QUESTION: I operate a small independent insurance agency and try to offer a full range of products to our clients. The insurance business is constantly evolving and it is difficult, expensive and time-consuming to stay abreast of all the changes taking place. Would I be wise to scale down my operation and focus on a few specialty areas?
ANSWER: You should focus on two main objectives, customer service and profitability.
Unless you are staffed with insurance professionals who specialize in the different product lines, it is a daunting task for one person to master the complexities of the entire 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 that they fail to address the other purpose of being in business — to make a profit.
I am not suggesting for one moment that you do not have a duty to clients to keep up with industry changes, but one must balance this with the other challenges and responsibilities of running a profitable business.
We live in an age of specialization. Insurance is no different.
Consider grouping the various lines of insurance into separate “profit centers.” An example could be one for personal lines of auto and homeowner insurance. Another could be commercial insurance lines of property and casualty, while the third could be for life, health and 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.
In this way, you can know for certain if your investment of time and money is generating a profit. Generic expenses like rent and utilities can be allocated, percentage wise, in direct proportion to the income each profit center produces.
Within a year or so, you will determine which profit centers produce the most reward and where you should devote the most resources.
Resist the impulse to try to fix the center producing the least return unless there is an obvious solution to the problem or it is a complement to the other product lines.
Yours is a business that is constantly evolving. It is imperative that you anticipate changing trends and adapt accordingly.
Established businesses as well as startups should construct and maintain a written business plan.
The experienced counselors at SCORE can assist and guide you in constructing a viable business and marketing plan to ensure your continued success.
SCORE offers a number of free, live webinars that can assist with this and many other issues confronting the small-business owner. To access, visit https://richmond.score.org/live-webinars.
Gray Poehler is a volunteer with the Richmond Chapter of SCORE, Counselors to America’s Small Business. To ask a question or request free and confidential business counseling, go to Richmond.score.org/mentors. Learn more about SCORE’s workshops on the website or by calling (804) 350-3569.