Start-up Business Advice

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Daidraco

Daidraco

Avatar of War Slayer
10,605
11,253
Outside of games, I dont know any of you and I dont care if I put my personal business or ideas are out there. Maybe it might help some of you with an idea?!

(Back ground)Apart from my current job, I am looking to start a business with my Older Brother. My current job has no relation to the business I am interested in starting and is actually a position at a company that works directly with Ebay on the software side. My brother has experience with Real Estate and is currently working at an upper management position with Norfolk Southern Railway but hes never home (and wants to be - house, wife, 3 kids). Our entire family lives in an area that is relatively middle class, and houses are from 90k, all the way up to a couple million on our local lake. I make 26 an hour, and he makes 33 and some change w/benefits and both of us have 4 day weekends at different times. I majored in science, with a minor in business at VCU and he is well known all across the area based on his past experience as a realtor. (Lake homes, which the area is known for, had their market drop off severely in 2009 and is now the market is starting to come back.)

(The Idea)I want to discuss this with my brother, but I havent yet because I want to get everything clearly thought out before I present it to him. My plan is to take one of the rental properties the family owns (its in a good spot and looks more like a one level business than a House) and turn it into a Real Estate Office. From there, the both of us get our licenses in multiple areas of insurance and sell insurance out of the same office. All in an effort to get the client to buy our home insurance when they buy a property from us, and then build onto that insurance with several "Package Deals" such as Car, Health, etc. and also Supplemental Insurance. If an insurance office can survive on its own, I can see a very profitable opportunity selling both under the same roof. If it starts off well, then of course a Secretary as one of the first acquisitions when everything is set up - to manage the office and set up appointments.

(The Questions)The real estate license is fairly easy to find and obtain, but when I look for Insurance classes in my area - I dont see anything that looks legitimate? Ie. The things I found were mostly online classes that set you up to take the exam. Then go somewhere else to take the exam, which sounds fishy? Are these classes what any of you would recommend for Virginia? Also, how many different licenses for insurance does one need to sell Home, Auto, Supplemental (Everything) and what are they called?

The next question is, do you think this idea sounds profitable?

Im starting from a completely different career so Im a bit behind my brother, should I get all of this done by myself first before I say anything to my brother about it? I feel like I would be latching onto him at first to make this work, but I feel like that would create resentment later on down the road if I dont get on my feet first. But his experience with real estate would be invaluable.

Ive asked around, but no one has heard any laws against this. Does anyone know if selling the two is associated with any morality laws in Virginia?

I found a company that will let me sell their supplemental insurance (which is where the idea originally stemmed from) but it was only something I originally wanted to do on the side. How does one go about finding the cheapest / best / most profitable insurance to sell as an agent, and then offer that insurance to sell?

--- I realize that I may be able to find the answer to some of these questions on my own, but I am looking for an answer from a person that is experienced with insurance sells so that I can get the full picture and not miss something that may be important.

Thanks guys/gals!
 
K

Kedwyn

Silver Squire
3,915
80
Depending on your state, it might be illegal to run insurance and real estate out of the same building. You are not able to do it in Florida.

You should check your state's department of insurance or financial services web page for information on how to get licensed.

As an agent for 15 years and recently just sold my company its an excellent business to make money in. The value of that recurring income is very high and people will pay well for it. The business itself, depending on state, can range from easy to difficult to get started. Same with keeping things going after you hit critical mass and have your client base. Florida, as an example, is a terrible state for personal lines insurance ownership while other states like MA are much easier.

Why? Well it depends a lot on the state, its risk factors, competitive nature and if you can get the appointments or not. Here in Florida its one of two things, companies either give their appointment to anyone with a pulse or its incredibly difficult to get appointed. Fortunately for us, we had experience in the business from a different state and were able to line up some of the better appointments. This allowed us to pick up companies that very few agents had and it carried us through the tougher times other agents experienced because when the fly by night carriers went under we had other markets to move clients to. Something other agents did not.

Florida was a double edged sword. Fewer carriers (home) and high risk means high premiums. If you can write the business its $$$$$$ and if you can retain the business when shit hits the fan its even more $$$$$$$$$$$ as the other agents shed their books and you pick up their clients with companies they do not have. Great business if you can get into that position. Not so much when the market falls out from under you when your largest carrier goes into receivership and you have no other markets available.

Unless you're in a state like MA which regulates exactly how much a company can charge for auto insurance, its a bitch. The best thing is to find yourself a niche with a stable company and fill that roll. There is so much competition with auto these days it difficult to hold on to people except super super preferred top tier customers and they are fairly rare these days.

Life and Health blows. You make higher commissions on the front end (life) but end up having to resell your client base over and over as those commissions fall off. The investment products they offer on the life side are also terrible for the client. I'd stay away from this. Individual health blows. Don't bother with it. Group health can be profitable if you have an in at large companies and can offer your plans or cafeteria style programs. I'm not a fan of that type of business though.

I'm a fan of personal lines in any other state besides FL. Markets are pretty stable, you won't have the asinine rules and underwriting guidelines and you should have a decent number of companies willing to give a start up a chance. Make sure you have a solid business plan, something that shows you are in this for the long run and makes sense with some capital to show you'll be around long enough to make this dream work.

Start by calling around for prices under fake names with a relative sample of homes. Get prices and see who is competitive price wise, check how long they've been in the market, run down and talk with an agency owner or two well outside of your area and see what they have to say, see which agencies locally have which companies and try and find a niche for yourself.

Agency management system isn't important right away. You can go hard file only until you make it or you can pick up a cheaper version of software like Eclipse from Nasa Soft instead of paying $$$ for Applied or one of the other big boys.

Good luck. Its not an easy business to get started in but if you make it you can make bank.
 
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