Episode 331: The Hidden Formula Behind Every Scaling Agency

Welcome back to the Scale Your Insurance Agency Podcast, the show built for independent agency owners who are done being the bottleneck in their own business. I'm Daniel Metcalf, and every week I'm joined by my co-host, Mike Stromso, one of the most respected operators in the independent agency world. Between the two of us, we bring you the real levers that move a $3 to $20 million agency from successful but maxed out to systemized, scalable, and running without you holding it all together. Here's what we focus on. Mike brings the people side, leadership, team development, niche sales mastery, and a three-piece system that helps agencies build a business worth owning. I bring the machine side. AI, automation, and workflow design that frees your team from the operational drag, eating your margin and your time. Together, we're building a framework that can grow an independent agency 4X to 9X without burning out your people or your checkbook. If you're an agency owner who's tired of growing by hiring, who knows you have a capacity sitting on the table but can't figure out how to unlock it, this is the show for you and your weekly edge.

Hey everybody, welcome back to the Scale Your Insurance Agency podcast. I am Mike Stromsaw. I'm here with my co-host, the one, the only, Daniel Metcalf. Daniel, how are you doing today?

I'm fantastic, Mike. Thanks so much again for another wonderful week. Can't wait to share what we've been learning.

Oh boy. Another wild and woolly week in the independent insurance agency world, but it's been a good week. It's been a good week because there's been a lot of good work going on, a lot of good uh growth within agencies, a lot of positioning of agencies to scale like never before. And so in thinking about how we can best serve you today on the podcast, uh Daniel and I came up with a two-sided equation, okay, because of an agency that we were working with who is right at that turning point. Super, super excited for that agency. So let me set this up for you. So this is an agency that is nearing the 3 million revenue mark and they're ready to go to four and five, okay, but they're stuck. So the owner is in a lot of ways freed themselves up to be the orchestra conductor of the agency, so they're not a first violinist playing an instrument, they're conducting the entire orchestra. So their time freedom has become reality, they've done the work. So that's an encouragement for everybody. Do the right work, keep doing the right work. Okay. So let's position this and the work that they have done. So if you look at the hours that an agency owner has put in in the age, puts in in the agency. Okay. So let's just say it's 50 hours. All right. And we know the normal working hours in a week is 40. I get it. I still work a lot more than 50 because I like to. Okay. But we'll call it 50 hours. And let's say they're investing 35 of those 50 hours as operator hours, meaning they're working in the agency. And they're operating 15 of those hours as the CEO of the agency. Let's jump to what's really happening in the in a lot of agencies right now, Daniel. The operator hours, that agency that's stuck. They're stuck and they can't see their way to the next million dollar stair step. The next million dollar plateau, three million to four million to five million. They're reactive, they're task-based, they're problem solving, they're rescuing clients. How can we help them get unstuck? And how can we use automation and technology to help them get unstuck?

Well, you know my line, delegate to elevate. That if as the owner, if you're only delegating 20% of all those recurring decisions, and the the team still remains dependent on you to make those recurring decisions, that's the difference between those that are stuck at 3 million versus those who can delegate 60 to 70% of those recurring decisions through clear systems, standards, workflows, automation, um, artificial intelligence or training tools or whatever it might look like, by being able to delegate those recurring decisions, that is when you start to see agencies being able to scale. Because then the CEO becomes the director, right? Um the owner becomes the works on leadership development. So, you know, who's going to replace you in each one of those different recurring decisions? Building out systems, creating accountability, culture. Then you can really start to focus on revenue design. And what kind of talent can we be adding? You know, one of our team's theories that we have right now is that agencies should start, should be starting to be collectors of A plus producer talent, licensed talent, right? That is where you're going to start winning the game of AI and automation right now. In one of our previous episodes we were talking about, Mike, which is that if we're going to start combating what's going on from the technology world, you should be in the world of acquiring A plus talented producers that just don't want to run their own agencies, right? But want to feel empowered and want to feel like they're part of the leadership team, and we can go on and on and on. But that where we're starting to see the difference between the op where where the owner is more in the operator seat with a few hours of on the business, where now the few hours in operating and the multi-hours in owning and orchestrating.

