The Bridge: Winter 2015

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I N S U R A N C E I N D U S T R Y K N O W L E D G E F R O M O A K S T R E E T F U N D I N G

W I N T E R 2 0 1 5

Technology Isolation

Power Forward: Reigniting Sales

Page 16Agency Growth Survey Results Page 4

Can too much technology be bad for sales? Page 10

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PublisherOak Street Funding

Editorial DirectorMichelle Wilson

Contributing EditorsMichelle WilsonStefanie Neer

Graphic DesignerAidreen S. Hart

Winter

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The Bridge is a newsletter produced by:

Oak Street Funding11350 N. Meridian Street

Suite 600Carmel, Indiana 46032

866-625-3863

Potential borrowers are responsible for their own

due diligence on acquisitions. Loans and lines of

credit subject to approval. California residents:

Loans made pursuant to a Department of Corporations

California Finance Lenders License. The materials in

this paper are for informational purposes only. They are

not offered as and do not constitute an offer for a loan,

professional or legal advice or legal opinion and should

not be used as a substitute for obtaining professional or

legal advice. The use of this paper, including sending an

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Oak Street, does not create a relationship of any

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© 2015 by Oak Street Funding LLC. All rights reserved. Any duplication

without prior written permission is strictly prohibited.

What Really Drives Referrals?

FEAT

URES

13

6

Loans and line of credit help agency execute succession

Customer Success Story

18Agency borrowing looks to be positive in 2015

Bright Outlook

16How one simple change can reignite sales

Power Forward?

Share Your ThoughtsIf you have any questions, comments or ideas for The Bridge, let us know. Email us at [email protected].

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Satisfied employees and customers are the lifeblood of any successful company.

This sentiment was expressed in a survey Oak Street recently conducted in which

we asked agencies to tell us about their growth efforts, results and challenges

(see excerpts from the results in this edition). One of the take-aways from the survey

was that most agencies believe strong customer service and staffing can contribute

greatly to the growth of an organization.

I agree wholeheartedly as we just finished a second consecutive record year of

originations at Oak Street Funding. I don’t share that great news to boast. Rather, I say

it proudly because we have a great team of people and a customer focus that made it

happen. Our goal is to exceed the expectations of both our employees and our

customers and place both at the forefront of our planning, decision making, and

execution of daily tasks.

We have always believed hiring the right people is the first step to success. A natural

by-product of having the right team and maintaining a strong culture is an exceptional

level of customer service. And as a result of this focus, our Net Promoter Score (NPS),

which is a widely accepted standard for measuring customer satisfaction, consistently

ranks well above the top scores in the nation. What’s more, employee opinions about

working for the company have earned Oak Street the honor of Best Places to Work in

Indiana for two consecutive years (2013 and 2014).

Growing a business is challenging—there’s no doubt about that —and I’m sure any

agent who is charged with increasing sales and any owner who strives to build an

agency understands this very well. Discovering new and better ways to sell, provide

service and manage operations is critical to continual growth. We hope you find

information in this edition of The Bridge to help you improve your agency and reach

your 2015 goals.

LETTER FROM THE FOUNDER/CEO

Commit to Excellence ACHIEVE IN 2015

Oak Street Funding Vision StatementOak Street Funding utilizes industry knowledge, well-developed technology and passion to deliver best-in-class service and capital products to insurance and finance professionals nationwide. Our customer-focused mind-set and access to capital will allow us to continue to fulfill customer needs, identify growth opportunities and provide an empowering work environment for employees.

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You Spoke. We Listened.

Agency survey growth trends

Insurance agency owners continually strive to grow their businesses and are challenged with developing the most effective growth strategies possible. Oak Street Funding conducted a survey to learn

about these challenges and share information to help agency owners understand the current landscape of agency growth. Here are highlights from the responses of 200 agents who participated in the survey.


Who Responded• Nearly 68 percent of all respondents have been in business for

nine or more years. 70 percent operate an independent agency with the remaining 30 percent being captive.

