10 Ways to Build a Brokerage Whilst Still Under Covenant
Jul 29, 2019
Worried that you could not set up in business as a self-employed Appointed Representative because of your covenant? Here are 10 points that may change your point of view.
1. Does your covenant have a non-compete clause, or not? If it does, could you possibly initially work in a field that does not compete with your employer? If it doesn’t and it just has a non-solicitation or non-dealership clause, you may be able to set up and seek clients from day one, as long as these are not clients ‘belonging’ to your employer. Check out the situation by consulting with a lawyer.
2. If setting up your own brokerage as an AR will deliver significant financial benefits in the longer term, do you have enough household income to get you through your covenant period, assuming that you cannot compete with your employer for a while? Could you do a different job for the period in which you are under covenant, or even take that gap-year or sabbatical that you have meaning to fit in?
3. Planning a business is something you will be able to do during a covenant. Use this period of time to plan our approach, determine your targets and build up useful contact details. Get everything in place for D-Day – the day your covenant expires, so you can hit the ground running.
4. Could you offer any consultancy to other businesses that do not compete in the same types of insurance as your employer? This could potentially earn you some money whilst you are under covenant.
5. Do some competitor analysis. Your employer is probably not the only insurance supplier in their market, so look at what the others are doing, how they market themselves and what they offer or don’t offer. How could you do things better, or differentiate yourself in your chosen market?
6. Start putting a website together, making sure that you have all the keywords that you need to attract customers. If you are legally allowed to work in a non-competing field initially, build your website around a non-competing service, or type of insurance. You can always add to it once out of covenant.
7. Head out to networking meetings to build up contacts that you could potentially work with in the future, or whom you can work with now in a non-competitive capacity. With time on your hands, this is a highly productive use of your spare hours.
8. If approached by any clients in such a way that could potentially cause you a legal problem, document everything that happens, to be able to show that you did not elicit contact. Beware of any email communications or text messages to such clients.
9. Start preparing ‘expert view’ blogs or podcasts, which you can use as soon as you are legally able to.
10. Sign up for some of the free-to-use or low-subscription design and video sites such as Canva.com and Promo.com and create some marketing materials that you can use when you are out of your covenant.
Remember to respect the terms of any contract that you signed, not just because it is the legal thing to do, but because it is also the ethical way to proceed. Being restricted by a covenant can at least give you the thinking time that many new businesses do not enjoy.
If you become a Gauntlet appointed representative, you will quickly be able to place risks thanks to Gauntlet’s extensive access to market, so income should start to come in very quickly, enabling you to grow and start to recoup any income that you lost whilst under covenant.