Adding a producer to your payroll can be costly. In fact, adding a good producer to your agency will likely be your most expensive hire. And while you might believe now is the time to bolster your team, how do you know if the time is really right? More importantly, can you afford it?
Every agency owner has his or her own perspective on this issue, but this anecdotal guideline can help you determine the affordability of a new hire: Written premium in the range of $750,000 to $1 million roughly translates to $150,000 in revenue. This should be your benchmark for supporting a new producer position.
Some may argue your agency needs to deepen its bench of producers before it will be able to generate that revenue. You’ll have to decide if the revenue or the hire comes first, and what works best for your risk tolerance. In either case, however, a skilled producer should bring a return on your investment over time – making the hire well worth the investment.
If you find you’re close to where you need to be to afford that new producer, but you still don’t quite have the cushion you hoped, there are practical steps you can take. Start by examining your non-income producing activities.
Consider outsourcing the administration of your written policies to a service center. Not only will this help to keep all of the related timely tasks for the policy on track, it can also help free up cash and personnel to focus on revenue-generating activities.
Alternatively, some independent agencies invest in hiring customer service representatives (CSRs). With a CSR on staff to address policy changes or issuing certifications, your producers are freed up to focus on writing new business. Finally, hiring a virtual assistant is another way to reduce administrative expenses while still maintaining an organized and professional appearance to your clientele.
Each of the scenarios above can help streamline your agency’s operations, focusing producers on what they do best while reducing expenses over time and making a more accurate correlation between revenue and when to add additional producers to the team.