State Farm Agent business plan for starting your own business
A thoughtful business plan is required to build a successful insurance agency. Are you planning to start your insurance agency? For that, you need a well written and well-thought business plan.
The insurance agents, also known as insurance sales agents are involved in a variety of things. These include life insurance, property insurance, health insurance, long-term care insurance and disability insurance.
If you are interested to start a business in this industry and to know how to start a state farm agency, continue to read this state farm agent business plan. Just like our previous business plan for ecommerce, we have mention all the required steps to start your business.
No matter if you want to write indoor shrimp farm business plan, business plan for farmers market, oyster farming business plan, landscaping business plan, pig farming business plan or mushroom growing business plan, you can use this template for all kinds of purposes.
2.1 The Business
Lifeline Insurance Company will be a registered general insurance company in New York. It was incorporated under the law of the US as a private Limited Liability Company.
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We plan to transform into a Public Limited Liability Company in the future. So that we can get listed on the Stock Exchange of New York.
When starting a state farm agent business, you should be aware of becoming a state farm agent pros and cons. Also, similar to the landlord business plan, it is important to mention the management, customers and target of the business.
2.2 Management of State Farm Agent Business
When writing a state farm business proposal, it is necessary to plan everything before starting the business.
Lifeline Insurance Company will work on making its management strong that can support the growth of the company. We will make sure that we hire highly qualified and experienced people to help us in building the dream company.
The management body of our company mainly comprises the CEO, head of claims and premium collection, marketing executive, HR manager, accountant and customer care representatives.
2.3 Customers of State Farm Agent Business
The Lifeline insurance company will target small businesses and medium-sized businesses in and around the heart of the US – New York City. We will also make efforts to grow and sell our insurance policies in the other cities of the US as well.
Our customers will be from the US and other countries from the world. We have listed down the customers that we have designed our services and products for
- Corporate organizations
- Real Estate owners
- Blue Chips Companies
- The Government
- Sports Organizations
In state farm agent business plan example available online, you can find many other customers that an insurance company has.
2.4 Business Target
We plan to make the most out of state farm agent signing bonus. We are optimistic to become one of the most popular insurance companies in New York in the next 5 years.
Our primary goal is to cover all the investment in the next 3 years of our launch. Our secondary goal is to ensure that our customers are satisfied with our services and they get their claims when due without unnecessary delays.
We want to get included in the list of companies who are generating large revenue and are most trusted by people.
3.1 Company Owner
Neil Fred will be the CEO of Lifeline Insurance Company. He will be responsible for providing direction to the business. Neil completed his degree from the University of London in Insurance and then decided to start his agency instead of doing a job. Neil knew that this industry is global and wide and he can make a lot out of it.
Keeping in view all these points, he decided to start a state farm agency program. He worked on all the things required for opening a state farm agency. He got the personnel and financial plan required in starting a state farm agency.
3.2 Why the State Farm Agent Business is being started?
Neil made research on the insurance market and got an idea of the profit he can make from starting a general insurance company. This business is a kind of business that never goes into loss. He first thought to start an insurance company in a specialized area.
Later when he realized that he can excel in the general market, he decided to open a general insurance company. Remember, in any state farm business plan sample, it is necessary to mention why and how the business is started.
3.3 How the State Farm Business will be started?
Starting an insurance company can be challenging. It is never easy to break into the industry. The insurance business is a business venture that is recession-proof and can stand the test of time. We have listed down the important steps you need to take to open your insurance business.
Make a research
If you do not have experience working as an insurance agent, it is important to have a thorough understanding of the insurance industry. Before you step into the world of insurance, make sure that you understand the necessary terms and concepts. When you completely understand the insurance products, terms, management skills, and sales savvy, you will be able to run this business successfully.
A business plan is required
Before starting any kind of business, a strong and well-thought business plan is required. Your business plan will decide how you are going to get the clients and how will you differentiate yourself from other insurance companies. When you write a business plan for your business, you will get a direction and vision for your business.
Get a license
To start an insurance company, you need to get a license. If you are planning to open an insurance company in the US, you need to get a license from the Association of Insurance Commissioners. This step is time-consuming but without it, you cannot start an insurance company.
Certain factors decide how much investment you need to start an insurance business. These factors include your location, business model and more. People who are working independently with no or few staff members will have minimum expenses to cover. While larger agencies need more money to start and run their businesses.
Access to Insurance Carriers
To sell insurance, you need to get in contact with the insurance carriers. The insurance carriers affiliate themselves with the insurance companies that want to sell their products.
