What you want will only get done if you make it an A+ priority. Jack Fries tells you how a business plan can reward you with survival, planned growth, and profit.
WHY PLAN?
As the manager and/or owner of your agency, you know that every task you undertake on a daily basis should bring you one step closer to the completion of an overall agency plan.
Why plan, you ask? It’s no secret that there’s a very strong consolidation movement within our industry. Five years ago there were 55,000 independent agencies. Today there are estimated to be somewhere between 40,000 and 43,000. This fact alone suggests that there needs to be a tremendous amount of planning within the ranks of the independent agency system.
The fact is, however, that only 10% of us have a fully developed written plan that each staff member is aware of and following. That leaves 90% of agents at a critical time in the insurance industry without the necessary planning tools to get to where we want and need to be.
The most frequent excuse we hear for not planning is that an agent has tried planning in the past, only to have the circumstances change so drastically that the plan becomes meaningless. That’s all the more reason to plan!
It’s better to have a plan and have to change it than to have no plan at all. If you were taking a trip along a planned route and came to a detour for a bridge out, while you would change your route, your destination would remain unchanged. The same analogy holds true for your agency.
As a matter of fact, the reason that these agents give for not planning (constantly changing conditions in the insurance industry) is the main reason why planning is so important. We must plan for the effects of competition, changing market conditions, economic shifts, and more importantly, for the continuation of our agencies, whether by perpetuation, sale, or a merger/cluster.
Finally, we must have a plan for profit because of the ever-increasing cost of automation and such everyday overhead expenses as group health, training, and education. In reality, the reasons to plan are as endless as the individual needs of each agency.
WHO PLANS?
No, you don’t have to do all the planning yourself. Encourage your entire staff to provide all of the input they want. As long as the plan remains “your plan,” they’ll help you with it as much or as little as they believe it affects each of them personally. If, on the other hand, they see the plan as “my plan,” you can expect a much higher level of cooperation and concern.
We like to involve everyone on down to the part-time file clerk. It’s surprising how many good ideas come from the people who actually do the jobs. However, be prepared to have the air let out of your tires! If your people give you honest feedback, they’ll develop ideas that will surprise you. That’s okay. The important thing is to get them started on the road to planning. The sign of a truly professional owner/manager is the ability to listen, refine, and implement.
The final planning step is to pull your key people together and put in writing all the input that they’ve developed. Organize a plan that can be implemented by using an Action Plan form that defines each task, assigns it to an implementer, gives it a priority, and sets a date for its start and completion.
When you’ve completed your plan, you have a right to feel pleased that you’ve accomplished a tough task — you’re now part of the 10% of agencies with a plan to succeed. But your real work actually begins now. The key to making the plan work is your own personal follow-through. What you wanted will only get done if you make it an A+ priority.
The reward for your effort will be survival, with planned growth and profit.
One of the major benefits of planning can be summarized by an agents’ seminar I attended that featured a panel of insurance company representatives. Their conclusion was that agents who have a written business plan would almost always receive an appointment ahead of agencies that have failed to plan. In fact, the company representatives concluded that agency planning and perpetuation planning were the two most important considerations they look for in an agency appointment once they’re satisfied that they can get the premium volume commitment.
A good agency plan shows insurance companies that the agency can produce the premium volume it has committed to and will remain in business. This means that the company’s book of business is protected as well.
THE PLANNING PROCESS
Planning involves five steps: (1) analysis (2) understanding objectives (3) determining assets and course of action (4) informing agency personnel and companies of the course of action, and (5) writing the plan.
1. Analyze the Available Data
To analyze your agency data, you must collect it. Although some of this can be done by using the agency’s management system, this isn’t always possible. I’m amazed at the weakness of some report features in the computer systems sold to agencies; they seem to have been developed by people who have never owned or managed agencies. This factor can be one of the most difficult challenges to overcome.
If you can’t get this data from the management system, it needs to be uncovered the old fashioned way — by manually counting, asking, and assembling a wide variety of information: production and account data; computer data and usage; sales strategies and results; agency procedures and policies; communications; customer service; agency organization; financial position; and business planning.
2. Understand Your Agency’s Objectives
This seems easy enough. Most agency owners have similar mental pictures of their objectives: Increasing the value of their business and providing themselves with higher income. Although these are laudable goals, very few agency owners ever attain them because they fail to invest the needed effort. Your challenge is to identify the essential interim steps for the agency to achieve its main objectives.
3. Determine Your Agency’s Assets and Course of Action
Your first asset is your agency personnel. Grade each person, including the agency owner, on how they currently perform their job, using a scale of 1 - 10 (10 being the highest and 1 being the lowest). Then grade each person from 1 - 10 on what they could be if they were properly trained or managed. Anyone who falls under a 7 on this scale should be guided toward a career adjustment. If the employee is qualified for another job in the agency, a job change might benefit both you and them. However, you must be prepared to replace non performers.
Other agency assets include location, relationships with carriers, customer base, Internet presence, etc. You need to consider all of these before determining your course of action. This determination, when written, will become the agency’s Business Plan, or “Course of Action.” This plan will be a dynamic document (a road map if you will) that you’ll continually update and change; if used properly, it will ultimately lead the agency to a far higher level of success than that of your competitors.
4. Inform All Personnel and Companies of Your Course of Action
Once you’ve set the Course of Action, discuss the changes with all agency personnel and ask for the support of your companies. Put a positive spin on all proposals and make sure that each participant knows what part they’ll play in the re-engineering of your business.
According to an old business adage, “If you keep doing what you’ve done, you’ll keep getting what you got.” One definition of insanity is, “Repeating what you’ve done in the past and expecting different results.” Because change is difficult for the human psyche and must be reinforced continually until new habits are developed, keep soliciting responses from employees and company personnel to ensure that everyone remains “on track.”
5. Write the Plan Needed to Attain the Established Objectives
The final step is to reduce the plan to writing by creating an Action Plan and establishing regular follow-up to make certain that everyone stay’s on the same page all of the time. In other words, it’s time to follow up on the plan. Do this on a monthly basis — without fail. Without regular follow-up, you’ll see little change.
Everyone knows that you can’t take one golf lesson and then join the PGA Tour. It requires hundreds of lessons, practice, and regular coaching to attain this level of success. The same holds true of agency operational changes: Owners and managers must provide regular follow-up and coaching.
CONCLUSION
By applying these steps and disciplines, you can not only change direction, but also transform the “culture” of your agency. You might also enjoy a reduction in your premium. In any event, writing and implementing an agency business plan will certainly boost your productivity, improve customer relations, and markedly increase the value of your agency significantly.