Before You Recruit: Setting Up Your Agency for Success

You’ve decided to start your own insurance agency — congratulations! You might be tempted to jump right into recruiting downlines; however, you have a lot to do before they can start working for you.

Of course, you’ll need some downlines to sign on with your agency, but to effectively recruit and retain agents, you’ll need to lay a solid foundation for your business first.

Consider these preliminary actions that can set your new insurance agency up for success.

Gather Capital

Funding is an essential first step to starting your business. As the adage goes, “You have to spend money to make money.” Consider where your capital will come from and what amount you need.

Some options for sourcing capital could include:

  • Your own savings
  • Investors or donors (family or otherwise)
  • Business or personal credit cards (preferably business)
  • Bank loans
  • A combination of all or some of these

The amount you need could range from as little as $5,000 to $50,000 or more (some projections say as much as $500,000!) and depends on many variables, including:

  • Where your agency will be located
  • How it will operate
  • What kind of promotional materials you want to launch
  • Paying downlines (depending on the contract type) and any other employees (office manager, grounds and bookkeepers, etc.) before you start seeing revenue (and don’t forget your own living expenses!)
  • How you plan to furnish your office space
  • Various other start-up costs

Research and make note of potential up-front costs. Doing so can give you a ballpark figure for the capital you need. It’s always safer to overshoot this number and have extra than it is to come up short and be left scrambling.

It’s always safer to overshoot your budget projections and have extra than it is to come up short and be left scrambling.

When it comes to start-up costs, trade time for money. The more you do yourself, like taking care of your own bookkeeping or creating your own promotional materials, can save you money but take more time. Paying others to do these jobs will save you time but cost more. Your approach depends on your personal working style, knowledge, comfort level, and budget.

Choose Your Entity Type

Every business requires legal structure. Each type of setup has its advantages and disadvantages, varying levels of personal liability, and tax implications. Your options are:

Thoroughly research each of these options, online with the U.S. Small Business Administration (SBA) and with a local attorney and a certified public accountant (CPA) to see which one is the best fit for you.

Choose Your Name

Next, you need to come up with a name for your agency that’s easily remembered and searchable. Be sure to follow your state’s Department of Insurance guidelines for naming, if any, as well as the Centers for Medicare & Medicaid Services’ (CMS) regulations. (In their 2024 final rule, CMS prohibits the use of the word “Medicare” in your agency’s name.) Additionally, perform some basic research on your idea, like searching it online to make sure there aren’t any agencies in your state with the same or similar name.

To Trademark or Not?

If you’re doing business in more than one state, consider trademarking your name with the United States Patent and Trademark Office (USPTO). If your agency will only operate within one state, it’s not necessary to trademark. But if you’re selling plans in several states, trademarking can give you federal protection for the name of your business. No other business in the U.S. will be able to use your name if your trademark application is approved.

If you do decide to trademark your name, before moving forward, make sure the name is available by using a reputable trademarking service to perform an in-depth search and to help you apply. Be wary of anyone on the internet promising to submit your trademark application for only $49. Typically, you should expect to spend, at minimum, $100 plus USPTO filing fees (charged per class). The cost will increase with any added services, like comprehensive search reports.

All of what’s required of you at the local and state levels can seem overwhelming, but ensuring you follow the proper steps means your business should be legally compliant from the start. In this process, your state’s website is your best friend. Here, you’ll find information, checklists, and questionnaires to help you determine what you need to do, online applications, FAQs, and more.

In fulfilling legal requirements, your state’s website is your best friend.

Register Your Name

After you choose your agency’s name, it’s time to register it with the state (and any local municipality if necessary) under the legal structure you’ve chosen. Research the process on your state’s website or the SBA. Usually, you can easily register and pay necessary fees through an online portal on your state’s Department of Business’ website. To get started, search on your state’s website or type in a quick search online, e.g., “Register LLC in [your state].”

