PULSE / Score Business Corner
written by: Gray Poehler
QUESTION: I operate an independent insurance agency, and try to offer a full
range of products to our clients. The insurance business is constantly evolving, which makes it difficult, expensive and time consuming to stay abreast of all these changes. Would I be wise to scale down my operation and focus on a few specialty areas?
ANSWER: You must focus on two main objectives: customer service and
profitability. Unless you are staffed with insurance professionals who specialize in the different product lines, it’s a daunting task for one person to master the complexities of the insurance universe.
Your most valuable asset is your time. The time spent in continuing
education is time taken from sales, marketing and other necessary functions of running a small business. There are individuals who are so consumed with learning they fail to address the other purpose of being in business – to make a profit. I’m not suggesting that you don’t have a duty to clients to keep up with industry changes, but it must be balanced with the other challenges and responsibilities of running a profitable business.
We live in an age of specialization. Professionals of all types carve
out niches within their chosen profession. Insurance is no different. Consider grouping the various lines of insurance into separate “profit centers,” like Personal Lines Auto & Homeowner, Commercial Lines Property & Casualty, and Life, Health & Annuities. If you wish to offer all of these product lines, make sure each profit center is staffed with knowledgeable individuals.
Your bookkeeping system should be able to track income and
expenses related to each profit center so that you can determine if your investment of time and money is generating a profit. Generic expenses like office rent, utilities, telephone, postage and basic supplies can be pro-rated, based on the number of employees assigned to each center. Within a year or two, it will become clear which centers are indeed producing a good profit for the business.
Resist the impulse to try to fix the center that is producing the least
return. Unless there is an obvious solution to the problem, retrain and assign employees to the centers which are doing well.
While this article specifically refers to an insurance agency
operation, the principles apply to any business offering a variety of goods and services. Small businesses, both start-up and established, should construct and maintain a written business plan that includes these concepts.
The Naples Chapter of SCORE, Counselors to America’s Small
Business, is staffed by fifty volunteer business professionals who can assist you in the development of a viable business plan. Contact them at
http://naples.score.org.
About the Writer Gray Poehler is a volunteer counselor with the Naples Chapter of
SCORE, a nonprofit organization that offers free counseling to small businesses. To learn more about management issues facing small business and SCORE’s many workshops, please call 239-430-0081 or visit their web site. Interested individuals can schedule free one-on- one counseling with a SCORE volunteer online at:
http://naples.score.org/mentors.
Questions specifically for the writer may be addressed to
http://naples.score.org/contact.
32 | Pulse Magazine SWFL
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