1.0 Executive Summary
The purpose of this business plan is to secure $75,000 via a revolving credit facility for the development of an insurance agency based in Bucks County, Pennsylvania. Deutsch Insurance Solutions LLC (“the Company”) was founded this year by Matthew Deutsch. Full scale revenue generating operations will commence in the third quarter of this year.
Operations
The primary revenue center for the business will come from the ongoing sale of insurance policies that will be sourced from a number of national level carriers. The business will generate the vast majority of its income through these operations. Matthew Deutsch, along with staff agents, will work closely with clients in order to address all of their personal as well as commercial insurance needs.
Starting in the second year of operation, the business will begin to generate significant revenue from policy renewals. This highly recurring revenue will expand during the course of the first five years of operation.
The operations of the Company will be further discussed in the third section of this insurance agency business plan.
The Financing
As noted above, the Company is currently seeking a working capital line credit in the amount of $75,000 to establish operations. These funds will be primarily used for the following:
• Location development in Bucks County
• Professional fees and licensure
• Working capital
Moving forward, the Company could easily acquire additional rounds of capital in order to further expand the scope of its operations, especially from marking standpoint. There is also the possibility that a business loan may be sourced in the future in order to acquire an existing insurance agency that can be merged into Deutsch Insurance Solutions’ operations.
The Future
Most importantly, the Company will continue expand the scope of its marketing operations in the coming years. This will include extensive direct outreach with business professionals in the greater Bucks County market in order to receive ongoing referrals among both individuals and businesses that require comprehensive insurance policies.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funding discussed in the executive summary will be allocated towards the following:
Matthew Deutsch will contribute $10,000 towards venture.
2.2 Management and Investor Equity
Matthew Deutsch is the 100% owner of Deutsch Insurance Solutions LLC.
2.3 Exit Strategies
Once the operations of this insurance agency are fully established, there would be a significant demand among third-party insurance entities to acquire its book of business. Generally, insurance agencies typically have a sales premium equal to one year of their total billable revenue. This may be higher depending on the amount of recurring revenue that is generated from referrals. Matthew Deutsch has no long-term plans to sell this business to a third-party.
3.0 Operations
As discussed in the executive summary, Deutsch Insurance Solutions will be actively involved providing a wide range of both personal and commercial insurance policies to clients within the greater Bucks County market. The scope of the Company’s policies will be as follows:
Commercial Insurance
• Business Liability
• Director and Officers Insurance
• General Liability
• Professional Liability
• Property and Casualty
Personal Insurance
• Automotive Insurance
• Home and Renters Insurance
• Live Insurance
• Supplemental Insurance
The business intends to work extensively with numerous carriers in order to receive the best possible coverage and pricing on behalf of its clients.
One of the major important revenue centers for the business comes from the recurring income that will be produced when insurance policies renew. Over time, this will become a significant revenue stream for the business. Generally, the Company will receive a renewal fee that is equal to 8% of the total annual policy cost.
In order to properly onboard highly qualified insurance agents, the Company will offer a number of training programs as well as continuing education programs, so that best practices are implemented throughout the sales pipeline.
4.0 Overview of the Organization
4.1 Registered Name
Deutsch Insurance Solutions LLC. The company is registered as a limited liability company in the Commonwealth of Pennsylvania.
4.2 Commencement of Operations
The business will commence insurance sales starting in Q3 of this year.
4.3 Mission Statement
Provide comprehensive insurance policies spanning a number of carriers on a cost-effective basis.
4.4 Vision Statement
To become the preeminent insurance agency within the Bucks County market.
4.5 Organizational Objectives
• Properly onboard insurance agents that will work in tandem with Matthew Deutsch when source in clients.
• Foster ongoing relationships with numerous carriers so that preferential pricing can be provided to clients.
• Implement numerous forms of marketing, including direct outreach with the accountants, attorneys, and real estate professionals.
• Maintain relationships with regional vehicle dealers and motorcycle dealers that will refer their clients to the Company when they require new automotive focused insurance policies.
