Look at your W-2 for the last year – that’s just the beginning of your worth. A few of us are embarrassed by how much we have earned in compensation during the year. That’s because we know we haven’t “earned” that compensation – we wouldn’t pay someone else the same amount to do our jobs. But, in fact, when we take the profits from our agency and make them earnings, it is justified by the extent of our profitability and our ability to manage our companies to that level of success.

Others are shocked by how little they have taken home based on the number of hours worked, their productive work effort compared to their employees. These are the poor owners who work for their agencies instead of their agencies working for them. And, believe me, there are as many or more poorly paid agency owners as overpaid agency owners.

But the common aspect of WORTH is that personal earnings (with or without profit distribution) is only one third of your worth.

The second part of your worth is the Tangible Net Worth (TNW) of your agency. TNW defines the “book” value of your agency and includes your retained earnings as a part of your Equity. If you take everything out of your agency every year, your TNW may be very low. If you have purchased your agency or others and have substantial intangible assets, the TNW may be a negative number and actually takes away from your worth. This is one of the reasons that we try to keep clients from taking every penny out of their agencies every year. They are ‘robbing Peter to pay Paul’. If they invest that extra money, they maintain the integrity of their value. But, for the most part, those extra earnings are taken for normal living expenses. They are spent, not saved. Left in the agency they become available for growth initiatives (acquisitions, producers, marketing, etc.) and are dollar-for-dollar increasing your WORTH as a business owner.

Then, of course, the value of your agency’s book of business is a real but intangible asset. If you died, became disabled, wanted to or needed to retire, each and every one of you have a value imbedded in your business (besides its cash position). The only way to tell what that value is lies in an Agency Valuation.

As you know Agency Consulting Group, Inc. is a leading appraiser of insurance agencies in the United States. Our process, while complex in the process is simple in concept. We determine what you or someone else could earn from your agency over a prescribed period of time. We do so based on your unique qualities and limitations, your geographic benefits and challenges and the market conditions inherent in your recent history and projected future.

Agency valuation is an art and a science. We show you exactly how we calculate your value based on historical trends and growth assumptions (of both revenues and expenses). It is an exercise that many agencies do on an annual basis both for estate planning and as a measuring device of the progress of their WORTH as a business.

Now that the year has wrapped up, we encourage you to contact Al Diamond, Agency Consulting Group, Inc.’s President or David Diamond, the Marketing Director to identify the cost and benefit of a valuation for you. You will be surprised by the cost and benefit of getting an initial valuation. Re-valuations annually are usually only 1/3 of the cost of an initial valuation since we already have your data within our system and only need to update it. We can be reached at 856-779-2430.