Year's end is an ideal time to evaluate results and to plan forthe new year. Are you committed to planning, and do you have awritten annual business plan?

Here I will share some actionable planning tools to help youestablish and maintain an annual business plan. The annual businessplan includes seven primary considerations for your agency:

Expense budget: Expense projectionsfor next year are the first order of business.

Marketing plan: This starts with theexpense budget for next year, because you need to know how muchrevenue is needed to cover expenses first, and then set your profitgoal. Chart A, “Marketing Revenue Projections” (at right), willhelp you project revenues based on your own agency's year-endresults. This data is input from a “Monthly Income Report,” Chart B(below), maintained on a year-to-date basis.

Sources of revenue: This displays therevenue results from Chart A visually, in a pie chart. It's a greattool for owners, managers and all employees to quickly and easilyview how all sources contribute to meeting the agency's annualrevenue goal. While not all channels of distribution have access toall sources of revenue displayed, it can be tailored to theorganization.

Reports for new/lost businessproduction: Chart C, monthly and year-to-date,shows new/lost business, actual versus goal. Marketing — Chart D —shows sources for new business and reasons for lost business,displayed monthly and YTD. Results are used for calculatingretention factors as well as other planning purposes. Below, asample of what these charts could look like.

Department/divisional plan: Eachdepartment should create its own annual plan to be incorporatedinto the agency business plan. Each department's plan should bewritten by its staff and submitted to management. All shouldaddress and set goals for revenue objectives, sales and marketingtactics, new business generation focused on account rounding,cross-selling, new products, training and education, automation andIT improvements.

Operations team plan: Often overlookedas a revenue generator, this is an integral part of planning. Theentire operations/admin/finance team should create its own annualplan, beyond logistics, with special emphasis on providing allreports and data needed for input to the annual business plan.Tracking all agency production and loss ratios from companies forcontingencies, bonuses and profit sharing should be maintained andreported quarterly. The operations team should have its own revenuegoal that can be achieved by identifying and referringopportunities for account rounding, cross-selling and new businessopportunities they personally refer to the agency. All agency staffshould be eligible for a “finder's fee referral” incentive.

Benchmark planning: Executives shouldfocus on growth and profitability by measuring these benchmarks, atminimum:

The results of the past year and the new annual plan should bepresented by the CEO at an annual meeting to share results — bothgood and bad — and introduce the plan for the new year for whichall employees provided input. All departments should meet on amonthly basis to review their department plans and modify asneeded.

Barry Seigerman founded the Seigerman Agency, afull-service, multi-line agency in 1975, and is now a producer forPeople's United Insurance Agency. Contact him at [email protected].