The tell all guide to opening and living as a Scratch Agency Owner : Part 1

by | Jan 26, 2018

Somewhere in the 13 years of my insurance career I decided at 9 months pregnant it would be a great idea to have opened my own independent insurance agency. Don’t ask me if it was the “nesting” kicking in, the fearlessness getting stronger, or just pure stupidity. However it was the decision I made just a little over 3 years ago.

When I “jumped” into agency ownership I did it without a coach. I actually did it after a not so great agency breakup, a heck of alot of unknown, and well… let’s just say not a lot of well wishes.

I came from the Captive Insurance world. I had spent years of my life making everyone I worked for  look shiny. I didn’t know much, but the one thing I knew was insurance. How to sell it, how to coddle it, and how to develop relationships to keep the quotes flying in.

Turns out… that is not all that is needed to open a scratch insurance agency. Do I have you shaking your head at me yet? No? Well don’t worry… it gets better.

What most soon to be or scratch agents don’t know is,  you could be the best insurance agent in the world… but that will never make you a good agency owner.

This is a distinct difference that I failed to see or even acknowledge when opening my agency. My goal here isn’t just to throw all my mistakes on the clothesline so we can all laugh and point (although please feel free to do so via meme fashion if need be). It is to maybe FINALLY throw the “here it is” out there for future scratch agents or even current ones to learn from.  You can’t google

How to become a Scratch Agency Owner


Everything I need to know before opening my own insurance agency

When you do type that into google you will find a myriad of sales companies, marketing jargon, and quite frankly just a ton of places that want to take your money because you are just uneducated. I’m about to let you in on my deepest darkest secret…

I am an awesome insurance agent… but I was a terrible CEO.

Here’s the thing, I have a very special place in my heart for scratch agencies. You know those meme’s that display the “what the world thinks I do, what my mom thinks I do, what my friends think I do”? Well when I think of a scratch agency owner I picture Khal Drago from Game of Thrones. Going after the kill (by kill I mean Ramen Noodle wrappers), stopping anyone in his/her way (in my case the 4 kids who took up all my time), and taking no prisoners.

The point is the Scratch Agency Owner is SAVAGE.

So what is it exactly the you need to know about being an independent agency owner? Better yet, what is it that you need to know about becoming a scratch agency owner? Let’s be honest- there is so much that covering it all in one article would be banana sandwiches. So together we are going to eat this delicious meal in two parts and dive into:

The Tell all guide to opening and living as a Scratch Agency Owner : Part 1

Let’s Get Acquainted with the Terms shall we?

The Erin Nutting definition of a Scratch Insurance Agency Owner (can I have your permission to abbreviate this beast of a phrase to SIAO?)

A licensed insurance agent that starts Day 1 with no policies, writes his/her first policy and has not inherited a book of business. An agency owner who has no residual income at the opening of his/her agency. Day 1= $0.00

Let that sink in for a minute. They/we open their agency with NOTHING.

Just me, myself, and I

Most of this article is based on things I have done wrong that needed immediate correcting in order to change trajectory however… this one thing (as she brushes dirt off her shoulders) I think I actually got right.

I came from the Captive Insurance land. Otherwise known as the land of 1 staff member per $300,000 in premium. I knew when I was getting ready to do the agency thing for myself that I needed to keep one thing in mind.

* This picture will never be overused to me*

Keep my overhead down.

Back away from the office supplies folks. Trust me on this, I also have the office supply addiction too but I am telling you right now, when you start as a SIAO (Scratch Insurance Agency Owner) you have no money. Purchasing fancy highlighters should most certainly not be on your shopping list. Say it with me now…. ” I do not need these 32.99 pens“.

Some tips on keeping overhead down:

  • If you can manage without an office location for a while- do it. The best thing you can do is not put yourself in debt trying

    Yay for home office working. Samantha here was 4 months old before leaving my side at the agency level while I still worked from home. She is now 3.

    to pay an office rent. As much as my situation (working out of my master bedroom for about 1 1/2 years- not even ready to talk about it) wasn’t perfect… it helped keep costs down so I could spend it elsewhere. Like Ramen Noodles.

  • DO NOT BUY INTO CRAP– I am going to talk a little further here on the must have’s and stay away from’s at the end of the article however I recommend not purchasing any “advertising” or excess trinkets and trash (you know the promo sticky notes and personalized id card holders that you have to buy a minimum of 500) that you don’t need. I know agents who have been very successful with mailers, and they are great when done right however it you aren’t careful they can also cost a ton with little to no return.
  • Function with only the systems you need. In my opinion to run a successful shop you need only the following:
    • Computer with email capabilities
    • Phone – Internet Phone System, Cell Phone, Shell Phone.. however you communicate
    • Agency Management System – AMS360, Hawksoft, QQ Catalyst– for a few examples
    • Rating System – Companies like Vertafore- Pl RATER or EZLINX  to name a couple- name of the game is options and efficiency so a rating system is a no exception for me.
    • Website – this is you… but online. If you don’t have a website how are folks supposed to find you online? Don’t cheap out here and “DIY“. I’ve done it and it ain’t pretty or functional.
    • Business Cards (this is not giving you permission to purchase 1000 cards on special with coupon- no)

The Algorithm that set me up for scratch agency success

Aside from starting a niche market, how to operate your agency with no money is probably the single most often thing I am asked by other agents.

