You have employees that have been with you for awhile and are no longer productive. We don’t know if this is due to complacency on the part of agency owners or out of loyalty to the long term employees. The market tends to address these situations in the long run. We identified an employee at an agency that didn’t seem to have responsibilities that merited their level of compensation. In addition, we discovered the employee was a huge distraction to other employees and actually made their tasks more difficult. The owner was only retaining the employee out of loyalty but terminated the employee when all the facts became clear.
9 ABOUT THE AUTHOR
John Biasiello, president of Biasiello & Associates, has more than 20 years of professional experience in the insurance industry. He serves as a major resource to Sukay & Associates on all client engagements. John has held several senior level positions with large insurance brokers in operations, finance and agency acquisitions. He holds a master’s degree in human resources management, is an adjunct business professor, and an accredited instructor in insurance training and continuing education accredited courses through the Academy of Insurance.
You do not offer any unique products or services to your clients or have any specialty niche business lines. An agency
does not want to become a commodity without any clear distinction from competitors. What makes you different and better? If you can’t identify any differences, how will your customers be able to make any distinction? So many agencies say that their strength is “service” that has become a cliché.
Your revenue is flat or decreasing and your expenses are flat or increasing.
Unfortunately, this statement describes the
majority of agencies in the last couple of years. The soft market has reduced commission levels on current customer bases, new sales haven’t sufficiently offset the soft market or the loss of clients to other agencies, and the economic downturn has dramatically impacted employment numbers. Although agencies have attempted to reduce expenses and don’t believe they can go any lower, we typically find most agencies have missed opportunities for further reductions.
client generates more than five percent of your revenue. We refer to this situation as a “concentration.” Although few would complain about having a very large client who produces a large portion of their revenue, concentrations can cause problems. If an account is lost, an agency can quickly find itself overstaffed and short on revenue. A concentration is similar to a large contingency payment — they are both great to have but you shouldn’t plan on them recurring over the life of the agency.
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Here is the dilemma: Should you sell your agency because of these issues or should you fix the ones you can before you try to sell? Here is the one thing we can say for certain: If you don’t have the passion or the time to fix the issues, why would you wait?
Count how many of these items you have within your agency today. Go to Oak Street Funding’s online poll (www.oakstreetfunding.com/poll) and let us know which ones you have and which ones you have been able to change. We estimate that every agency has at least three out of the ten.
Your top five clients generate more than twenty percent of your revenues or the largest