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captureChris Burand is an active consultant in the independent insurance industry specializing in financial analysis, sales, and marketing.  Chris writes a well-respected column in the “Insurance Journal,” and I find his writing to be entertaining, informative and thought provoking.  I frequently find myself quoting him to agents, or groups of agents, with whom I speak and work.

In a recent column, Chris has written one of the best defenses as well as criticisms of independent insurance agents!  Without attempting to summarize his writing here, I would just like to suggest that you read it.  If you’re not a subscriber, simply go to www.insurancejournal.com and select the April 3, 2017 issue.

jimOAA and its 135 member agencies, held our Annual Success Celebration last week where we gathered to celebrate our collective success in the past year.  That event was highlighted by the attendance, and remarks, of Jim Masiello the founder of SIAA, which OAA is a part of.

During one session with Jim I asked “how confident are you about the future of the independent agent?”  I pointed out that he has two 12 year old grandsons and I have to sons in college.  I asked “would you recommend that they consider the business for their careers?”  Without reservation Jim’s answer was yes!

Interestingly, the current issue of the Insurance Journal contains the results from the “2017 Young Agents Survey”.  The results indicate that young agents agree with Jim.  According to the survey 58.1% are very optimistic about their career while 29.2% are optimistic.  Thirty seven point nine of these same agents are very optimistic about the future of the independent agency system while 41.5% are optimistic.

Overwhelmingly, those in whose hands the future of our industry rests, believe we have a bright future!  I agree with them.

Those who read my postings here will note I believe that our business will be changing over the next few years.  But I also believe we aren’t going away.  The independent agent’s fundamental value proposition of choice, advocacy and trusted relationship is more valued than ever, by more consumers than ever, as indicated in other surveys of consumer attitudes.

With all of this optimism it is certainly a privilege to participate in the creation of dozens of new agencies each year here at OAA!  How can we help you move forward with your business and career?

 

 

If you are a fan of NBA basketball, you know who Russell Westbrook is.  If you’re not, let me introduce him.  He is not just an incredible athlete, but someone who is focused single mindedly on playing his absolute best every minute he is on the court.  Russell’s comment quoted in the headline came after an incredible 57-point scoring night in which he single handedly created a victory for his team in the second half of a game where they were down by 21 points at half time.

Russell Westbrook is the epitome of a competitor.

In the business of building a company, whether an insurance agency or any other kind, we are competing with many others for the dollars of prospective customers.  As business owners and sales people, we are competing every day in a zero sum, win or lose, game that determines the future for our business, our careers, and our families.  How many of us play with the single minded focus of a Russell Westbrook?

I believe that there are some valuable lessons for us to learn from Russell.  The first is continuous progress and improvement.  As I’ve watched Russell’s career develop over the last nine years, he’s gone from a wild, almost out of control, inconsistent performer with tremendous ability, but not much to show for it, to superstar.  That’s happened as he has gradually worked on his focus, his team work, and his fundamental skills.  As business owners and sales people, do we do that every day?  It is a key to success for every star player.

Russell seizes opportunity and takes risks.  This year his long time team mate and team leader departed.  His team was widely considered washed up, but the absence of the other super star gave Westbrook an opportunity to develop greatness if he stepped up and took the risks.  He did, and the result has been one of the best seasonal performances in history.  As business people, we are faced with new challenges and opportunities frequently.  Do we conquer our fears, as Russell has, and take on the challenge and risk or settle for the status quo?

As he has improved his performance, Westbrook has also worked to improve the performance of his teammates.  He has made them better, and in so doing, they have contributed increasingly to his success.  Most of us aren’t in business alone.  We have team mates, too.  What are we doing to improve their games?  This is an incredibly powerful key to continued and increasing business success just as it is in basketball.

Finally, Russell Westbrook simply wants to win and does everything he can, without any excuses, to make that happen.  What about you?

OAA hosted the first Circle of Excellence of the year at our new facility!  OAA has a new training room at 1220 N. Robinson Ave in downtown OKC.  We had lunch with our Elite OKC members and discussed Sales Forecasting.  Each member received a sales forecasting tool developed by Tony Caldwell.  We will be hosting the OKC Masters group on 3/15 and we look forward to another informative meeting.  Thank you to all our Circle of Excellence members for your  participation!logocoeteacher12

OAA is proud of the way our Strategic Company Partners work with OAA members to provide great products and services.  Our national partnership with SIAA allows OAA members to access the best contracts with the best companies and the most profit sharing available to an independent insurance agent.    Our friends at Safeco stopped by to drop off our 2016 profit sharing check last week.  We immediately went to work distributing that money to our members and we will celebrate along side them at our annual Success Conference & Celebration on April 12th.    Pictured left to right:  Tony Caldwell, CEO at OAA, Myrna Estrada, Kennetha Caldwell, Nancy Lyons and Paul Jones of Safeco.

