The key to the VIA is that each participating agency becomes a profit center for the generation and retention of a book of business. The owner responsible for that profit center earns their income from the success of that profit center. The owners responsible for each location are the stockholders of the VIA. The agents trade their agencies for stock in the VIA.
Many VIA’s begin as a central market facility. All carrier appointments become appointments of the cluster. Profit Center managers may still have their preferred markets, but they are now legitimately appointed with all carriers. The VIA uses the power of this business combination because it is far stronger than having common markets.
Revenue growth is the goal of each of the VIA owners. Their revenue growth results in greater income for them as Profit Center Managers. However, the expense reduction that results from centralized and specialized agency functions often generates more profit for each of the owners than through revenue growth. Professionally managed service centers cost less and are far more productive than supporting a full service and administrative staff at each agency. The administration and service functions of the VIA are centralized and centrally managed as is its automation and administrative functions.
MERGERS VS. VIA
Many mature clusters end up merging as the owners realize the economies of scale they can achieve. The owners’ roles are diluted, and they essentially become producers. The owners get paid for their books of business and enjoy a piece of the excess profits from the combined agency every year.
The VIA is established to maintain each office as an owner’s location and as a profit center for the organization. Each owner is responsible for their profit center and earns income from the production and profitability of their specific profit center.
If you have a group of agents who wish to cluster, who are informally clustered and would like to mature into the next level of organization or would like to consider a VIA, please call us at (800) 779-2430. We will visit you to meet with the entire group and identify your priorities as well as which form of organization would best suit the short term and long term goals of the owners.
Reprinted from the PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 20 years. Call for information about the content of this article or PIPELINE subscription information. E-mail email@example.com – Website www.agencyconsulting.com