ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

THE AGENCY BUDGETER

As many readers already know (from all the calls coming in asking about our new offerings), Agency Consulting Group, Inc. tries to bring agents at least one new product or service each year to help agencies make more money or grow faster.

Last year we introduced the Agency Valuer, a software package based on Agency Consulting Group, Inc.’s own copywritten valuation process, that permits insurance agencies to conduct their own valuation of their own (or other) agencies. The Agency Valuer has been well-received and our greatest surprise is that many agencies use it to learn how agencies are valued and to help them with their due diligence in mergers and acquisitions.

Later this year we will be bringing you a method of securing your network to avoid problems and to solve those that arise on occasion at a moment’s notice 24 hours/day, 7 days/week for pennies per day. This is VERY exciting and can save agents tens of thousands of dollars a year currently being spent on systems support.

But first, we again draw on a process that we have been using for 20 + years to help agencies understand growth, expense trends and planning profit to produce “The Agency Budgeter” – our initial product for 2005.

Most agency management systems provide a rudimentary tracking device in the form of Operating Statements that track revenues and expenses. Some even have basic comparative budget reports. Most do not have the flexibility to put that information into a form useful enough for agency owners to help manage their businesses. “The Agency Budgeter” addresses the need for

flexible budgeting – you can change budgets any time during the year and The Agency Budgeter will convert to report on the revised budget.

Ability to change category titles – We begin with the Operating Statement revenue and expense categories normal to an insurance agency. But you can easily add lines of revenue and change titles of expenses.

Comparing Budget to Actual on a Monthly Basis

Comparing Budget to Actual on a YTD Basis

Comparing Current Year performance by line to prior year on both a monthly and YTD basis.

Creates a Year-End Forecast of every line of revenue and expense to alert you to income and expense projections every month.

Best of all, reporting is done on a single page for each month (and an overall Budget page to publish the Year-End Forecast at the end of each month).

Why is budgeting important?

Because judging your success by whether you have enough money in your checking account to pay your bills is a survival mechanism, not a success track. You can certainly use this Budgeter to figure out if you’re going to survive to the end of the year without borrowing money (and it will tell you through the forecast WHEN you will need to borrow). But it is much more useful to the agent who is doing things (marketing, advertising, hiring, acquiring) to grow the business and needs to track the expenses concurrent with the growth to determine if the efforts are bearing fruit.

Planning agencies understand the need for budgeting and forecasting. Budgeting involves the expected revenue generation and the expenses (compensation, sales, operating and administration) needed to support that revenue. As you identify marketing, advertising and sales costs associated with planned campaigns, the budget reflects how the expense are expected to be offset by expected revenues from those efforts.

Forecasting, the major part of the Agency Consulting Group, Inc. budgeting process, automatically calculates the projected revenues and expenses at the end of every month based on actual income and expense to date and budgeted income and expense until the end of the year. With an active planning process (and Agency Consulting Group, Inc. can help you plan your agency) and The Agency Budgeter analyzing your budget vs. actual vs. historical performance and forecasting results, you will be able to know early in the year if you will have a strong or weak fiscal period.

Best of all, you don’t have to be a CPA to operate The Agency Budgeter. The instructions are simple enough to fit on one page. If you can read your operating statement, you can operate The Agency Budgeter. The initial setup will take about an hour to input historical data (for comparison purposes). Subsequent data entry for monthly reporting takes about 15 minutes per month.

Please call us (800-779-2430) to order The Agency Budgeter or visit our website (www.agencyconsulting.com) to see what the product looks like and to order on-line (secure ordering through Paypal).