 

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reason-small-business-failureIn my last post, I discussed the varying views on how many small businesses don’t make it.  There is debate on the rate of survival but not on the difficulty.  Many experts have theories, and, while I’m not an expert, I have helped over 100 people start a small business and watched some of them fail.  Here are some of my observations about why.

  • Lack of planning. I see a lot of business plans.  Most of them are too vague and nonspecific.  The ones that most often succeed are highly detailed in terms of how they will attract prospects and convert them into customers in a given period of time.
  • Lack of capital. Stories of starting a business with virtually no money are legion.  I started mine that way, but, in a small business, the founder needs to identify how he and the business will survive the inevitable financial challenges that come in a new business.  It can be spousal income, savings, investors, or other sources, but very few businesses and their owners can survive the time period required to establish regular cash flow with only the income from the business.  A realistic assessment of this is almost always lacking in failures.
  • An unrealistic marketing plan. The number one job of a founder is to create revenue, but many budding entrepreneurs way underestimate the number of prospective customers that will be required to get to a certain level of income.  In addition, they have no certain means identified to produce those prospects in necessary numbers.  Most insurance agency startups are created by sales people.  Many of those don’t understand how to make the phone ring.  Before you hang out your shingle, make sure you do.
  • No Unique Selling (value) proposition. The failures I see think that a lower price than the next guy is enough.  It isn’t.  It never has been.  It won’t ever be.  Especially in a day in which customers can easily shop many sources quickly, being cheapest isn’t enough to stay alive.  Since virtually all agencies tout “service” as their USP, that doesn’t work well either, unless it’s really true, and it usually isn’t.  What is your USP?
  • Inadequate work ethic. How much time should a founder expect to invest in their business on the way to success?  I’ve heard a lot of theories.  My answer is: all of it.  To be successful in starting a business, the founder needs to be ready to commit all of their time to it, except the time required to eat, sleep, and eliminate.  I’m not kidding.  Look at those who made it, and that’s what you see.  Yes, starting your own business should (eventually) allow you freedom of time, but it won’t for the first few years.
  • Wheel reinvention syndrome. There are many startups who invent a new product and become fabulously successful.  Legions more who don’t, but in the small business arena (like insurance agencies), usually success involves following well established paths to success.  When involved with companies like mine who have a well charted set of success strategies, follow them.

 

This is the land of entrepreneurs and the “overnight” success story that often takes many years.  There are lots of paths to success and some pitfalls.  The ones I’ve listed here are common and 100% preventable with some effort.  Good luck to you if you head down the path to independence!

OAA has gone through some changes in the last few months, not just new scenery with our recent office move, but we’ve also added several new faces!  Our AccessPlus team is member focused, and we’ve been working hard while stretched thin these last several weeks.  After an exhaustive search for the right fit for our team and yours, we are so excited to introduce our new AccessPlus professionals.  Please meet Robbie Hoffman, Sylvia Smith and Caleb Wonn.    Be sure to welcome them to the team during your next AccessPlus interaction.  They are here to help you and are training hard to do just that!

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OAA’s newest team members are pictured left to right.  Below you will see their answers to these 3 questions:

  1.  How many years of experience in this industry?
  2. What is something you think you are good at that will lend itself well to helping our members?
  3. What do you enjoy doing outside of work, hobbies, interests, volunteer work etc?

Robbie Hoffman

  1. 20 years
  2. Knowledge about the industry; I really care about what I am doing; helping clients to the best of my ability
  3. Spending time with my 3 grandchildren & my family; Reading; Cooking; Being outdoors

Sylvia Smith

  1. 20 years plus
  2. I enjoy helping people and it’s important to me to exceed expectations, and give the best customer service
  3. I love to run in my spare time and I also have 2 grandchildren that I love spending time with

Caleb Wonn

  1. 7 years
  2. I love crunching the details of coverage. I think that knowledge will be beneficial to the members as a way to distinguish themselves
  3. Fishing, camping, boating, water skiing, play piano and guitar, being a husband and dad to three girls fills a lot of my time
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I’m reluctant to write about the topic of terminating someone’s employment involuntarily because it is fraught with emotion, misunderstanding and legal liability.  Yet I have been thinking about something I read recently on the subject and want to explore it.

In a recent blog Steve Adams, creator of the Dilbert cartoon, quotes well known venture capitalist Naval Ravikant as saying “the secret to business success does NOT necessarily involve hiring the right people.  We just think it does.  The real secret to success is firing the people that you discover to be the wrong fit until you END UP with the right people…. But a good leader knows which employees to fire and does it quickly and humanely.”

This is as insightful as anything I’ve read in a long time.

Anyone who has been in business very long has likely faced the necessity to fire an employee.  It is never pleasant and is one of the things that I think just about any decent person would not want to do without necessity.  After all, when you fire someone you are making a very serious, usually negative (at least temporarily) impact on their life.  And there are real risks if it isn’t done properly.