Yeah, absolutely. So those operator hours, here's the thought process that I also want to add to the entire equation. From being stuck to being unstuck and scaling your agency. The owner's time or the ownership team's time must shift. And it's a change in thinking, and it's a change in belief. I've learned in self-identity. And I think they're all in play. And it's a it's a change in cultural identity. We're gonna be an AI forward organization. That's a change in culture and identity, right? So all of that must shift, and it starts with leadership and ownership. Okay, that shift must go from doing and deciding, from doing and deciding to leading and multiplying. To leading and multiplying. The split, it looks very different at that three million dollar agency to that five million dollar agency and beyond. So our encouragement for everybody, regardless of where you're at, start thinking like your future agency now and do your best to operate as that agency in the present. That's the definition of scaling. And that's what we want for you. So if you have your hour, if you're at all of those hours and you're stuck working in the business doing reactive work, you want to do proactive work, right? I'm gonna proactively work on my future agency, which is AI-led, right? And make sure that I have the tasks organized with my in my agency, the processes, the systems, and the workflows, as we keep reminding you every single week. Make sure you're building those out consistently and have somebody own those and get away from the problem solving. Let somebody else handle it. And the client rescues. You know what, Daniel? Uh our teammate, uh, Mr. Joel McKinley talks about this all the time. And it's it's pretty blunt, and and a lot of people, I watch them and they have to they stop for a minute and start to think about what he said. He said, if you're not letting somebody else perform the work in your agency, you're stealing from your business. That's a strong statement. You're stealing from your business and you're stealing from their futures because you're not allowing them to grow. So talk about the things that they need to be thinking about in the strategic 15 hours that they're working on working on if they're stuck, Daniel. They can they can dedicate some of their time to working on the business. What kind of strategies for the future and vision for the future and leadership strategies do they need to be thinking about culturally and from that leadership chair to begin to shift over to that scaling mindset?

Well, ironically, I I have them start by um creating a custom GPT through Chat GPT or uh a custom project or or something within Claude or something to that effect of where they can start to actually work through a strategy with the amount of little amount of time that they have, build out a custom agent, tell it about its business plan, tell it, tell it about um who you are as a leader, where you want the agency to go, put the agency website in there, or you know, some of the carriers, whatever it might be, and tell it that you want a strategic partner to help you move from the agency that you're at that where you want to go. Um that gets you into the process of using artificial intelligence and calling yourself AI forward, right? If you're going to that, if you're building that out for yourself and you're going to that every day to help you make some of those strategic decisions, helping you make research decisions, things like that, that already puts you in that AI automation framework. Then the next is that what the time you have left is starting to get your numbers in place. We talk about this in uh in many different places. Like let's get that dashboard, let's identify where, what, you know, how do I compare to other agencies in my at my level and geography and whatever, you know, my mix, whatever it might look like, what are the where do I want to go? Where do my benchmarks need to be? And how do I get myself to those benchmarks? That's creating the vision, sort of, right? So that that creates the vision of where we want to go and using math as a way to be able to do that. And then and then lastly, we start looking at okay, what are tools that I can build to start becoming more of a leader or building up my leadership team? Is that gonna be in the hiring stand? You know, am I gonna have to hire leaders? Am I gonna have to grow leaders? Um, am I gonna have to take my leadership team that I currently have and grow them? There's many different ways we can build that leadership team. And then how are you going to go about delegating all these recurring decisions to each one of those leaderships? So those are kind of the steps that have, you know, if you're in a situation where you can't just fire yourself from the operator at that particular time, these are some of the small steps that we where we use technology as a way to help you start to unlock yourself and unlock some of those hours.

