Build vs. Buy an Agency: Organic Growth in Rising Interest Rate Environment

Now that interest rates are rising again, it's time to re-examine whether buying an insurance agency is the smart choice for growth or whether building an agency makes more sense.

While lots of factors come into play when agents want to start their own agency or an owner wants to expand, it generally comes down to three questions:

1. How much time do you have to grow your business?
2. How much sweat equity are you willing to put in?
3. What is your exit strategy when you're ready to retire?

For nearly a decade, we had some of the lowest interest rates in modern history. Money was cheap, and it made sense to finance a merger or acquisition by borrowing. The cost of borrowing used to be around 5 percent (prime plus 1-2 percent), but as prime moves closer to its historical average of 7 percent, your borrowing costs could jump up to 9 percent.

This leads me to my first point: How much time do you have...