Conventional wisdom says only a crazy man would try to set up a brokerage from nothing these days. Barry McGoun, Peter Faulkner and John Finch ignored conventional wisdom, and a good deal of skepticism from colleagues, to set up BJP in the affluent Berkshire town of Wokingham.
Three years later, their company is taking £6m per year in premium income.
The challenge started when the three men – Faulkner in his early thirties and McGoun and Finch who were self-confessed “no spring chickens” – were working for Helm Group but foresaw change that concerned them.
McGoun, then managing director of the group, says: “Helm was owned by one man who was approaching retirement age. We were worried about succession.”
Following a failed attempt to buy Helm, McGoun, his commercial director Finch and sales and marketing manager Faulkner decided to make a go of their own brokerage. A challenging task, heightened by the fact that McGoun's wife died in the same month.
Using nothing but their own personal finance, and bringing barely any clients with them, they decided that they needed to manufacture leads before they could bring in any sales staff.
Doing it differently
Now the unconventional moves started: they hired three telemarketers instead.
“We bought every Yellow Pages we could, we phoned trade associations – and some actually gave us their membership lists – but then we found a more intelligent database to work from,” Faulkner says. “The telemarketers spent all day phoning numbers on specific lists, generating 400 leads a week.”
After three months, BJP had enough leads to bring in sales staff; three followed them from Helm and they hired another three. There was still no money to pay for account handlers but they were confident of success.
“You can only lose money,” Faulkner says. “If you can live with the worst thing, then you can achieve a lot.”
Shortly after setting up the company, they were approached by long-time contact David Brown, then of NIG, who asked if he could work for them as an underwriter. This led to the birth of Focus Underwriting, of which McGoun, Faulkner and Finch are directors, but it operates as a completely separate entity to BJP.
Brown, who according to McGoun “took a huge risk to come and work for a new brokerage with no customers”, has since been joined by five other underwriters, each with between 15 and 35 years' experience.
Faulkner, who is BJP's marketing and sales director, believes the secret to their sales success lies in knowing every industry in which they sell. “I heavily stress with our sales guys to go in and ask questions so you can advise people properly,” he says.
“We find out about the business, where it's coming from, going to and its risks. It's not rocket science; it's just a matter of doing it. If they don't get small commitments throughout the process, they stop chasing the business. We're very focused about not wasting time. We may get 60% drop-off from leads to appointments, but it saves a lot of time.”
Meanwhile, McGoun said Focus is doing well because its small margin allows it to offer selected brokers, whose insurer market is shrinking, as much commission as they would get elsewhere.
Looking after their staff
They have not yet had to advertise their broking or underwriting services, although they offer commercial combined, contractor's liability, professional indemnity, directors & officers, legal expenses and motor trade products.
There is a great focus in the company on staff development and the only other minor shareholders in BJP are staff. Faulkner adds: “We believe in our staff, we want to invest in the future and we want them to come with us.”
While Finch handles accounts and manages the office as BJP's commercial director, McGoun, as managing director, takes care of the computer systems and oversees Focus.
McGoun says the initial suspicion from the industry that greeted the opening of BJP has subsided. “The industry all waited for us to attack Helm clients and we never did that,” he comments. Faulkner adds: “We've got a game plan. Going after the Helm database wouldn't have been morally right and it would have taken us off the track we were on.”
He believes the next three years will be spent on carefully planned organic growth. “We spend a lot of money developing business for the future, we keep count of the hit rate and we know how many leads we need in 12 months' time – because if you don't know, you won't get there.”