Millennial-owned insurance agencies transitioned into virtual (remotely staffed) operations when the COVID-19 pandemic first hit the US in 2020. Since then, a study revealed that 50% of insurance agencies plan to continue this model, with few, if any, workers returning to the office full-time. As a result, more than other demographics, we’re seeing millennials becoming virtual insurance agency owners: could it work for you?
Let’s examine the common considerations surrounding this new dynamic. Should you decide to pursue virtual insurance agency ownership, Springtree Group maintains an extensive network that allows us to access information regarding thriving insurance agencies for sale before they’re listed publicly. Once we know the size, structure, and location of agencies you’re searching for, we’ll keep a sharp eye out for ideal opportunities on your behalf.
Reduced Overhead Costs
When compared to a traditional office environment, virtual agencies cost significantly less to operate. The overhead costs associated with maintaining a physical office can eat into your profits, so it makes sense to avoid paying for an exorbitant lease whenever possible.
Employee Satisfaction
While not all employees want to work from home, those who do will actively pursue employment with an agency that offers this flexibility.
If you envision an environment that presents employees with even greater flexibility, consider renting a shared workspace that allows workers to come in to work one to two days per week. Meeting space may be a priority here because, among those who wish to return to the office at least part-time, a main motivation reported was feeling frustrated by the demands of less convenient virtual meetings.
Should You Maintain a Minimal Office Presence?
If you want to offer clients a front desk experience alongside conference rooms, you may wish to maintain some form of office presence. Still, without having to provide comfortable office space for your entire team, you should be able to significantly slash your overhead.
Does Going Virtual Influence an Agency’s Valuation?
In a word, yes. As we’ve discussed, virtual agencies cost less to operate than their traditional counterparts. This results in increased profits, which directly translates into a higher valuation. EBITDA (earnings before interest, taxes, depreciation, and amortization) calculation formulas mean that for every dollar of profit you conserve, your agency’s valuation increases by far more.
Technology Considerations
Because insurance agencies already rely on cloud platforms and specialized software, there should be relatively few technological barriers to remote operations. Still, it’s understandable that you may not want to coordinate and supervise the transition phase—which is precisely why this is the ideal moment to move ahead with a virtual agency acquisition. Post-pandemic, 75% of agencies still have fleshed-out remote capabilities still in place.
However, millennial buyers are likely to prefer purchasing remote-capable agencies, which may result in diminishing inventory over the next several years (especially now that in-person work has been normalized once again.) If you plan to acquire a virtual-ready insurance agency this year, waste no time reaching out to Springtree Group. We will be able to share our current inventory as well as keep you updated on brand-new opportunities throughout the remainder of the year.
Our in-house financing department will work closely with you to ensure that your offers on competitive agencies are fully funded. Lapsed or insufficient funding represents the greatest obstacle to acquisition attempts. Working with Springtree Group means you’ll never deal with this frustration or disappointment.
