Creating An Agency Business Plan

Aaron Hammons, Co-President / CEO

Agents don’t plan to fail, but they fail to plan.

As we head out of the summer season and enter into fall, I can imagine most of you went on some sort of family trip or vacation. If you’re like my family, we begin planning months in advance of where we want to go, where we want to stay, and most importantly, where I’m going to eat! All this takes time and effort, yet the end result is memories and hopefully a great experience.

I can remember during many previous MEAA Annual Meetings where the late Kieth Sims would ask, “who of you will be going on vacation this year?” Almost everyone raised their hand. He would use this example, “when you leave your home, you know if you’re going to turn left or right out of the driveway.”

I would then follow Keith and ask our agents a similar question, “how many agents had a formal business plan?” Almost no one raised their hand. Much like your vacation, your agency, regardless of size or longevity, needs a business plan.

When we talk to start-up agencies or even those with a ton of experience we hear ideas of how new business will be written, but not a plan. So the question you may ask is, “Why do I need that?” Two main reasons:

  1. You need to know where you want to be in 1 year, 3 years, 5 years, and even 10 years: This needs to be consistently updated and reviewed with new and adjusted objectives.
  2. You need to check, double-check, and modify your agency’s workflow: As you continue to grow, workflows change as technologies improve.

Alright, so you probably see the need to formalize or at least put your ideas on paper, now the next question is how or what do I include? Your business plan should include 3 main things.

1 Executive Summary

I love reading a company’s mission statement that is found in the Executive Summary. I’ve read large, small, and even companies that are no longer in business.

Simon Sinek wrote a book several years ago titled Start With Why. I highly encourage you to invest in this book, it’s an easy read and really makes you think within your organization, “why do we do, what we do?”

So know your mission! Also, within that summary you should include a vision statement, this can be relatively short, but know where you want to go. If you have these already, awesome! However, you may need to tweak it as the years go by. Look at Apple, they are no longer a computer company and continues to expand on the business landscape.

Lastly, share this with your staff and let the public know. They’ll let you know if you’re not holding true to your values.

2 SWOT Analysis

In college, we were required to include a SWOT analysis when we wrote business plans or analyzed where a corporation is in the marketplace. This step is critical because it requires a lot of thought and self-awareness. A basic SWOT Analysis should include:

  • Strengths: What do you do well? What sets you apart from your competition? Do you have access to unique carriers, do you specialize in a niche market, or is your customer service exceptional?
  • Weakness: What do you not do well with? What does or may hold you back? Maybe you don’t know commercial lines or technology is not up to par.
  • Opportunities: What is out there that you can capitalize on? Can you add a new carrier, emerging market, subdivision development, etc.?
  • Threats: Things that could harm you and your business. These are influences outside of your control (i.e., COVID-19, shifts in the economy, weather-related claims, etc.)

This analysis should influence the direction you move your business in and will keep you ahead of the current trends.

3 Finances

The final piece to include are some financial estimates and plans. This will take a little bit of guessing and forecasting. Take your weekly and monthly expenditures (rent/payroll/consulting expenses/utilities/etc), along with your revenue coming in, and look at what your profit and loss may look like.

With your plan, expect to grow as well to increase your revenue numbers. The key question is, “how much growth?” Well, that will depend on your overall marketing and sales plan and how you plan to acquire new clients. Are you spending most of your time servicing or are you really out there driving new business? This will have a major impact on your overall growth numbers and help you begin planning for the next few years.

Here at Mountain Empire Agency Alliance, we will be entering into the 2022 planning season (I know! Crazy isn’t it?!) with each of our partner carriers. We will also take time this fall to reach out to each of our member agencies to talk about how these carrier plans affect them. We are a business ourselves and will complete this planning process internally, but we also work closely with each of our agencies to plan for the years ahead.

So here is your homework: take a minute to talk about your plans and goals over a few years. Put pen to paper and create a business plan. Together, we will help and assist each agency achieve its goals regardless of its size or how long it has been in business.

Looking for a business partner that is looking out for your best interests? Talk to my team here at MEAA to get started.