Because of this, my experience tells me that many business owners delay, avoid or deliberately refuse to dismiss employees who don’t fit in their business.  Clearly this only exacerbates whatever problems exist when you know you need to terminate someone and rarely, if ever, improves to a satisfactory point.

Since reading Ravikant’s comment I’ve been surprised how many conversations I’ve had with business leaders about their need to let someone go.  Perhaps it’s just coincidence or maybe it’s like learning a new word and I’m just seeing conversations I’ve always had in a new light.  But it’s clearly an issue that needs more discussion and thought.

As I’ve reflected on my own experience I can’t think of a single example of someone who I thought needed to go who either didn’t ultimately go on their own or that I had to fire.  And in my reflection I have realized that each time I have delayed, for whatever reason, the business (and sometimes me personally) have paid a price that wasn’t worth it.

So, I think Ravikant is right.  While it’s important to get the right people on your team it’s critical to get the wrong people off.  The sooner the better.  For everyone’s benefit.  And this last statement is important.  I think it’s part of what Ravikant means by “humane”.  Sometimes employees that need to go are troublemakers or cancerous.  But often they just aren’t cut out for the position you have them in.  When you let them go you are freeing them up to go somewhere where they will be more productive, useful and perhaps content.  Regardless, as he says, it’s the leader’s job to do what is necessary.

blue-growth-chart
I have a very simple idea, one that everyone knows about, but my idea is so simple that no one ever does it.  Sound crazy?  Of course it does.  But stop and think – how many great ideas have you heard in your career where you think “of course!” and then go right back to not doing it?

I’ve had that experience – a bunch of times.

So, before I give you my idea, promise yourself you’ll try it!  Ok, ready?

Not so fast!  Let me ask you a question first.  What was your retention rate the last 3 years?  Subtract that from 100%.  What then was your slippage, non-retention, etc?  For the average small agency, it was about 15% per year.  This means that if you’re average you’ve lost 45% of your customers in the last 3 years.

What if you could have one third to one half of them back?

If you could do that, in a year, you’d grow by 15% to 22.5% right?  Divide your growth rate last year by that number.  The average growing agency grew about 5% last year, so if you could do this and you’re average, you’d increase your growth rate 300% to 450%.  Regardless of your actual numbers, I hope you get my point.

Ready for my idea?

It’s really simple.  Call your old lapsed customers back!  Almost ALL OF THEM will be glad to have you quote!  What’s your conversion rate?  It’ll be higher with these people because they know you, trust you already, and will be happy to come back!  I have a partner who has a department of people who focus solely on this, and they win back a huge per cent of those they call.  Here’s another great idea – do what they do and hire someone(s) to focus solely on this.

Let’s do the math.  Assume a $2 million book of business and a $2,000 average account size.  That’s 1,000 customers.  Forty five per cent of that number is 450. Assume you can resell a third of them.  That equals 150 “new” customers at $2,000 premium each or $300,000 in new business.  That’s $45,000 in “new” commission income.  For a $300,000 revenue agency, that is a LOT of new business.  Multiply or divide for your agency’s size.

This is such a simple, powerful, and profitable idea that only the most successful business growers will even try it.  Are you one of those?

hayEver since the election in November, I’ve been talking to business people about the results.  Regardless of party affiliation or candidate preference in the election, one thing has been coming through loudly and clearly: excitement!

Like the coming of spring when the clouds depart and the sun shines, business people seem to be full of enthusiasm for the future in ways I haven’t heard in a long time.  Almost every business owner I have spoken to is thinking about how they plan to increase investment to take advantage of what they see as an improved climate for business.

Obviously, we insurance agency owners are probably also excited by and large.  I know that I am.  As I’ve thought about what I hear about lower taxes, perhaps the end of the death tax, less regulation, etc., I’ve also thought about how we as agents can leverage this optimism to grow our businesses.  Here are just a few ideas:

Now is the time to review with business customers their plans for increased sales, payrolls, and property values so we can make policy adjustments early.  This helps our customers plan better, may increase premiums and commissions, but certainly cements the idea that we are valuable advisors.

  • Optimism will lead business owners to purchase coverage, like higher auto limits, excess liability policies, and increased employee benefits that they may have dropped in recent years.
  • For consumers, whose measured confidence is increasing, we need to be doing coverage reviews to make sure our policies are keeping up with their spending.
  • For personal lines customers, now is the time to suggest an umbrella policy, additional life insurance, or other products that they may have been putting off until now.

It also appears that increased expensing allowances and reduced taxes are going to set up an opportunity for business owners (like you!) to make additional investments in your business with new technology or other needed items.  This news coming at Profit Sharing time means that you have the means and the motivation to consider how to invest in your business to grow even faster this year.

What do you think?  How can you leverage the new political climate and the optimism it is engendering to grow your business?