We’re asked frequently how to form a successful insurance agency. And while the answer seems painfully obvious that the number one thing you need is sales, that’s only part of the overall picture.

Most agencies–and other sales businesses–fall short of expectations due to a lack of planning in four areas. So, how do you keep your good intentions on track?

Sales

Sales are a critical piece but planning how you’re going to sell is equally important as making the sales. Whether you’re using online leads or having face-to-face discussions with prospects, what are your sales objectives? What number of activities are needed to reach those objectives? How do you free up your prime selling time so you can achieve those objectives? It’s very easy to get stuck in your office, handling the multitude of other issues outside of selling–let that happen and you’re destined for mediocrity at best.

Financial

Are you capitalized to the extent you deem necessary? The only way to know if you have capital available is to create a proforma for your business, including all costs incurred, on a month-by-month basis, along with expected (not hoped for) revenue. Take into consideration the time lag between the sale and receipt of revenue on direct bill policies. Do you have a line of credit? Are you maintaining a trust account for premium dollars? Do you complete an in-depth review of your income & expense statement every month? How about the balance sheet? These foundational practices are all critical to your success. And the good news is, once they are in place, they require minimal maintenance.

Employment and Human Resources (HR)/Legal

This is likely the biggest area where you will encounter problems. This includes how you’re dealing with payroll and payroll taxes, to licensing, to employment agreements and producer agreements. Do you have financial controls in place? Are you compensating producers in accordance with a written agreement? Most agencies we see do not have an employee manual. Are you using a CPA to prepare your taxes? Do you have your attorney review legally-binding agreements before you sign them? Do you have any idea if you are following HR guidelines that are up to date? Every person in your agency is either your biggest potential asset or your biggest potential liability, and you determine this by setting standards in this area and sticking to them.

Business Operations

Every agency needs an agency management system to keep track of clients, policies, and revenue but few use their systems appropriately. Getting rid of the paper files and having everything available on a system is very efficient, and having it backed up offsite is a must-do. Procedures that keep input consistent are critical, and a written business plan is crucial. To the extent that it is possible, carrier downloads into your agency management system are incredibly useful. Unnecessary touch costs time and money that should be spent in growing your business.

Do you see your agency falling short in any of these areas? Let’s talk!