File for a Tax ID Number

Apply online with the Internal Revenue Service (IRS) for a free Employer Identification Number (EIN), also known as a Federal Tax Identification Number, to use when you file your agency’s taxes. You need an EIN if you’re registered as a corporation or partnership. You can use your Social Security Number (SSN) if you’re registered as a sole proprietor or single-member LLC, although you can apply for an EIN if you’re an LLC of any type. Fill out the questionnaire on the IRS’ website to determine whether you need an EIN if you’re unsure.

Register and License as a “Business Entity”

Besides holding your individual license in your state, your agency will need one, too. Register as a “resident business entity” with your state’s insurance commissioner’s office.

In addition, you will need to hold agency non-resident licenses in all states where you, as the business owner, hold an individual non-resident license. Besides that, you’ll need to hold both individual and agency licenses for any states where your future downlines will sell. Carriers require both to be eligible for overrides. You can obtain both individual and agency non-resident licenses from other states’ insurance commissioners’ offices or, better yet, head over to the National Insurance Producer Registry, a one-stop resource for obtaining, renewing, and managing licenses.

Apply for Any Other Required Permits & Licenses

You may need a general business permit or other licenses to operate in your state, county, or city. You can find this information on your state’s website. If you get confused, don’t be afraid to email or call state department contacts for answers.

Choose a Physical Location

You also need to make a decision about your business’ location. You have three options:

  • Operate from your home
  • Rent an office space
  • Buy an office space

Your home will likely only work if you plan to run a small agency and have the room to comfortably do so, like a separate entrance into a finished basement space partitioned off for your business. Clients might not want to feel like they’re just visiting one of your agents at home, so consider setting up any home office space with a separate entrance, if possible, and make the area seem as “office like” as you can.

Although running an agency from your home might save you money, you might want more flexibility in location and size. If so, you can either rent or buy office space. Consider down payments and rental security deposits when factoring the price of office space into your start-up costs, and don’t forget the price of furnishing any office space, too. Office furniture could cost you thousands of dollars for higher end desks and chairs. Additionally, research the possible locations. If you rent or purchase space, make sure it’s in a well-established and traveled part of town that’s easily accessible to your clientele.

Write a Business & Marketing Plan (Include a Budget!)

Every new business needs a plan (especially when you have your downlines depending on you). A formal business plan will give you a clear sense of purpose and direction.

In your plan, we suggest you:

Every new business needs a plan (especially when you have your downlines depending on you). A formal business plan will give you a clear sense of purpose and direction.

If you plan to source capital from investors or donors, it’s important to show them your knowledge of the market and how you will fulfill your clients’ needs. They want to see that their money is going to something that will help others, not just to fund some fancy online software you plan to use or your lease payments.

If you need help writing a formal business plan, you can employ the services of a consulting firm or experienced freelancer. Check out SBA’s website for lots of useful tools, too.

Financial Projections

When determining your budget, draft one for start-up costs and one for ongoing expenses. How much money will you need to bring in monthly to make this business viable?

Your projections of start-up costs should include enough money to run your business for three to six months while you get it off the ground. Include line items such as:

  • Rent (including up-front deposits) or down payments
  • Utilities and grounds maintenance
  • Wages for any W2 employees
  • Necessary insurances
  • Technology (computers and software)
  • Consulting or website services
  • Business license and permit fees
  • Office furniture and equipment
  • Marketing materials to announce your business’ launch

Budgeting a cushion of three to six months will give you a financial safety net as you turn your attention to recruiting downlines, obtaining agency-level contracts, seeing clients, and selling policies.

A budget for monthly operating expenses should consider:

  • Advertising & marketing
  • Payroll
  • Technology, including telephones
  • Property & liability insurances
  • Loan repayments & interest
  • Taxes & renewal fees on any licenses or permits
  • Office supplies
  • Rent or mortgage payment
  • Utilities
  • Any membership fees to agency networks

Search online for free budget templates, pay for a comprehensive accounting software (with budgetary options), or hire a CPA, bookkeeper, or online service to help you create a budget and track expenses.