How Agencies Have Grown• Roughly half of all respondents grew by 10 percent or more over

the last two years, while approximately 15 percent grew by less than 2 percent.

• 61 percent of all agencies just met their goals or didn’t meet their goals over the last two years. 8.59 percent said they greatly exceeded their growth goals.

• More independent agencies reported greater growth than captives.

What Contributes to Growth• Of all the major factors that typically contribute to agency

growth, customer service was most frequently identified as one that greatly contributes, followed by sales efforts and then referral programs. A social media presence and carrier marketing/ advertising were identified most frequently as factors that contributed little towards success.

• Tied closely to results agents reported, agents believe that sales efforts, customer service and referral programs can have a strong impact on growth. More than a quarter of respondents believe carrier marketing/advertising, social media presence and office location can have little to no impact on growth.

What Are Growth Strategies• It’s likely no surprise that almost all agents desire to grow to

increase revenue and profits. 65 percent were also motivated to position their agency for a potential sale or succession.

• In terms of organic growth, the two strategies that were believed to be the most effective were hiring a producer and initiating marketing strategies. 46 percent believed agency technology enhancements could also be effective.

• A small portion of agents — 4.47 percent — preferred growing via acquisition strategies. 52 percent preferred growing using a combination of organic and acquisition strategies, while 43 percent favored organic growth.

• As agency owners face the challenges of business ownership, nearly 85 percent say staffing resources pose difficult to very difficult challenges and 61 percent say time resources pose the same level of difficulty. The other top challenges identified were carrier changes and adequate leads.

You Spoke. We Listened.

Agency survey growth trends

SURVEY METHODOLOGY: In October of 2014, Oak Street Funding sent an online survey via email to over 20,000 insurance agency owners throughout the United States. The names were randomly selected from Oak Street’s database and the results presented are from 200 profes-sionals who responded to the survey.

See MORE data and comparisons based on independent versus captive,

younger versus older agencies and higher versus lower growth agencies.

oakstreetfunding.com/growthsurvey

70%30%

independent

captive

Survey respondents

16+4-8

9-15

1-3

# years in business

Preferred method for growth

Organic: 43.02%

Acquisition: 4.47%

Combination 52.51%

Agencies that grew 15% or more

37% 26%

independent captive


How to Double or Triple Your Referrals Next Year | by Michael Jans

Would you like to know how to double or triple your referrals this year? By developing four key components, you can see 20 to 300 percent more referrals than the previous year. Here is a summary of the concepts that can help your agency achieve the ultimate referral program. To learn more, read the full article at oakstreetfunding.com/DriveReferrals.

Component #1: Nurturing Use some of the common tools that are available for

nurturing (i.e., email, newsletters, value added education, a genuinely strong and useful web presence, authored books and account reviews). Although you may be tempted to take an easier route and copy generic content from various mar-keting sources, take the extra steps to provide customized content that refers to your clients, community, agency and other interests. Customized content can make a difference.

Component #2: ProgramMost referral programs include a special offer or

incentive which I like to call a ‘game’ element (think of a gas card, book of free car wash coupons or Starbucks® gift card). The incentive is the first thing the client sees. Because it’s promoted and is the most visible part of the program, agents mistakenly think the incentive is the program. But it’s not. It’s only one part of the entire formula for the referral program. You reward the behavior you want repeated, however the key motivation for referrals should clients' approval of your business.

Component #3: PromotionAn incentive gives you the opportunity to promote your

referral program. You can talk about it in conversations; include it in every outbound mailing and more. The options for promoting your program are endless, but consider incorporating some new ideas into emails, electronic newsletters, website content, articles with local publications, and flyers inserted in mailings (see the full version of this article for ideas you can incorporate).

Component #4: PersonaA human connection is one of the biggest missing ele-

ments I’ve noticed in almost all retail agency marketing. Many large insurance carriers have created mega marketing personas that represent their companies — Progressive has quirky and perky Flo and GEICO has the charming and cute gecko. What you can glean from them is the strong impact a likeable and memorable persona can have on your business. Carefully select the unique characteristics that will help your marketplace connect with you and build your persona based on who you really are.

