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Analysis of Agencies with Revenues
Between $2,500,000 and $5,000,000
P
ERPETUATION
“We must get bigger and better if we
plan to stay independent.”
“For many years we never considered
the problems of “repurchase liability” of
aging shareholders. It’s all we think
about now. We want to stay
independent, but also want this to be a
good investment to those who choose to
invest.”
“We accidentally found our
perpetuation in a couple of young
producers who have proven to be
superstars. But we have also made
them very successful. I guess that is
win-win.”
“If you do not actively think about
perpetuation from the beginning, you
will likely end up sold to a bank, broker
or the competition. We don’t want
that.”
The ability to transfer ownership from one group of shareholders to
the next is a challenge for any business. For the agency business,
many have found that the transfer of ownership requires careful
planning and many years to accomplish. Creating ownership paths
for key employees from all areas of the agency is an increasing
element of successful planning.
Many of the leading firms are starting to think about this issue much
earlier, and are incorporating the need to transfer ownership into the
strategic planning process. Younger producers want to know what
the long term plans for the agency are, and whether perpetuation of
the ownership to them is part of the plan.
Finally, many of the firms realize that if reinvestment is not a critical
part of the future of the agency, internal perpetuation will not be
possible.
B
USINESS
P
LANNING
“There is never enough time to plan. It is,
however, one of the most important
things we do. Communication,
consensus among owners and common
goals are essential to our success.”
“Our last round of planning resulted in
a number of major decisions that are
having significant impact on our
clients: we agreed to hire a powerful
claims manager, we agreed to purchase a
new agency automation system, and we
decided to terminate a couple of people
that should have been terminated a long
time ago. They are the best decisions we
have made in a long time.”
“Fail to plan? Plan to fail.”
Many agencies are investing more time and effort in the planning
process that ever before. The strategic planning process is
becoming a defining practice of the most progressive agencies.
The decisions are increasingly tough – whether to hire new
producers, to buy books of business, or to invest in new areas of
expertise – and making a mistake can be quite costly.
Annual strategic planning is increasingly common. Often, the pace
of taking care of customers does not allow for much planning along
the way. Without this time of focused planning, the decision making
process becomes unclear and the focus of the daily business
operations loses its meaning.
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