100% agree. And it is a step. And the most important step that you can take is the first step. But the great encouragement is from a strategy and vision and leadership standpoint, as importantly as anything else, you've got to have a plan. You've got to have a business plan that's currently in place, that's documented and shared with the entire team and understood by all. These are the steps that we're going to take. This is your responsibility in the entire vision of the plan and what we're going to accomplish together, and this is how we're going to do it. That way everybody has clarity on each of the steps, and there's no confusion, right? Right. Because when there's confusion, Daniel, especially when we're talking about implementing AI and how we're using it to get people back their time, when they don't completely understand it, they're confused.

Right.

And so it's really, really important that business plan addresses all of that. Daniel, I I've been harping on this a lot lately, and I'm gonna I'm gonna continue to be very loud on this because of our own journey. That business plan and the processes and systems and workflows which are part of that business plan, what kinds of things do they need to be thinking about to put in their business plan regarding AI technology and automation?

Um, so rather than looking at it from a standpoint of where can we insert artificial intelligence or automation into the workflows, it's how, now that we have artificial intelligence and uh automation, how should our workflows look like? Right? How you know how how should they be different? How should they be set up? That's that's really the the flip when you want to talk about AI forward. How are we you know why is it not our go-to rather than just a oh it's uh one of the tools in our toolbox? Um and and that's where that mind shift has to start to start to shift over.

Got it. So it's a cultural mindset shift. So repeat that for me just to make sure that we all got it. Instead of where am I going to put a uh automation technology powered by AI into my business plan? What did you say?

How will I lead now that we have this? How is that going with artificial automation and our artificial intelligence? How is that going to lead this workflow, not just be a partner workflow?

How is it going to lead the workflow? Aha. It's just like, you know, using GPT, CLOD or whatever your favorite tool is, right? Yep. Use it as our strategic thinking partner.

Yeah, let's use a very simple case study. Just for, and this was an exciting, it was it was nerdy and exciting for me because based on some of the work that we're doing, it allowed the it allowed the agency owner who put himself in the seat of they're the chief revenue officer, rainmaker, right? Not necessarily that they're the ones making the sales, they're the ones driving the revenue opportunities for their producers and account managers to right. So we got to spend four hours, and I know it sounds like a lot of time, we got to spend four hours together doing a revenue design on some new business generation. You where where we're saying to ourselves, how can artificial intelligence and automation be the leader, right? Be in the front of running this workflow for us. And um happen to be a commercial opportunity and using artificial intelligence to help us build the list, enrich the list, get it, get that the the list of work, you know, do the research on the list, make sure that we uh understand what our marketing materials are gonna be towards that list. How do we how do we reach out to the list? Like writing in every single step along the way, like a whiteboard session, if you will, remotely here. And okay, artificial, you know, AI is gonna do this, and it's gonna do this, and automation is gonna do this, and this is where the human has to come in. Okay, well, what happens if this happens? And we are roadmapping that out for four hours, and his and we start doing the math together, like okay, that's a hundred, you know, that's a hundred of this type of business, that if we can just get 50% of them over the next six months to um to have a discovery call with us, and we're able to close 30 of those. Here's the average premium that we get from this type of business. And when it's this type of business, the quoting process is all the same, the servicing of it's all the same. Like we don't have to create a bunch of exceptions because we know this business inside and out, and we know exactly what we have to collect. We know exactly so. It was just it was this very powerful conversation where now he feels like he's actually doing revenue design and actually like designing it rather than what do I have to do if this per type of person calls in, or if this type of person calls in, or if this if this scenario shows up, or what happened when we're firefighting, now he was actually looking at more proactive ways of trying to have revenue design. Um and and then what can artificial intelligence do to fill in the gaps where a human isn't needed, or it would take too long.