About the authorMichael Jans is the President of Agency Revolution (www.agencyrevolution.com). He has written and created over 50 books, programs and courses to help insurance agencies grow. In the past 20 years Michael has trained and consulted with over 11,000 insurance clients in five continents.

What Really Drives Referrals?


For businesses that consider or choose to take on debt to implement growth initia-tives, achieving the right balance between that debt and available liquidity (available cash or the capability of quickly converting assets to cash) is important. Maximizing a company’s return on equity requires a certain amount of debt. Oak Street appreciates the need for clients’ capital management strate-gies to align with their long term growth plans while minimizing potential cash flow vulnerabilities and works cooperatively with its clients to achieve these goals. In a survey, we discovered our clients were able to realize an average of 36 percent growth by the investment of borrowed monies into their agencies.1

Many agencies have recurrent thoughts about growth, but due to their day to day demands they often are not able to develop a focused plan. If you are considering borrowing to grow, you should ask yourself the following questions.

How do I want to grow? Growing a business can mean different

things to different companies. Whether businesses choose to grow by expanding products and services, tapping referrals, increasing sales and marketing efforts, hiring or through acquisitions, different levels of investment are required. Begin by under-standing how you plan to grow and what kind of investment is needed.

What is my growth timeline? A young business owner may have decades

to grow an organization, while an executive nearing retirement age may need to build value quickly in order to sell a business. For executives with short timelines, growth via acquisitions may be the best strategy. Your

goals and timeframes will help determine your timeline.

Are opportunities favorable now?

Timing is always important. For example, during times when a soft market is ending and revenue streams are weak, acquisitions can be relatively cheap. Business owners should always be ready to take advantage of a favorable opportunity. A line of credit can help you be ready when the time is right. Position your business to move quickly by getting approval before opportunities present themselves.

How do I feel about risk? Everyone has a different

tolerance for risk. Some view debt as a risk, preferring slow and steady growth through utilizing cash versus debt. Others consider organic growth a risk, since the slower pace may result in competitive pressures. Balance these views with your growth plans and timeline to come to an acceptable level of risk.

1 Data as of April 30, 2013, for entire portfolio of loans. Average timeframe of 28 months. Individual loan results may vary and revenue growth is not guaranteed. Some loans were used for multiple purposes so percentages may reflect growth rates based on a weighted average achieved in combination with other loan purposes.

What will it take to grow?If you choose to take on debt to

implement growth initiatives, how will

you achieve the right balance between

that debt and available liquidity? Oak Street

Funding answers this frequently asked question.


:industry news

As the insurance market goes direct and digital, agents must adjustAn Accenture survey of more than 1,100 independent P&C agents showed changing consumer behavior and

new technologies may mean significant shifts for insurance agents. 39 percent of respondents believe their

greatest competitive threat is from direct insurance channels. The biggest components of those threats are

online services, claims processing and quoting. In order to adjust to the changing market, agents will have to

adopt new technologies, take advantage of customer and prospect data and find better ways to reach their

target audience.

Just when you think change may level off,

something disruptive occurs. With an auto

insurance shopping site already active in the

U.K. for two years, Google now has its eyes on

opening a site in the U.S. The company has struck a

deal with CompareNow.com that will give it access

to a network that includes approximately 30

insurers. In order to combat the competition,

independent agents are being advised to make

stronger efforts to demonstrate their value.

Google enters auto insurance space


Statistics show there is a growing

gap between the amount of life

insurance coverage consumers need and

the amount of coverage they actually

purchase. One insurance professional

believes carriers are to blame because of

their push to sell policies online without

the personal, consultative help a

face-to-face interaction with an agent

provides. Carriers, on the other hand,

point the finger at agents whom they say

don’t sell enough coverage.

Who is to blame for the gap in life insurance coverage?

