(We consistently hear from and talk with agency leaders from across the country, and for the past few months, the vast majority have been asking us the same question – it’s actually THE question for every benefits agency leader. This post reveals that critical and all too common question and provides THE strategic answer.)
The employee benefits industry is a hotbed of merger & acquisition activity. But there is a dirty little secret behind many of the transactions.
It’s clear why the buyers are buying. The larger, mostly national firms that are buying up the smaller, mostly local firms are looking for more market share and, often, growth that they can’t create organically.
But why are owners of these firms selling? These agency leaders who are selling out are traditionally fiercely independent, have been highly successful, and like seeing their signature on the front and the back of their paycheck. Why are they selling out, giving up their independence, and losing control of their firm?
As my friend and client, the visionary benefits agency owner Craig Lack, puts it, “The answer is “Money’. Now what’s the question?” There are really only three reasons a benefits agency owner sells his firm.
One, it’s an exit strategy. Without a succession plan and into his or her 60s or older, cashing out can be a pretty good exit plan. Time to take the money and ride off into the sunset.
Two, the buyer is offering crazy money. The owners of these target firms aren’t ready to retire but simply can’t turn down what are some ridiculous multiples especially considering all the disruption in the marketplace. Good for them!
Dirty little secret
Three, it’s the third group of agency owners that has the dirty little secret. They are not ready to retire, selling is no exit strategy for them. And they aren’t necessarily getting stupid, crazy money for their firm. These owners are selling because they don’t have an answer to the most critical question facing the leaders of employee benefit firms:
These agency owners look at their valuation and realize that they don’t know what to do next to keep it at its current level, never mind grow it. They don’t want to sell, they don’t want to give up control, they don’t want to work for someone else…. But they don’t know what to do next to keep their valuation from falling in the face of declining medical commissions, a disrupted marketplace, and an agency business model that just isn’t working like it did for so many years.
Since they don’t have the answer to “What’s next?” they decide to let one of the national or super-regional firms figure it out. They cash out now to protect the value of their business…losing both their independence and control of their firm. But at least “What next?” is someone else’s problem now.
The tragedy is, what they don’t realize is that they don’t have to sell…they don’t have to give up control. The answer to “What’s next?” is readily available and being implemented by agency leaders across the country.
The answer to “What’s next?”
The answer to “What’s next?” is a new, reform-proof agency business model that frees a benefits firm of its dependence on medical commission and repositions the firm to become a consultative, strategic partner to its clients…that “trusted adviser” that so many brokers talk about but have no idea how to become.
And finding that NextGen Business Model is not hard. In fact, it’s available to agency leaders in two formats.
Our industry best-selling book, DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success (www.insurancebottomline.com/doordiebook), is nothing more than a detailed, step-by-step guide to that new, reform-proof agency business model.
DO OR DIE walks you through the four key areas of agency reinvention and growth:
- Portfolio – Product & service solutions that allow you to solve client pain points
- Marketing – Telling your prospects & clients about the solutions you have
- Selling – Using a consultative approach to convert warm prospects into clients
- Management – Managing for maximum top-line revenue & bottom-line profit
These business-building components of your agency, when done right, drive your growth, revenue, and profit. More to the point, during this time of industry disruption and uncertainty, focusing on reinventing these key areas is THE answer to the agency owner’s question, “What’s next?”
Here’s what Ty Miller of Shirazi Benefits in Greeley, CO, said about DO or DIE:
Three years ago I bought a copy of DO or DIE. Once I read it, I gave a copy to everyone on our team at Shirazi Benefits. DO or DIE became the blueprint for our agency’s reinvention efforts. Thank you for writing your book and getting us started on reforming our agency! It has been and is continuing to be quite the journey!
But reading DO or DIE is not the only way to get this critical information….
“Anti-conference” for agency leaders answers “What’s Next?”
In conjunction with Employee Benefit Adviser magazine, our team will be presenting the NextGen Business Model for benefit agencies next January in Nashville at ASCEND – The Agency Growth & Leadership Summit. This unique conference is exclusively for agency owners & principals of independent benefits firms and benefit practice leaders at independent multi-line firms. Some of the nation’s top agency leaders are committed to attend ASCEND…you can see a representative sample on our influential Host Committee.
With a focus on the business-building topics above, peer-to-peer collaboration, and actual implementation of the strategies & concepts you will learn at the conference, ASCEND is like no other conference in the industry. In fact, due to all the interactivity and peer collaboration, ASCEND has been called the “anti-conference.”
Will you have a seat at ASCEND?
There are only a handful of seats left, so take action now to be join nearly 100 other agency leaders in discovering how your firm can answer “What’s Next?” with a specific action plan for exponential growth in 2016.