Daniel, dropping gold nuggets, thank you. So I want to make sure that two points that he just made, and my mind is getting really excited right now listening to that. So using AI to lead the workflow, an AI forward agency, getting unstuck is what we're trying to help with here because we're gonna talk about actually scaling your agency in just a moment. And then Daniel just talked about working with an agency, revenue design, actually designing using artificial intelligence and everything that we have available to us, actually designing how we're going to generate revenue. Isn't that cool? Isn't that cool? That is great stuff. And I I saw it in your eyes, Daniel. They got you really fired up, and I know that's what fires you up. So well done. And appreciate what you do for the industry. So let's talk about the shift. We've overcome the shift. We've got away from the mindset shift of doing and deciding, from doing it ourselves and deciding, you know, making decisions, being the bottleneck, to leading and multiplying. Okay. We're down, maybe you're still working in the business a little bit, but our operator hours have been reduced to 15 hours, and you're investing 35 of those 50 hours as the CEO. So you made the shift. 35 hours as a CEO, 15 as the operator. You're still doing some things within the business. But when you're doing the things in the business, like I heard Daniel say this earlier, you're the director and you're overseeing the systems that operate the agency and making the right decisions, right, Daniel? Yes. Make the right decisions that are necessary to continue to scale the agency. What does that look like?

Well, it looks like many different things. And again, it comes down to okay, I have the leadership team now. I've given over those recurring decisions, you know, I've delegated those recurring decisions. Now what kind of systems do I have to, if I want to go from here at 3 million to 10 million, what systems do I have to have in place in order to be able to service, to sell and service another $7 million? What where do I need to go, you know, what where do I need to focus on? Am I focused on a couple of niches? Where where am I focusing on? Uh the acquisition of talent, like I told you before, another good scenario where talking about, hey, what are some what are ways that we can use artificial intelligence to beef up our uh talent acquisition pieces of it? Finding more A players, getting in front, getting you know, um, getting more A players to sit in the resumes, getting in more uh um interviews, making the interview process more effective, um, being able to review all of those different interviews all in one and analyze it all to find out who they who they are, to get to be the first one to be able to give them an offer, to give them an offer in a comp package that's gonna make them excited, that you know that you're gonna get them validated as quick as possible. Things like you know, you're actually gonna start knowing when you're gonna start making money and everyone. Those are the exciting conversations where you can use artificial intelligence and automation as a way, depending on what what is the main role that you need to play and what do you need to orchestrate and hold and hold accountable. So either you're doing it for yourself to be able to run that, or you're building, you're helping build these systems for the leaders and who whoever's role that is. Hey, if there's somebody whose role it is to manage all the talent acquisition, you're helping you, you're helping side by side with them, hold them accountable, help them utilize the tools, make sure that the outputs of those tools are getting the um numbers that we want, things like that. It's all on how you want to design it. But that's my suggestion is is um the latter rather than the former is how can you sit with your leadership team and figure out how to use the artificial intelligence and automation as a way to help them with whatever they're responsible for in that whole equation of creating those goals. So if it's from three to ten, you have a plan on what you need to do to get to seven, who's who's ultimately responsible for who what different parts of this plan, and how are you holding them accountable and what systems are you giving them to succeed in that role?

