Jump to content
Sign in to follow this  
Guest Vanilla

Becoming an Owner

Recommended Posts

Guest Vanilla

I have a potential opportunity to become an owner of a TPA firm (small non-producing) in the next 3 to 5 years. I was hoping some owners out there might share some advice:

1. Is there anything you wish you had done or concentrated on before becoming an owner of a TPA firm?

2. What is the biggest challenge you face?

(Quality employees? Keeping up with the demands? Staying profitable? Growing the business? Work/life balance?)

3. What is the best thing about being an owner?

4. Would you do it again? (Become an owner)

5. Any other miscellaneous advice?

TIA!

Share this post


Link to post
Share on other sites

1. If I had become and enrolled actuary, I would have saved a lot of money in outside actuarial fees.

2. Most important, how are you going to get new business? It is a relationship business and you or someone has to be great at this end of it.

3. All you list are challenges you will face, which is the "biggest" will vary depending on what's going on at the time. When times are good, attracting and retaining good employees is a challenge while the business rolls in. When times are slow, bringing in new business is paramount.

4. Best things about being an owner - get to do it your way, it makes you a better pension consultant to other business owners as you will share the same experiences. You should make more money than as an employee and hopefully you are building equity that you can eventually convert to cash. You end up on the good side of the tiered gateway allocation.

5. I would do it again in the time period I did it. I don't know if I would do it again now. The race to the bottom on fees is making this a much tougher business.

Other - if you do own the business, remember it is an investment from which you should derive an appropriate risk-adjusted return. You should budget for a profit in addition to a compensation for yourself that is equivalent to what it would cost you to hire yourself in the market. We targeted a 20% profit - but it took us a number of years to get there. Be sure to go to the NIPA BMC every January. There are other organizations such as Vistage that provide support for business owners. You can hire technical help, but you need to define the vision for your firm and drive to fulfill that vision. Try not to borrow a lot of money otherwise the lenders own you and control you. Design your fees and billing such that you get paid as the work is done, not after the fact. Enforce a strict policy on collections and stop providing additional services when a client is in arrears. Always carry E&O insurance, it is a cost of doing business so budget for it.

  • Like 3

Share this post


Link to post
Share on other sites

In order...

1) Nothing I can think of.

2) Employees without a doubt. You are no longer one of them. Remember that.

3) Flexibility

4) Yes

5) Keep continuing education as a priority. Also, sharpen up on marketing/communication skills. Finally maintain an ethical standard from which you will not deviate. Some people think that as business owner you can do whatever you want. Well, never forget that there is right and wrong, and doing wrong can cost you a lot of money!

Share this post


Link to post
Share on other sites

Never stop selling your services. Selling for some is drudgery. If you don't love it, your TPA will founder as soon as you stop selling. 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...