I am considering purchasing an independent P&C Insurance Agency book of business in the burbs of Atlanta, Ga. The owner says that fixed costs are $1000/month. She also said she currently has a book of $450-475k in premium. P&C agents generally make 10-14% on the premium, so monthly cash inflows are somewhere around $3750-5000. The agency does very little advertising (no yellowbook ad). The officespace is located on the square of city that has 6500+ residents. I have no experience working as an agent, but I do have an undergraduate degree in business and currently obtaining my MBA. I have about $20k in an IRA and Roth IRA to possibly spend as a downpayment. The owner wants $35,000 for the business however I think she might be willing to take $30k. Is this a good investment? If so, how should I go about coming up with the $30k+ it will take to take it over?
      Answer1:The short answer: No. And heres why:1. Her financial information is coming by way of undocumented claims. Have an accountant look at the books.2. Office space: How much is she paying to lease it and how much of that is coming out of gross monthly receipts?3.No experience. Your college degree means nothing in the world of business, except it makes you a highly educated employee. I gather you have never sold anything on commission. Its either feast or famine, and a new agent finds quickly what draw means. 4. Do the numbers: She says fixed costs are $1000 a month, cash-flow might be $5000 a month. That means, without including any variable costs (tax deposits, utilities, advertising of some sort, office supplies, etc.) you are down $4000. What does she live on? Does she pay herself a salary? 5. What about the other agents, theres a cost involved for them simply leasing a desk and telephone through your office. Will they stay once the company is sold?Theres entirely too many dont knows for me to ever consider this as a viable business opportunity. The first thing Id recommend, get an accountant in there to find out the real numbers.