Promote the business
After you have made a strong business plan, got a license, secured your financing and affiliate yourself with the insurance carriers, the last but not the least step is to promote your business.
|Research and Development||$28,000|
|TOTAL START-UP EXPENSES||$371,100|
|Other Current Assets||$234,000|
|Start-up Expenses to Fund||$371,100|
|Start-up Assets to Fund||$1,248,000|
|TOTAL FUNDING REQUIRED||$1,619,100|
|Non-cash Assets from Start-up||$1,629,000|
|Cash Requirements from Start-up||$322,000|
|Additional Cash Raised||$53,000|
|Cash Balance on Starting Date||$39,000|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$48,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,619,100|
|Loss at Start-up (Start-up Expenses)||$345,900|
|TOTAL CAPITAL AND LIABILITIES||$2,043,000|
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In the state farm agent business plan, it is necessary to mention all the services that your insurance company will provide.
When you open a state farm agency, you list down all the services you want to offer to your clients. When Neil was planning to start a state farm agency, he decided to provide the following services:
- Life & Health Insurance
- Property & Vehicle Insurance
- Disability & Group Insurance
- Agriculture & Travel Insurance
These services vary from state farm business to business.
Marketing Analysis of State Farm Agent Business
In the state farm business plan for new agents, the marketing analysis is necessary to mention. Neil wanted to get through this step smoothly so he got the services of marketing experts.
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To start and run a successful business, solid state farm agent business plans are required. In all the state farm business plan examples, you will find this important part of the marketing analysis of a business.
No one can deny the importance of marketing analysis because whether the business is going to fail or succeed heavily depends on it. Marketing analysis forms the basis of many important decisions and steps in running a business. The state farm marketing plan include market trends, market segmentation, business target and product pricing.
5.1 Market Trends
The US has the largest number of insurance companies in the world. In a research made in 2013, the total gross premium on a global scale was 4.640 trillion US dollars, out of which 1.274 trillion was only written in the US. This figure shows how big the insurance market is in the US.
One common trend in the insurance industry is the existence of small insurers as single corporations. They partner up with holding companies. It has a lot of benefits because the survival of single insurance companies after turbulence is pretty low.
5.2 Marketing Segmentation
In the insurance industry, markets are segmented into different groups. The products or services offered by an insurance company are tailored to match the needs of the client. The advantage of marketing segmentation is to help the insurance organization identify the needs of their customers.
The marketing segmentation for our insurance company will be following:
The household sector will include retired and self-employees and salaried staff.
This sector will include big and small businesses.
The industrial sector will include industries and manufacturers.
This sector includes all kinds of organizations and institutions.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
5.3 Business Target
The state farm mission statement includes the business target that a company aims to achieve. The business target of Lifeline General Insurance Company is to become one of the top companies in the US.
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We aim to expand our state farm insurance franchise to other cities of the US as well. We are optimistic to cover all of our investment in the next 5 years of our launch.
5.4 Product Pricing
In the insurance industry, there is an established trend in pricing the products. Pricing the products and services depends upon the risk involved in the insurance policy covers. This calculation is done by the experts who keep in view all the aspects and then give the pricing.
The Lifeline Insurance Company will sell its insurance products and services at a low rate as compared to other insurance companies in town to increase our sales and customers.
Marketing Strategy for State Farm Agent Business
In every state farm agent business plan sample, you will find the marketing strategy because it is an important component in every state farm agent business proposal.
To make your insurance business run successfully, aggressive marketing is extremely important. It is why there are always men and women selling their insurance cover to people.
To survive in this industry, you need to be prepared to spend a lot of money on marketing and advertising your business to promote your products. There should be a strong marketing team that come up with unique and innovative ideas that can catch the attention of potential clients.
6.1 Competitive Analysis
The insurance market has become much more competitive over the last ten years. To survive in this industry, you have to be highly proactive, creative and customer-centric. Neil was aware of this high competition and he was prepared to compete among the leading insurance companies in the US.
From marketing managers to social media managers, a strong team is required to run an insurance business successfully.
6.2 Sales Strategy
- We will introduce our business to other small and medium-sized businesses by sending them letters, brochures and our policy.
- We will advertise our business using social media platforms to reach out to millions of people.
- We will attend seminars, expos and business fares to enhance our network and customers.
