2001 Best Practices Study

Analysis of Agencies with Revenues Less Than $500,000

SIIA was a viable perpetuation option. Most have taken steps to put in place the necessary legal documents to address death or disability. Many of the older principals had one of their children or key employees poised eventually to take over the business. They had a perpetuation plan in place to transfer both ownership and leadership over time and had made it known to other family members, carriers, and other affected parties what the basic details of that plan were. The biggest issue they felt they had to overcome was how to cash out and yet leave the business viable enough for the next generation to survive. B USINESS P LANNING When asked, most of the agencies in this study group would indicate that their business planning is a weakness. However, the top agencies in this group of agencies do engage in annual business planning, albeit using a process far less complicated and strategic than that used by larger agencies. Typically they set and monitor agency production goals and, even if not completely documented, have an idea of how they are going to achieve the goals. Their business planning often includes marketing strategies such as advertising via local communications media such as the radio, newspapers, cable, and sponsorships of community activities. They prepare budgets and use year-to-date and prior year comparison to stay on target. When looking at any material investment they plan ahead and put money aside or ask carrier partners for assistance in order to level out the cash flow.

“When we wanted to bring on a new producer we knew it was going to impact on our financial position significantly. We knew we had to plan that investment very carefully, but because we did, we were able to ask for and get help from our insurance companies.” “I came from the life & health side of the business and started this agency from scratch. A business plan was critical. We update it annually. And yes, it includes both production projections and a marketing plan.”

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