Reinsurance with captives may be reason for increased economic risksInsurance companies that

utilize captive insurance providers to

reinsure their life insurance portfolio risk are being

partially blamed for increased risks to the United States’

stability. The OFR, a division of the Treasury Department,

released a report as part of a measure to pinpoint risks to the

economy. It cited that reinsurance with captives as an example of

moving financial activities toward weaker areas of the

financial system.

Look for more insurance apps from IBM and Apple partnershipApple and IBM announced a new partnership in 2014 that

would strive to combine Apple’s proven business-to-consumer

user experience and IBM’s enterprise expertise. This partnership

may touch the insurance industry through the development of

new, innovative apps. A retention app that addresses mobility

and analytics was recently announced and more technologies

are on the horizon.

The evolution of an agencyManaging and growing a business at the same time is

challenging. In order acquire new clients and increase sales,

agents must be able to focus on the right strategies. But with

the responsibilities of running the back-end operations, growth

tactics are often neglected. See the evolution of managing a

practice and how new ideas are freeing producers to do what

they do best — sell.

www.marketwatch.com/story/independent-insurance-agents-not-immune-to-digital-disruption-according-to-accenture-report-2015-01-06

bits.blogs.nytimes.com/2015/01/08/new-clues-on-googles-plans-for-insurance/?_r=2

www.insurancetech.com/channels/ibm-apple-partnership-could-yield-trove-of-insurance-apps/d/d-id/1318372

insurancenewsnet.com/innarticle/2014/12/03/insurance-captives-threaten-financial-stability-report-says-a-575794.html#.VLC1PSvF-mE

www.lifehealthpro.com/2014/12/31/2015-outlook-what-the-future-of-practice-managemen?t=life-sales-strategies

insurancenewsnet.com/innarticle/2014/12/12/whom-to-blame-for-the-coverage-gap-a-578092.html#.VLCzDSvF-mE


Technology has transformed the lives of people across the globe over the last

five years. The introduction of the smart phone placed what are essentially

small computers right in our pockets – available we want them to conduct financial

transactions, check calendars, send emails, search the internet and more. They

have changed sales processes and sped up sales cycles. They’ve complicated and

simplified things all at once. Other technological advancements, like cloud

computing and software-as-a-service, have also contributed to major changes.

Can too much technology be bad for sales?


But as much as technology helps us in our personal and professional lives, it can hurt us too. Parents complain their kids don’t know how to communicate as well as they should because they text too much and ‘old-schoolers’ wrestle with people who never seem to want to pick up a phone and just talk. The convenience of technology versus the cons is a debate that could go on forever. The truth is technology can impact insurance agents in ways they may not realize.

More and more agents take advantage of the many benefits technology provides. They communicate with clients via email on a regular basis instead of making phone calls and face-to-face visits, send questionnaires to capture information for life insurance quotes, and connect with clients on Facebook or other social media outlets.

Insurance providers are also leveraging opportunities in the digital world as they work to direct consumers to online resources when they need insurance coverage. Much like the diamond industry has convinced many buyers that an engage-ment ring is worthy of two months’ salary, insurance companies are working to change consumer thinking. Instead of seeking the guidance and services of an insurance agent, a lot of advertising directs buyers to the internet to search for the best rates. A recent press release even touted that online insurance quotes are better than phone quotes (http://www.pressreleaserocket.net/online-car-insurance-quotes-are-better-than-phone-quotes/23550).

But the insurance business truly is a people business. And while there is some insight we can gain about people via social channels, nothing can replace the depth, breadth and quality of information we can gain from voice or face-to-face interactions with clients — ‘real contact’ with people. Too much dependence on digital communications can cause agents to miss out on the ability to sell consultatively and be viewed as a resource by current and potential clients.

Real contact provides opportunities for agents to learn about the current and future needs of people and to share what they know about insurance and its potential impact on financial security. The more real contact agents have with people, the better those people can come to value agents and the products and services they provide.