• Use multiple forms of online advertising so that the business can be quickly found in the Bucks County market.
• To provide exceptional financial compensation to agents that further the objectives of the business.
• Adhere to all laws and regulations regarding the sale of insurance within the target market.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the insurance agency business plan will focus on the current economic climate, the industry, the demographic profile, and the ongoing competition.
At this time, there is a higher than anticipated inflationary period occurring with the United States. This has been principally as a result of evolving government policy regarding trade as well as related budgetary matters.
It should be noted that the revenues of Deutsch Insurance Solutions will remain relatively stable. Despite the fact that inflation is higher than an anticipated, the lines of insurance offered by the business are absolute necessities for both individuals and businesses. Furthermore, the Company is operating in the extremely wealthy market of Bucks County, which will further contribute to the economic viability of Deutsch Insurance Solutions.
5.2 Industry Analysis
As of this year, there are 400,000 companies that are actively involved with the sale of insurance on behalf of underwriters. These businesses generate $260 billion a year revenue and provide jobs for over one million people.
One of the common trends within this industry is provide end-to-end solutions as it relates to both insurance as well as annuity needs. In fact, many major carriers have also begun to integrate specialized financial services such as stock brokering and retirement account management. Moving forward, Deutsch Insurance Solutions may integrate additional services that complement its primary operations of selling comprehensive insurance policies.
The industry has enjoyed substantial growth over the past ten years.
5.3 Customer Profile
Any homeowner or business owner within the greater Bucks County market is a potential customer of Deutsch Insurance Solutions. In regards to personal accounts, these individuals will typically be between the ages of 35 to 60 and have a household income exceeding $150,000. The Company will take a broad-based approach when approaching commercial enterprises for their business insurance needs.
As of this year, Bucks County has a population base of 646,000 people. The median household income is $112,000 which is $28,000 higher than the county has a whole. Median household income is $500,000. Approximately 77% of the population is over the age of 18. This presents a total addressable market of $504,000,000 of annual demand for insurance policies. This area maintains a strong degree of economic stability. Although nearly equally impacted by fluctuations in inflation, GDP, and consumer spending the area is far less impacted by changes in the prime interest rate. Based on historical statistics, establishing an insurance agency in Bucks County only carries 72% of the risk as compared to the country as a whole.
5.4 Competitive Analysis
The Company will face sign significant competition from more established instance agencies and independent insurance brokerages within the Bucks County market. One of the primary ways that the Company will differentiate itself is by maintaining ongoing relationships with numerous insurance carriers so that comprehensive and competitive pricing can be offered. Additionally, the ability to provide both personal insurance as well as commercial insurance will be a major differentiating factor.
6.0 Key Strategic Issues
6.1 Sustainable Operations
Deutsch Insurance Solutions will have sustainable operations as a result of the following:
• The Company will operate in both a commercial and personal capacity which will expand its scope of sales operations.
• The Company can seamlessly add in additional services such as annuity placement and surety bonds.
• An experienced owner, Matthew Deutsch, that has more than ten years of experience in the insurance sales industry.
• The Company is operating and a substantial market that is enclose proximity to Philadelphia, which will further reduce economic risk.
6.2 Basis of Growth
The Company will expand via the following methods:
• Expansion of the number of agents working on behalf of Deutsch Insurance Solutions.
• Continued expansion of the types of services offered that complement the primary focus on insurance sales.
• Acquire existing books of business that can be integrated into the Company’s operations.
7.0 Marketing Plan
7.1 Marketing Objectives
• Foster ongoing relationships with numerous business professionals, including accountants, attorneys, enrolled agents, and realtors.
• Use multiple forms of online advertising through the business’ search engine optimized website.
• Operate as a community minded business by providing financial support via cobranding opportunities with academic institutions and charities within the Bucks County area.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• The Company will launch its operations in Bucks County.
• Revenue will reach $366,000.
Year 2
• The Company will expand the scope of its regional marketing campaigns.
• Revenue will reach $450,000.
Years 3-5
• In Year 5, aggregate revenue from insurance sales and renewals will reach $832,000.
