Accept the fact that some change is inevitable and be prepared to go beyond your comfort zone. Start by assessing your agency's capabilities and then take a hard look at each option outlined below.

ACQUIRING: YOU DON'T HAVE TO BE A MEGA-AGENCY

Over the past decade, small and midsize agencies have found acquisitions to be a fertile path to growth. Many principals, who had for years been content running their own business, never imagined themselves on the buying end.

But the continued lag in organic growth rates and decline in agency values have created the most attractive buyer's market in decades—an opportunity too good for some owners to pass up.

If you want to purchase one or more agencies, be ready to take on more responsibilities and deal with more stakeholders. Then follow these steps:

• Assess your business model and set clearly defined goals, such as increasing revenues by a certain percentage, expansion to key locations and breaking into new markets.

• Define your ideal agency or book to be acquired, considering size, location, carrier and product mix, and leadership style.

• Decide whether the acquired agency will open as a branch office or be consolidated into your current operation.

• Ensure that you have enough cash to cover purchase and transition costs and contingencies that may occur after the acquisition.

As a buyer, you must be prepared for the exhaustive due diligence required on the seller's book of business to determine factors such as client retention, types of clients, loss ratios, carrier persistency, and contingency liabilities and opportunities.

You may also need to build a convincing case for securing additional capital and your ability to repay the debt.

WHEN SELLING MAKES SENSE

If you're closing in on retirement or don't have the resources to invest in the growth of your business, consolidating with another agency could be the right move. But selling to a third party—and relinquishing control of a business into which you've put your heart and soul—is a tough decision that requires careful consideration.

Even if the sale is part of an internal perpetuation plan with a family member or trusted employee, be prepared for significant changes in your work life.

Before selling, create a written agency perpetuation or succession plan. Among the questions you'll need to answer:

• Does the prospective buyer have solid financials and a workable long-term plan?

• How much of the selling price are you willing to take on contingency or as a deferred payout?

• Is the buyer valuing your agency based on projected earnings, not commissions, because they expect to earn a fair return on their investment?

• What percentage of your book will you be able to retain after the consolidation?

• Have you and the individuals who will be running the agency agreed on your role after the sale—even if they're family members?

• Does your gut feeling tell you that the company or individuals buying your agency are the right fit?

TO GROW ORGANICALLY, INVEST WISELY

Many experts predict that agencies' organic growth rates and average revenues will continue to fall in 2011. But if you're committed to building your agency the old-fashioned way—organically, without acquisitions—go for it.

While most small and midsize agencies are scaling back or waiting for the economy to improve, now is an opportune time to invest in your agency's growth.

Start by figuring out what differentiates your business from competitors. Then develop a well-orchestrated plan that capitalizes on these advantages and identifies your best growth opportunities. Your plan should answer these questions:

• Do you have the capital and manpower to sustain growth over time?

• How much are you willing to invest in marketing, technology and staffing so you can compete with the major players, many of which are growing through acquisitions?

• Which product lines give you the highest profitability and the best opportunities for cross-selling?

• Have you analyzed the marketplace to see if some markets have dried up while others may now be ripe to approach based on generational differences, new demographics and other indicators?

If you plan to acquire another agency or grow organically, you'll probably need financing. But don't get discouraged by all the negative news that money isn't available to small businesses. If you've got solid financials, a strong track record and a well-orchestrated growth plan, loans are available at affordable rates.

Look at different lending sources, including non-traditional lenders that specialize in the insurance industry and understand the way you work.

Sometimes the most challenging part of a journey is deciding on the best course to get there. So before you choose yours, honestly assess all aspects of your business.

Determine what's practical, how much you can invest, and how far beyond your comfort zone you're willing to go. Then develop a plan and find the right players and resources to make it happen.