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Three Things I've Learned as a Fractional CFO for Agencies

This April marked my one year anniversary as a consultant with AgencyFocus, and I wanted to take some time to reflect on the key things I’ve learned over the last twelve months. During my 12 years of experience working in the industry I’ve learned a lot, and while I ultimately use that knowledge to help our clients, I never want to feel like I’ve stopped learning. Because our company’s mission is to help agency owners achieve their goals I thought it would only be fitting to share my personal reflections with the hope they resonate with you.

With that in mind, here are the top three things I’ve learned working as a Fractional CFO for Independent Insurance Agencies.

Agency owners can “feel” their numbers, even if they don’t know them

When insurance agencies often hire us to do financial reviews, productivity benchmarking, or valuations we get some early intel on opinions regarding their performance. I noticed a particular trend when we delivered their report owners or managers would often make statements like:

“It felt like we were performing better than average, but we were moving so fast I never stopped to check.”

“My operations manager told me yesterday we need two more people, and you’re telling me we have the budget to hire two people. Did you and my manager talk before this meeting?”

“We never measured that KPI because I knew we were behind what I wanted. I never thought to research how we could improve it though.”

“As I was reading this report I was shocked at how these sections made so much sense. It’s like you took my thoughts and explained them so I could do something about it.”


As an owner or manager of a business you are touching so many things that give you a bird’s eye or microscopic view of the agency. So when you analyze certain parts to seek insights it can feel familiar and strange at the same time. Data doesn’t create a story, it simply helps to illustrate a story that has already happened. You’ve lived that story, and my role as a Consultant CFO is to help you extract what’s important to help shape the future.

There is a lack of specific benchmarks for small agencies, and agency data is also behind

According to the Big I’s Agency Universe 2022 study it’s estimated that 83% of independent agencies are below $1,250,000 in annual revenue. That’s an estimated 33,000 out of 40,000, which is staggering! It makes sense when most agencies you encounter are local home town privately owned small businesses. So if you consider the Pareto principle, or the 80/20 rule, the threshold for agencies to “break through” seems to be that $1.25M of annual revenue mark.

Source: Big I's 2022 Agency Universe Study

One of the biggest challenges for growing agencies is knowing what they have and what they want to accomplish with their agency. Because it’s a small business, there isn’t a perfect roadmap for steps A, B, and C to grow from one stage to the next. It’s beautiful that there are unlimited ways you can structure your business, but can also be overwhelming on what to do.

The prevailing needs of an agency evolve as the company matures, and can also be different based on how that agency operates. Because of this, benchmarking data for scratch agencies or agencies in the smaller revenue categories is largely unavailable in a simple format. This is due to a few reasons, but a main one being is general benchmarks may not be the most helpful thing for growing agencies to focus.

There are some industry standard key performance indicators (KPIs), such as Revenue Per Employee, Policies per Customer, Line of Business Mix (PL/CL/L&H). But even those can take extra effort to measure if the agency doesn’t have good procedures to manage their data.

This is significantly more important today than it was in prior years. If you want to build a roadmap to get from $500K of annual commission to $1.25M it requires some planning. In order to arrive at a destination by following a map, it requires having a good understanding of your starting point to see which direction you need to go.

Too many owners have “informal” exit plans

I heard a presentation recently that put an interesting spin on the idea of maintaining value over time. A dentist had two new patients on their schedule. They were the same age, and similar backgrounds but were scheduled for different reasons. One was simply changing providers because their former dentist retired, and the other noted on their chart not having visited a dentist in many years.

The first patient’s checkup and cleaning was routine, easy, and a pleasant because they had good dental habits throughout their life. Brushing and flossing for a few minutes each day maintained good dental health. The second patient’s condition was not great, and even had some signs of trauma on their gums. When the dentist asked why their gums were so inflamed their response was “Well I haven’t brushed in 2 years so I brushed for 18 hours straight yesterday to make up that time in prep for my appointment.” One and a half minutes a day for two years totals 1,095 minutes, or 18 ¼ hours. The takeaway? Consistent habits provide significant results and “catching up” isn’t always a viable option.

If you want a certain result to happen, such as, “I want to sell my agency for 3 times of revenue,” there needs to be a clear understanding of how that can happen. Unfortunately there are too many agency owners that operate under assumptions that are often not accurate. If you aren’t doing the steady work to build and maintain an asset you can easily find yourself in a less than ideal situation when it comes to exiting your agency.

In the book Atomic Habits by James Clear he talks about the two types of people that want to change. Those who are seeking results, and those who want to change their identity. In my work, this looks like two types of agency owners.

Owner #1 is (very) close to retirement and is entertaining offers from potential buyers. They want a valuation to “confirm” what they think their agency is worth to validate what they want to happen. Which unfortunately may not always be the case.

Owner #2 is planning for their exit. They get a valuation and hire an advisor to help them connect the dots between where they are and where they want to be. They want to be acquired with specific goals and set a plan to be the agency that is more likely to realize that outcome.

Which one do you want to be?

Visit our contact page to schedule with Colby and Carey to perform a valuation or benchmarking analysis for your agency.

Visit the Big I's 2022 Agency Universe Study Here