Preparation for Writing a Business Plan

Introduction

Purpose

This document will grow as we learn more about our business.  This will be were we write questions and answers in an effort to learn in an organized way.  Our learning will help us improve the agency’s performance in several ways and help us write a business plan to maintain the improvements we begin using this summer.  Writing the plan will help us learn and work smarter.   We are using some of the steps on page 16 of Orientation for Business Planning.  Be sure to accomplish step 3 as soon as possible.  It is fundamental.  We can use what is collected here to create a rough draft of a business plan to be completed later.

From Orientation for Business Planning

What have you read so far?  We are more than halfway through it.

Here are questions based on its contents: 

q    What large-scale action plans (strategies) should we develop for interacting with your suppliers and your customers order to achieve long-term goals?

q    What specific actions (tactics) are required by your company’s circumstances in order to implement the strategies you described above?

q    What groups of tasks (activities) do your teammates need to accomplish so your tactics will satisfy your organization’s needs?

q       What assignments (tasks) should be scheduled with target completion dates? 

§     As every satisfied customer you speak to for a referral.

§     Ask every dissatisfied customer for the chance to make things right.

§     List descriptions of the types of groups of people that use your products.  (e.g., local builders*, real estate sales offices, car dealers, new move-ins, newly licensed drivers)  After your list and descriptions are complete, write down the names of each person or company described on your list. 

§     Prepare a list of everyone the agency used to insure in the last three years.  Determine who might be a prospect you should call on.  Determine three or four smart ways to prepare to use the list for prospecting.  Prepare two or three ways to approach people on the list.

§     Is there a medium-sized piece of land you should consider developing into a mobile home park, a single-family dwelling subdivision, etc.?  Real estate development and insurance sales go together well in many offices.  

 

 *  Builders can be your clients and a great source of referrals.  Should you try to insure your builders’ model homes?  Can you create a quote for each builder’s typical home and then create information packets to give to the builders with a tailored quote for their typical homes in each packet?  Having a statement of your front-line underwriting requirements, with a disclaimer, is essential to this program.  Please contact a builder to: 

1.     explain this new service you are developing,

2.     learn what the replacement cost was for the last home he built and what his average replacement cost has been,

and

3.     set a tentative appointment for approximately two weeks into the future to review what you develop to make sure he’s comfortable with your rough draft and he will use it on his prospective clients.

 

§     If your current team does what we (you and I) agree they should do, then you’ll see you can afford more help and need to hire them. 

§     “Staffed” can be any of several arrangements and it can vary from employee to employee depending on their functions.  You could pay someone to work part-time.  You could pay someone to go on sales calls the commission your agency gets when sales are made.  You could pay Lynn sales commissions and servicing commissions when she sells or services policies.   

 

Think of the previous statements as activities and remember, strategies are implemented as tactical plans are executed.  Tactical plans are executed as activities are performed.  Activities are accomplished as tasks are completed.  Plan to do the tasks you need to accomplish so your activities will give you a tactical advantage in strategic ways.  You are at war against weak competitors who serve your prospects poorly.    

 

As explained on pages 2 and 3 of Orientation for Business Planning, please write a description of your business (what is the essence of what you do?).  Think and then write while you think*.  Business plans should help people think better so they work smarter and produce more favorable results after planning in better ways. 

 

If you think the “service our agency provides makes it stand out above the rest” without making sure your customers agree frequently, you are deluding yourself and working to go out of business.  Make sure your customers know and appreciate your “service” so they will be more loyal in more rewarding ways.  What are you or should you be doing to get credit for the good that you do?

 

*  We are getting ready to create the parts of business plans described on pages 4 through 6.  What you type up during the next 30 days will be replaced as you learn more and get better at communicating. 

q    The description requested above will help us write up the purpose/mission of your organization, teams, partnerships, or individuals. 

q    The description requested above will help us develop strategies to be used to accomplish you organization’s purpose/mission.

q    After a rough mission statement and strategy descriptions are created, we will develop descriptions of tactics to be used to accomplish your strategies.

q    We will create a calendar or time line listing the actions to be used to accomplish each strategy you need to pursue.

q    We will write up descriptions of the actions to be taken with details like who is in charge, who will do the work, and how will the work be done. 

q    To do lists will be developed with deadlines for each person on our teams. 

 

As explained on page 3, please write a list of the things you think the plan should include concerning directions and explanations.  What diagrams, descriptions, and lists should be included?

 

As explained on pages 7 through 9, how do you want to proceed from where we are now?  What do you want to do next?  Can any of your markets or professional associations give you copies of other agencies’ business plans or templates used to create business plans?

