How to Set Up Your Brokerage
So, you’ve decided to take the plunge. What next? There are two basic ways of setting up an insurance brokerage either a sole trader or a limited company. There are pros and cons to each option and lots of advice is available to help you choose which option is right for you.
Setting up a limited company is an easy process and can be done online at minimal cost. There is an excellent Companies House guide which will take you through the process. If you are setting up a company it should be noted that if the word Insurance is in your name, for example ABC Insurance Brokers Ltd, this is regarded as a sensitive name and will require FCA approval before Companies House will register it. Your chosen name will also need to make it clear that you are not an insurer so if you want to include ‘Insurance’, you will need to include ‘Broker’, ‘Services’ or something similar.
Every business needs a plan. This does not need to be a long and tedious document – after all it is what you do that is important and the best plans in the world will not lead to success unless the execution is good. However, the thought process; how are you going to get business, researching your market and competitors, planning your campaign, marketing/networking etc. is important.
Understanding your cash flow is vital. In starting your own business, you may be exchanging the certainty of a salary for the unpredictability of what business you will win. Your planning should help in establishing when revenue is likely to come through, however it is important that enough allowance is built into your projections to allow for the lack of certainty. The cash outlay involved in forming an insurance brokerage will need to be closely monitored and be influenced by the model you choose Directly Authorised or Appointed Representative. There are lots of helpful sites available containing lots of advice to get you started with your plan including Gov.uk, Princes Trust and Start-up Donut