• The business may develop additional offices.
7.4 Marketing Strategies
Given the substantial amount of competition that insurance agencies face, Management will take a broad base approach when implementing marketing campaigns. As has been one of the themes throughout this document, the Company will work closely with numerous business and financial professionals that will provide ongoing referrals when their clients need comprehensive insurance policies. This will be one of the primary ways in which the business develops is book of business over the next five years and through the life of the Company.
In regards to the Company’s website, this platform will undergo substantial search engine optimization so that it can be quickly found when relevant searches related to insurance are conducted for the Bucks County market. This platform will showcase all carriers at the Company uses when placing insurance policies.
For social media, the business will maintain extensive profiles among all social media platforms. On an ongoing basis, the Company will distribute home safety tips, news about the insurance industry, and other relevant information that will position Deutsch Insurance Solutions as a trusted resource for matters related to insurance.
The Company will also engage in numerous co-branding opportunities with regional charities. This position the Company as a community minded business, which will further lead to rapid client onboarding.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• Deutsch Insurance Solutions will acquire a $75,000 revolving credit facility to establish these operations.
• The Company will have a compounded annual growth rate of 23%.
• Matthew Deutsch will contribute $10,000 towards the development of this insurance agency.
9.2 Financial Highlights
• Business will generate contribution margins of 95% on all policy sales.
• The Company’s recurring income from renewals will increase at a rate of 8% per year.
9.3 Sensitivity Analysis
Only in a severe sustained economic recession will the demand for new insurance policies for both personal and business use decline. The business is operating in extremely wealthy market that is in close proximity to Philadelphia. As such, many of the economic risks that are commonly found among insurance businesses are substantially reduced for this business. The Company will be able to maintain this profitability and service its underlying financial obligations at all times.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
SWOT Analysis
Strengths
• Substantial ongoing to demand for comprehensive insurance policies for both individuals and businesses.
• Recurring streams of revenue in the coming years from renewals will fully support the operations of the business.
• An experienced Owner, Matthew Deutsch, that will be able to properly guide the operations of the profitability.
• The Company will have access to a wide range of talent in regards to onboarding new insurance agents into the organization.
Weaknesses
• This is a highly complex business that requires adherence to laws and regulations.
• The sales of insurance is a highly competitive industry.
Opportunities
• Expansion of operations to include satellite offices throughout other markets in Pennsylvania and Connecticut.
• Integration of complementary product lines, such as sales of annuities as well as surety bonds.
• Potential acquisition of existing books of business.
Threats
• New competitors can enter the market with relative ease.
• A highly severe economic recession could impact revenue.
• Ongoing issues with inflation could cause the underlying operating costs of the business to increase especially as relates to marketing expenditures.
Risk Analysis
Development Risk – Low
The service architecture that the Company will offer has been developed and numerous carriers have been sourced that will issue underwritten policies on behalf of the business. The primary matter that needs to be addressed in is securing the credit facility discussed throughout this document.
Financing Risk – Low/Moderate
The funding that is being sought will be primarily used for working capital purposes as the Company establishes its operations within Bucks County. These risks are reduced by the fact that the Company will generate recurring fees of revenue in the coming years from policy renewals.
Marketing Risk – Low
Direct outreach will remain as the primary methodology in which the business receives referrals for new insurance policies. Matthew Deutsch will conduct this extensive direct outreach in tandem with staff insurance agents.
Management Risk – Low
Matthew Deutsch is a highly experienced entrepreneur that has worked extensively in the field of insurance sales.
Valuation Risk – Low
The valuation risk is offset by:
• The target market area is incredibly wealthy and demand for insurance is significant in this area.
• Business can easily scale operations by integrating, annuity sales, surety bonds, and other types of services.
• The business can further scale operations to the continued hiring of staff agents that will increase the book of business.
Exit Risk – Low
Once established, there would be a substantial sales premium associated with the divestiture of Deutsch Insurance Solutions. In this event, a formal valuation will be completed and a suitable buyer that has extensive experience in the insurance industry will be sourced.