 

We need the following illustrations so we can see and therefore understand better:

q      a timeline showing deadlines for tasks to be completed

q      a matrix showing several types of information about our markets (e.g., names, marketing reps, usefulness, evaluation measurements, profit-sharing thresholds/goals, profitability (Y/N))

q      a formula calculating how you will reserve enough money to feel secure enough to trigger hiring a _________ to being doing ____________ so you can delegate less profitable tasks and begin performing more profitable tasks

q      diagrams of the work processes listed on page 10 of Orientation for Business Planning

 

We want to make sure your business plan answers the following questions persuasively: 

q    Will reading your plan gives your employees a clear understanding of what your organization is trying to achieve and why it does what it does? 

q    Will your employees be enthusiastic about their team’s goals? 

q    Will your employees see how their tasks contribute to achieving your plan’s goals? 

q    Will your employees be able to do their work so well that they will feel satisfied with what they’ve accomplished each week? 

q    Will your plan enable your employees to achieve their professional goals?

q    Will your plan help your employees trust each other? 

q    Will your plan help your leaders foster open communication that is respectful of differing opinions which results in new and better ideas?

q    Will your plan help your employees hold people accountable for the results they produce? 

 

As explained on pages 13 and 14, what processes (work activities) should you diagram so you can improve how work is done and make sure it is standardized? 

 

Is how your people should use phone logs documented?  Are they documenting each call’s caller, date, time, topic, and follow up?

 

Are uploaded payments checked nightly using a receipt book logged with agency check numbers?  Is this process documented? 

 

Is each policy written checked by the licensed producer who wrote it?  What are your policy underwriting and issuance steps? 

 

Do your lists and diagrams clearly communicate what processes (work activities) should be performed consistently.   Most agencies’ main work processes include:

q      Responding to a prospect asking for a quote.

q      Responding to a client asking for a change. 

q      Responding to a client complaining about service, price, etc.

q      Prospecting for new clients (preparing to approach prospects, asking them for information so you can give them a quote, and persuading them to accept your quote and the conditions of your coverage) 

 

Do you agree?  Should any of these be reworded?  What types of processes can be added (What did I miss?)  If your documentation is logical and correct you will grow your book of business profitably and with out E&O losses.  Think about how each process is performed.  What can you and your team do to improve on how each process is performed?  Is your only option to “show up for work and do what we know how to do” or are there smarter things that should be done starting next week, next month, or next year? 

From Your Market’s Representatives & Underwriters

Order five-year loss runs on Excel spreadsheets from each market.  Make sure each loss includes risk characteristics as well as loss details and you get them in the next two weeks to give us time to see what is missing and order improved loss runs.  We need Excel spreadsheets to be complete and very easily sorted so we can look at the information in several ways and find patterns, trends, etc. to learn what is going well and what needs improvement.  

 

How “competitive” are your markets/insurers when compared to other insurers serving the agency?  Are all the insurers’ rates helping or hurting the agency?  The word competitive, as used here, is defined as being no more than 8% higher than the highest competing insurer serving the agency. 

 

Are the all insurers’ coverage features and benefits competitive?  The word competitive, as used here, is defined as being very comparable with other insurers serving the agency. 

 

What measurements are the markets/insurers using to evaluate the agency? 

 

We need to have measures and trends for: 

-      accident-year loss ratios for the agency,

-      retention ratios for the agency, and

-      this year’s percentage of new business compared to last year’s new business without including new policy holders gained as a result of book roles. 

Have your Marketing Reps or underwriters sent you any diagrams showing how your loss ratios, retention ratios, and percent of new business are trending? 

 

Have the markets’/insurers’ loss-ratio measurements been adjusted to exclude things like officially recognized catastrophes, unrealistic loss reserves, amounts being subrogated, etc.? 

 

Have all markets’ representatives made sure the agency has up-to-date materials?  

 

How do the markets/insurers give rewards for agency performance?  For example, if new business growth in the previous year was 8%, are rewards given predicated upon exceeding the 8% by a realistic and specific percentage?  What are the markets’/insurers’ goals/expectations for the agency?  Your response to the “measurements are the markets/insurers using to evaluate the agency” questions on the previous page will help with this subject. 

 

How well do the markets/insurers serve the agency’s new applicants?  Is processing of applications and endorsements taking less than three business days 85% of the time?

 

Is the agency doing well at: 

q      Proper placement – submission of applications for programs and coverages that the risks are eligible for.  Make sure your underwriters give you credit.  Make sure your difficult to place risk clients appreciate where you can take them for coverage. 

q      Proper modification or movement of risks -- accomplished by semi-annual reviews of policies with losses and/or MVR activity exceeding some predetermined threshold.  How proactive or reactive do you want to be when risks’ insurability deteriorates?  Do your markets give you a heads up or do they surprise you and your clients?  

q      Timely updating of account information. 

 

If so, is the agency getting credit for such good work from the markets/insurers (e.g., are exceptions to guidelines given freely)?  If not, what can be done now and in the next 60 days to remedy all deficiencies?  If your relationship with underwriters is built upon credibility, they will trust you when you ask for accommodations.  If you are seriously prospecting for new leads and want to increase your book of business be open minded enough to ask for accommodations constructively.  Know which markets may be persuaded to give you accommodations when you propose mitigating risk management programs so unattractive risks may be more acceptable to underwriters who trust you.  Success is within your reach if your knowledge, ambition, and credibility are managed to extend your ability sufficiently. 

 

Does the agency retain or loose personnel the markets/insurers have trained for the agency?

 

Is this process working well for you?  By that I mean: 

q      Have you gained insights from thinking and gathering information?

q      Are you putting 2 and 2 together in new ways? 

q      Are we building your understanding and helping you envision what your team can and should do to be more profitable?