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Business Plan How-To Guide

Posted By Administration, Tuesday, October 30, 2018

What should make up your business plan? There are seven essential sections.

1) Executive Summary

Though it is the first section of your plan, it’s better to save it for last to write. Because this section summarizes the fundamentals, it’s better to first write the rest of the plan. It will make it easier to write the executive summary.

There is one thing you must include. What it is you want. State what it is you’re looking for so the readers of your business plan don’t have to hunt through the document to find that information.

2) Agency Description

Describe your business, its purpose and your vision. What do you want your agency to look like in the future? What are your values? What’s important to you? This doesn’t need to be lengthy. You can sum it up in a purpose or vision statement.

List your goals and objectives. Goals are what you hope to accomplish in the long term. These can be in terms of profitability, market share, etc. Objectives are more short-term and specific. They describe the actions you will take to reach your goals.

For example, your goal might be to become one of the top 10 agencies in your city. Your objectives could include to quote 150 policies a month and close 30 percent of them. Another objective could be to retain 85 percent of your customers a year. One more might be to cross sell one line of business to clients and close 40 percent of them. These objectives would help you toward your goal to be a top 10 agency.

Detail your strengths and core competencies. What is going to help you achieve those goals and objectives?

3) Market Analysis

This section should include a SWOT analysis evaluating the strengths, weaknesses, opportunities and threats for your agency.

Describe the industry and what factors are affecting it. What are the current trends in growth and customer behavior and preference? What are the opportunities and potential threats in the industry?

Identify your current and future target markets. You’ll have more than one customer group. Build very specific outlines or buyer personas for your most important groups. If you’re selling to consumers, use factors like age, gender, location, income level, social class, occupation, and education level. For businesses, use industry, location, size, quality, coverage, and price sensitivity. 

You’ll also need to include a competitive analysis. Who are your competitors? Do they compete with you for certain customers or products? Or do they compete with you on all products and all customer groups? What is their market share? What are their strengths and weaknesses? How do you compare? What is your competitive advantage? What makes you unique? Don’t say service.

Explain the barriers you face. This can include, but is not limited to, high costs in capital, labor and/or marketing. It also can include brand recognition, training and skills, and technology. How will you overcome these barriers?

4) Management and Operations

What is the legal structure of your agency? C or S corporation? LLC? General or limited partnership? Who are the owners and what is their percentage ownership? What is the extent of each owner’s involvement with the agency? Also, include profiles of your management team. What is their background, qualifications, expertise?

Do you have an advisory board you meet with once a quarter? Who is on the board? What is their background, etc.?

If you have employees, you should detail the roles and responsibilities. How many employees? How will you recruit new employees? How will you train your current and future employees? Include an organizational chart to show who does what.

What is your physical location, and its strengths and weaknesses?

Don’t forget about your agency technology. List each, including your comparative rater and/or agency management system and how each contributes to your operations. Include your plan for any new technology or upgrades.

5) Products and Services

What lines of business do you sell? Do you offer add-ons, like roadside assistance? Do you offer any services in addition to insurance? Are there new lines you should add?

What do you do after the sale? Do you perform annual policy reviews? 24/7 help with a call center or live chat?

While you don’t set the price of the policies you sell, you do need to describe your commission or fee structure.

How do you onboard carriers to your agency? What are your plans for new appointments?

6) Marketing and Sales

Now you talk about how you’re going to get customers and grow. Describe the growth potential and opportunity for an agency similar to yours. What is your growth strategy? How are you planning to grow your agency? Organically or through acquisitions?

How are you going to reach potential customers and market your agency? What’s in your agency marketing plan? Advertising? Community involvement? Online marketing? Buy leads? Partner with potential referral sources?

What about your agency’s visual brand? This could include your logo, insurance agency website, business cards, signage, marketing materials. Are you going to be using technology like email marketing or marketing automation?

How much are you going to spend on marketing and when (startup or ongoing)? If it’s an ongoing expense, add it to your operating plan budget.

Who is going to be selling for your agency? How will you recruit and train producers? How will you compensate them?

Include a sales forecast based on your past sales experience, marketing strategies, research and industry data. You might consider doing two forecasts. Your best guess of what you expect and a worst case scenario that you’re confident you could meet no matter what.

Set a goal for your commissions for the first year. Then you can figure out about how many policies you need to write a month, which then helps you know how many quotes you need to be doing a month.

7) Financial Projections

You will need to create forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. 

And remember, your business plan is a dynamic document. It’s not something to do once and forget about it. You will need to review it at least once a quarter to check your progress.

If you’re feeling overwhelmed with all the items to include in your business plan, don’t worry. There are many resources available to you.


How to Create a Business Plan for Your Independent Agency

How to Create a Simple Business Plan

How to Create Financial Projections for Your Agency's Business Plan

The Planning Process

How to Build an Insurance Agency Business Plan

A Sample Insurance Agency Business Plan Template

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