Find teachable momentsReal contact offers teachable moments with people. When you

watch for and respond to teachable moments with your clients, you begin to shift your role. Instead of being seen primarily as someone who is trying to sell them something they may or may not actually want, you become a trusted advisor who has a genuine interest in their well-being. (Yes, you may feel that you are already in that role, but there’s probably a gap between your belief and their perceptions.)

Today, we have access to more information than ever before. We can get more answers in five minutes with Google than we could gather in two hours with an old-fashioned encyclopedia. But instead of feeling more knowledgeable, many people are becoming overwhelmed by information they’re not certain they can trust. You can help by providing information that is both helpful and relevant to them.

increase talk timeIn efforts to increase efficiency for the agency, save the

client time and provide quick feedback, we utilize technology for common tasks. We actually encourage the use of it and expect more and more people to demand it. After all, people claim to be busier than ever in our culture today and offering modern conveniences seems to be the right thing to do. As a result, we shift interactions to the digital world. So when a client calls with a question or a concern, our natural inclination is to resolve it as quickly as we can, saving the person time and moving on to the next call. However, the immediate answer isn’t always the best answer for the client and rushing off the phone isn’t necessarily the best tactic. Taking the time to ask a question or two can go a long way. By engaging in conversation and probing a little, questions can uncover information that will give you an opportunity to better serve the client. For example, a policy holder who is doing some room renovations may call to see if you have referrals for licensed contractors who do the work. By taking a little time to ask about renovation plans, you may dis-cover the homeowner is significantly adding to the home’s value and needs an upgrade in coverage.

The second benefit is that the conversation you have with the client builds rapport. Instead of simply being a service provider who offers a quick answer to a question, you’ll demonstrate a genuine interest in something that’s important to the client.

Having a strong rapport with your clients also helps with retention. When clients are comfortable working with you and see you as more than just another agent, they’re less likely to react to a premium increase or a problem with a claim by simply switching to another carrier. They may not be happy, but they’ll be more likely to share their dissatisfaction with you, so you can take steps to help. (And sometimes, simply listening to their complaint may solve the immediate problem.)

Share when you’re not sellingYou probably read financial publications and newspaper

articles regularly. When you encounter an article that might interest a client, either forward the email or make a copy of the article and drop it in the mail with a short handwritten note saying, “Thought this might interest you.” That may seem like a very small effort, but you’ll be surprised at the impact it can have.

If you use social media or a client newsletter as part of your marketing efforts, you can share useful information without a strong sales pitch. Suppose you find a great article online about things people forget when planning for retirement. You might report that on your social media page with a message that says something like, “I was surprised by what I learned in this article” or “Here’s something you may not have considered about your retirement.”

Once your clients become comfortable turning to you for impartial advice and useful information, they’ll start to do so more often … and they’ll trust your recommendations. Take a lesson from those veteran agents who describe their clients as friends. That’s exactly how they treat them, and you’ll see it in the loyalty and longevity of those clients.


You don’t always need an extensive or complicated plan in order to executive marketing activities for your agency. Marketing tactics need to do two major things: help attract new customers and help you maintain existing ones. Here are five simple things you can do to market your

agency that don’t require a lot of time, money or expertise.

.

1. Increase daily contacts.

You can count on a certain number of client calls every day for a variety of reasons. They’ve traded in one car for another. They don’t remember when their premium is due. Their daughter just passed her driving test. Each of these calls is an opportunity to talk, ask questions and identify other potential needs. The big question here is, “How often do you call them?” Why wait for the phone to ring when you can cre-ate even more opportunities by making conversations happen. This may sound too basic, but it’s often neglected. Even if you just leave a message, you’ve touched a client and planted a seed. You’ve made them aware that you’re still in business, still their agent and still care. That will go a long way. And if you divide your entire client list, you may be able to reach every household each quarter, year or other timeframe just by making a few calls each day.

