
5. Our goals are our clients’ dreams with deadlines!
Years three through five were exhilarating. We reinvested every penny into the organization to attract talent, build technology and position ourselves in the community. The recipe was working to perfec-tion. All of our stakeholders—clients, staff, carriers, centers of influence and community —were fueling our growth and success. These stakeholders saw us as something unique.
Community recognition followed. In 1993 and 1994, The Addis Group was a Philadelphia finalist for Inc. magazine’s Entrepreneur of the Year Award. The Philadelphia Business Journal described the award as the “nation’s most prestigious recognition for leaders of some of the region’s hottest entrepreneurial companies.” In 1994, 1995 and 1996, The Addis Group was placed in “Philadelphia 100”—the fastest growing privately held companies in the Philadelphia region. In 1997, the firm was recognized as the Greater Philadelphia Chamber of Commerce “Business of the Year.”
As I look back on the early years, there is no question that we our success hinged on the design and development of our network, value proposition, business plan, family support system, insurance carriers, and passion and purpose.
Do you want to start your own agency? The experience of The Addis Group gives evidence that you can achieve this goal. You can start by asking yourself the following questions:
1. Do I have a network of centers of influence and friends who will stand behind me, refer me and become clients?
2. Do I have a unique “value proposition” to differentiate myself in the marketplace?
3. Does my marketing and business plan lay out a roadmap for future success?
4. Is my family supportive?
5. Will I be able to attract insurance carrier partners?
6. Do I have the purpose and passion to build this enterprise?
The author
Scott Addis is president and CEO of The Addis Group and Addis Intellectual Capital, LLC (AIC), a coaching and consulting company for insurance agents, brokers and carriers to use when working with their clients. Scott was named one of the “25 Most Innovative Agents in America” by the National Alliance for Insurance Education and Research. He can be reached at www.beyondinsurance.com.