I have the privilege of speaking with many insurance agency entrepreneurs every year. Virtually all of them are interested in growing their businesses, yet only a few actually do accomplish a growth rate above the rate of inflation. Though they want to grow they don’t. At the same time, some agency owners grow their businesses exponentially. Those that do have some things in common that I think constitute the “secrets” of their success.
Here are the top 10 secrets that I see most often in agencies that manage double digit growth nearly every year.
Growing agencies set goals. Goal setting in a sales culture seems like second nature. Everyone sets goals. Right? Wrong. In fact, most agency owners I speak with can’t tell me, with specificity, how much they plan to grow overall in the current year, or the next several years. They can’t tell me how much they plan to grow by line of business, carrier, geography, niche, etc. It’s been said that you can’t hit a target if you don’t aim (except by accident) and this is obviously true. So, why don’t more agency owners set goals?
I think the biggest reason is fear. They are afraid if they set goals and they don’t achieve them, they will fail. Though this may be true, business owners who think this way are missing a key point. Even when they fall short of their goal, working toward that goal will likely drive them to higher performance than they would otherwise have had.
Business owners also avoid setting goals because they don’t know how they will accomplish them. Conversely, the most successful agency owners set big goals with the same uncertainties. They have learned from experience that the first step may be the hardest, but if they take it, the second step will be revealed. The answers have always been in plain sight. Just like you don’t notice gas stations until you need a refill, opportunities for growth are often invisible until you’re actively looking for them.
Growing agencies plan. One way to achieve ambitious goals is to build a logical plan that breaks needed activities into steps. The agencies I see who are beating the averages plan for operations, sales and marketing moves that will turn their goals into realities.
Growing agencies execute. It’s one thing to plan, but successful builders of growing enterprises do the things they say they will. They examine interim results and tweak. They don’t allow the enormity of a problem or the size of a goal to overwhelm them. Samuel Clemens, the famous author known as Mark Twain (and a successful entrepreneur who built an amazing sales business) said “the secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small, manageable tasks and starting on the first one.”
Growing agencies build a strong balance sheet. As agencies grow, one of the biggest challenges is managing cash flow. Profits often show up on the income statement, but the balance sheet is challenged with receivables and often with excess distributions to owners. Owners who desire consistent strong growth know they must feed the company first so they must retain the working capital to not only pay bills on time, but to invest in the people, or acquisition opportunities, that fuel their growth. They know their personal lifestyle has to come second to the agency, not first.
Growing agencies continually invest in the business. This imperative is related to the one before but is only possible when No. 4 is achieved. Growing agencies continually invest in up-to-date equipment, technology, and marketing, but most of all in people. They are continually hiring new talent and training their existing employees. High-growth agencies understand they won’t generate as much EBITDA as static ones because they are building future profits and wealth. Owners like this understand that even though their margins may be lower than an agency with flat revenues, their agency value is higher because potential acquirers value their growth.
Growing agencies are willing to regularly go backwards. While this sounds counterintuitive it isn’t. Michael Jans, a longtime coach of growing agencies, coined the “law of the short reverse” decades ago. This recognizes that it is necessary to crouch or back up to spring forward. Just as the basketball player crouches to shoot, a growing agency must occasionally recognize they have reached a point of diminishing returns on their current means of operating. They must retool and reinvest in new methods to continue their growth. As an example, today every agency is “paperless,” but it took the industry over two decades for that to happen. The agencies that adopted this strategy early benefitted compared to the late comers.
Growing agencies maximize the lifetime value of every relationship. These agencies recognize the easiest sale to make is one to an existing customer. They work to sell their clients every policy and risk management solution available to them. They understand this practice not only raises revenue and profits but also increases retention, which drives growth rates still higher.
Growing agencies are always ready to pivot. They know the business climate is dynamic. They will abandon a line of business, a customer niche, a marketing strategy or insurance carrier when bigger, better opportunities present themselves. They stand ready for change. For example, many high growth agencies were able to go virtual at the beginning of the pandemic while others floundered, lost momentum and opportunity because they weren’t prepared to adapt.
Growing agencies celebrate. People who are continuously successful don’t take their success for granted. They understand how and why they have achieved something, and they are grateful for it. They know celebration reinforces the successful habits they’ve worked hard to build. Celebration fosters reward, too, where the entire team sees the benefits of victory. This reflection, teamwork, sharing of the success, wealth and fun that comes with celebration builds and fuels cultures that support continual achievement and growth.
Growing agencies never give up. I’ve met many so-called “overnight successes. But as I had the chance to get to know them, I discovered most of these individuals actually worked for years to become successful. Ultimately, they triumphed because they didn’t quit. They allowed failure and setbacks to teach them rather than defeat them.
They put into practice in their businesses the adage that “what doesn’t kill you makes you stronger.” These agency owners, as a group, also tend to develop the habit of forgetting the past and focusing on the future.
These are the 10 most powerful secrets I’ve learned from watching and talking to agency owners who grow their businesses successfully over time. In my observation, those who use these secrets, most of the time, grow faster and more consistently than those who don’t.
This is certainly not an exhaustive list, but it’s pretty comprehensive.
Here’s hoping that 2022 is the beginning of the strongest, longest, and best period of growth that you and your agency have yet experienced!
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