2. Use your data.

Comb through your data and find ways to identify needs and opportunities

based on common characteristics. Clients within the same age band, for example, are likely to be in the same stage of life. Forty-somethings typically have teenagers who are getting ready to drive and will need insurance. Teenagers will need renter’s insurance when they head off to college, whether they live in an apartment or dorm. Once these groups have been identified, you can develop simple call scripts, emails or other communications to reach out to them. They’ll appreciate you helping them ensure their needs are met.

3. Send a printed

newsletter or letter. With software like Microsoft

Word, it’s easy to develop a letter or newsletter you can mail to a large group of clients (if you follow the point above about data, you can create a few versions based on groups of clients). Come up with three or four main points that are relevant and informative and write a short paragraph for each. You don’t need to be clever or provide a lot of fancy graphics, just focus on what’s in it for the client and how you can help them. Share success stories or testimonials from clients you’ve helped. Always include a call-to-action for them to contact you or go to your website to get a quote or find helpful information.

4. Give a promotional product.

People are guilty of procrastinating or just getting busy. As a result, address-ing insurance needs is often pushed to the backburner or altogether forgotten. Sometimes it helps when people have a visual reminder. Consider sending your clients and prospects a magnet for their refrigerator or some other small but fun product that will keep your name in front of them. Just make sure there’s something about the product — whether it's a catchy phrase or unique design —that will make them want to keep it. You can spend as little as one dollar to purchase something that may be very effective.

5. Provide inexpensive incentives.Sometimes a small incentive is

enough to get people’s attention and influence them to take action. Consider providing $5 or $10 gift cards for every quote you receive or request to evaluate current coverage. Alternatively, you can enter names in a drawing for a more substantial giveaway, like a $500 gift card or a computer tablet. Test a few options to determine what motivates people to respond to different promotions.

5 simple and inexpensive ways to market your agency


The CompanySawicki Insurance Agency was established in 1973 by Joseph

Sawicki to provide insurance to the greater Hartford area in Connecticut. As the founder of the independent agency, Joseph successfully grew the agency for over 30 years. In 2005, he ushered his son Josh into the company as the beginning stages of a succession plan. Josh, who’d previously worked in public accounting in various roles for several years, cast a new vision to grow through a primary focus on acquisitions.

Now called SEK Holdings, the company is a family of several agencies in Connecticut, Florida, Texas and California that offers personal, commercial, health and life insurance. The father and son are majority owners of the company with two additional minority owners who serve key roles.

The StrategyJosh’s acquisition model has been to acquire agencies in a

given region that have strengths complementary to the original Sawicki agency. One business, for example, provides market-ing capabilities while another contributes solid sales and talent recruitment experience. Josh has been selective about his acquisitions, being careful to only purchase businesses that offer the right fit, profitability and potential.

Armed with greater functionality, Josh has positioned the company to acquire books of business that can be consolidated into one organization, thereby increasing operating efficiencies.

Overall, SEK has grown by more than 700 percent. What’s more, the legacy started by Joseph three decades ago is positioned to continue for years to come. In all, Sawicki has acquired more than ten agencies with financing from Oak Street.

The Oak Street® ExperienceJosh turned to Oak Street for his first acquisition and was

pleased with not only the results of his purchase, but also his experience obtaining the needed capital. As a result, he requested more capital in order to pursue the purchase of additional books of business. The line of credit Josh secured allows him to have the speed and agility of a cash buyer, often giving him a tremendous advantage over other buyers who are interested in the same deals.

Quote“I’ve worked with Oak Street for more than five years and they

are really good. Without them, I wouldn’t be able to accomplish all that I have for this business. They truly understand the insurance agency business and acquisitions, which makes working with them simple. I’ve worked with the loan, underwriting and processing teams and my experiences have been pretty much the same each time. They are all very consistent. The line of credit Oak Street extended me is unique and I don’t think I would’ve been able to secure it with any other lender. I wouldn’t be able to make acquisitions as quickly as I can without it and it’s been instrumental in helping us grow.”

Loan and line of credit help execute succession, acquisition plan

Customer Success Story


Webinars On-Demand | Learn from the experts without leaving your office. Oak Street Funding offers resources to help agents and brokers. Our monthly webinars, conducted by subject matter experts, provide insight on a number of hot topics. If you miss one, access it on our website or our YouTube channel. Here are some of our most popular webinars.