Love it. So let's dig in. And I I heard you say something with regard to uh attracting, recruiting, interviewing, and hiring, which we've we talk a lot about still, because it's very prominent out there. But uh have an agency that we serve, and they have used Claude to name an AI tool. And what they do is they use disk profiling. For their teammates and for their future teammates. And, you know, I was just collaborating with uh one of our UPP coaches who used uses WonderLick in their agency. And his talent is, hey, it's what the NFL uses, and I just started using it because of that. And so that's what he uses. Fine. Whatever you use to evaluate the individual to make sure that it's the right talent for your agency. But they've used the AI tools to make sure that it's the right person, right seat in their agency to be meshed with the right team from a personality and ability and skills and everything else standpoint. And it happens just that quick. It's it's magical. This agency uh explained the whole thing to me and how they did it after they learned uh about the AI opportunities out there. Great, great stuff. So it's all about developing those teammates, but it's the right person, right seat. So use the AI uh in every possible way. Leadership development, continue to develop your leaders and make sure that they're in the forward-thinking way, an AI forward thinking for your agency. That's what's going to take to get you to the scaling point. Systems design. Daniel was talking about revenue design. Great, great stuff, absolutely critical. But also, as we say, the system design, especially as you're moving towards those higher levels. And Daniel, let's talk about the last thing that's so vitally important. And I'm going to go very vulnerable, transparent here. Um, as we continue to evolve in serving agencies, uh, we have a lot of inner accountability going on as well, uh, as well as accountability that uh we help independent insurance agencies with, with our accountability team. So there's a lot of call-outs going on, if you will. Like, why isn't this happening? Why isn't this happening? Why isn't this in place? Because this isn't in place, we can't get done what we need to do to help them scale. So embrace accountability, build in accountability to your culture, help people understand that it's not a criticism to not know this, to not do this, to not have it in place. Rather, it's something that's part of our journey together. And so embrace accountability because accountability breeds responsibility, but it's back to using AI and the talent evaluation and everything else. So all of this is absolutely critically important. But the difference between being stuck and getting unstuck and being in the scaling mode operationally and from a mindset standpoint, from doing and deciding to leading and multiplying, it's not personality. It's not personality, it's what you choose, and it's a decision, right, Daniel?

It is a decision.

It's what you choose to delegate. If the owner delegates only 20% of recurring decisions, the team remains dependent. The team remains dependent on that person, and you will continue to be stuck. If the owner delegates, I don't know, 50, 60, 70% or more, hopefully, of the recurring decisions through clear systems, standards, and workflows. There we go. Processes, systems, standards, and workflows. The business begins to scale and will continue to scale. Exciting times, eh, Daniel? Absolutely. So, anything to add as we begin to wrap this one up? I have a very cool story to encourage everybody.

Alright, go with the story. I like it.

Yeah, good. You good?

I'm good.

By the way, I want to reiterate something that Daniel said. Use AI to lead the workflows and revenue design. Design how you're going to build the agency of the future. So, we too in our agency business, as we re redesigned the agency three years in a row, there came a point in our agency where our second in command came to me one day. It was a magical moment. And our second in command, her name was JR. She was our second in command and my direct report. We had done the right work. And she came to me one day and we were face to face having a conversation, and she said, Mike, we don't need you anymore. Our current plan has been fully realized. And I thought to myself, what? You don't need me anymore. And I actually said it to her, you don't need me anymore. And she said, Nope. You can go play with your grandkids, you can ride your bike, you can go help other agents grow. We'll let you know if we need you. Ladies and gentlemen, that is a wonderful, incredible place to be. And that's why we are doing the work that we are doing because we want that for you. More than we can tell you, right, Daniel?

Absolutely.

More than we can tell you. Ladies and gentlemen, let's make that magical moment reality for you. If you're stuck in any way, we want to help you get unstuck. We want to get you to scaling mode. And if you want to talk more about that, there's a link here around the show notes. Click that link. Make sure that you schedule an Onyx scaling session so that we can talk about how we can get you unstuck or where are you stuck? What is your future look like? So we can design revenue for you. Isn't that a cool place to be? So that we can let AI lead the workflows and so much more. Daniel Metcalf, great job. YouTube Mike. Thank you very much. And we want to also thank our incredible, amazing producer, the one and only Andrea Wyatt. And for all of you, let's get unstuck. Let's get on to scale. Here we go. Have a great day. We'll see you on the next episode.

That's a wrap on this week's episode of Scale Your Insurance Agency. Quick reminder: everything we talk about on this show is built to do one thing: turn your time into profit. More revenue, more margin, more freedom without adding headcount to make it happen. If something landed for you today, please share it with another agency owner who needs to hear it. This community only grows when good operators help each other level up. Please subscribe, download, and share our podcast and all your other favorite podcast engines. And if you're ready to stop figuring this out alone, Mike and I are both in the field working with agencies right now. Please reach out. Find us on LinkedIn or on our websites, and we'll tell you exactly where your biggest opportunity is to scale. Until next week, build the system, protect your time, and scale the right way. See you next week.