Purchase Necessary Insurance

You’re in the business; you know the importance of insurance. Protect your new agency with these recommended (and sometimes required) policies:

  • Errors and omission (E&O)/professional liability insurance: Protects against lawsuits related to accusation of errors or oversights
  • General liability insurance/business liability coverage: Protects against claims of bodily injury or property damages
  • Commercial property insurance: Covers damage to the physical premises, equipment, furnishings, supplies, etc.
  • Commercial auto insurance: Covers any company vehicles, if any
  • Cyber liability insurance: Protects against the high cost of rectifying damages incurred by a data breach or malicious software attack
  • Workers’ compensation insurance: Required if you have any employees; covers medical expenses if an employee becomes sick or injured on the job
  • Health insurance: Only required if you have more than 50 full-time employees; if fewer than 50, you can participate in the Small Business Health Options Program (SHOP) or provide a stipend to help cover health plan costs

While we recommend all of these options, some, like E&O and workers’ compensation, are required or very likely required. Check with your state for any mandatory policies.

Decide Which Technology to Utilize

To run a modern agency where your downlines can excel, you’ll need to load up your belt with efficient, powerful online tools. Think about and set up these options now, so you have adequate time to learn and use any tools yourself before trying to train your downlines on them and your agency gets busy meeting with clients.

To run a modern agency where your downlines can excel, you’ll need to load up your belt with efficient, powerful online tools.

Customer Relationship Manager, Enrollment Platform, & Lead Software

If you’re an already established independent agent, you’re likely using a customer relationship manager (CRM), online enrollment tool, and perhaps lead program. If you aren’t or have been more apt to use paper applications or carrier enrollment portals, consider upgrading your approach with streamlined and integrated technology.

Many field marketing organizations (FMOs), like Ritter, offer free or low-cost options where you can keep track of clients, quote multiple types of products, and submit enrollments all in one place. Lead generation software may be integrated into CRMs and enrollment platforms or be stand-alone programs, depending on the FMO, but it’s likely there’s at least some integration (e.g., import your lead’s info into your CRM when they become a client).

Accounting Software

If you plan to hire someone else to manage your finances, you won’t need to take this into consideration, but if you plan to track expenses yourself, set yourself up for success from the start by choosing simple but comprehensive accounting software. You don’t want to be playing catch up at the end of the Annual Enrollment Period (AEP) or beginning of the Open Enrollment Period (OEP), trying to track the year’s expenses and send them to your CPA to file taxes.


Although setting up a website can seem daunting and time consuming, it’s an essential marketing tool for your agency, not only for potential clients but for potential downline partners, too. Today, more than half of consumers don’t trust a business that doesn’t have a website.

Luckily, you don’t just have to fashion a website out of thin air. Check with FMOs to see what kinds of services or recommendations they offer. Ritter, for example, can provide you with a simple client-facing site (and enrollment tool) called Shop & Enroll. We also partner with AgentMethods, a company that builds websites for agents and teaches them how to maintain and update it. There are various other options, too, like freelancers or DIY website builders, so you can find the one that works best for you.

Find a Partner

Starting your own agency is a big undertaking, but you don’t have to do it alone. Find the help you need to lay a strong foundation that will serve your business for many years to come. We suggest working with a mentor, professional consulting group, and/or an FMO. Some FMOs, like Ritter, provide ample resources and assistance to agents starting their own agencies. In fact, we have a dedicated agency team ready to walk you through all these action items, plus help you recruit and train downlines, acquire agency-level contracts, and more.

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After you’re through these agency fundamentals, you can turn to recruiting and training downlines, obtaining agency-level contracts through your FMO, implementing your marketing strategies from your business plan, setting up appointments with clients, and watching your agency grow.

You can learn about all this and more in our free eBook, Developing an Agency — Your Guide to Getting Started!

We’d love to help you set up your new business! Register with Ritter for free to access all our sales support and tools, including personalized help from our agency team.

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