Contingency Planning

After 36 hours without electricity, I know that my contingency plan, which is supposed to ensure emergency preparedness for the business, is not up to snuff.

• It's not up to a foot of snow and 20 degree temperatures.
• It's not up to hauling firewood from the back of the property (not quite 50 yards) in a bushel tub.
• It's not up to a generator with a pull starter that I'm too puny to pull (thank goodness for helpful neighbors).
• It's not up to a cable Internet connection without power to run the modem and the router.
• It's not up to conducting business from a cell phone that is email enabled but not Windows enabled.
• It's not up to .... okay, enough whining. You get the picture.

My contingency plan needs re-working. My clients were all sympathetic and understanding. We rescheduled a few phone calls and changed a few due dates. How about your contingency plan? Placerville, California, a town of less than 10,000, had at least a couple of dozen insurance agents - none of whom could open their offices. There were downed tree limbs all over the area - some across roadways, some on power lines but others on the roofs of homes. According to the local paper this morning, there was a "moderate" increase in vehicle collisions reported to the local California Highway Patrol Office. You know there were a lot of folks trying to reach their insurance agents or the company claims office, or both.

How would you have fared in this situation?

Need help bringing your contingency plans up to date? Here are a few good things to help you in your planning. If you would like additional help, please feel free to e-mail me to discuss the status of your contingency plans: pam@transformationadvisors.com

Ultimate Sales Planning

Sales Planning is both strategic or tactical. It is indeed a critical part of any strategic plan but the plan itself has to include all the tactical elements as well.
Frequently

The sales planning process should help each producer set personal goals and the action plans to achieve them. And, each individual sales plan should support the overall agency goals and objectives.

Sales isn’t a department–it’s an attitude!
The most profitable and successful businesses are highly focused on new business sales. In the face of economic turmoil, increased competition, and alternative distribution systems, every business needs a genuine sales focus built into its culture. Business development should be part of every individual’s job description. This is the ultimate in sales planning.

Read more about Sales Planning here.

Share Your Vision

Strategic planning isn’t a solo enterprise. At least, it isn’t if you want to achieve your highest goals. Planning without sharing your plan is like building something all by yourself.
Sure, there is some satisfaction in the work itself – and in the finished product. But think about how much easier it goes if you have some help. And there is something much more rewarding about enjoying the fruits of your labor if you share it.
Who you share the work with depends on what kind of organization you have. Managers and key employees, board members or trusted advisors. Look for help from those who can provide input and perspective.
Who you share your vision with goes right to the heart of the plan. Your employees can't help you accomplish your goals if they don't know what your goals are. And they need to know what's in it for them.
Creating the vision isn’t enough. Working the plan isn’t enough. Documenting the plan isn't enough. Sharing the plan – and getting others engaged in your vision – that’s how vision becomes reality.

Planning is Indispensable

Dwight Eisenhower is credited with saying, "Plans are useless, but planning is indispensable.” This makes some people uncomfortable - especially when quoted in the context of not planning. To some, this seems contradictory. It's not. Think about Eisenhower's most famous plan, the D-Day invasion in June of 1944. An enormous amount of planning went in to the preparation to take back France and the rest of Europe from the German's. But D-Day was originally planned for June 5th. Bad weather almost forced the Allies to revise their plan considerably.

A thorough understanding of what it would take to postpone the invasion until the next favorable season, and a real understanding of the risks associated with delaying and proceeding, put Eisenhower in a position to make his decision.

For most of us, the fate of the free world does not lie in our ability to get through the indispensible planning that prepares us to take advantage of opportunities or avoid the risks. It does matter, however. Don't let circumstance dictate your well-being and the well-being of your family and your employees and your customers. So what if your plan becomes useless. And it might. It's the process of planning - the practice of planning - that prepares you to take action when action is needed and to hold back when holding back is the smart thing to do.

We're coming into the time of the year when many businesses start their planning cycle for the coming year. Some of you are probably pretty far along. This has been a year when plans had to be revised. A lot of people were caught off guard - with their plans down, so to speak. For those of you who turned the corner, it was the planning - not the plan - that made it possible.

