TOP 10 LIST OF THINGS TO CONSIDER WHEN STARTING A NEW AGENCY
1. MISSION STATEMENT. A mission statement might read: 'Our mission is to identify and serve specialty markets that have availability, price, and ancillary service needs (e.g., loss management and loss control) that are not currently being met well or at all. By doing this cost-effectively, we can achieve satisfaction and ultimately profit. We will begin with an industry with which we have knowledge and access: restaurants.'
2. OWNERSHIP/FINANCIAL STRUCTURE. The structure adopted must be appropriate, legally and financially sound, and tax-smart. This step would also include the development of a perpetuation plan and development of working relationships to ensure productivity and security among the founders and partners.
3. MARKETING PLAN. Reaching your markets is critical. Your plan could be (1) distributed through a national restaurant association, (2) endorsed by the association as we approach clients accessed by the association's mailing list, (3) based on a systematic marketing campaign, and (4) staffed (internal and production) by people who are experienced in the restaurant business.
4. CARRIER CONTRACT AGREEMENT. Focus on finding carriers that demonstrate commitment, financial integrity, market stability, communication skills, and coverage flexibility.
5. ORGANIZATIONAL STRUCTURE. With operational and automation plans in mind, consider determining the organizational structure of the agency.
6. PRO-FORMA BUDGET AND OPERATING FINANCIAL PLAN. To find and allocate financial resources, you must know what is needed and whether the profit will support the endeavor. Why not do this earlier, you wonder? Because you can't plan income and expenses until you have described the sources of income and the necessary expenses of organizational and marketing activity.
7. CAPITALIZATION & FUNDING SOURCES. Determine probable funding sources, which will include your own pockets, traditional bank sources, capital investors, and carrier financing.
8. LOCATION. Location is a logical result of decisions included in the marketing plan. For a new venture, you might decide that dependence on the National Restaurant Association could mean joint tenancy in their office building or a location nearby. A national focus would mandate either wide distribution of offices or just a central location if you would be operating with heavy automation support.
9. OPERATION PLAN. Workflows and carrier technology availability would be determined at this point. Automation tools, either off-the-shelf or custom-designed, could be identified and acquired.
10. STAFFING. Factors important would include: (1) written job descriptions, (2) careful employee selection based on a commitment to client service, and (3) appropriate aptitude testing to ensure the hiring of employees who are skilled and well-suited to their roles.
FOR THE EXISTING AGENCY: GIVE YOUR AGENCY A PHYSICAL
Listed below are a series of self-diagnostic questions corresponding to the top-10 headings above.
1. MISSION STATEMENT. Is your mission statement still relevant to the clients in your geographic area? Has the geographic area been expanded due to the agency's burgeoning reputation or telemarketing capabilities?
2. OWNERSHIP/FINANCIAL STRUCTURE. Is your agency's structure still smart in light of current laws? Are new equity owners needed to enliven the organization? Might valuable producers expect an equity position? Are buy-sell agreements in place? Is funded life insurance sufficient to cover current value? Do you know the current value?
3. MARKETING PLAN. An agency marketing plan should be revisited, tweaked, or seriously revised at least every six months. Continued monitoring is often planned but seldom carried out. If that's your agency's case, is your sales program less successful than it could be?
4. CARRIER CONTROL AND AGREEMENT. These agreements should be reviewed at each renewal. Consultants and national agents' associations will be happy to review them for you to be sure the deal is fair and in line with other carriers' contracts. Do the contracts reflect, for example, hold harmless provisions that relate intelligently to new ways of doing business-for example, interactive interface and download?
5. ORGANIZATIONAL STRUCTURE. Is your agency's organization current with technology? For example, is everyone a salesperson, or are some just paper-pushers? Have you analyzed whether new work processes with carriers (e.g., download, single-entry transmission) will affect your structure and how you work? Have you planned what your structure will be and built relationships with carriers that support it?
6. PRO-FORMA BUDGET AND OPERATING FINANCIAL PLAN. Budgeting is a continuous process. Most initiatives-new automation system, concerted sales campaign, fax-on-demand program, etc.-take money. Is there investment capital (from retained earnings, ideally) to fund such new programs?
7. CAPITALIZATION AND FUNDING SOURCES. Marketing plans rely on upfront investment. New computer systems can bring big payoffs, but only if financed in the first place. Is your agency's relationship with bankers strong and constantly nourished 'just in case'?
8. LOCATION. Are current office sites cost-effective? Would clients from acquired branches really mind if you consolidated your operation? Do you really know their opinion and ideas, or are you just assuming? Do you really need that cross-town location to stay ahead of the competition? Are you unnecessarily limiting your marketing area when car trips and/or telemarketing could expand your pool of prospects?
9. OPERATIONAL AND AUTOMATION PLAN. Are current workflows direct and simple enough to allow payback from automation? Are they focused on serving the client well or bending over backwards to accommodate carriers?
10. STAFFING. As your agency evolves into a marketing and servicing organization, what happened to old-timers who were hired as paper-pushers? They've served loyally and well; how do they fit into the organization now?
Reprinted with permission from Automated Management Group, Inc., Boulder, CO.