Insurance Agency Sales: How Good Record-Keeping Can Increase Your Profits

When it comes to insurance agency sales, owners naturally want to secure a top bid. Therefore, focusing on agency profitability is key. Two comparable agencies with similar contracts/carriers can sell for wildly different prices based on their profitability.

Increasing sales and limiting expenses is the foundation of profitability, but these things are impossible to evaluate without accurate records. Thus, good record-keeping is essential for savvy independent agency owners. Owners who are always looking for ways to increase profits typically have impeccable record-keeping practices.

Make sure you understand how your expenditures and income line up (with the help of your accountant). Rather than attempting to overhaul your business in the months before you sell, your accounts need consistent attention throughout the years that you own your agency.

Buyers typically review the last three years’ statements before they will seriously consider purchasing an agency. The stronger your financials, the more robust you can expect offers to be.

Digital Record Keeping

If you’re just beginning to integrate digital record-keeping, you’ll find that when you make use of available technology to create and track invoices, patterns may emerge that you would otherwise miss.

Expense Tracking

Accurate record keeping is also essential when it comes to tracking expenses. If expense tracking is slipping through the cracks, even for a short period of time, you may have a false sense of how profitable your agency truly is. Maintain tidy and transparent books. The data you use to make financial decisions about your business can only be as accurate as the records you keep.

Reinvest True Profits to Grow Your Business

Optimum profitability can be achieved when revenue becomes stable. When you’ve been keeping solid financial records, you’ll know exactly when to reinvest surplus capital into growing your business. Hire another agent, invest in marketing, or expand your parking lot; just be sure that the investment you make will help your agency continue to grow.

Increase Agency Efficiency

A buyer will naturally be much less interested in your business if revenue has begun to decline and agency costs are rising out of control. This struggle will be apparent to potential buyers.

If your agency currently struggles on the low end of profitability, you simply must take the time to increase efficiency by keeping detailed records, reviewing them in a timely manner, and maintaining low costs while reinvesting free capital in the future of your company.

Independent agency owners, having built their companies from the ground up, face unique challenges when it’s time to structure the sale or transition of their agency. Springtree Group serves as a business intermediary explicitly facilitating insurance agency sales, offering a full range of financing and M&A services geared toward healthy agencies that bring in less than $5 million annually.

If you would like to discuss a successful business transfer or require assistance with financing, email Springtree Group at or contact us online.