Change Management and Sales

An insurance agency is a sales business. Sure there is definitely a service component but nothing happens until somebody sells something. If you're feeling the economic pinch, and we all are, then sales - to new customers and to existing customers - is more important than ever. If you're not doing something to improve sales effectiveness then you are going to struggle to make it to the other side of this market.

One of the keys to the effectiveness of any sales organization is total commitment. Every one of your employees needs to be on the sales team. Are they? Is "sales" a department or a state of mind in your agency. If not the latter, then cultural change may be in order. And what does that require? Well, more sales of course.

"The key to successful leadership today is influence, not authority." As much as I would have hated it as a line manager in corporate America, this quote by Kenneth Blanchard says it all. Of course, if you're the business owner you have the authority. But that's not how you get the best from your organization. You have to sell it. My friend Marsh Egan said it very well in this article on "The Convincing Side of Change."

Employees are customers, too. If you don't think so, remember back to the recruiting and hiring process. You (or someone in your organization) spent a good deal of effort selling that prospective employee on the benefits of working for your business. Just as you don't stop selling to customers, if you want buy-in and commitment to new ideas, you can't stop selling to employees.

It never ceases to amaze me that some of the very best sales people in the world, don't use those skills where they would do the most good. Right in their own businesses.

Accountability and Hiring and Firing

Building and maintaining a business where everyone owns their own job takes discipline. An agency owner told me he had recently terminated two employees. Not because he was cutting back but because he needed to upgrade his staff. These two individuals just wouldn't follow procedure. They weren't bad employees. They just couldn't sign on to doing things only one way - the agency way. "I tolerated it for too long," he told me. "And I realized last week that if I was ever going to have an organization where people were truly accountable to do things the right way, then I had to do something different. It wasn't easy but it needed to be done."

So now he's recruiting to fill two jobs. For the job market, it's a wash. For his agency - short term - there is some big expense. Hiring and training take time. For the long term, however, it could mean higher productivity and better performance. So, better profit. Higher return on investment. For the economy, it's a win.

Apparently this strategic thinking agency owner isn't alone. Check out this article in the National Underwriter: "Insurance Hiring Continues Despite Poor Economy, Says Expert."

If you're looking for help to make a touch decision about a marginally performing employee, the bad economy might be a blessing for your business. One of the good things about a bad economy or a soft market is that it forces us to be more disciplined.

Measures of Success

Is your business successful? How do you measure success? In this economy - in this market - how do you feel about your business results? Are you "satisfied?"

We hear:

"Revenues are down.
"Rate continues to be low."

"I'm losing accounts because they are going out of business."

"Revenue per account is down."

So does that mean your business is "in trouble?" Last year you had a successful insurance agency. How did you measure success? By that measure, are you still successful? If you answer, "No," then why? What has changed? Maybe nothing has changed. And maybe that's the problem.

There is no question that some businesses will fail - are failing - in the current environment. Many of those business owners would have said to me less than a year ago, "If it ain't broke, don't fix it." Well, there's "broke." And then there's blase. Business as usual is a business killer if the only measure of success is this year's profit.

That said, what do we do about it? Start by looking at how you measure success. Operating profit, how well operating revenue (without contingent income) covers operating expense is a critical indicator - much more reliable than pre-tax profit. Also take a look at the percentage of fixed vs. variable expense. During periods when income is down, do expenses stay high? If so, it becomes even more important to maintain tight expense control even when times are good.

Two other solid indicators of performance are 'hit ratio' and account retention.

Hit ratio measures sales effectiveness - the number of sales made to the total number of sales opportunities. And when you look at this one, be sure to compare your total opportunities to prior years. If you're not going after as many new accounts, you may see a false positive here, i.e., hits will be measured against a smaller base.

Account retention tells you how many customers you retain. It's a little more difficult to measure than revenue persistency, which is what we usually refer to as "retention," but is a better measure of service effectiveness. If revenue per account is down, it's more important than ever to keep the customers you have.

Everyone is feeling the effects of economic downturn. And the lingering soft market. Businesses that are not "in trouble" are the ones that measure their success consistently and critically - regardless of the economy or the market cycle.