The Agency Business Plan – A Road Map to Success

Why Plan?
As the manager and/or owner of your agency, you know that every task you undertake on a daily basis should be one step closer to the completion of an overall agency plan. Why plan, you ask?

It is no secret that there is a very strong consolidation movement going on within our industry. Five years ago there were 55,000 independent agencies. Today there are estimated to be somewhere between 39,000 and 42,000. By the year 2005, the experts are predicting that there will be 20,000. This fact alone suggests that there needs to be a tremendous amount of planning going on within the ranks of the independent agency system.

The fact is, however, that only 10 percent of us have a fully developed written plan that each member of the agency staff is aware of and following. That leaves 90 percent of us in a critical time in the industry without the necessary planning tool to help us 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. All the more reason to plan.

It is 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, you would make changes in your route, but your goals, presumably, would still be the same. The same analogy holds true for your agency as well.

As a matter of fact, the reasons those agents give for not planning (constantly changing conditions in the insurance industry) are the main reasons why planning is so important. We must plan for the effects of competition; for hard market conditions; for economic changes in our area (for example: the massive layoffs by big business or the current economic slumps, etc.); and, more importantly, for the continuation of our agencies, whether that be internal perpetuation, sale of the agency to a third party or a merger/cluster for strength.

Finally, we must have a plan for profit because of the ever-increasing expense of automation and such everyday overhead expenses as group health, training and education. Actually, the reasons to plan are as endless as each agency’s individual needs.

Who plans?
No, you do not have to do all the planning yourself. Your entire agency staff should be encouraged to have all of the input they want. As long as the plan is “your plan” they will help you with it as much or as little as they see 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 is surprising how many good ideas come from the people who actually do the jobs.

I have to warn you, however, to be prepared to have the air let out of your tires. If your people give you honest feedback, they will develop ideas that will surprise you. That’s okay. The important thing is to get them started on the road of planning. The sign of a truly professional owner/manager is the ability to listen, refine and implement.

When you have completed your plan, you have a right to feel pleased that you have accomplished a tough task. But your real work actually begins now. The key to making the plan work is your own personal follow-through. The first time you say, “Never mind, I’ll do that” you’ve undermined your plan. What you wanted will get done, but only if you make it an A+ priority. The reward to your effort is planned growth, profit, and being a survivor agency into the future.

One of the major planning benefits can best be summed up 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 agency 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 are satisfied that they can get the premium volume commitment.

A good agency plan indicates to an insurance company that the agency can produce the premium volume it has committed to and the perpetuation plan that protects the agency. This means that the insurance company’s book of business is protected as well.

How do you plan?
Creating a business plan for the first time seems like a daunting task. Where do you start? As another consultant, Roger Sitkins, once said, “Prescription without diagnosis is malpractice.” The first thing to do is to analyze your existing statistics. It is most important that you know your numbers. For example, what is your current rate of growth/decline in personal lines, commercial lines, financial services, etc? It is important that at least one person on the planning team produces and examines your current results and produces a document outlining the current status of the agency and the statistics for the past two years. Considering the current marketplace, any statistics over two years old are invalid.

The plan should address the various departments/aspects of the agency. For example, Personal Lines, Commercial Lines, Financial Services, Administration, Automation, Marketing/Advertising, Perpetuation, etc. Each agency should select those areas of concentration and avoid overloading their TO DO list. The next step is to conduct a SWOT test on the various aspects of the agency’s business. SWOT = Strengths, Weaknesses, Opportunities & Threats.

Once the SWOT test has been completed, a list of objectives should be created for each department and then those objectives prioritized. When the objectives have been established, it’s time to complete the Action Plan. The Action Plan will list the steps necessary to attain the established goal or objective. The best Action Plan we can think of defines each task, assigns it to an implementer, gives it priority and sets a date for the start and finish of the task.

Once the plan is created it should be shared with the entire staff. Creating a business plan and not sharing it with the employees, is like a football coach creating a game plan and not sharing it with the team. Everyone in an organization must have a full grasp of the goals and objectives and how each individual is to play a part in attaining those goals. Remember, “Goals are the fuel for the furnace of achievement.”

The final step is the follow-up or benchmarking. Benchmarking is the art of comparing yourself between where you are today versus where you want to be or should be. It is imperative that the plan and its objectives be visited each and every month. If necessary, changes should be made to either insure the attainment of the goal or to modify the goal based upon changes in the marketplace or the appetite of the companies represented.

Topics Agencies