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Old 11-26-2019, 03:30 PM
 
Location: Citrus countyFL
416 posts, read 309,137 times
Reputation: 566

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I currently own an insurance agency with very little overhead. I work out of my home, and have agents that also work out of their home. We focus on Medicare and Life insurance.

I am considering buying a Franchise P&C Insurance Ageny, and using my current book of business as a jump off point.

However, I will have much more overhead ie: office rent, utilities, etc..

I have enough startup capital to get me through the first 5.33 months of business (assuming absolutely no revenue comes in). Is this enough working capital? What is the rule of thumb for the amount (in months) of operating capital to have when starting a business?
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Old 11-26-2019, 09:15 PM
 
20,893 posts, read 15,192,613 times
Reputation: 16180
Are you buying a state farm office?
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Old 11-27-2019, 06:14 AM
 
Location: Citrus countyFL
416 posts, read 309,137 times
Reputation: 566
Quote:
Originally Posted by Lowexpectations View Post
Are you buying a state farm office?
No
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Old 11-27-2019, 06:36 AM
 
18,856 posts, read 57,365,396 times
Reputation: 33452
Absent knowing what the cash flow will be, I wouldn't take that risk without a full year of reserves at a minimum. A quick way to get a conservative opinion is to go to a bank and see how much of a loan or line of credit you can get without a personal guarantee backed by your home.
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Old 11-27-2019, 06:42 AM
 
2,600 posts, read 990,345 times
Reputation: 6538
Quote:
Originally Posted by harry chickpea View Post
Absent knowing what the cash flow will be, I wouldn't take that risk without a full year of reserves at a minimum. A quick way to get a conservative opinion is to go to a bank and see how much of a loan or line of credit you can get without a personal guarantee backed by your home.
An unsecured loan for a new business with no track record or sales? That’s easy to answer, the bank will lend $0.
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Old 11-27-2019, 10:23 AM
 
18,856 posts, read 57,365,396 times
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Quote:
Originally Posted by TimAZ View Post
An unsecured loan for a new business with no track record or sales? That’s easy to answer, the bank will lend $0.
You got my point.
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Old 12-13-2019, 08:50 PM
 
Location: VA, IL, FL, SD, TN, NC, SC
1,181 posts, read 328,541 times
Reputation: 2528
Quote:
Originally Posted by RedneckRebel View Post
I currently own an insurance agency with very little overhead. I work out of my home, and have agents that also work out of their home. We focus on Medicare and Life insurance.

I am considering buying a Franchise P&C Insurance Ageny, and using my current book of business as a jump off point.

However, I will have much more overhead ie: office rent, utilities, etc..

I have enough startup capital to get me through the first 5.33 months of business (assuming absolutely no revenue comes in). Is this enough working capital? What is the rule of thumb for the amount (in months) of operating capital to have when starting a business?
Hmmm....I am skeptical, based on your vernacular, that you do not know what you think you know, but I could be wrong.

01) I assume what you really mean is you intend to become a "zee" (franchisee) verses you are buying a franchise and becoming a "zor" (franchisor). Please, correct me if I am wrong.

02) In general (note the word general) the type of opportunities that are worth while are ones where they direct business to you and you service the business for which they receive a piece of the action and you keep the residual book of business. I suspect, based on how you wrote this, you are doing the prospecting by using you existing book of business and hope to cross sell, which is the opposite of how the cash should flow. Your go to market strategy is sound but I would really think about who I was "partnering with" and what they are bringing to the table verses what you are bringing to the table.

03) What is the name of the franchise (see assumption in 01 above)? Have you reviewed the FDD and FA with a legal expert who understands franchise law? And have you reviewed the opportunity with a business analyst/consultant who understands franchising? Is this actually a franchise, a business opportunity, or a captive (or semi-captive) operation that is pushed by Allstate, Country Companies and the like?

04) I fail to understand why you cannot just add P&C to your LOB as a non-captive agent and act as a general P&C broker. But I have not been in the biz, for decades so maybe the rules have changed ex CLU, CPCU, ChFC

05) You are too poorly capitalized.

Last edited by GhostOfAndrewJackson; 12-13-2019 at 09:06 PM..
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Old 12-20-2019, 09:41 AM
 
8,311 posts, read 7,499,676 times
Reputation: 3963
Quote:
Originally Posted by RedneckRebel View Post
.

I have enough startup capital to get me through the first 5.33 months of business (assuming absolutely no revenue comes in). Is this enough working capital? What is the rule of thumb for the amount (in months) of operating capital to have when starting a business?
How much did working capital did you require the first time around? You stated you already own a brokerage.
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