Capital Options for Insurance BusinessesAn audience-driven panel discussion that addresses common questions insurance business owners have about fulfilling their unique capital needs.

Best Practices for Growing Insurance BusinessesKeys to building a thriving insurance agency. This webinar touches on everything from organic and acquisition growth strategies, to internal processes and culture, to financial management.

The Ins & Outs of Internal SuccessionKey factors to keep in mind when considering a succession plan. Learn about typical challenges that are encountered in an internal succession, what happens when multiple owners are involved, and how you can avoid common pitfalls.

Enhancing Your Customers’ ExperienceDiscover how to analyze and shape your customers’ experiences with your agency as you

learn six essential steps to differentiate your agency from competitors. This webinar can help anyone in your firm responsible for building and maintaining relationships

What’s Your Level of EQ?EQ deals with our emotional intelligence — our ability to recognize our own and others’ feelings and use that awareness to positively impact relationships. Discover what your EQ is and how it may be impacting your professional life.

How to Get ROI Out of Your Marketing EffortsThis webinar discusses common mistakes business owners make in marketing, how to make marketing a profit center and not a cost center, and how to build a foundation of sales and marketing alignment.

:around the web


Where can you take your agency with extra capital?

Position to sell? Acquire an agency? Enhance customer

service? Tighten up operations? Expand to new markets?

No matter where you’re taking your business,

Oak Street can help with a customized loan that

leverages your commission stream. Since 2003,

thousands of agents have accessed capital to grow,

acquire and succeed with an Oak Street loan or

line of credit. Call us or get a quote

oakstreetfunding.com/quote.

Customized Loans• $25,000-$20,000,000• Terms up to 12 years• Interest-only options

1-866-OAK FUND | oakstreetfunding.com

Agency Growth Trends Download the

Results of a Recent Survey at oakstreetfunding.com/

growthsurvey

Uses of Capital• Acquire an agency or book• Consolidate business debt• Get working capital• Buyout ownership/Succession

• Invest in business growth• Recapitalize

Taking You Where Banks Won’t.®


BHow one simple change can reignite sales

Basketball superstars attract great crowds. The rare talents who can score over 30 points in a professional game, accomplish a triple-double or perform nearly impossible maneuvers are captivating. But superstars aren’t necessary to win games. In fact, teams that master basketball fundamentals and develop well-rounded rosters sell out stadiums. When each player knows his or her role and plays it with precision, teams succeed. This is especially true with point guards and shooting guards.

Point guards are typically good ball handlers and passers. Their primary role is to get the basketball up the court and get the offense initiated. Point guards will occasionally take shots, but most often pass the ball to shooting guards. Shooting guards, on the other hand, take shots — usually a lot of shots. Their goal is to score points.

Often in sales, leaders hope to recruit superstars who can close a large number of deals. They hire someone with proven experience or potential and expect great results. But that’s not always the best approach and it’s certainly not the only approach. Agency owners and managers should consider building a sales organization that is staffed with professionals that are akin to point guards (pointers) and shooting guards (shooters).

Pointers are employees who are skilled at the first stage of the sales process. They work to make contacts with leads and turn them into real opportunities. They are good about making initial contact with people, identifying needs, and setting up appointments. Once they establish that a contact is interested in their product or service, they have no problem passing that contact’s information along to the next person or stage of the process. Shooters take hand-offs from point guards. They culti-vate relationships, drill down to really understand needs, craft solutions that will meet those needs, negotiate and attempt to close sales. Hopefully, they experience a decent success rate.

Both positions are important to the process, but each requires a slightly different skill set and level of experience. Because shooters have to fully grasp the potential client’s challenge and develop an appropriate solution, they need to be more seasoned in selling and closing. Pointers have to be skilled at making connections with people and convinc-ing them to go further in the process to learn more. Pointers should also be persistent and okay with not being the

person who will actually close the deal.

