Here are the five steps you need to take now to prepare your Independent Insurance Agency for year end financial management.

Step 1: Don’t wait until March, consult with your CPA / tax advisor now.

  • By this time of year, year-end profit can be projected reasonably well. It’s time to sit down with your CPA or tax professional and get an estimate your agency’s taxes.  This will give you time to make some decisions and take actions that can lower your tax liability.
  • Remember to discuss whether you are on cash or accrual basis and the deadlines when transactions can be made

Step 2: Hold your producers accountable! Build detailed, executable producer plans for the upcoming year.

  • Don’t accept a plan that simply states, “I’m going to write $XXX dollars in 2019. Producer plans must specify how, what, and when.
  • Get tangible answers for these key questions:
    • How will they produce the business?
    • What lines of business to which target markets
    • When will business be produced?
  • Use the information to plan the key milestones for the year – monthly or quarterly objectives are better than annual.

Step 3: Create the vision! Plot out an organizational chart which shows what your agency will look like at the end of upcoming year.

  • Identify who might be leaving – retirement or exiting for other reasons
  • Look at who is promotable to what positions?
  • Build a plan of when and how to fill each needed position.
  • Ultimately, this will identify key hires for the upcoming year and potentially beyond.

Step 4: Work towards common goals. Develop a plan of key initiatives for the upcoming year.

  • Identify how each initiative will impact key agency metrics.
  • Specify milestones for each initiative.
  • Break the plan down into months or quarters
  • Final step, do a reality check. Carefully, and objectively, consider the capacity your staff has for successful completion of the new iniatives.  Often times, less is more.

Step 5: Knowledge is power. Craft a budget with targets for key performance indicators and then maintain it as a tool for your increased financial acumen.

  • Take everything you learned in items 1 – 4 above and integrate them into your budget.
  • Step back and assess whether it is realistic.
  • Adjust as necessary before finalizing.
  • Build in some flexibility for the unforeseen….use your budget as a guide. When opportunities arise assess them and make good business decisions.

By utilizing these steps, you have set your agency to start the new year on strong financial ground.  For expert guidance or to learn more about our custom budget process tool, please contact Don Polczynski, RD Advisory Group Partner and Agency CFO at [email protected].