- We will hire sales agents and marketing executives to carry out direct marketing of our services and products.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
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In state farm agent business plans, an important part is the personnel plan. To open state farm agency, it is crucial to plan everything before the launch. Like in every state farm business plan proposal example, the personnel plan is an important step as it affects the decisions and success of any business.
The success and reputation of any business depend mainly on the staff and management of that company. The more loyal management, the more successful the business is. The personnel plan contains detailed information about the number and types of people who will work in a company. The advice of HR experts is vital to take at this step to make important decisions.
7.1 Company Staff
Neil Fred will be the owner and CEO of Lifeline Insurance business. The following people will be needed to run our company
- 1 Legal Secretary
- 2 general insurance managers
- 1 Head of Premium Collections
- 1 Head of Claims
- 3 customer representatives
- 2 client service executives
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|General Insurance Manager||$120,000||$132,000||$145,200|
|Head of Premium Collections||$160,000||$176,000||$193,600|
|Head of Claims||$120,000||$132,000||$145,200|
|Client Service Executives||$75,000||$82,500||$90,750|
The next step in state farm business plan is the financial plan. Like a personnel plan, it is also a crucial step in making any business plan. Like in all state farm business plan example, the financial plan covers all the points regarding the company expenses. It also includes the cost to start a business.
- The cost required for license, permits and policies
- The cost for buying computers, furniture, printers, telephones, and fax machines
- The salary of the employees
- The cost of making a website
- The rent of the office
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.12%||8.15%||8.24%|
|Long-term Interest Rate||8.37%||8.46%||8.49%|
8.2 Break-even Analysis
|Monthly Units Break-even||5340|
|Monthly Revenue Break-even||$131,500|
|Average Per-Unit Revenue||$232.00|
|Average Per-Unit Variable Cost||$0.65|
|Estimated Monthly Fixed Cost||$163,400|
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8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$8,078,000||$9,637,520||$11,811,283|
|TOTAL COST OF SALES||$8,078,000||$9,637,520||$11,811,283|
|Gross Margin %||3.37%||6.24%||6.55%|
|Sales and Marketing and Other Expenses||$137,000||$148,000||$156,000|
|Total Operating Expenses||$312,300||$337,900||$362,080|
|Profit Before Interest and Taxes||($30,300)||$304,036||$466,256|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$14,000||$15,120||$16,330|
|SUBTOTAL CASH FROM OPERATIONS||$66,000||$71,940||$77,695|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$67,000||$72,000||$78,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$63,000||$66,000||$69,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$63,000||$68,040||$73,483|
|Net Cash Flow||$19,000||$21,000||$22,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$287,000||$321,440||$361,299|
|TOTAL LONG-TERM ASSETS||$24,000||$26,880||$30,240|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$19,000||$21,280||$23,919|
|TOTAL LIABILITIES AND CAPITAL||$303,700||$328,160||$369,180|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.12%||2.35%||2.60%||2.40%|
|Total Current Assets||149.00%||152.00%||152.00%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||94.00%||96.54%||99.24%||97.80%|
|Profit Before Interest and Taxes||41.00%||42.11%||43.29%||33.90%|
|Total Debt to Total Assets||0.18%||0.18%||0.17%||0.40%|
|Pre-tax Return on Net Worth||74.00%||74.50%||75.00%||75.00%|
|Pre-tax Return on Assets||94.60%||99.33%||104.30%||111.30%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||33.01%||34.03%||35.09%||N.A.|
|Return on Equity||56.00%||57.74%||59.53%||N.A.|
|Accounts Receivable Turnover||7.7||7.8||7.8||N.A.|
|Accounts Payable Turnover||15||16||16.3||N.A.|
|Total Asset Turnover||2.4||2.5||2.6||N.A.|
|Debt to Net Worth||-0.04||-0.03||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$239,000||$252,384||$266,518||N.A.|
|Assets to Sales||0.86||0.87||0.87||N.A.|
|Current Debt/Total Assets||1%||0%||0%||N.A.|
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- How do you make money as a State Farm agent?
The state farm agents get the clients. They come up with innovative and unique strategies to attract new clients and are paid based on successful sales and commissions. When you know how to start a state farm agency, you can make more money from your business.
- How much do State Farm agents make per policy?
The insurance agents get a commission of 40% in their sales for the first year. From the second year, the commission on the same sales become 2 to 5 percent. The commissions are pre-defined in the state farm agency program.
- Is a State Farm agent a sole proprietor?
Yes, state farm agents work as independent contractors and they are solely responsible for making decisions regarding the management and staff employed by them. The detail is given in the state farm agent business plan.
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