Why is that?! Well it’s because I lived/live it folks.

With just 3 years under my belt after making the “jump” I am still learning how to operate my agency on a budget. I am still at times struggling to figure out the cyclical hell that is the insurance agency owner commission structure, and then the swift kick in the butt most scratch agents don’t even think about… retention.

Something you will hear me say all the time when I refer to households is BIC’s. This is my acronym for “Butts in Chairs“. If you can figure out how many BIC’s you need every month and go after that goal you will find that your closing, new business production, and commissions will follow behind.

Here is the basic un-official Erin Nutting algorithym that has worked for me. *When I say worked for me I mean I had to fail miserably a few times to figure out this is actually what works*.

*For all you math whizzes out there, there might be a way smarter way to break this down, but this is what I did and it worked for me*

You simply CANNOT suck

So you’re crushing new business production. Yay you.

You have your BIC’s  and you are pumped for underestimating the premium you could write (can you tell this is becoming a True Life I’m Erin Nutting story?). You are grooving along and It is happening. 

However, what you forget about is what happens when you write the business? What happens when you are “crunked in the club” with new business but the new business is flying out the back door? You are losing new business customers because their new homes didn’t end up closing, they have buyers remorse, or simply… you SUCK at customer experience.


This was me. I sucked at the one thing that made sure I was going to retire without having a care in the world. I was losing the residual income I worked so hard to capture.

My first year new business premium… Jelly Bagels Amazing. My first year retention… drinking the last sip of beer in the bottom of a bottle disgusting.

Just How Residual Insurance Income Work

This is year one. Keep doing that every year and you can understand why keeping your clients happy is just as if not more important than writing new business.

Learn how to mingle with the best of them

Now that you have your BIC’s plan, you are getting ready to keep your cost down to maximize every dollar brought in you start realizing well where the heck do I get business from?

If I had a nickle for every time I heard an insurance agent say

I just want to build my business upon referral only

Well who the heck doesn’t? But I have news for you SIAO… you are going to get a total of zero referrals if you just simply wait for them to walk in the door. Here is a list of tips that you should be doing prior to opening your agency or within the first 30 days of opening:

  • Find a local networking group with a low cost to enter- scope out if they have a good digital presence and how many other insurance agents are involved.
  • Develop your demographic. This is meat and potatoes here. Who do you want as a client? Who are you the best agent to? Do you prefer working with one customer over another? Who do you want to serve?
  • Join local networking facebook groups in your area. Start teasing things within the group that you are about to open or are “new”. people love to celebrate in new success and ventures.
  • Join a group like that for a small monthly membership can help drive leads to your agency.
  • Evaluate your ability to receive business. Do your business cards speak to the business you are trying to receive? Does your website look and feel like you are able to “take care of your clients”. More importantly is it actually functional.
  • Build a business plan. NO I am not joking. Take all the information above and put it down onto something that is for you. Something that you can reflect back on in 3 years and see the difference you have made in your agency and in your income.

I think as a SAIO myself I can say I made mistakes more than I make good calls out the gate. I thought being an agent for 9 years prior to opening my agency gave me some sort of “agency owner street cred” that was genuinely fictitious. I let my ego get in the way when success started, I ignored signs of retention slip, and most times I just simply wouldn’t get out of my own way.

See the thing is, as SAVAGE as it is being a Scratch Insurance Agency Owner it is also incredibly defeating if you don’t have a plan. It can knock you down on your behind, taunt you while you lay there, and give you little to nothing in return if you don’t know what you are up against.

Whether you are a scratch agent getting ready to open your first agency, a producer just trolling to see if the grass is greener on the owner side, or maybe you are an up and coming agent in a family owner agency looking to put her/his stamp on the world.

Wherever you are in your agency journey the important thing to remember is that people before you have done it.

Learn from their mistakes, watch for yours closely, and be willing to surround yourself with a team that wants to share in your success.

To Be Continued…

Now, what would be a Part 1 be without a Part 2?

Stay tuned because in March 2018 the Tell All guide continues.

This time we will be tackling day to day operations, processes specific for a first time agency owner,  why choosing a demographic for your scratch agency is a non-negotiable, and why I pay myself the same amount every month regardless of agency commissions (I will get some shocked and awe faces I am sure for this one).

Also included will be do you go direct, cluster, MGA, etc…

The benefits and things to consider of all and what the heck they all mean.

I will feature some other agency owners who have failed and succeeded in all three arenas.

I’m sure we will cover the usual Starbucks, me being a mess, and hot topic items like how many Star Wars gif’s Hanley will feature in his Elevate 2018 presentation this year… so look forward to the continuation in The tell all guide to opening and living as a Scratch Agency Owner : Part 2.

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