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STRATEGIC PLANNING FOR INSURANCE AGENCIES – PART ONE

How to run your agency in a ” 7 Habits” way

to integrate success with personal satisfaction.

 

Many readers understand that we strive to operate our consulting firm (and our personal lives) on the basic principles of The Seven Habits of Highly Effective People (Stephen Covey).  We have found that if we focus on the basic principles that Stephen explained in his seminal work we are BOTH personally and professionally successful and, more importantly, our personal satisfaction with our efforts and results is very high.

The fact that Covey’s principles dovetail with most of the key business principles validates this work and simultaneously explains WHY Strategic Planning is a common sense way to progress your agency without the stress of overly aggressive goals without substantiation beyond simple growth.

Creating a Strategic Plan documents your intention for your agency for the next five years.

What we have found over 50 years of trial and error is that, excepting incidents like 9/11 or nuclear accidents, we can see about five years out for projection purposes (personally and professionally).  Too much can change economically over 10 years to validate longer Strategic Plans with the exception of retirement planning and Succession and Perpetuation Planning that should begin 10-15 years before the expected incident.

Mission and Vision Statements

Using Covey’s 2nd principle, ‘Beginning With the End In Mind’, we create Mission Statements (a set of business goals and expectations) and Vision Statements (a set of personal goals of how we want to be viewed in the long term) WHICH ARE DIFFERENT FROM THE WAY WE ARE CURRENTLY ESTABLISHED.  The reason we don’t use today’s view of the business or of our personal views is that the only thing we can guarantee is that THINGS WILL CHANGE.  If not, your business or personal life is in entropy – also a position of change, but natural change as a process of degradation , personal or professional.

If you look back to five years ago and find that your agency and your personal life is exactly the same as it was then, it is time to become alarmed because degradation always trends toward disorder and is just moving toward a tipping point – never a positive position and one in which you will lose or lack control over the future.

Habit 3 is to Put First Things First.  A MISSION STATEMENT defines how you want your business to change over the next five years.  This dovetail the personal needs of the owners of the agency with the goals of the agency necessary to accomplish the goals of the owners.  This is the statement that may be private or public and talks about your expected growth, profitability, staffing levels, clients served, territories served, product lines and mix, etc.

Habit 1 is to Be Proactive.  Proactivity is defined by Personal Vision.  A VISION STATEMENT defines how you want to be viewed by your most important audiences, 1) Your Owners, 2) Your Staff (Yes, your staff is more important than your customers for a variety of reasons), 3) Your Clients, 4) Your Partner Carriers, 5) The General Public.  These statements will address the quality issues, personal satisfaction, professionalism, community service, quality of clients (loss ratios), etc.

STRATEGY DEVELOPMENT

If you believe you are doing everything you need to do to arrive at the points of your Mission and Vision within the next five years either you have not stretched yourself sufficiently to reach your potential or you have no need for Strategic and Tactical Planning.

But most agents who create Mission and Vision Statements that advance their businesses to achieve their personal goals for themselves and their families will need a set of Strategies.  A Strategy is that which has to be done differently than in the past in order to accomplish your future goals.  Each Action Step (an activity statement) of the Mission and Vision deserves one or more Strategies in order to assure you that you are doing all that is needed to achieve your Mission and Vision.

LONG TERM GOALS LEADING TO YOUR TACTICAL PLAN

A Tactical Plan is your Plan for the next twelve months.  As you identify each Strategy you should determine what needs to be done in stages in each of the next five years in order to arrive at the point of the Mission Statement within that Strategy.  The lowest level of goals for all of your Strategies should naturally become the Objectives of your Tactical Plan for the next year.

If you look at the bottom level of goals for each strategy and cannot rationalize if and how you can accomplish those Objectives in the next year, you are obligated to temper your Strategies so that you reach a level of goals for each of the next five years that is achievable through your personal and financial assets.

For instance, if you are a $1 Million revenue agency that has grown by 2%/year over the last five or ten years, and have created growth strategies supporting a goal of 100% growth to $2 Million within the next ten years, the Plan only works if you are willing or able to do that which is necessary to grow your agency naturally by 15% (14.8699%) or artificially by acquiring businesses to build your business to its desired levels.  If you can’t accomplish the activities by year, your Plan is not realistic and you need to temper it down to levels to which you are willing to address your physical and financial assets.

The Mission, Vision and Strategies define the Long Term Goals and actions needed to accomplish the goals of the business and of the business owner.  The next article in the series will address the ACTIVATION of the Strategic Plan through the Tactical Plan – that which must get done in the next year in order to achieve the stepping stones toward the position you desire in five years.

We at Agency Consulting Group, Inc. stand ready to guide you through the process of Strategic Planning or to facilitate your organization’s plan.  Either way our goal is to educate you and your staff to create, evaluate, and manage your own plan so that you can use our services supporting your objectives rather than re-organizing your team to accomplish them.  Call us at 800 779 2430 with questions or for assistance.