This type of model can be helpful not only because it can be very effective in selling, but also because it helps businesses save on personnel costs and helps develop talent. Pointers will typically command lower rates as they are likely to be more junior level employees. What’s more, their role allows them to grow and learn over time so eventually they may be groomed and ready to take on a shooter position. The close contact maintained between pointers and shooters allow the pointers to be mentored over time. And since training to be an insurance agent can be a long learning process, pointers can make great contributions to sales early in the training process and increasingly as they learn, versus making a significant impact after several months or even years.

If your agency is like thousands of others in the industry, struggling to find, develop, and afford new talent, consider this sales model.

About the authorBill Nicholson is Executive Director of Sales for Oak Street Funding. With experience overseeing the close of millions in insurance industry loans, Bill truly understands the unique complexities of the insurance agency business model and its unique capital needs. For more than 15 years, he has successfully led sales organizations in highly competitive environments and developed growth strategies for financial service companies. He can be reached at [email protected].

| by Bill Nicholson


| by Bill Nicholson

The close contact

maintained between

pointers and shooters

allow the pointers to be

mentored over time. And since

training to be an insurance

agent can be a long learning

process, pointers can make

great contributions to sales

early in the training process,

versus making a significant

impact after several months or

even years.


Bright Outlook


If you’re an agency owner considering funding options for growth, 2015 should be a good year in which credit is available to borrow capital and conditions are positive for new commercial loans, working capital or refinancing.

• Market conditions. Some products in the insurance industry, like commercial lines, are softening while others are growing at a slower pace.

• Credit standards. According to the October 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices published by the Federal Reserve System, a modest number of banks have eased their commercial and industrial loan standards to firms of all sizes and a larger number have eased pricing. Banks also reported stronger demand for commercial and indus-trial loans to larger firms. (www.

federalreserve.gov/BoardDocs/snloansurvey/201411)

• Interest rates. If any increases are made by the Federal Reserve in 2015, they are

likely to occur in the fourth quarter

or in early 2016 and be small. This should

keep capital affordable.

• The economy. The pace of economic growth should continue along with improve-ments in unemployment.

• Business confidence. The majority of small business owners are confident that the economy will improve over the next

year (Spring 2014 Bank of America Small Business Owner Report).

Knowing where to find the right credit is important. There are more options today and choosing the right source can significantly increase the probability of closing on the needed capital. A large, prominent bank in the U.S. recently ended its insurance lending practice, revealing issues larger banks have historically had with collateralizing commissions and other types of future cash flow. Larger banks haven’t tradition-ally favored providing loans to insurance agents and brokers and this trend will probably continue in 2015. What’s more, bank regulators still have to follow sig-nificant regulations (because of financial crisis in 2008) regarding business loans. Capital minimums and liquidity limitations require banks to have more cash available for emergencies. As a result, bank credit is often extended primarily to larger businesses with tangible assets.

Niche lenders like Oak Street Funding should continue to be a viable source of funds for insurance businesses of all sizes. While niche lenders are just as risk averse as other lenders, they aren’t bound by all the same regulations as banks and credit unions. Agencies that may typically be ineligible for a traditional bank loan (because banks won’t leverage their tangible assets) often get the funds they need from niche lenders at competitive rates.

About the authorRick Dennen is President and CEO of Oak Street Funding, which provides commission-based lending for insurance agents that need capital to buy, build or sell their agency. Dennen is a licensed agent in the state of Indiana for Life, Accident & Health products and a licensed Certified Public Accountant in

Several years after the financial crisis of 2008, is the U.S. economy finally stable? Can agencies have enough confidence to expand operations, hire staff, upgrade technology, initiate new referral programs and invest in other growth strategies? | by Rick Dennen

the State of Indiana. In addition, he is an adjunct professor of Venture Capital and Entrepreneurial Finance at the Indiana University Kelly School of Business. He can be reached at [email protected].

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Documents

The Bridge: Winter 2015