| SUCCESSFUL ANNUAL PLANNING by Catherine Oak Follow this basic planning annual process annually — and watch your sales and earnings grow. Your agency needs to run on the track of its annual business plan. Believe it or not, fewer than 10% of agencies have workable written plans. Such a plan is essential to effective management that will lead to an improved, more efficient, and more valuable, agency. A successful business plan must answer three important questions: 1. Where is the firm today? 2. Where does management want the firm to go tomorrow? 3. How can it get there with the resources available? To start the planning process, owners and key managers must answer the first question, determining the agency’s underlying strengths and weaknesses. The annual business plan should capitalize on the strengths of the organization and minimize or eliminate its weaknesses. Turn the major weaknesses into opportunities, some of which should become the agency’s goals for the coming year by working out a strategy to reach each goal. ANNUAL PLANNING MEETING: THE NUTS AND BOLTS Hold an annual meeting of key managers and agency owners, preferably off-premises, to develop the plan. A retreat-type atmosphere is the most effective. At least for the first meeting, it might be beneficial to have a third-party expert (such as a consultant) attend or moderate the planning meeting. An outside consulting firm can provide a moderator, keeping the ideas flowing and the meeting on track. Above all, the consultant can offer expertise on what works in other agencies, while providing an objective look at your business. This strategy meeting should focus on a self assessment that uses group discussion and consensus to determine the strengths and weaknesses of the agency in nine primary areas: 1. Profit 2. Growth/Business Development 3. Personnel 4. Management and Organization 5. Compensation 6. Accounts Receivable/Money Management 7. Markets 8. Accounts/Book of Business 9. Workflow These nine areas cover most issues that face management in streamlining agency performance, productivity, and profitability: Profit - How has it changed over time?
- How does the firm compare to others of similar size?
- What expenses need to be controlled?
- Which expenses are nonrecurring, non-operational or not necessary to maintain the book of business?
- What is the true profit available to spend in the budget, prior to giving owners perks and bonuses?
Growth/Business Development - What are the best sources of new business?
- Is there in-house expertise in certain classes of business?
- How can attrition be better controlled?
- Can existing accounts be further expanded?
- Do producers need more support to increase sales time?
- Are producer motivated?
- Does the firm need a sales plan?
Personnel - Are there turnover problems?
- How can the quality of service and support staff be improved?
- What kind of training and education is needed?
- Would job descriptions help?
- Can employees move up in the organization?
- Is there a good personnel manual?
- Are performance reviews effective?
- Is there a good screening process for new employees?
Management & Organization - Are management responsibilities among owners segregated properly?
- Do middle managers have the qualifications and authority needed to carry out their responsibilities?
- Is communication flowing well throughout the organization?
- Can staff meetings be improved?
- Is work delegated down to the least costly qualified employee to handle?
- Is there a good Procedures Manual that spells out the 'firm's way' that can be used as a training tool?
Compensation - Is there a good salary administration program in place with salary ranges by position?
- Is pay fair for the work performed?
- Are there incentives available for the better performing employees?
- Are performance reviews tied to salary increases?
- Are salaries and benefits competitive for the area?
- Is the producer compensation plan effective and profitable for the firm?
Accounts Receivable/Money Management - Are collections good?
- Are bed debts a problem?
- Is the collections procedure written and communicated well to all employees?
- Is premium financing used effectively? Binder billing done?
- Is investment income what it should be?
- Should direct bill be used for some commercial accounts?
Markets - Do market relations need improvement?
- Is there a need to be concerned about loss ratios and volume commitments?
- Do markets need to be consolidated?
- Are additional new companies needed?
- How can 'preferred' status be achieved with each carrier?
- Are certain types of businesses targeted that are attractive to the firm's carriers?
- How can the marketing/placement process be improved?
- Does centralized marketing need to be established or refined?
Accounts/Book of Business - Is there a heavy concentration of business in a particular line of coverage or class of business that makes the firm vulnerable?
- Should the firm specialize or generalize?
- Is a low average account size in personal and/or commercial lines adversely affecting productivity?
- How can larger accounts be written?
- Are key accounts tied to the producer or the firm?
- Does a better job need to be done to develop existing accounts?
- Does the mix of business need to be changed (e.g., write more Life/Group insurance, less personal lines, fewer small commercial accounts)?
Workflow - Are producers delegating service work?
- Are assistants to CSRs being utilized?
- Are the talents in the firm being used?
- Are there bottlenecks in the workflow process?
- Are procedures spelled out in writing?
- Is there uniformity from desk to desk?
- Any communication problems?
- Is the office designed to effectively move the paper?
- How can the computer be better utilized?
ACTION PLAN Once you’ve determined the strengths and weaknesses of the agency from an analysis of these nine primary areas, prioritize the weaknesses. From this prioritized list, select opportunities to be turned into goals for the coming year and years to come. Identify the steps needed to accomplish these goals. Write down the steps so you can communicate them to the people affected. Assign responsibilities for accomplishing the steps in the required time frame and make these assignments part of each person’s performance evaluation. Monitor progress on the steps at least quarterly, or, preferably, in monthly staff meetings. Adjust the steps as needed to take into account changes both internally (within the agency) and externally (factors outside of the agency’s control). These external factors include market cycles, competition, local economy, the social and legislative climates, etc. CONCLUSION It’s essential to plan your agency’s future course Competition is keener than ever, expenses need to be well-controlled, market cycles continue to cause havoc, and value is at stake. This annual self-assessment process is the key to business planning. If you don’t know where you are, there’s no way that you can plan for tomorrow and know how to get there Follow this basic planning process annually, and you’ll have a successful journey to an improved, more efficient, more valuable, operation. Take the time to plan ahead. Catherine Oak is a principal with Oak & Associates, P.O. Box 2047, Glen Ellen, CA 95442, Phone (707) 935-6565, Fax (707) 935-6515, e-mail [email protected], or visit www.oakandassociates.com. |