Two recent milestones in my life made me realize just how fast time passes. I sent my oldest child off to his second year of college and I celebrated Oak Street Funding’s twelfth year in business. It seems like my son should still be in middle school and Oak Street just opened its doors with only a few employees. But he now walks the campus of my alma mater and Oak Street is very different from even three years ago in terms of size, sales and capabilities.

If we’re not careful, we’ll look up and an entire year will come and go in what seems like weeks, in retrospect. Two or three years can be gone in a flash and we’ll wonder where in the world time went. Sometimes it’s only when we reach milestones that we stop and reflect on progress and how closely we’ve achieved our goals. We ponder how well we’ve raised our children or closely we’ve aligned our business with our vision cast years before.

Hopefully, we don’t make a habit of waiting for major events to occur before we are prompted to reflect on and measure progress in our personal or professional lives. If we do, we may find we’ve severely missed the mark and it’s too late to make up for lost time. There are no “do-overs” in many areas of life, especially in business. We have opportunities to change directions when we know we’re off-course, but they typically pale in comparison to the opportunities we have when we’re just starting out and everything is fresh. One of the best ways to avoid finding ourselves in regretful circumstances when we didn’t properly respect time is to develop and follow a strategic plan.

While some of you are just starting out, most of you are likely veterans of the insurance business looking to your next phase. Some of you are even preparing to retire. Regardless of your stage, you’re still a business owner or an agent who needs to either continue operating at your current level to maintain what you’ve built or grow to expand, increase profitability or position your agency for sale or succession.

It may seem like a rhetorical question, but does your agency have a strategic plan that is regularly evaluated and revised to meet the results you desire? If yes, are they written with goals, steps and action items or do they exist in someone’s head?  It’s difficult to achieve goals that aren’t in writing — hard to plan and execute activities, monitor progress, assess effectiveness and more. It’s also much more challenging to budget for activities and market your business on a continual and consistent basis.

Agents and brokers should develop a strategic plan that addresses short-term and long-term goals.  Whether you’re a small business or fairly large, planning is critical. Too often, business owners make the mistake of thinking business planning is more suited for larger, complex organizations, but it’s just not true. The potential consequences of not planning can negatively impact every area of your company regardless of its size, from finances to human resources to sales.  Some effects are obvious — you can miss out on short-lived opportunities, fall behind the competition, de-motivate your employees because they don’t sense direction or purpose, and fall short of revenue targets.

Other consequences are more subtle and can catch you off-guard. One of the biggest dangers, for example, is that you can be ill-prepared for change. If there’s one thing I’m certain of as a business person, it is constant change. Owners must go through planning and evaluation processes to identify changing factors that may impact their organization and how they do business. They need to know how and when they will react and what resources will be necessary to respond appropriately. Online insurance aggregators are growing; larger companies are acquiring more and more smaller agencies, giving those agencies more capabilities; carriers are introducing new, tougher revenue and retention requirements, certain products are softening while others continue to harden, and commission schedules are changing, to name just a few shifts that can quickly set new changes in motion.

What’s more, you can set your business up to fail financially when you don’t plan. Creating an operating budget and sticking to it is an important business practice. Most agents start an agency because they have an aptitude for sales, but they don’t necessarily have a strong accounting background and may struggle with business finance. Consequently, they may neglect to plan, monitor and control revenue and expenses. Cash flow almost always suffers when owners lack a detailed understanding of the agency’s financial condition. Agencies should invest time and resources to ensure their business is in good financial shape and that cash flow is adequate to cover unexpected expenses. This will also help the business thrive and position it favorably should there be a need to access capital or make other adjustments due to market changes.

A strategic plan is critical to reaching your goals and fulfilling whatever vision you’ve cast for your business. But a plan has to be developed and executed in the right way so it actually serves as a roadmap to guide you to your desired destination. Plans should extend beyond visions and big pictures. They need to include goals and action steps with dates, expected results and estimated dollar amounts. They need to be reviewed and tweaked on a regular basis and include systems of accountability. Even if funds are scarce and new growth initiatives aren’t possible for a time period, a strategic plan will still help to keep an agency focused in the right direction and keep finances on track.

Developing strategic plans doesn’t have to be complicated or costly. Online resources offer a host of tools and information to help you get started. A host of templates can be used to guide planning and dashboards are available to help you track and share key performance indicators. At the very least, start with something simple and build upon it over time until it’s more comprehensive. The world of insurance changes at a fast clip and time passes quickly, so make sure business planning is a key part of your operations.

About Oak Street Funding

The materials in this paper are for informational purposes only.

This article originally appeared in the November 2014 issue of Rough Notes Magazine.

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