Just
about every industry relationship will require a formal business plan.
This includes carrier prospects for appointments and E&O insurance
providers. The business plan consists of a narrative, resumes and
several financial worksheets. The five things every business plan should
address are:
- People – At
its core, the fundamental value of any agency is in the capability of
its people to execute its objectives. Therefore, your business plan
should include information about the people who are responsible to
execute it. At a minimum, include resumes on each of the key players
that describe the professional and personal background relevant to the
agency business as well as the knowledge, skills and abilities possessed
by each. For start-ups, a lack of a demonstrated track record may
inhibit your ability to attract prospective employees, customers and
carriers. To mitigate this uncertainty, include an explanation of who
you know and how you may be known in the community and/or industry.
- The opportunity – A
key to agency success and of interest to all current and potential
stakeholders is how the agency plans to acquire customers, including
with what products and services and with what advantages over
competitors. This section should demonstrate that you know who your
customer is, what your products and services are and how you will
position your products and services to be selected over those of your
competitors.
- The business environment – Your
business plan should demonstrate that you have a keen awareness of the
external business environment in which you operate, that you understand
its impact on your business prospects and how you will navigate and
exploit it. The discussion should encompass regulation, the economy,
labor supply, customer markets, suppliers, competitors and in what way
the status of these factors is relevant to the operation of your agency.
- The risks – Many
business plans, especially those that will be used outside the agency
to attract other stakeholders, often make the mistake of painting only a
rosy picture; however, risk is inevitable. The best business plan
readily identifies and confronts the risks to be faced. Potential
stakeholders, especially prospective carriers, will develop confidence
in those agencies that pose the risks and provide strategies to resolve
them.
- The numbers – You
need to have realistic expectations of where revenues will come from
and when and how cash will be used; furthermore, insurance carriers will
be interested in growth projections. At a minimum, you should have a
start-up budget, a cash flow forecast and a production forecast.