When you decide you want to own a business, there are really only three basic choices available to you:
- Start your own company from scratch
- Buy an independent business for sale
- Buy into an established franchise
Each has its own pros and cons, and eager entrepreneurs will need to evaluate all their options to determine the best choice for them. Sometimes, however, the market dictates the fastest or most likely road to success. That’s the case right now for entrepreneurs looking to own their own insurance agency.
While opening a brand new insurance agency may fit a niche in your local area, it’s still going to require all the effort, expense, and risk that comes with any new small business startup.
Buying an established independent agency can be a safe investment initially, but unless the previous owner has already successfully differentiated the company from its competition, you’re still going to have that struggle on your hands. And, you’ll be doing it alone.
Heading into 2019, buying a franchise insurance agency offers many entrepreneurs the best chances of success. Here are some reasons why this is the case:
Why a franchise insurance agency may be your best bet
The insurance marketplace is incredibly competitive right now. According to the J.D. Power 2018 Insurance Shopping Study, “a combination of record-low volumes of new insurance shoppers, consistent price competition among insurers and emerging ‘insurtech’ disruptors on the horizon” has created an environment where differentiation is difficult.
The customer’s experience has really become the last battleground. And, while the J.D. Power report is specific to auto insurance, every other sector in the insurance industry is finding essentially the same situation forming.
So, how does buying into a franchise help a new business stand out under these conditions?
Quick, efficient startup
The key benefit to the business owner of opening a franchise location is the turnkey quality of the startup period. An established franchise will have everything in order, including detailed instructions and guidance, so you can be up and running as quickly and efficiently as possible.
Predictable costs and ROI
Because you’re tapping into a proven system, you’re in a better position to accurately predict cash flow, return on investment, and other financial factors that are largely a mystery to a brand-new startup.
And, you have the support of the parent company and other successful franchisees to fall back on if challenges arise, increasing the likelihood your forecasts will come to fruition.
United marketing efforts
Another key benefit of being part of a franchise is the marketing and advertising power the parent company wields. Rather than having to create, distribute, and pay for all your own marketing and advertising, you’re able to “plug in” to an established marketing and advertising program that’s already underway.
The parent company will be routinely working toward enhancing brand recognition and reputation, and many also invest in bringing in leads for all their franchisees.
Company-wide strategies, products, and processes
Buying into a franchise also offers owners access to an economy of scale that independent businesses can’t match. This is not only the case from a purchasing standpoint, but applies to the knowledge and experience the collective franchise company enjoys.
As a result, a brand new franchise owner can often make business decisions right away that would otherwise have taken months or years of experience to come to.
They can bring new products to market faster, fine-tune their processes more effectively, and arrive at the most effective strategies as a group rather than having to learn independently through trial and error.
What are the most successful insurance franchises available?
According to Franchise Chatter, the top four insurance franchises in the United States (based on their ratings in Entrepreneur Magazine, annual revenues, and other factors) are:
Fiesta Auto Insurance and Tax
Beyond these leaders, there are dozens of other insurance agency franchises that are succeeding in today’s highly competitive market. The three key factors franchise experts noted for choosing a franchise insurance agency location worth buying included:
- Average profits of at least $100,000
- Average sales of at least $1,000,000
- Average sales-to-investment ratio of at least 2:1
So, is buying a franchise insurance agency on your list of goals for 2019? Get started today by checking out the available listings here at BusinessesForSale.com.