Agency Plan
My insurance agency serves a small community. Crop Insurance is my main product, although we do insure houses, vehicles, and commercial property. I have been in business for 21 years. I built the customer base from nothing, starting in 2000. I have had a strong customer base which has declined because of COVID-19 and the retirement of several farmer clients. I need investors, or preferably a loan. I hired additional staff before COVID-19 that would have allowed me to be out of the office to acquire new accounts. Due to COVID-19 and the cost of payroll I took out EDIL Loans. My hope is to grow the business instead of letting my staff go to cover these loans. Ideally, I would like to pay all debt and start fresh, having only one payment to one lender. The business commissions for 2021 and 2022 are under $400,000. As you can see from the Valuation below, prior to COVID-19 I was almost at $700,000 and growing. I also own the building at 322 Main which should appraise at $250,000. I ask for your consideration, with the assurance that, with an injection of funds, the business will grow, and the loans will be repaid. Thank you, Julie Williams
A Valuation of my Insurance business: Several Insurance Agencies in the subject market area have sold and resold over the last fifteen to twenty years. These agencies have ranged from franchise full service to independent full-service agencies. The purchase is based on the book of business, type of business, and gross commissions received from the book(s)s of business. The book is based upon different types of policies, which fall into the general categories of property and casualty, hospitalization, life insurance, annuities, automobile, liability, personal property and insurance related to agricultural crop production.
The higher the policy turnover ratio, the lower the factor, on the other hand the lower the policy turnover ratio, the higher the factor. The factor takes into consideration risk and turnover. Property and Casualty and Life Insurance policies have the highest turnover ratios (factors range from 1.0 to 1.50), while crop insurance typically has the lowest turnover ratio (factors range from 2.0 2.50). Discussions with Insurance Brokers and Managers indicated local and region sales of similar agencies with a book of crop insurance, have sold on the basis of 2.0 to 2.50 times the Commissions Received annually. In my estimate, the most applicable factor is 2.250 Thus, the Total Commission $676,445 Times a factor of 2.25 equals $1,522,001, or $1,522,000.
TOTAL COMMISSION $676,445
Multiplied by x 2.25000
TOTAL VALUE $1,522,000
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