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.

USINESS

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.”